Three Executives To Leave Novartis AG After GlaxoSmithKline, Eli Lilly and Company Deals
Published: Oct 09, 2014
October 8, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Basel, Switzerland-based Novartis announced today that three of its division heads will leave as members of the Executive Committee of Novartis (ECN). This is the result of company transactions with GlaxoSmithKline and Eli Lilly and Company . All three men are directors of divisions that will be affected by the transactions.
George Gunn, now head of Novartis Animal Health plans to retire in July 2015. Brian McNamara, head of Novartis OTC, will move to GSK as Head of Americas and Europe for the consumer health businesses. Andrin Oswald, head of Novartis Vaccines, will be leaving Novartis to pursue other opportunities.
In April 2014 Eli Lilly, headquartered in Indianapolis, announced an agreement to acquire Novartis Animal Health for approximately $5.4 billion. It will be merged into Lilly’s animal health business, Elanco. “Animal health continues to represent an attractive growth opportunity for Lily,” said Lilly’s chairman, president and CEO in a press release. “We intend to keep Elanco and to take advantage of the substantial synergies between our animal health and human health businesses.” As a result of the deal, Lilly is closing its Terre Haute, Indiana animal enzyme facility by early 2016 in order to consolidate its animal enzyme manufacturing to a site in Great Britain.
Also in April, Novartis and GSK agreed to develop a new consumer health business. Novartis acquired GSK’s oncology product lines for $14.5 billion, as well as an additional $1.5 billion dependent on meeting developmental milestones. GSK will pay $7.1 billion in royalties for Novartis’s vaccines business, except the flu component of the vaccines division.
The deals are all part of what Novartis CEO Joe Jiminez described in a Reuters article as making the company “fighting fit” to deal with the next decade of changes and challenges in the worldwide healthcare market. Although the various deal would decrease overall sales by about $4 billion, profits would be higher because the oncology market has a higher margin than the vaccines business.
The deals also moved GSK out of the cancer drug market, where the company CEO Andrew Witty indicated they did not have the size and scale to compete. GSK’s two core business are vaccines and consumer health, so those deals strengthened the company’s business in both areas.