But Joe Jimenez, Novartis’s chief executive, says it is also driven by anxiety over new challenges ahead as companies scramble for the best strategic positions in a changing healthcare landscape.
“Companies are looking at their portfolios and thinking about how healthcare dynamics are going to change in the next 10 years,” he told the Financial Times.
“An ageing population will lead to additional healthcare spending, but governments around the world are going to have difficulty funding these needs. So we need to have market-leading businesses with global scale that can compete in a tough pricing environment.”
These forces have led Mr Jimenez and Sir Andrew Witty, GSK’s chief executive, to make their boldest moves since taking the reins of their respective companies, with an ambitious deal to reshuffle billions of dollars in assets between the rival groups.
The aim for both sides was the same: to strengthen core businesses while offloading units that lacked scale.
“It is important to focus on those areas where we think we have significant competitive advantages and then to be very clear-minded about whether there are assets where there might be a better owner if we cannot be a leader,” Sir Andrew told the FT.
This thinking led GSK to the conclusion that, as number 14 in the oncology market, there was little chance of it becoming a champion in the fight against cancer. Instead, its oncology business – including new treatments for deadly melanoma – will be acquired by Novartis for up to $16bn, bolstering the Basel-based company’s number two position in cancer therapies, behind local rival Roche.
By the same logic, GSK will acquire Novartis’s vaccine unit – including a breakthrough jab to prevent meningitis B – for up to $7.1bn, extending its lead over Sanofi, Merck and Pfizer in a fast-growing market in which the Swiss group struggled to secure a meaningful foothold.
But Joe Jimenez, Novartis’s chief executive, says it is also driven by anxiety over new challenges ahead as companies scramble for the best strategic positions in a changing healthcare landscape.
“Companies are looking at their portfolios and thinking about how healthcare dynamics are going to change in the next 10 years,” he told the Financial Times.
“An ageing population will lead to additional healthcare spending, but governments around the world are going to have difficulty funding these needs. So we need to have market-leading businesses with global scale that can compete in a tough pricing environment.”
These forces have led Mr Jimenez and Sir Andrew Witty, GSK’s chief executive, to make their boldest moves since taking the reins of their respective companies, with an ambitious deal to reshuffle billions of dollars in assets between the rival groups.
The aim for both sides was the same: to strengthen core businesses while offloading units that lacked scale.
“It is important to focus on those areas where we think we have significant competitive advantages and then to be very clear-minded about whether there are assets where there might be a better owner if we cannot be a leader,” Sir Andrew told the FT.
This thinking led GSK to the conclusion that, as number 14 in the oncology market, there was little chance of it becoming a champion in the fight against cancer. Instead, its oncology business – including new treatments for deadly melanoma – will be acquired by Novartis for up to $16bn, bolstering the Basel-based company’s number two position in cancer therapies, behind local rival Roche.
By the same logic, GSK will acquire Novartis’s vaccine unit – including a breakthrough jab to prevent meningitis B – for up to $7.1bn, extending its lead over Sanofi, Merck and Pfizer in a fast-growing market in which the Swiss group struggled to secure a meaningful foothold.
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