said on Friday that it would spin off its Alcon Eye Care unit, a business analyst thinks it could be estimated at more than $ 20 billion, the latest step the company's chief executive to transform the Swiss drug giant.
The company said that the spin-off of Alcon into a separate business, publicly traded in Switzerland and the US, would allow the drug maker to focus more strongly. It is expected that the spin-off will be completed in the first half of 201
The decision is the last major strategic step of the new Chief Executive
At the beginning of this year, he took over the management of the Basel-based company and committed himself to focusing Novartis on drug development.
Following the spin-off of Alcon, Novartis will be wholly a prescription drug company, "and I think that's the case too," said Narasimhan in an interview.
Novartis bought Alcon in two transactions ten years ago for a total of more than $ 50 billion, and reviewed its ownership rights over the company last year. Alcon was a big disappointment – until recently, when revenue growth picked up.
"Alcon has returned to a strong position and it is time to give the company more flexibility to pursue its own growth strategy," said Narasimhan, a Harvard-trained physician and former McKinsey & Co. consultant.
Mr. Narasimhan declined to appreciate the potential valuation of Alcon, based in Fort Worth, Texas, which sold more than $ 7 billion in 2017.
Vontobel Research analysts said the spin-off is strategically meaningful and Alcon could have a market capitalization of between $ 15 billion and $ 23 billion, depending on the profit multiples.
The expected value of Alcon is below what Novartis paid, partly because the Swiss company retains the ophthalmology pharmaceutical businesses after the spin-off.
When he announced his decision spin-off Alcon, Narasimhan said on a call with reporters that he sees a rapidly evolving technological landscape, and said that Novartis should focus its capital on the use of digital technology for innovation.
Under Mr. Narasimhan, Novartis agreed in March to sell its stake in a joint venture with the Consumer Health Authority
PLC to the British company for $ 13 billion. In April, Novartis also approved the purchase of the US gene therapy company AveXis for $ 8.7 billion.
The Company Announced Friday Repurchase of $ 5 Billion in Equities by the End of 2019
Novartis said that Alcon Chief Executive Mike Ball will be named Chairman-designate of the company as of July 1, and with the Preparation of the company for the spin-off and recruitment of a board of directors. Alcon Chief Operating Officer David Endicott succeeds Ball.
Write to Brian Blackstone at [email protected]