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Novartis will spin off Alcon's eye care business



Novartis AG announced Friday that it would spin off its Alcon eye care unit, a business analyst estimated at more than $ 20 billion, the company's new chief executive's latest move to transform the Swiss drug giant [196592002] Das 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 2019.

The decision marks the final major strategic step of new CEO Vasant Narasimhan, who took over the management of the Basel company earlier this year and has committed to refocusing Novartis on drug development

Following the spin-off of Alcon Novartis will only be a prescription drug, "and I think we need to be successful," Narasimhan said in an interview.

Novartis bought Alcon in two transactions 1

0 years ago for a total of more than $ 50 billion and has reviewed its ownership rights to the business over the past year. Alcon was a big disappointment – until recently, when revenue growth picked up.

"Alcon has returned to a position of strength and it is time to give the company more flexibility to pursue its own growth strategy," said Mr. Narasimhan, a Harvard-trained physician and former McKinsey consultant & Co.

Mr. Narasimhan declined to appreciate the potential valuation of Alcon, based in Fort Worth, Texas, for more than $ 7 billion in 2017 sales.

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, in part because the Swiss company retains the ophthalmology pharmaceutical business after the spin-off.

When he stated 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 GlaxoSmithKline PLC to the British company for $ 13 billion. In April, Novartis also agreed to buy the US gene therapy company AveXis for $ 8.7 billion.

The Company Announced Friday to Repurchase $ 5 Billion in Equities by the End of 2019

Novartis announced that Alcon Chief Executive Mike Ball will be appointed and designated as Chairman of the Company on July 1 will prepare the company for the spin-off and to win a board of GSK directors. Alcon Chief Operating Officer David Endicott succeeds Ball.

Write to Brian Blackstone at brian.blackstone@wsj.com


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