Grifols SA, one of the worlds top developers of plasma-based medicines, has been growing amid Spains economic crisis by using strategy of targeting sales abroad and making quality acquisitions.
Novartis AG agreed to sell a blood-transfusion diagnostics unit to the Spanish health-care company for $1.66 billion (1.24 billion euros) as the Swiss drug-maker slims its portfolio. The transaction, would probably be completed in the first half of next year, company said in a statement this week.
Novartis is reviewing market segments to assess which one it wants to stay in, Chief Executive Officer Joe Jimenez said today. He said the company now has three with global scale: pharmaceuticals, the eye-care business Alcon and the generics arm Sandoz. Novartis has said it wants its businesses to be among the industry leaders or will otherwise consider divesting them. The review of operations follows the departure of veteran chairman and CEO Daniel Vasella, who merged Ciba-Geigy and Sandoz creating Novartis in 1996.
Globally, the healthcare industry is undergoing a large amount of mergers and acquisitions as giant drug-makers divest non-core activities, as trying to focus their new drug pipelines by acquiring smaller firms.
Grifols best-selling product by volume is albumin, which is used in treating a range of patients, such as burn victims and people undergoing cardiopulmonary bypass surgery. IVIG, which can be used to treat illnesses including leukemia and autoimmune diseases, is the companys best-seller by revenue.
The companys net profit added 35% for the first nine months of this year to 267 million euros, led by a strong performance in the U.S. and growth in emerging markets. Grifols shares gained 4.5% to 32.36 euros in Madrid.
For Grifols, the worlds third-largest blood products maker, the acquisition ensures diagnostics will take a larger share of its revenue raising to 20%, up from 4% now.
Novartis rose less than 1% to 71.55 Swiss francs. The stock has surged 25% this year.
“This is a good deal for Novartis,” CEO Jimenez said in a phone interview for Bloomberg. “It allows us to focus on our strategic businesses. It also provides good value for us on what is a good business but not a business we had decided to grow aggressively.”
The deal should wait for regulatory approvals and is expected to be completed in the first half of 2014, the companies said. Novartis was advised by Goldman Sachs Group Inc. while Nomura advised Grifols.