Novartis eyes the future
This week Swiss-based drug firm Novartis announced the purchase of Alcon, a US-based eye care company, from Swiss-based Nestlé. The deal is for $39 billion.
Novartis has been making a series of moves in the last few years, away from its patent pharmaceuticals business and into other health-related area, including generic drugs and vaccines. The Alcon deal will make it the world's #1 vendor of eye care produces, with a 22% market share worldwide.
Alcon makes optical drugs, devices for eye surgery, and solutions for contact lenses. Its brands include Opti-Free, Patanol, Systane, and Travatan
Nestlé, the world's #1 food company, has seen its involvement in Alcon as strictly financial -- the closest Nestlé comes to health products is in the area of nutritional supplements, and clearly unloaded it when the price was right. Nestlé bought Alcon in 1977 for $275 million.
This is interesting in several ways:
- It shows that big strategic deals are still doable in spite of the credit crunch. That's especially true if you are spending euros.
- It shows our recurring pattern of discards and pick-ups, with both sides happy, and Nestle divesting itself of a division far from its core business.
- It shows that Novartis is well aware that the days of big money from prescription drugs is waning and its drug pipeline is running dry, so diversification is essential.
- By the way, in 2006 Nestlé bought Novartis's medical-nutrition division ($2.5 billion), and, in 2007, it bought Novartis's Gerber baby-food business.
- The current thinking sis that Nestlé, flush with cash, may try to buy he Mead Johnson infant-nutrition business from Bristol-Myers Squibb, which is trying to unload it. It's an almost perfect circle, with money from a drug company will help Nestle buy a food division from a drug company. (Of course, it also rumored that Nestlé (A 28% owner) may buy the remainder of French cosmetic company L'Oreal, so maybe not sticking to its core business so much.)
- It indicates that Alcon, a company known to no one other than financial analysts in the health field or ophthalmologists, can have a value very close to what Microsoft is offering for Yahoo, a comnpany known to everyone. Yahpoo is a company that, after all, has a set of very intangible products and servcies that could become worth a whole lot less in a big hurry, Alson's products are well-etsablished and tangible, and aging baby boomers are going to need them more than ever in the upcoming years.
10:21:31 PM 
|
|
