Novartis Plans $5 Billion Buyback, More Business Segments

Novartis AG (NVS) has announced plans to buy back $5 billion of stock over the next 2 years along with foraying into areas such as treatments for skin and heart disease. The pharma company stated that the share repurchase process will start immediately, and the company will enter into new business concerned with dermatology, heart failure, respiratory illnesses and cell therapy.

Novartis to re-focus on certain segments

 “Novartis has reached an inflection point, having fully integrated Alcon and reduced debt,” said Chief Executive Officer Joseph Jimenez. Jimenez added that the company is implementing the focused strategy to provide more value to shareholders through science based innovation in high growth segments of health care given the global scale, competitive advantage and the right capabilities to win.

Novartis AG is the most dominating drug-maker by sales in Europe, and is re-focusing on the segments such as animal health operation, which fall short on the global scale.

Earlier this month, the medical firm announced its decision to sell of a diagnostic unit to Grifols SA for $1.68 billion. After announcing the sell-off, Novartis is left with three segments with global scale, which are pharmaceuticals, the eye-care business Alcon and the generics arm Sandoz, according to Jimenez.

Novartis is keen to become the industry leader in all the segments it operates, or it will resort to divesting the business. According to the sources, aware of the development, the Basel, Switzerland based company is strongly considering its animal-health business for sale. It is also looking forward to sell its over-the-counter medicine segment and the vaccine operation. However, the company has not yet reached any final decision.

Third quarter financials

For the third quarter, the drug maker posted a 6% drop in the net income to $2.26 billion, against corresponding quarter last year’s $2.4 billion. Earnings per share came in at $0.91, from $0.99 a drop of 8% affected by the currency headwinds. Group’s core net income came in at $3.1 billion, a drop of 3% in the US currency, but soared 3% in constant currency.

Share of Novartis soared 0.6% to 72.35 Swiss francs at the close yesterday in Zurich. The stock has returned $31 this year compared to 27% for the Bloomberg Europe Pharmaceutical Index.