Novartis has agreed to sell its blood transfusion diagnostics unit to Spain's Grifols for $1.68 billion (CHF1.54 billion), a move that comes as the company is considering shedding further smaller businesses or seeking potential partnerships for them.This content was published on November 11, 2013 - 10:51
Barcelona-based Grifols, the world's third-largest blood products maker, said on Monday its diagnostics unit would make up 20% of its revenues after the deal, up from 4% now, and that annual turnover in the business would grow to around $1 billion.
The diagnostic business focuses on ensuring the safety of blood transfusions.
"The sale of the Novartis blood transfusion diagnostics unit enables us to focus more sharply on our strategic businesses while providing Grifols with a platform for global expansion," said Novartis CEO Joseph Jimenez.
The blood transfusion unit was acquired in 2006 as part of US biotechnology firm Chiron and has been part of Novartis’ vaccines and diagnostics sector since then. Headquartered in California, its net sales last year were around $565 million.
"The acquisition of Novartis' diagnostic business is a step further into our vision to become a world leader also in the diagnostics field. To achieve this we knew we needed a significant presence in United States," said Victor Grifols, chairman of the Spanish company.
Grifols said it would finance its purchase with a $1.5 billion loan. The transaction requires regulatory approvals and is expected to be completed in the first half of 2014, the companies said.
The sale comes as Novartis is reviewing all its businesses. The company wants its units to be big enough to compete worldwide, with the criteria being annual revenue of around $10 billion and a position among the top two market leaders.
Jiminez said Novartis had three global businesses - pharmaceuticals, eye care and generics - it was focusing on, but was looking at options for its three subscale businesses, vaccines and diagnostics, over-the-counter (OTC) and animal health.
Asked whether Novartis might sell the animal health and OTC businesses, he said: "I wouldn't want to speculate on the outcome. Our objective is to determine what it would take to gain global scale. If that is not possible, [selling animal health and OTC] would be a potential outcome. "
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