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A Novartis employee works in a laboratory in Prangins near Nyon, Switzerland. On Wednesday the company gave details of how an overhaul would boost profitability. Associated Press
John Revill
June 18, 2014 3:05 a.m. ET

ZURICH—Swiss pharmaceutical giant Novartis AG on Wednesday offered details of how its sweeping business overhaul would boost its performance, saying its core operating profit margin would have been more than two percentage points higher if the changes had been implemented last year.

Basel-based Novartis is in the midst of a series of transactions worth roughly $25 billion that includes the sale of its vaccines business to GlaxoSmithKline GSK 3.36% PLC and its animal health business to Eli Lilly LLY 3.32% & Co. Novartis is also buying Glaxo's oncology business as part of the deals.

Deals Reshape Novartis

In April, Novartis and GlaxoSmithKline unveiled a series of transactions worth more than $20 billion that fundamentally transform both companies, more tightly focusing Novartis's scope without significantly crimping its revenue, while turning Glaxo into a vaccines-and-consumer-drug powerhouse. Read More.

The deals are expected to close in the first half of 2015.

The new structure, which will focus Novartis on pharmaceuticals, eye-care and generic drugs, would have pushed the company's core operating profit margin 2.5 percentage points higher had the deal been completed last year, the company said. That would have lifted its core operating profit margin to 27.2% from 24.7%.

"Following the expected completion of the portfolio transformation transactions, the new Novartis will be more focused, more profitable, with the potential to grow faster," Chief Executive Joe Jimenez said in a statement for its investor day.

The company said it was also trying to improve profitability through the creation of Novartis Business Services, which aims to reduce the $6 billion worth of expenses it oversees.

Novartis shares closed Tuesday at 80.85 Swiss francs, and have gained 13.5% in 2014.

Write to John Revill at email@example.com





 Novartis says core profitability would be higher if recent deals were already completed

Pharmaceutical Giant Is Completing a Series of Deals Worth Roughly $25 Billion


