Novartis may divest $14B stake in Roche, could generate M&A funding
- Novartis could be eyeing a sale of its stake in Swiss rival Roche to help reload for future acquisitions, Reuters reports. Under former CEO Daniel Vasella, Novartis built up a large position in Roche and currently owns roughly one-third of its voting stock, estimated to be worth $14 billion.
- Now, with a poor launch for the new heart-failure drug Entresto, and continued challenges at its Alcon unit, Novartis may be considering selling its stake to fuel new growth.
- Novartis hasn't formally committed to selling its stake in Roche, but a book order sale with select investors could be a likely route if it chose to do so, according to Reuters.
Current Novartis CEO Joe Jimenez has previously said he would want a premium price of its stake in Roche, but that may no longer be the case if market developments continue to put pressure on the company.
If Novartis is serious about selling, Roche could also buy the stock back through a buyback program. But Reuters reports this has typically been a lower priority for Roche.
The company last week reported a 13% drop in Q1 net income as it battles generic competition to its blockbuster cancer drug Gleevec. Additionally, uptake in the U.S. was slower than expected for the company's new heart failure drug Entresto, which notched only $17 million in Q1 sales despite higher formulary access.
Novartis has high hopes for Entresto and plans to build out its field force in the U.S. as well as deploy a new marketing push.