• by bcarlson@marketresearch.com
  • April 24 2014

Novartis Benefits Most From Recent Deals With Glaxo, Lilly

Novartis Benefits Most From Recent Deals With Glaxo, Lilly

Novartis, Glaxo Smith Kline and Eli Lilly engaged in a series of transactions designed to play up each company’s strength.  We think giant Novartis benefits a bit more from its recently announced transactions with Glaxo Smith Kline. The two drug makers will cooperate and among other transactions, Glaxo will buy Novartis’s vaccine business and Novartis will gain Glaxo’s oncology drug pipeline.   Kalorama broke out revenues of major pharma companies by therapeutic area in its recent report Top 25 Pharmaceutical Company Pipeline Analysis and Sales Projections to 2023.

“In my opinion although some of this deal will strengthen GlaxoSmithKline and streamline its businesses, I think Novartis is coming out a tad better overall,”

--Melissa Elder, analyst for Kalorama Information and the author of the report.

According to Kalorama’s recently released survey of the top 25 pharmaceutical companies, Top 25 Pharmaceutical Company Pipeline Analysis and Sales Forecast to 2023: as of now, Novartis has about 1/3 of its pharmaceutical revenues coming from oncology products, which certainly makes sense to build that area.  Novartis is currently number 2 in the world for cancer therapies behind Roche, according to Kalorama.  The firm does not think that Novartis rises in market share from the deal, but it does believe it will certainly strengthen it, and maintain its wide distance from the 3rd competitor in the market.

Although we think the move benefits Glaxo Smith Kline, there are less advantages for the company in the deal than for Novartis.

“Acquiring the vaccine business from Novartis will help GSK in this area, which is a strong move but I think there will continue to be limitations in some areas,” Elder said.

Novartis will keep its influenza vaccine line, as part of the deal.  Kalorama thinks that while this vaccine trade could work out to be highly beneficial, vaccines is a competitive area.   Furthermore, in pediatric vaccines GSK is also a major contributor and leader and solidifying this position is good but is not really helpful in the overall picture.

“It could be great for GSK, but there is also a lot hinging on development pipeline in this part of the deal,” Elder said. 

The deal also included a sale of Novartis’s animal health unit to Eli Lilly.  Kalorama did not comment on this as we have not studied animal health markets outside of diagnostics recently.

Kalorama’s Top 25 Pharmaceutical Company report, released just last week has breakouts of pipelines and forecasts sales for each major company in the industry.   Information about this report is contained on the following pages.