Buzz: Novartis mulls selling its vaccine unit as swap deal with Merck stalls

Last week Novartis' ($NVS) vaccine unit posted yet another operating loss, extending its streak in the red to four years. Yet despite its well-known, long-term problems, suitors are reportedly circling the unit, with the potential of Bexsero and Menveo likely to be a factor attracting potential buyers.

Joe Jimenez

News of interest in an outright buyout of the vaccine unit comes weeks after Bloomberg reported that Novartis was trying to arrange a swap deal with Merck ($MRK). Talks with Merck are continuing, the publication reports, but the companies have yet to agree on a valuation of the assets. In light of these difficulties, Novartis is reportedly looking into alternatives, including selling the vaccine business separately for $1 billion.

Although the buzz suggests the likelihood of an asset swap is fading, it is only a week since Novartis said anything is possible. "We want to build leading businesses at Novartis, and if that means that we're going to have to assume different or unconventional structures, or ways of thinking about the businesses differently, we're going to do that. So I wouldn't take anything off the table today," Novartis CEO Joe Jimenez said during last week's conference call to discuss fourth quarter results.

It is unclear who would be interested in buying or partnering with the vaccine unit. Bayer and Eli Lilly ($LLY) have both been linked to Novartis' animal health unit, but the identity of potential bidders for the vaccine group remains a secret. The level of interest in the unit is likely to rest on the perceived potential of Novartis' meningococcal franchise, particularly Bexsero. Novartis expects the meningitis B vaccine to begin generating "significant" sales this year but has yet to give more concrete guidance.

- here's the Bloomberg article
- check out FiercePharma's take
- and the earnings call transcript

Related Articles:
Novartis vaccine unit is no wallflower: It has suitors flirting with a deal, too
Suitors size up Merck's consumer unit for potential $10B deal: Reuters
Wanna trade? Novartis and Merck are reportedly negotiating a $5B unit swap