57.3 F
Fort Worth
Saturday, December 5, 2020
Health Care Has Novartis given up on Alcon?

Has Novartis given up on Alcon?

Other News

A look at big issues on Supreme Court’s agenda

Some of the issues either already on the Supreme Court's docket when it begins its new session or likely to be before the justices...

Wall Street posts solid gains after surge in corporate deals

By ALEX VEIGA and DAMIAN J. TROISE AP Business Writers Wall Street kicked off the week with a broad rally Monday, clawing back much of...

Tarrant County ranks low in work-from-home study by NAR

North Texas ranks pretty high in the “Work from Home” category, according to a just-released study by the National Association of Realtors. But Tarrant...

Commentary: Universities and COVID-19: Charting turbulent times

Ray Perryman As the COVID-19 pandemic emerged this spring, college campuses across the United States swiftly sent students home in droves and switched to...

Novartis, which spent several years and more than $50 billion acquiring the Alcon eye-care company, is ready to give up on the business.

After more than a year of efforts to turn around the Fort Worth-based business, Europe’s second-largest drugmaker on Wednesday said it was considering all options for the embattled division, including a spinoff or initial public offering. Profit from the business plummeted 31 percent last year even as Novartis sought to improve its operations by appointing a new manager, injecting funds to bolster its customer service and making small acquisitions.

In recent months, Novartis had considered selling parts of Alcon, including the unit that made devices for eye surgery, people familiar with the matter said, asking not to be identified because the plans were private. A spinoff or IPO of the business may now be the best option as finding buyers has proven to be challenging, the people said. The company weighed selling its contact lens operations in 2015, people with knowledge of the discussions had said previously.

“Now is the time for us to take a look at what’s in the best interests of Novartis shareholders for that unit,” Chief Executive Officer Joe Jimenez said in an interview with Bloomberg Television’s Anna Edwards and Manus Cranny. “This is going to include all options, including retaining the business to exiting the business.”

Novartis expects to provide an update on its review of the options for Alcon, which sells surgical equipment for ophthalmologists and contact lenses, by the end of the year, the Basel, Switzerland-based company said Wednesday in a statement.

“We’re starting to see a turn on that business,” Jimenez told reporters. The management team “is on the right track.”

Shares of Novartis climbed 1.7 percent to 70.75 Swiss francs as of 1:06 p.m. in Zurich trading. The stock declined about 15 percent last year.

Under the stewardship of Jimenez’s predecessor Daniel Vasella – who oversaw a string of acquisitions including the purchase of a stake in crosstown rival Roche Holding – Novartis in 2008 acquired a 25 percent stake in Alcon for $11 billion from Nestle as a first step in taking over the business. The investment was aimed at reducing Novartis’s reliance on pharmaceuticals as new drugs faced delays and sales of other medicines were being eroded by cheaper versions.

Jimenez, who took the helm at Novartis starting in February 2010 while Vasella stayed on as chairman, acquired a majority stake in the eye-care company from Nestle for $28.3 billion a few months later, and then paid another $12.9 billion in April 2011 for the remainder.

But things began souring in 2015, with Alcon’s performance impaired by a decline in surgical equipment sales in the U.S. and in emerging markets, as well as increased competition from generics for some eye treatments.

As things deteriorated, Jimenez told investors in October 2015 that Novartis was doing a “deep analysis” of Alcon’s businesses, and that he hoped to come up with a plan “to get this business back to a decent growth rate.”

The Swiss company boosted its investment in Alcon last year to accelerate sales and improve customer service, and made some small acquisitions to bolster its pipeline. Other steps to fix the operations included moving the ophthalmic pharmaceutical drugs from Alcon to the pharmaceuticals division a year ago, and appointing a new chief for the unit.

But the turnaround, which Jimenez had hoped to see in 2016, has “taken a bit longer,” the CEO told investors at a conference in San Francisco earlier this month.

Sales at Alcon declined 3 percent to $5.81 billion last year as revenue from surgical equipment fell. This year, the sales may remain mostly flat or grow by a “low single digit” percent, Novartis said on Wednesday. Core operating income, a measure of profit, plummeted to $850 million.

Bloomberg’s Naomi Kresge and Ed Hammond contributed.


close






Oh hi there 👋 It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.


close






Oh hi there 👋
It’s nice to meet you.

Sign up to receive awesome content in your inbox.

We don’t spam! Read our privacy policy for more info.

Latest News

Allied Electronics & Automation doubles Fort Worth Distribution Center capacity

Allied Electronics & Automation, a high-service distributor of automation and control, electronic, electrical, mechanical, and maintenance products, has completed an expansion of its North...

Texans living in long-term care facilities will be among first people eligible for COVID-19 vaccine

People living and working in long-term care facilities, like nursing homes and assisted living centers, will be among the first group of people eligible...

Japan spacecraft approaches Earth to drop asteroid samples

TOKYO (AP) — Japanese space agency officials said Friday the Hayabusa2 spacecraft is on its intended trajectory as it approaches Earth to deliver a...

MedStar and Texas Health Resources to donate ambulance and supplies to Fort Worth Sister City Toluca, Mexico

Toluca, Mexico, capital of the State of Mexico, is the center of a rapidly growing urban area and the fifth-largest city in Mexico, home...

Hewlett Packard Enterprise to move headquarters to Texas

SPRING, Texas (AP) — Tech giant Hewlett Packard Enterprise said it is moving its global headquarters to the Houston area from California, where the...