Novartis: A Transformative Deal

Case Solution

David J. Collis, Ashley Hartman
Harvard Business School ()

When Joe Jimenez became CEO of Novartis Switzerland in 2010, replacing former CEO Dan Vasella, he took control of one of the world’s leading pharmaceutical companies. An avowed advocate for diversification, Vasella had broadened the scope of the company and structured it into sixteen different businesses, from animal health to oncology, while “actively promoting competition between those businesses for resources.” Shortly after taking office, Jiménez began a strategic review aimed at focusing the portfolio on businesses where Novartis could be present in attractive markets around the world. Rather than follow competitors like Pfizer into a single mega acquisition, Jiménez and her M&A team chose to achieve this goal through targeted transactions or “precision M&A.” After examining around twenty potential deals, in 2014 the company negotiated a multi-million dollar asset swap with GlaxoSmith Kline (GSK) that was unprecedented in the pharmaceutical industry. Although Novartis would improve its position in oncology by acquiring GSK’s promising drug portfolio, the company had to sell its vaccine and animal health businesses while relinquishing control of the over-the-counter (OTC) business. Jiménez and his team knew that the offer was “alornotic” and debated whether to accept it or reject it and go in a different direction.

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