Novartis considers a veterinary unit spin-off

Novartis AG, which is one of the worlds most successful pharmaceutical and consumer healthcare products manufacturers. The company is based in Basel, Switzerland and specializes in both human and animal health products. These days it became clear that the animal-health business of Novartis is drawing interest from some drug-makers, such as Merck & Co. and Eli Lilly & Co., and still the company is getting ready for selling this unit.

The Novartis Veterinary Unit is known to be manufacturing the Sentinel flea control tablets for dogs, as well as the Vira Shield antiviral medicine for cattle. The company has not officially announced it is selling the unit, and none bids and offers are made, but Bayer AG seems to be interested in the unit in question. Marijn Dekkers, who is the Chief Executive Officer of Bayer, announced yesterday that the company is interested in expanding its business in the animal health care industry.

At the same time, Novartis and Goldman Sachs Group Inc. are working together on the units portfolio, which will provide the company with the opportunity of selling its veterinary business at a good price. On the other hand, most drugmakers are trying to increase the investors valuation of their businesses work, which is the reason why they are looking for different options of expanding their veterinary units.

Novartis does not publicly report the individual financial results of its businesses, but in October this year its veterinary unit was valued by Citigroup Inc. at about 4 billion dollars, including the companys net debt. The spokesmen of Merck & Co. and Eli Lilly & Co. refused to comment the situation and did not provide any information about any possible sale of the animal-health business. Joerg Renhardt, who is the Chairman of Novartis, and Dr. Marijn Dekkers – the CEO of Bayer AG did the same at a conference in London yesterday.

At the same time, it seems that Novartis is considering the sale of several other units apart from their veterinary one. Rumors are spread that the company is also planning to sell its over-the-counter medicines unit and the vaccines operation unit, but there is no final spin-off decision made. On its turn, Bayer AG, which is considered as the most probable buyer of the divested Novartis units has recently acquired Teva Pharmaceutical Industries Ltd., which is also a veterinary business.

According to Bloomberg, the current stock price of Novartis AG is 1.25% down, and its one year return rate is 27.42% up.

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