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Novartis announces USD 5 billion share repurchase

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November 22
4:21 AM 2013

Switzerland-based Novartis said it will be buying back USD 5 billion worth of stock in the next two years. Novartis told shareholders in its investor day today that the share repurchase will start right away. Aside from the share buyback, the company also said it will pursue the addition of new segments in the areas of dermatology, respiratory diseases, heart failure and cell therapy.

Novartis Chief Executive Officer Joseph Jimenez said, "Novartis has reached an inflection point, having fully integrated Alcon and reduced debt. We are now further sharpening the execution of our strategy to strengthen shareholder value through science-based innovation in high-growth segments of health care where we have the global scale, competitive advantage and the right capabilities to win."

In addition, Novartis said it will consolidate its research sites in order to reduce costs and enhance productivity. The company said it expects to deliver productivity gains of about 3% to 4% per year until 2015.

Novartis is the largest drug manufacturer in Europe in terms of sales. This year, Novartis stock has outperformed the Bloomberg Europe Pharmaceutical Index with a 31% return, as compared to the latter's 27%, a Bloomberg report said.

As part of its review of its market segments, Novartis also said that it would be exiting from its diagnostics business to Grifols in a USD 1.68 billion deal. It has also started to evaluate units that have not scaled globally, such as its animal health business. So far, the drugmaker's global businesses include its pharmaceuticals unit, its eye care arm and its generics business.

Sources told Bloomberg this month that the animal health arm was a top candidate for divestment. The people added that the drugmaker was also mulling the sale of its vaccines business and over-the-counter medicines operations. However, Novartis has not made any final decision regarding the said businesses, the sources said. 

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