Vas Narasimhan officially became CEO of drug giant Novartis in February — but he’s already putting his stamp on the firm in some major ways.
On Friday, Novartis announced that it will spin off its Alcon eye care unit to shareholders and launch a $5 billion stock buyback program. The Alcon move, which Novartis will seek shareholder approval for, would be set to occur in February 2019, while the share buyback would be completed by the end of next year. Novartis stock spiked 4% in early Friday trading following the news.
Alcon has been a bit of an albatross round Novartis’ neck since the drug maker bought it for a cool $52 billion back in 2011. It’s been the subject of a turnaround campaign for Novartis amid lagging sales.
The big unknown is: How much is Alcon actually worth? Even Novartis’ previous CEO, Joe Jimenez, pegged its value at somewhere between $25 billion and $35 billion, as CNBC notes. Other analysts have pegged it even lower. However, the expensive turnaround effort has shown early signs of paying off, with Alcon raking in $90 million in operating profit in the first quarter of 2018.
In a broader sense, the announcement marks Narasimhan’s wish to double down on Novartis’ prescription drug business. The company has had some notable recent Food and Drug Administration (FDA) approvals, including for the cancer immunotherapy drug Kymriah.
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