Novartis

Introduction:

Novartis International AG is a Swiss multinational pharmaceutical company based in Basel,

Switzerland, , positioning number one with the sales of (57.9 billion US$) among the industries
worldwide in 2013. Novartis in July, 2015 has a market cap of $280 billion making Novartis the
largest company of healthcare by this metric

Novartis is also a full member of European Federation of Pharmaceutical Industries and

Associates (EFPIA), Pharmaceutical Research and Manufacturers of America (PhRMA) and the
International Federation of Pharmaceutical Manufacturers and Associations (IFPMA)

Novartis AG is publicly traded Swiss company that operates via the Novartis group. Novartis
AG owns, all the companies worldwide, directly or indirectly that function as the subsidiaries of
the Novartis Group.

A Novartis business is divided into three of the operating divisions: Pharmaceutical, Sandoz
(generics) and Alcon (eye care). Novartis directly operates through the subsidiaries in the
countries world-wide

Novartis overall, was the second largest company of the world in 2011 however an IMS Health
report ranked Novartis to be the largest pharmaceutical company of 2012.
Novartis and acquisitions:

Alcon when bought by the Novartis was worlds largest and profitable eye care company
already, overall with 2009 annual sales of $6.5 billion and net income of $2 billion. At that time,
Novartis stated that it believed the two companies could generate approximately $200 million of
potential annual pre-tax cost synergies

As of 2013, Sandoz was the world's second largest generic drug company, contributing
US$1.09 billion to Novartis' operating profit on US$8.70 billion in revenue in 2012.

Novartis in April 2014 announced of acquiring GlaxoSmithKlines cancer drug business and the
deal was done for $16 billion as well as selling its business vaccines to GlaxoSmithKline for
$7.1 billion.

GlaxoSmithKline (GSK)

Introduction:
Glaxo SmithKline (GSK) is a British pharmaceutical company established in 2000 and is
headquartered in Brantford, London. GSK was the sixth largest company of the world in 2015.
The company has the primary listing on London Stock Exchange. As of August 2016 it had a
market capitalization of 81 billion (around $107 billion), the fourth largest on the London Stock
Exchange. It has a secondary listing on the New York stock Exchange.

Novartis and GSK deal:

The pharmaceutical industry saw a spell of mergers and acquisitions this year, but none was
more complex than this one. Novartis and GSK finalized a deal for $20 billion in assets what
amounted major restructurings for both the firms.
Novartis bought GlaxoSmithKlines cancer drug business, GSK took Novartiss vaccine
business, and the companies agreed to combine their respective over-the-counter and consumer
drug businesses.
Financial position of Novartis
(For the year 2014 and 2015)

Year Ended Dec 31,2015 Year Ended Dec 31, 2014

(USD Millions) (USD Millions)
Net sales from 49 440 52 419
continuing operations
Other revenues 947 1 215
Gross profit from 32 983 36289
continuing operations
Operating income from 8 977 11 089
continuing operations
Return on net sales (%) 18.2 21.3
Net income 17 794 10 280
Total basic earnings 7.40 4.21
per share

2015 2014
Total current financial 5447 13862
assets
Total current financial debt -5604 -6612

Explanation:
Novartis being a big name and beign associated with a lot more acquisitions is already
doing well in the market, after the merger with GSK it had some changes within its
financial structure

Net sales:
As per the annual report of year 2014, the net sales of the company was $52 419, which
declined to be $49 440 for the year of 2015
Gross profit:

The gross profit of the company Novartis for the year of was $36 289 which falls win
the coming year of 2015 and the gross profit of the company for 2015 is $32 983.

Operating income:

Novartis operating income for the year 2014 was $11, 089 which reduced and the figure
reached to $8 977 for the year 2015.

Earnings per share:

Earnings per share for the company of Novartis in 2014 was 4.21 which later increased
with a good gap and reached to be 7.40 in the year 2015.
Financial position of GSK:
(For the year 2014 and 2015)

2015 2014
Net sales 29,583m 27,883m
Gross profit 8.092m 7,346m
Operating profit 3,900m 2,869m

Earnings per share:

2015 2014
EPS 8.3 5.3

Explanation:

This explanation is to discuss the financial difference of the company before and after
the recent merger of Novartis and GSK and to analyze how the merger has treated the
financial figures of the company

Net sales:
GSKs sales seems to be increasing comparing the years of 2014 and 2015, being the
amount of 27, 883m for the year 2014 it reached to the net sales of 29, 583 in the year
2015.

Gross profit:
Gross profit for the year 2014 was 7,346m which increased to be 8,092m in the year
2015, so this is how the gross profit after the merger gave increased for the company
GSK.

Operating profit:

The company seems to do well in this area as well, with the operating profit of 2,869m
in 2014 it increased and reached to $3900m in the year 2015.
Earnings per share:

GSKs earnings per share for the year 2014 was 5.3 which increased and reached it to
be 8.3 for the year 2015.
Bibliography

https://www.novartis.com/news/media-releases/novartis-announces-completion-
transactions-gsk

https://en.wikipedia.org/wiki/Novartis

http://pk.gsk.com/media/128803/gsk-annual-report-2015.pdf