) announced a definitive agreement to divest its blood
transfusion diagnostics unit to Spain-based Grifols for $1.675
The divestment is expected to be completed by the first half
of 2014. The diagnostics unit generated sales of $565 million in
Novartis acquired this transfusion diagnostics unit in 2006
which then became a part of its Vaccines and Diagnostics
We note that Novartis' Vaccines and Diagnostics segment is
engaged in research, development, manufacture, distribution and
selling of preventive human vaccines and novel blood-screening
Novartis aims to focus better on its strategic business and
hence the company decided to divest its diagnostics business. The
company will however retain its companion diagnostics unit and
the Genoptix business as these businesses are integrated with the
We remind investors that the Vaccines and Diagnostics business
generated net sales of $1.3 billion in the first nine months of
2013, up 8% from the year-ago period.
The Vaccines and Diagnostics business looks strong with
numerous vaccines under its kitty. Influenza vaccines are the
core products of this division, which includes brands such as
Fluvirin, Fluad, Agrippal, Optaflu and Flucelvax. Novartis'
meningococcal franchise consists of three vaccines - Bexsero,
Menjugate and Menveo.
We believe the divestment of the diagnostics unit is a step in
the right direction as Novartis can invest resources to further
strengthen its vaccines franchise.
Novartis currently carries a Zacks Rank #3 (Hold). Right
Johnson & Johnson
) look attractive. All three carry a Zacks Rank #2 (Buy).
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