Novartis AG (ADR)(NYSE:NVS) Says It Will Not Sell Its Stake In Roche

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The chairman of Novartis AG (ADR)(NYSE:NVS), Joerg Reinhardt, has said that the pharmaceutical giant has reconsidered selling its 33% stake in Roche, worth approximately $14 billion, after a review was conducted.

“We said we would review whether it makes sense to sell the stake. We came to the conclusion that that’s not the case. We have made no decision to actively move ahead with the sale,” Reinhardt said in a newspaper interview.

No premium

Mid last year the chief executive officer of Novartis, Joe Jimenez, revealed that the pharmaceutical giant was ready to offload its stake Roche without requiring a premium. He said at the time that options were being discussed with various banks. Last year the Roche holding generated an income of $464 million for Novartis. The Roche stake was acquired when Daniel Vasella was the chairman of Novartis over ten years ago.

During the same newspaper interview Reinhardt disclosed that there was a recovery in sales at the Alcon eye unit. Currently Alcon generates slightly over 10% of the annual sales of Novartis which last year were $48 billion. According to Jimenez, the value of Alcon could be between $25 and $35 billion.

Kymriah leukemia therapy

The decision by Novartis to hold on to the Roche stake comes a few weeks after a breakthrough cancer therapy by the pharmaceutical giant was criticized for its high price – $475,000. Known as Kymriah, the potential blockbuster is designed as a treatment for leukemia and is the first therapy to get approval among a class of treatments referred to as CAR-Ts. These drugs present a new and promising way of treating and potentially even curing genetic conditions from blindness to cancer.

Due to the criticism over the price Novartis has proposed that in the case of patients whose healthcare expenses are being met by U.S. government programs, the drug maker will only receive payment if there are signs that the treatment is working on the patients a month after receiving it. There are also other value-based approaches of payment that Novartis is considering.

On Thursday shares of Novartis AG fell by 0.44% to close the day at $85.99.

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