Novartis has reached a deal to sell its blood transfusion diagnostics unit to Spain’s Grifols for $1.7bn in cash.
The move comes in the face of calls by some of Novartis’ investors to offload some non-core business units – including diagnostics, animal health and consumer health – to allow it to focus on more profitable businesses such as pharmaceuticals and eyecare.
Novartis’ chief executive Joseph Jimenez intimated of late that he was happy to consider divestments, and the sale of the blood diagnostics unit – which had revenues of $565m last year – is the first major deal of this type in recent years.
“The sale of the Novartis blood transfusion diagnostics unit enables us to focus more sharply on our strategic businesses while providing Grifols with a platform for global expansion,” said Jimenez in a statement.
Grifols is a specialist in collecting blood and making blood products, ranking third in the market worldwide after Baxter and CSL Behring, and already has a small diagnostics unit that covers similar ground to Novartis’ business, testing blood donations for pathogens such as HIV, hepatitis B and C, and west Nile virus.
The Spanish company noted that the deal includes in vitro diagnostics and technology for transfusion medicine and immunology, a manufacturing plant in the US and offices in the US, Switzerland and Hong Kong.
After the deal closes, diagnostics will account for more than 20 per cent of Grifols’ total sales with an estimated turnover of around $1bn.
At the heart of the deal is Novartis’ Nucleic acid Amplification Techniques (NAT) technology and Procleix instruments that can be used to test for multiple viruses in a single test tube.
The plasma market has been experiencing significant consolidation in recent years as the big players jostle for market share, and adding value-added services such as diagnostics is seen as one way to differentiate and win supply contracts.
Adding Novartis’ portfolio will make Grifols “a vertically-integrated company able to provide solutions for blood and plasma donor centres, with the most complete product portfolio in the immunohematology field”, said the Spanish company.
The deal is Grifols’ largest acquisition since it took over blood plasma product specialist Talecris in 2010 for $3.4bn.