CSL to acquire Novartis’ influenza vaccine unit

Australian vaccine maker CSL said it would have a $1-billion influenza vaccine business within five years after the biotechnology company said it would pay $275 million for Novartis' loss-making division, Australian daily The Age reported.

The unit would combine with the $36 billion company's vaccine subsidiary, bioCSL.

According to chief executive, Paul Perreault, the deal would "transform bioCSL" by giving the smaller vaccine division access to state of the art facilities, global scale and product and geographic diversity.

He added, CSL would emerge the second-largest player in the $4 billion influenza vaccine market after Sanofi.

The company drew just 7 per cent of its $5.3 billion in sales from bioCSL. Its business is mostly based on plasma products. According to Perreault, the transaction had the potential to create a global platform for bioCSL that was comparable in many aspects to its global protein science business.

Drug maker GlaxoSmithKline bought other vaccine divisions of the company in April, leaving the influenza division available.

The business posted sales at $527 million in the year ended 31 December, 2013 at a loss of $138 million.

According to CSL chief financial officer Gordon Naylor, the company would turn around the division's performance. He said, within two to three years after the acquisition it would be significantly profitable.

Meanwhile CSL said in a press release, CSL Limited today announced that it has agreed to acquire Novartis' global influenza vaccine business for $275 million. The business will be combined with CSL's subsidiary, bioCSL.

Combining bioCSL's existing influenza vaccine operations with the Novartis business will create the number two global player in the $4 billion global influenza vaccine industry, with manufacturing plants in the US, UK, Germany and Australia, a diversified product portfolio and strong pre-pandemic and pandemic franchises in its major centres of operation.

The combined business will have a strong growth profile and is expected to achieve sales approaching $1 billion per annum over the next 3 to 5 years.

The Novartis influenza vaccine business is one of the largest in the world, with net sales in the 12 months to 31 December 2013 of $527 million. The business has state-of-the-art manufacturing facilities and a diversified, late stage product pipeline.

CSL managing director and chief executive Officer, Paul Perreault, today said, ''The Novartis influenza vaccine business provides bioCSL with a global leadership position in an attractive sector we understand intimately. It will transform bioCSL by giving it first class facilities and global scale as well as product and geographic diversity.

''CSL has demonstrated its ability to make the most of specialist pharmaceutical acquisitions in areas we know well and this transaction has the potential to create a global platform for bioCSL that is comparable in many aspects to our global protein science business''.

Final settlement of the transaction is expected to occur in the second half of calendar year 2015, subject to regulatory approval.

Acquisition synergies are estimated to reach $75 million per annum by fiscal year 2020. Integration costs are estimated at $100 million, accruing predominantly in fiscal year 2016.

The acquisition is expected to be funded through surplus cash and is not expected to impact the share buy-back programme announced at the company's Annual General Meeting in October 2014.