Novartis Announces Share Buybacks and Business Expansion

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By Trey Thoelcke Published
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Speculation has run hot that Swiss drugmaker Novartis A.G. (NYSE: NVS) would announced further restructuring at its investor day in London. Instead, on Friday the company announced a $5 billion share buyback program and said that it would develop new business segments in dermatology, heart failure and respiratory illnesses.

In the wake of the departure of long-time chairman and former chief executive Daniel Vasella, the company has been reviewing its operations with an eye toward divesting itself of assets that lack the scale to become world leaders. CEO Joe Jimenez said earlier this month that the company would consider selling off its non-strategic animal health and over-the-counter (OTC) businesses if it cannot turn them into businesses on a global scale.

Novartis said in a statement Friday that it will set aside capital for a strong and growing dividend, bolt-on acquisitions and a $5 billion share buyback, all which will take place over the next two years. The share repurchases are to begin immediately. The buyback is part of an $11 billion plan initiated in 2008. More than three-quarters of that plan still remain.

The Basel-based pharmaceutical company also said it would consolidate its research sites worldwide and review its manufacturing sites in its ongoing effort to cut costs and improve productivity. Novartis expects to deliver annual productivity gains of 3% to 4% for the next two years.

Earlier this month, Novartis said it had agreed to sell its blood transfusion testing unit to Madrid-based Grifols S.A. (NASDAQ: GRFS), the world’s third-largest blood products maker, for $1.68 billion.

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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