Novartis looks at Alcon spin-off

Novartis may spin off its struggling Alcon eye care business and is to launch a share buyback programme worth up to $5 billion, the Swiss drugmaker said on Wednesday in reporting fourth-quarter results that lagged market expectations.

Its sales were flat in the fourth quarter while posting a $120 million operating loss, forcing a critical look at whether to sell eye care division. "We've not ruled anything out, all options are on the table," Chief Executive Joe Jimenez said on a results news conference call. 

The Basel-Switzerland based pharmaceutical company said core net income for the three months ending in December came in at $2.66 billion, marginally lower than the $2.7 billion forecast in a Thomson Reuters poll. 

Net sales dropped by the same percentage to $12.32 billion, although viewed on a constant currency basis, finished the three month period flat.

"Novartis is considering options for the Alcon Division," the company said. "The review will explore all options, ranging from retaining the business to separation via a capital markets transaction, in order to determine how to best maximize value for our shareholders. The review will be conducted during the course of 2017 and in a manner such that Alcon Division associates can fully focus on the unit's return to growth."

Turning to the question of President Donald Trump who recently raged that the industry was "getting away with murder" with regards to the prices charged for medication, Jimenez argued that the pricing issue was not new and Novartis had a plan in place.

"Novartis recognized this a couple of years ago and we started down a path of contracting based on the outcomes that the drug delivered instead of just the transaction of getting a particular price," he said and added "This kind of outcomes-based contracting is in its infancy but Novartis is a leader here and that's one of the ways that we defuse the arguments around pricing because if our products don't deliver then we don't get the same kind of pricing that they would if they deliver on, say, reducing hospitalization."