Novartis deals could affect Mass. drug research

A massive European pharma transaction — with Novartis AG and GlaxoSmithKline PLC swapping their vaccines and cancer drug franchises in a complicated three-party string of deals — could spell changes for the Massachusetts research landscape and usher in a new round of global industry consolidation.

Under one deal, Switzerland’s Novartis will sell the bulk of its Cambridge-based vaccines business to GSK for $7.1 billion, potentially giving the British company a foothold in the Boston area. Novartis now has about 350 employees working on vaccines in Cambridge. But some work on influenza vaccines, a business line Novartis plans to spin off separately.

In another deal, Novartis, which has based its global drug research in Cambridge, will buy GSK’s pipeline of cancer drugs treating everything from breast cancer to chronic lymphocytic lymphoma. The price for the drug pipeline, including approved therapies and those in late-stage clinical trials, will be $14.5 billion and as much as $1.5 billion more if the drug programs meet certain milestones.


That deal will position Novartis as one of the top cancer therapy companies worldwide, challenging another Swiss drug giant, Roche AG, at a time of significant medical breakthroughs in the field. Novartis scientists are currently testing 25 new molecules as potential cancer medicines and have 24 pivotal clinical trials underway.

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Novartis and GSK also will form a joint venture in the over-the-counter drug business, with GSK owning 63.5 percent and Novartis owning 36.5 percent, while Novartis will sell its animal health division to Eli Lilly & Co. of Indianapolis for $5.4 billion in a separate deal.

Taken together, the transaction unveiled Tuesday represents a “historic milestone,” Novartis chief executive Joseph Jiminez said in a conference call with stock analysts.

“Each component of this deal creates value, as does the deal in total,” Jiminez said. Speaking of the purchase of the GSK cancer drug pipeline, he said, “The transaction for our oncology business will further strengthen what is a world’s leading oncology business.”

Novartis executives declined to specify how the transaction would affect Massachusetts.


“As with transactions of this size, it is too early to comment on what the combined organizations will look like or whether there will be head-count reductions,” said Novartis spokeswoman Julie Masow. “We will establish an integration office to work on detailed plans for arranging the transfer of [employees] and the business.”

GSK spokeswoman Melinda Stubbee similarly suggested it was premature to say whether her company would keep the Novartis vaccines operation in Cambridge, expand it, or fold it into another GSK vaccines site out of state.

“No decisions have yet been made about facilities or staffing,” she said. “We will be reviewing both in the months to come.”

Industry watchers said the cancer drug deal is almost certain to strengthen research done at Cambridge-based Novartis Institutes for BioMedical Research, the drug maker’s global research headquarters, which has about 1,850 employees.

While the company is acquiring mature drugs and drug candidates from GSK rather than the early-stage molecules being tested in Novartis labs, follow-on testing of the drugs for new patient populations could be done locally.


“From the standpoint of Novartis research, my guess is that this is a good thing,” said Skip Irving, partner and managing director at life sciences consulting firm Health Advances in Weston. “It shows Novartis is doubling down on cancer.” With new treatments emerging that combine two or more therapies, “the only way to be successful at managing that is having critical mass,” he said.

The mega-transaction also could help fuel another round of mergers, acquisitions, and spinoffs in the biopharmaceutical sector. Pfizer Inc., the world’s largest drug maker, has reportedly talked about a possible purchase of Anglo-Swedish pharma AstraZeneca PLC. Both companies run research and development labs in the Boston area.

GSK, for its part, last fall said it planned to open a new research office with a small staff in Cambridge. It will join multinational life-sciences companies such as Pfizer, AstraZeneca, Novartis, Merck & Co., Johnson & Johnson, Sanofi SA, and Shire PLC. All have set up shop or expanded operations in the Boston area in recent years to capitalize on university and hospital research and collaborate with the area’s cluster of biomedical startups.

In 2008, GSK paid $720 million for Cambridge biotech Sirtris Pharmaceuticals Inc. Sirtris scientists were studying the antiaging effects of a red wine chemical called resveratrol and trying to develop drugs that activated enzymes called sirtuins to fight age-related diseases.

The nature of their work attracted widespread attention, but the company was not able to bring a product to market. In March 2013, GSK said it was pulling up stakes in Cambridge and folding the Sirtris operation into a center outside Philadelphia.

Even after that pullback, however, GSK has continued its partnerships with biotechs and academic collaborators in the Boston area, including the Harvard Stem Cell Institute. It is also majority owner of Tempero Pharmaceuticals Inc., a Cambridge company developing drugs for a variety of conditions, from inflammatory bowel disease to rheumatoid arthritis.

Robert Weisman can be reached at Follow him on Twitter @GlobeRobW.