Two drug giants with major operations in the Triangle, Novartis and GlaxoSmithKline, are swapping businesses in two major deals.

Meanwhile, Novartis (NYSE: NVS) also plans to sell its huge vaccine production facility in Holly Springs in a separate deal.

Plus, Novartis strikes an agreement to sell its animal health business to Eli Lilly.

Novartis, which had been rumored for months as being in the process of reorganizing and divesting itself of some businesses, is at the core of all the deals announced early Tuesday in Geneva, Switzerland, where the $60 billion pharmaceutical giant is based.

Novartis said none of the 15,000 employees involved would lose their jobs.

GSK (NYSE: GSK) operates its North American headquarters in RTP.

Eric Altholff, a spokesperson for Novartis, confirmed to WRAL News that the Holly Springs facility is not part of the agreements disclosed Tuesday but the company did plan to sell it.

“Novartis is starting a separate bidding process for the influenza business, which includes the Holly Springs facility,” Althoff said.

“We expect that the transactions announced today will close during the first half of 2015 and expect that we would have concluded a transaction relating to the flu business within a similar time frame.”

Novartis opened the $1 billion vaccine facility in Holly Springs in 2009.

The company also has a research and development operation in the Triangle.

Andrew Witty, chief executive officer of GSK, hailed the deals.

“This proposed 3-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings,” he said. “Opportunities to build greater scale and combine high quality assets in Vaccines and Consumer Healthcare are scarce. With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.”

Breaking Down the Deals

The deals:

  • Novartis is buying GlaxoSmithKline’s cancer-drug business for $14.5 billion, plus up to $1.5 billion more if certain milestones are met
  • Novartis in turn will sell most of its vaccines business to GSK for $7.1 billion, plus royalties.
  • Additionally, the two drugmakers also are creating a new consumer health care business through a joint venture. It combines Novartis’ over-the-counter drug business with GSK’s consumer business to create a new entity that would generate $10 billion a year in revenue. Novartis would own 36.5 percent of the new business, focusing on pain management, coughs and colds and dermatology.
  • All the deals between Novartis and GSK are timed to close simultaneously.
  • Separately, Novartis said it will sell off its animal health division to U.S.-based Eli Lilly & Co. for about $5.4 billion.

“Transformational” for Novartis

In a statement, Novartis CEO Joseph Jimenez said the deals mark “a transformational moment” for the company by refocusing its business around three core strengths: innovative drugs, eye care and generics.

“They also improve our financial strength, and are expected to add to our growth rates and margins immediately,” he said.

The oncology business that Novartis is picking up from GSK had revenue of $1.6 billion and a 20 percent growth rate last year, Jimenez told reporters in a conference call.

And the Swiss company said its flu business, which is not part of the sale to U.K.-based GSK, would be divested in another pending deal, but it did not provide more specifics.

Taken together, the deals will reduce Novartis’ sales by about $4 billion, from $60 billion down to $56 billion, Jimenez said, but the company’s “absolute profit goes up and that’s partly because we’re acquiring the oncology products and we are divesting products that have lower profit.”

The transactions affect some 15,000 of the company’s 135,000 employees globally, he said, and “they will move with the divestitures or into that joint venture.”

Jimenez, however, said Novartis won’t fire anyone. All Novartis employees whose units are being sold off “will be fully transferred to the new owners,” he said.