GlaxoSmithKline’s top executive Andrew Witty says the multiple deals announced early Tuesday with Novartis promise to deliver “broadly sustainable sourced sales growth and improve long-term earnings.”

In a lengthy statement, Witty spelled out numerous reasons why GSK (NYSE: GSK) is selling its oncology business to Novartis, is forming a joint venture with the Switzerland-based company to sell over-the-counter products, and why it is acquiring much of Novartis’s vaccine business. 

[The Holly Springs vaccine facility operated by Novartis is to be sold in a separate deal, a company spokesperson told WRAL News.]

Witty’s statement:

“This proposed 3-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings.

“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.

“The Novartis OTC [over the counter] portfolio is highly complementary to GSK’s and has many well-known, widely recommended brands such as Voltaren, Excedrin, Otrivin, and Theraflu. Together, we will create the world’s premier OTC business with clear opportunities to accelerate revenue growth.

“The acquisition of Novartis’ Vaccines business will significantly enhance the breadth of our vaccines portfolio and pipeline, notably in meningitis, with the addition of Bexsero, an exciting new vaccine for prevention of meningitis B. The acquisition will also strengthen our manufacturing network and reduce supply costs.

“The third part of this transaction would see divestment of our Oncology portfolio to Novartis. Over the last six years we have made excellent progress to develop a series of innovative medicines. This transaction provides us with a unique opportunity to crystallize an attractive value for this portfolio and allow these medicines to benefit from Novartis’ global scale in this area.In financial terms, this transaction significantly exceeds our return criteria and delivers accretion to core earnings per share in year one and then with a growing contribution over time, particularly in 2017, as growth opportunities and projected cost savings are delivered.

“We also expect to return £4 billion [$6.8 billion] to shareholders following completion of this transaction, whilst maintaining a strong capital base and our commitment to increasing dividends.“Finally, and very importantly, this transaction strengthens GSK’s offering to patients and consumers. We will expand our portfolio to both help treat illness and prevent disease, and we will broaden our scope to improve human health with the acquired R&D and innovation expertise.”

The full GSK statement about the deal can be read online.

GSK operates its North American headquarters in RTP.

[GSK ARCHIVE: Check out more than a decade of GSK stories as reported in WRALTechWire.]