Dive Brief:
- Alcon, the eye care unit of Novartis, plans to relocate its global headquarters to Geneva, Switzerland after a planned spinoff from the pharma giant that would create a separately traded, standalone company.
- Novartis currently operates the Alcon division out of Forth Worth, Texas. Following Alcon's split from Novartis, the site would continue to be a major operational hub for an independent Alcon, the company said Tuesday.
- Alcon anticipates it will employ as many as 700 staff in Switzerland as a result of the decision. The unit's regional office for Europe, the Middle East and Africa (EMEA) is already located in Geneva.
Dive Insight:
After months of internal deliberations, Novartis decided in June to cut ties with the business that it bought nearly a decade ago for $39 billion. Originally aimed at diversifying the Swiss pharma's business, acquiring Alcon didn't pan out exactly as hoped.
The division has struggled in recent years, ringing up operating losses the last two years as core operating margins slumped from the low 20% to just above 14%. It's also a smaller unit than it once was after Novartis in 2016 transferred certain ophthalmic products from Alcon to its Innovative Medicines division — a move that set the stage for a split.
As currently planned, Alcon will separate from Novartis in the first half of 2019. Beginning next year, corporate and EMEA staff will also begin moving over to the Geneva location.
The spinout will leave Novartis a smaller conglomerate, although it will retain its lucrative ophthalmology pharmaceutical portfolio, including the VEGF inhibitor Lucentis (ranibizumab). But removing Alcon narrows Novartis' business focus to the core pharmaceutical areas, such as oncology, upon which it hopes to build future blockbuster franchises.
Novartis has also recently slimmed down its generic Sandoz business and sold off its stake in a consumer health joint venture to GlaxoSmithKline.
For its part, Alcon will focus on surgical and vision care under David Endicott, currently chief operating officer of Alcon under Novartis. It will incorporate in the Swiss canton of Fribourg, near existing sites in Rotkreuz and Schaffhausen, Switzerland.
