Novartis (NYSE:NVS) said yesterday that it is considering selling its Alcon eye care business and will buy back up to $5 billion worth of shares over the next 12 months, in an effort to reorganize after a tough year.
The company’s profits dropped -11% to $936 million in the 3 months ended Dec. 31, while sales fell -2% to $12.32 billion.
Novartis bought Alcon from Nestle for $52 billion in 2010 under the leadership of former CEO & chairman Daniel Vasella. Alcon’s sales have struggled in recent years and the company has undergone changes to its leadership team. New division head Mike Ball has been charged with halting the company’s revenue slide in case the unit is sold.
Novartis reportedly said it could sell Alcon, spin it off in an IPO or keep it. “We’ve not ruled anything out, all options are on the table,” CEO Joe Jimenez said, Reuters reported. Jimenez told investors to keep an eye out for an update by the end of 2017.
Following the news of the $5 billion buy-back offer, Moody’s downgraded Novartis’ debt rating outlook from stable to negative. Moody’s reportedly said that the company’s borrowing capacity would be weakened by offering a debt-financed share buyback program at a time when its sales are stagnant.
Jimenez also said that Novartis expects to see growth in 2018, as its top-selling blood cancer drug’s patent expires and as newer drugs take off in the market.
“Unfortunately, 2017 is going to look a lot like 2016,” Jimenez said, according to the news outlet. “We expect the next growth phase of this company to begin toward the end of this year.”
In November, Novartis backed off a 2016 start date to test its autofocusing contact lens in clinical trials, but it told Reuters that the product is “progressing steadily” in its collaboration with Google (NSDQ:GOOGL).
In 2014, Jimenez said he hoped the lens would be on the market in 5 years and last year he said his company’s Alcon eye care unit was on track to begin clinical testing in 2016.
Novartis and Google inked a partnership 2 years ago to develop an autofocusing lens for people with presbyopia and a lens that can measure blood glucose levels in diabetes patients.
The noninvasive lenses for diabetic patients could present an alternative to finger-pricks and an autofocusing lens could help patients whose ability to focus degenerates as they age. The company has not commented on when testing for the diabetes lens will start, according to Reuters.