Novartis

Company Update:

According to the FT, Novartis has agreed to divest the diagnostic arm of Advanced Accelerator Applications (AAA; bought in 2017) that produces radioactive chemicals used for cancer scans, to Siemens Healthineers for €200m.
Note: Novartis had acquired AAA to gain access to the latter’s radiopharma drugs, which kill the cancer cells via radioactive chemicals in a targeted manner with limited damage to healthy cells. While, the to-be-divested diagnostics arm is a much smaller part of Novartis’ business, this development is in line with the firm’s efforts in recent years to move away from non-core businesses and focus on innovative pharmaceutical business.

Expert Opinion:

Novartis keeps delivering on its refocusing plan. The company now trades at rich valuation levels with PE24 of 20x down to 17.5x in 2026. Bear in mind that Novartis will face a patent expiry for Entresto in 2025 (one of its key cardiovascular drugs).