Novartis to unload blood transfusion Dx arm for $1.7B

Novartis ($NVS) said it will sell off its blood transfusion diagnostics arm to Spain's Grifols for $1.7 billion in a bid to narrow its focus.

The division became part of the Swiss drug giant's operations in 2006 when it acquired Chiron in 2006, and it has been an element of the company's Novartis Vaccines and Diagnostics operation, focused on making sure blood products are safe. It is a large business, having generated $565 million in net sales in 2012. But Novartis said selling it is a better option, allowing the company to grow more strategically down the line.

"The sale of the Novartis blood transfusion diagnostics unit enables us to focus more sharply on our strategic businesses while providing Grifols with a platform for global expansion," Novartis CEO Joseph Jimenez said in a statement. He added that he sees the deal's new owner as an entity "that will focus on growing this business aggressively."

As our sister publication FiercePharma noted, Novartis' vaccine and diagnostics business in general has struggled a bit, and Jimenez has argued that the business lacks proper scale. Novartis is focused on slimming down longer term and could end up selling other divisions such as animal health, OTC drugs and vaccines if they can't meet the global scale that Jimenez desires.

At the same time, Novartis emphasizes that it is keeping its companion diagnostics unit as well as its California-based Genoptix business, a laboratory operation that provides diagnostic testing and services. Novartis founded its diagnostics unit in 2008.

Grifols, meanwhile, gains quite a bit on its side of the deal. FiercePharma points out that the company now instantly expands what is already a growing diagnostics business, and that the Novartis division will beef that up to 20% of overall sales.

- read the Novartis release
- here's FiercePharma's take
- check out Reuters' coverage