Novartis (NYSE:NVS) is considering a possible divesture of its struggling Alcon eyecare business, according to chairman Joerg Reinhardt.
Alcon was purchased from Swiss food maker Nestle for $52 billion in 2010 as the company sought to build a European healthcare juggernaut under former leader Dan Vasella.
But after Vasella’s departure in 2013, the company has reversed its course, focusing on prescription drugs with an emphases on its cancer medicines and Sandoz generics unit.
“All options are open in the future. In the long run, the question arises as to whether we are the best owner for Alcon,” chairman Reinhardt told Swiss weekly SonntagsZeitung in an interview.
Alcon’s sales have been shrinking, posting losses for the 1st 9 months of the year so far.
Novartis may not be able to recoup its original $52 billion investment in Alcon upon divesture, according to a healthcare industry banker, though disposing it at a loss would free it of the underperforming business.
Last month, Novartis CEO Joe Jimenez warned that the turnaround of the Alcon eye care division could take longer than expected, after predicting earlier in the year that it would be growing at a low-single-digit percentage by the end of 2016.
The company blamed a failure to innovate and inconsistent customer service as faults behind the failure at Alcon.
“It’s probably going to be flat to down slightly, but it will be improved growth momentum going into 2017,” Jimenez said of Alcon, whose sales fell 3% in constant currencies to $1.4 billion, with an operating loss of $50 million.
Material from Reuters was used in this report.
