Novartis highlights big pharma diversity drive

By Sam Cage - Analysis

ZURICH (Reuters) - Novartis AG's move for eye care company Alcon underscores a refocus for big pharma, seeking to combat threats to top-selling drugs with new areas like vaccines and non-prescription healthcare.

Novartis and other drugmakers including the world's two largest, Pfizer Inc and GlaxoSmithKline Plc, see diversification as a way to cut dependence on the fading blockbuster model, which faces ever more competition and tougher paths to market.

In the latest step to broaden its portfolio from a core prescription drug business, Novartis said on Monday it will acquire Nestle's stakes in eye care company Alcon for $39 billion.

"It is interesting that we have seen a trend with the full-year results of companies concentrating on their other businesses, highlighting how attractive they are," said Denise Anderson, analyst at Landsbanki Kepler.

The reasoning?

Big drugmakers face a "cliff" of patent expiries between 2010 and 2012, which will make it easier for generics companies to launch copy-cat versions of some of the world's top-selling drugs.

That is pushing big pharma away from its core towards businesses which until recently they would have turned their noses at. Pfizer, for example, sold its consumer health products, including Listerine mouthwash, in 2006 in a move that analysts say now looks short-sighted.

Novartis's own top-seller, Diovan, for treating high blood pressure, loses patent protection in 2012 and the Swiss-based company has been a trend-setter in broadening its base, buying vaccines maker Chiron and bulking up its Sandoz generics unit.