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Maverick Capital Increases Stake in Novartis

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Maverick Capital and Novartis

Maverick Capital increased its position in Novartis (NVS) by more than $22 million in stock. It represented 0.75% of the fund’s total portfolio in 4Q14.

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Novartis focuses on three core priorities: innovation, growth, productivity

After receiving approvals from regulators and with the release of significant clinical trial data, Novartis witnessed progress in its pipeline. Management in the company’s earnings release said, “In the fourth quarter, key growth drivers – including Growth Products such as Gilenya, Tasigna, Afinitor and Jakavi , as well as biosimilars and Emerging Growth Markets – continued to demonstrate the strength of our portfolio across disease areas and geographies.”

In its 4Q earnings release, Novartis said, “Ongoing productivity initiatives relate to procurement and resource allocation across the portfolio, as well as R&D, our manufacturing network and supporting infrastructure. Improving productivity and leveraging synergies across divisions will help us support margins.”

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 An update on Novartis’s divestitures

For last couple of years, Novartis has been engaged in a couple of divestitures to transform its portfolio and create shareholder value. On January 1, 2015, Novartis completed the divestment of its Animal Health Division to Eli Lilly (LLY) for approximately $5.4 billion. This divestiture is part of company’s strategy to focus on its leading business areas, which include pharmaceuticals, eye care, and generics.

In April last year, NVS announced it would divest its non-influenza segments of Novartis Vaccines to GlaxoSmithKline (GSK). Novartis expects to complete this transaction with GSK in the first half of 2015.

Novartis’s transaction with Carlisle Companies, Inc. (CSL) includes the divestment of the Novartis influenza vaccines business, including the development pipeline. The deal is expected to be completed in the second half of 2015. The transaction is subject to customary closing conditions, including regulatory approvals.

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Outlook for 2015

Novartis’s group net sales in 2015 are expected to grow mid-single digits. Group core operating income is expected to grow ahead of sales at a high single-digit rate.

Pharmaceutical industry

Market Realist recently published a series Called Understanding the pharmaceutical industry. The series highlighted the major publicly traded companies in the drug manufacturing category. This includes Johnson & Johnson, Novartis AG (NVS), Pfizer Inc. (PFE), Merck, Sanofi, and GlaxoSmithKline.

Pharmaceutical ETFs include the PowerShares Dynamic Pharmaceuticals ETF (PJP) and the SPDR S&P Pharmaceuticals ETF (IHE). Johnson & Johnson, PFE, Merck, and Eli Lilly together make up 32% of IHE’s portfolio.

About Novartis

Novartis (NVS) is headquartered in Basel, Switzerland. It offers a diversified portfolio in the areas of innovative medicines, eye care, and cost-saving generic pharmaceuticals. Novartis is the only global company with leading positions in these areas.

In the next part of this series, we’ll look at Maverick Capital’s position change in Northstar Realty Finance Corp. (NRF).

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