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What Are Novartis’s Key Business Segments?

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Updated June 22, 2016.

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Business segments

Novartis (NVS) is one of the largest pharmaceutical companies worldwide with headquarters in Switzerland. The company manufactures innovative medicines, eye care products, cost-saving generic pharmaceuticals, preventive vaccines, and over-the-counter (or OTC) products.

The new structure

In 2014, the company announced that it would divest its animal health business to Eli Lily and Company (LLY). In 2015, the company sold its vaccines business, excluding its influenza business, to GlaxoSmithKline (GSK), and it sold its influenza business to CSL Group. The company also acquired GSK’s oncology products except vaccines and created a joint venture for its OTC division and GSK consumer healthcare.

The company’s new structure has only three divisions that it classifies as continuing operations:

  • pharmaceuticals
  • Alcon
  • Sandoz
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Pharmaceuticals

The pharmaceuticals division deals with the development of innovative, patent-protected products in oncology, primary care, and specialty medicines. The division includes research, development, manufacturing, distribution, and sales of patented prescription products. The company has organized its pharmaceuticals division in the following franchises:

  • oncology
  • cardio-metabolic
  • immunology and dermatology
  • retina
  • respiratory
  • neuroscience
  • established medicines

The pharmaceuticals division accounted for $30.5 billion, or 61.5%, of net sales in 2015.

Alcon

The Alcon division offers the world’s widest range of eye care products. It includes research, development, manufacturing, distribution, and selling of eye care products and technologies, serving the full-life cycle of eye care needs. This division is organized into three franchises:

  • surgical
  • ophthalmic pharmaceuticals
  • vision care

Alcon accounted for $9.8 billion, or 19.8%, of net sales during 2015.

Sandoz

Sandoz is the generics brand of Novartis, which offers over 1,000 types of affordable medicines across many therapeutic areas. The division includes the development, manufacturing, distribution, and selling of prescription drugs that are not protected by patents, pharmaceuticals, and biotechnological active substances. This division is also organized into three franchises:

  • retail generics
  • anti-infectives
  • biopharmaceuticals and oncology injectables

Sandoz accounted for $9.2 billion, or 18.5%, of net sales in 2015.

Novartis AG (NVS), Johnson & Johnson (JNJ), Pfizer (PFE), and Novo Nordisk (NVO) make up 30% of the VanEck Vectors Pharmaceutical ETF (PPH). Other ETFs in the segment include the iShares U.S. Healthcare ETF (IYH) and the SPDR Health Care Select Sector ETF (XLV).

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