Updated on 25 November 2013
The buyback is part of a $10 billion programme authorized by investors in 2008
Singapore: Novartis has offered investors $5 billion through a share buyback programme, signaling a sharper focus on shareholder rewards. The firm is carrying out a broad review of operations and would allocate capital to the share buyback over two years as well as to a strong and growing dividend and to "bolt-on" or relatively small acquisitions.
The buyback is part of a $10 billion programme authorized by investors in 2008 and which was partly resumed in 2010 to mollify shareholders in the wake of the company's $39 billion purchase of the rest of eye care firm Alcon. The latest payout could also help ease concerns ahead of the loss of exclusivity from 2015 on its biggest seller, cancer drug Glivec, that could drag on mid-term growth.
Novartis is also considering options for its non-core assets that lack the scale to become world leaders. Novartis had last week taken the first step in a much-anticipated restructuring by agreeing to sell its blood transfusion testing unit to Spain's Grifols for $1.7 billion.
The drugmaker was silent about any further plans to sell off or bulk up its business, although it referred to the testing unit sale as one result of its review. Novartis's 33 percent voting stake in rival Roche Holding has also been cited as a possible divestment.
The company said that it would continue to cut costs to improve productivity by consolidating its research sites worldwide and expects to deliver productivity gains equating to roughly three-to-four percent of sales per year through 2015.