TABLE OF CONTENTS
CHIEF EXECUTIVE OFFICER
MAJOR FACTORS AFFECTING INVESTMENT POTENTIAL
STOCK PRICE DATA AND INVESTMENT ANALYSIS
CONCLUSIONS & RECOMMENDATIONS
This company profile provides a preliminary investigation and analysis of Novartis International AG, a multinational pharmaceutical company based in Basel, Switzerland. Novartis is one of ten companies the Investment Board will consider for further in-depth research for a multimillion-dollar investment. Novartis was created in 1996 from the merger of two Swiss-based chemical/life sciences giants; Ciba-Geigy and Sandoz Laboratories. Novartis is comprised of four business divisions: pharmaceuticals, vaccines and diagnostics, Sandoz Generics, and consumer health. Dr. Daniel Vasella is Chairman of Novartis since 1999, and is Chief Executive Officer of Novartis since the merger that created Novartis in 1996. The global pharmaceutical industry tops $600 billion in sales annually, where Novartis’ top three competitors are Johnson & Johnson, Merck, and Pfizer. Novartis’ sales over the past 5 years have steadily increased from $23.1 billion to $36.7 billion. Major factors affecting investment potential include heightened competition from generic drug makers, unprecedented pricing pressure from payers, hard-to-control inflation in research and development budgets, a new U.S. Medicare prescription drug benefit boosting sales, and an aging population. Novartis has a strong diversified approach to healthcare in its four business divisions. Its largest and most profitable division, pharmaceuticals, has a strong product portfolio while continuing to invest heavily in R&D to ensure a healthy drug development pipeline. Generics have become the fastest-growing sector of the pharmaceuticals industry, and Novartis is well positioned with their Sandoz division as the largest manufacturer of generic drugs in the world. Novartis stock has performed well over the past five years, and analysts are now strongly recommending buying Novartis stock during the next 6 months. In light of these conclusions, Group #4 Planning Analysts strongly recommend to the Investment Board that Novartis be chosen for further in-depth research for potential investment. I.
This report provides a preliminary investigation and analysis of Novartis International AG, a multinational pharmaceutical company based in Basel, Switzerland, for the purposes of assessing its investment potential. This company profile was requested by Damon Chapman, Chief Executive Officer, and intended for review by the Investment Board. Novartis is one of ten companies to be studied and reported to the Investment Board, which is tasked with reviewing and selecting three investment possibilities for further in-depth research. II.
Novartis was created in 1996 from the merger of two Swiss-based chemical/life sciences giants; Ciba-Geigy and Sandoz Laboratories, which at the time became the largest corporate merger in history at approximately $41 billion. Ciba-Geigy was formed in 1970 by the merger of J. R. Geigy (founded in Basel in 1758) and Ciba (founded in Basel in 1859). Sandoz was created in 1886. Since the 1996 creation of Novartis, the company has experienced multiple acquisitions and divestures. In 1997, Novartis acquired the crop protection business of Merck & Co. based out of New Jersey. In 2000, Novartis Pharma AG acquired the products Famvir and Vectavir/Denavir from SmithKline Beecham, and also acquired BASF Pharma's European generics business. Additionally in 2001, Novartis Seeds merged with AstraZeneca's ' agribusiness operations to form Syngenta, the first global group focusing exclusively on agribusiness. In 2001, Novartis Generics acquired generics manufacturer Lagap Pharmaceuticals. In 2002, Novartis...
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