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Novartis To Buy Gen-Probe?

Tuesday, 7 Jun 2011 | 7:25 AM ET

Novartis has won the auction for medical testing company Gen-Probe, according to a report in the Wall Street Journal on Tuesday.

The Swiss pharmaceuticals giant declined to comment on the paper's story. A spokesman told CNBC that the company does not comment on market rumors and speculation.

Novartis CEO, Joe Jimenez
Joe Jimenez, CEO of Novartis tells CNBC that the Swiss pharmaceutical company will keep its research and development spending high

Buying Gen-Probe, which has a market value of close to $4 billion, would help Novartis develop its expertise in the increasingly important field of testing. As fewer new drugs are approved every year, pharmaceutical companies are trying to diversify their activities into other areas of medicine.

Joe Jimenez, chief executive of Novartis, told CNBC Tuesday that Novartis will keep its spending on research and development high, even as other companies, such as GlaxoSmithKline

and Pfizer cut the amount they spend on internal research in favour of buying in more medicines from smaller companies.

“We are going to keep spending on research and development, because fundamentally it’s a growth industry,” said Jimenez.

“We will maintain research and development spending at about 20 percent of sales in our pharmaceuticals division. If sales grow by 5 percent we will increase research and development spending 5 percent.”

The company is spending about $1 billion on a new research facility in China, which Jimenez believes will eventually become its most important market.

Big Pharma companies are facing patent expiries on some of the industry’s best-selling medicines, as their pipelines are not delivering as many blockbusters as before.

Many are now developing treatments for rarer diseases, with smaller patient populations, such as Gaucher’s disease.

Novartis has stuck to its specialty of cancer treatment. It had some good news on Monday with the news that Gleevec, already a major blockbuster approved to treat several forms of the disease, extended the lives of patients with difficult-to-treat gastrointestinal stromal tumors when used for three years after surgery. As the current treatment is used for one year, this could help boost sales. Eye disease treatment Lucentis was cleared to treat more conditions earlier this week.

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