Deal Participants

Target (Company)   Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd.
Acquirer (Company) Novartis AG

Deal Rationale

The acquisition enables Novartis to expand its human vaccines presence in China.

% Acquisition 85%

The new vaccine, named Celtura, uses validated cell culture line for production of viral antigen components rather than traditional chicken eggs, according to the statement. The technology has previously been licensed in Europe for the production of a seasonal flu vaccine.

"Our modern cell culture technology can enable a faster start- up of vaccine manufacturing, offering the ability to respond more quickly to future pandemic threats," said Andrin Oswald, CEO of Novartis' Vaccines and Diagnostics division.

Novartis said Celtura was made at a licensed cell culture facility in Germany, and the company "is close to completion of a second cell culture-based influenza vaccine manufacturing site in the United States, which is being built in partnership with the U. S. Department of Health and Human Services."

The company added that it would continue to pursue registration of the new vaccine in other major countries, including Japan and Switzerland.

The World Health Organization has said that vaccination is one of the best means for countries to protect their population against the A/H1N1 pandemic, which has so far killed over 5,700 people worldwide. More than 20 countries have started A/H1N1 flu vaccination campaigns with vaccines made using egg-based methods.

To allow for this large expansion, the BioMedical Research Institute will relocate to a new campus in Shanghai. Its activities are expected to span work in analytics and biomarkers, in vivo pharmacology, protein production, characterization and scale-up screening and chemistry and proteomics, genomics and imaging.

CNIBR is expected to extend and increase its collaborations with institutions in China and is committed to cultivating local R&D talent, sharing the development technology platform of Novartis and years of drug development experience.

CNIBR is expected to be the third largest R&D center for Novartis, after the R&D center in Cambridge, Massachusetts, US and the facility at the Novartis headquarters in Basel, Switzerland, and to become the largest comprehensive R&D center in China. Estimates are that the number of R&D associate positions will increase from 160 to about 1,000.

Novartis has also invested $250 million in a new global technical center which is opening in Changshu, focused on technical research, development and manufacturing activities of active pharmaceutical ingredients.

According to Novartis, the synergies gained from the co-location of both technical R&D and manufacturing enable significant pharmaceutical process improvements and operational efficiencies. The number of high quality jobs at the new center is projected to nearly double, and the facility is expected to be a critical part of the global production and supply chain network.

Daniel Vasella, chairman and CEO of Novartis, said: "We are confident that our expanded investment in R&D will result in innovative therapies for patients in China and other countries nurtured by the growing scientific excellence in China."

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The two companies intend to collaborate on building a vaccines industry leader targeting unmet medical needs in China.

The acquisition remains subject to government and regulatory approvals in China.

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