Novartis increases stake in Roche; 2003 results strengthen global position

Swiss drug giant Novartis has increased its holding in smaller rival Roche Holdings from 32.7% to 33.3%. This new level of ownership is just a hair's breadth away from the level at which it is required to make a takeover bid under Swiss law, but the company does not foresee such a move in the near future, possibly due to sustained resistance from Roche.

Speaking at the results conference in Zurich, Daniel Vasella, Novartis' chief executive, said the stake in its rival is seen "as a good investment; we are very appreciative of Roche's turnover and success," and added: "we always said it's a financial investment with a strategic character - we have a multi-year horizon which goes beyond my own." A merger between the two companies would result in the world's second biggest pharmaceutical group, jumping the UK's GlaxoSmithKline.

The move was announced as Novartis reported record profits for 2003. Group sales of $24.9 billion were up 19% (or 11% in local currencies) over 2002, driven primarily by the pharmaceuticals and Sandoz segments. The Swiss major's medicines businesses, comprised of pharmaceuticals, Sandoz, over-the-counter and animal health, grew 22% in 2003 and contributed 86% to total revenues. As a result of increased sales achieved in the year, Novartis says it has overtaken AstraZeneca to become the world's fifth largest pharmaceutical group, with a 4.38% share of the global health care market.