The mega-merger of Swiss drug makers, Ciba-Geigy Ltd. and SandozLtd., brings together various biotechnology companies with anemphasis on research in gene therapy and genomics.

The two pharmaceutical firms, both located in Basel, Switzerland,said Thursday they were combining to form a company calledNovartis in an exchange of stock valued at nearly $30 billion. Sandozshareholders will own 55 percent of Novartis and will receive 1 shareof the new company for each Sandoz share. Ciba shareholders willown the remaining 45 percent and will get 1.067 shares of Novartisfor each Ciba share.

Formation of Novartis eclipses last year's $15 billion pharmaceuticalmerger between Glaxo Holdings plc and Wellcome plc, both ofLondon. Another major 1995 deal involved Pharmacia AB, ofUppsala, Sweden, and Upjohn Co., of Kalamazoo, Mich. The twocombined into Pharmacia & Upjohn Co. in a $13 billionconsolidation.

Sandoz and Ciba said their merger gives Novartis a 4.4 percent shareof the global pharmaceutical market, second behind GlaxoWellcome, with annual drug sales of $11.6 billion. The company'syearly research and development budget will be about $1.7 billion.

Based on the closing prices of Sandoz and Ciba stocks March 1,1996, when the deal was negotiated, their combined marketcapitalization would be $62 billion. The merger is subject toshareholder approval and regulatory reviews. Shareholders areexpected to vote in April.

Sandoz and Ciba said they intend to sell off their chemicals divisionsto focus on life sciences with core business areas in pharmaceuticals,agribusiness and nutrition.

Biotechnology will figure prominently in Novartis' drug developmentactivities. In late 1994 Ciba purchased a 49.9 percent interest inChiron Corp., of Emeryville, Calif., for $2.1 billion. Chiron is thelargest biotechnology firm associated with Novartis.

Larry Kurtz, vice president of corporate communications for Chiron,said the merger will not affect commitments agreed to in the Ciba-Chiron strategic alliance.

Sandoz's acquisition of Genetic Therapy Inc., of Gaithersburg, Md.,and its majority ownership of Systemix Inc., of Palo Alto, Calif., willbring together gene and cell therapy technologies with gene therapyexpertise Chiron acquired in its takeover of Viagene Inc., of SanDiego.

Novartis also will have access to genomics information for drugdiscovery through Sandoz's alliances with several academicinstitutions, including Stanford University Human Genome Center inPalo Alto, Calif., and Whitehead Institute for Genome Research atthe Massachusetts Institute of Technology (MIT) in Cambridge,Mass.

Earlier this week, Sandoz said it was donating $1 million to aid aconsortium of Stanford, MIT and Research Genetics Inc., ofHuntsville, Ala., in mapping genes on chromosomes.

Ciba has a genomics presence through its collaboration with MyriadGenetics Inc., of Salt Lake City, to discover genes involved incardiovascular diseases.

Novartis' biotechnology research also will focus on use of transgenicanimal organs for transplant into humans through Sandoz'scollaborations with Imutran Ltd., of London, and BioTransplant Inc.,of Boston.

Novartis' two top selling drugs are Ciba's Voltaren for treatment ofarthritis pain and Sandoz's Sandimmun for prevention of organtransplant rejection. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.