Ciba-Geigy Merger with

Sandoz
Aldhy Firdaus
Gabriel Febrianti
Monica Margaretha Gozal
Sumarlin

 The Geigy company was founded by Johann Geigy

1975 The Geigy traded organic compounds

1970

1980

Ciba merged with Geigy company

Decided focus on chemicals and the health care products field

Formed alliances with high technology companies

Joint venture with a Carlsbad, Isis Pharmaceuticals, and
1998
Affymax

Ciba-Geigy Company Profile

1886

Sandoz was founded in Basel as Kern & Sandoz

1950- Expanded across Europe and Japan

1960
Acquaired Dr. Wander A. G., which gave Sandoz a consumer
1967 products presence and strengthened its international holdings
Acquiring Northrup King & Corporation to diversify its product,
1976 traded seed
Operate six companies: Sandoz Chemicals, Sandoz Pharma,
Sandoz Agro, Sandoz Seeds, Sandoz Nutrition, and MBT
1990
Holdings.

Sandoz Company Profile

March1996:

Ciba-Geigy and Sandoz issued

joint statement with the new name Novartis

Novartis

would focus on its core businesses:

pharmaceuticals, agribusiness, and nutrition

Each

company would divest its division that

did not related to the core business

April

1996: Ciba-Geigy and Sandoz

approved the merger

Ciba-Geigy Sandoz Merger

Ciba-Geigy
Sandoz 55%
45%

Novartis Share

Sandoz
share
rose
20%

Ciba
share
rose
30%

Novartis estimated market value: $60 billion

Merger Effect

To compete in fiercely competitive

pharmaceuticals industry
To lower the cost of research and
development

To develop a continuing supply of new drugs

To compete in great produtivity and new

research in developed country
Economize on research, combine product
lines, and increase marketing effectiveness

Merger Reasons

Ciba Geigy strength

1) Chemical products
Disposable contact lens
Harbithol nicone patches
Ritalin for hyperacve children
Sunkist Vitamin
Maalox
Zantac
E&dac
An over-the-counter cold medicine
2) Ciba formed alliances with high technology companies
to study computeraided screening of its product

Q1: What were the individual strengths and

weaknesses of Sandoz and Ciba-Geigy?

Sandoz strength
1. Nutrition foods
Berber baby foods
Ovaltine
Wasa crispbreads
2. Sandoz spent the post World War II era concentrating on
product development based on internal research and
development.
3. Sandoz acquired Dr Wander A.G. which gave sandoz
consumer products presence and strengthed its international
holdings.
4. Diversify its product scope by acquiring Northrup King &
Corporation, one of the US seeds companies.
5. Have strong cash :ows and was able to connue to strenghten
itself with new invesment and acquisions.

Q1: What were the individual strengths and

weaknesses of Sandoz and Ciba-Geigy?

Ciba-Geigy

was the worlds 9th-largest

drug maker, and Sandoz was the 14th
The merger created a new company that
was to be the worlds numner one supplier
in agricultural chemicals, a world leader in
biotechnology, and a large presence in the
nutrition products held.

Q1: What were the individual strengths and

weaknesses of Sandoz and Ciba-Geigy?

Ciba Geigy weaknesses

Tarnished image
The company paid 6 Egyptian boys to
stand in a field and have the chemical
sprayed on them : The result was public
outrage.
1000 deaths in japan were linked to a
Ciba Geigy diarrhea medication.

Q1: What were the individual strengths and

weaknesses of Sandoz and Ciba-Geigy?

Economies of scale
Increase marketing effectiveness
Allow greater investment in R&D
Combine product lines
New market
Increase funding
Increase the liquidity of shareholders

Q2: How would the merger help

each company?

For

Novartis future strategic focus, it should be based

on the previous duo strengths, the potential strategic
fits along the value chain, and the market condition.

Based

on those aspects, we conclude that

pharmaceuticals could be company major long term
strategic focus, this aspects support by stronger
research and development arsenal on the combined
company, which could be translated into the ability to
economize research cost, combine product lives, and
increase marketing effectiveness.

Q3: What was the expected future

strategic focus of Novartis and why?

The

merger could also provide an integrated

pharmaceuticals production activities, with
Sandoz has an experience on seeds knowledge,
biotechnology development, and both of company
also has exposure into agribusiness. Our
expectation for company to strategically focus on
pharmaceuticals business has been proven by
company decision to 1) Divest its specialty in
Chemical, 2) Sold their Nutritional division to
Nestle by 2006, and developing oncology and
biosimilar product later on.

Q3: What was the expected future

strategic focus of Novartis and why?