(c) 2013, Bloomberg News.

(c) 2013, Bloomberg News.

GENEVA Novartis has identified its animal-health business as a top candidate for a sale as Chairman Joerg Reinhardt revamps the Swiss drugmaker, according to three people familiar with the matter.

Novartis is working with Goldman Sachs on a portfolio review, which is at a relatively early stage, said two of the people, all of whom asked not to be named because the process is confidential. Novartis is also considering selling its over-the-counter medicines unit and the vaccines operation, they said. No final decision on asset sales has been made, the people said.

A sale of some or all of those operations would reverse some of the legacy of Reinhardt's predecessor, Daniel Vasella. Reinhardt began a review of the portfolio after taking over in August. Novartis wants its businesses to be among the industry leaders or will otherwise consider divesting them, he said in an August interview. The process is continuing, Chief Executive Officer Joe Jimenez said last month on a call with journalists.

Eric Althoff, a spokesman for Novartis, declined to comment. A Goldman Sachs representative declined to comment.

Novartis also must still decide the fate of a 33 percent stake in crosstown rival Roche Holding's voting shares. Vasella amassed the stake more than a decade ago but was unable to persuade Roche's founding families who control 50.1 percent of the voting shares to agree to a merger. The stake is valued at about 13.4 billion Swiss francs ($14.7 billion).

Novartis now has five units: the Alcon eye-care business; pharmaceuticals; vaccines and diagnostics; the Sandoz generic- medicines division; and consumer health, which includes both over-the-counter medicines and animal-health products. Consumer health had revenue of $1 billion in the third quarter.

The veterinary business, which makes Sentinel flea control tablets for dogs and the Vira Shield antiviral medicine for cattle, is valued at about $4 billion including net debt, Citigroup Inc. said Oct. 22. Eli Lilly Bayer and Boehringer Ingelheim are among companies that may consider an offer if Novartis proceeds with the animal health sale, one of the people said.

Other pharmaceutical companies have spun off or considered divesting veterinary units, in part in an attempt to boost the valuation that investors award to those operations. Merck & Co. said last week it's still looking at whether its animal-health and consumer businesses, as well as its drug projects, might be divested or partnered outside the company. Pfizer Inc. in June completed the spinoff of its Zoetis Inc. veterinary unit.

Novartis's OTC business, which sells the Excedrin pain reliever and the Theraflu cough and cold treatment, returned to growth this year after manufacturing woes at a U.S. plant.

Novartis rose 0.3 percent to close at 70.30 francs in Zurich. Novartis returned 28 percent in the past year, compared with a 25 percent return for the Bloomberg Europe Pharmaceutical Index.

Reinhardt, previously the CEO of Bayer Healthcare, is facing calls from some investors and analysts to jettison some businesses acquired by Vasella. The former chairman and CEO was with Novartis for 17 years, overseeing the 1996 merger of Sandoz AG and Ciba-Geigy AG that created the Swiss drugmaker.

A $10 billion acquisition is possible for Novartis as the drugmaker reviews its businesses, including animal health and vaccines, Reinhardt, 57, said in August.

Novartis should consider "all strategic options" for the vaccines unit, which "has failed to deliver," Andrew Baum, a Citigroup analyst wrote in an Aug. 9 note to investors. The OTC business should be sold, and the animal-health division needs "more aggressive management to compete with industry leaders," he said.


Von Schaper reported from Munich, Campbell from London.