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In the stock market, the pharmaceutical company Novartis received many applause for the split of Alcon. But observers of Moody's solvency are worried for a good reason, Novartis delaying debt reduction.
[194559006] Dominik Feldges
However, both projects are critically viewed by the Moody's rating agency. On Monday, he lowered the credit rating of the pharmaceutical company's debt from a notch of Aa3 to A1. Surprisingly, this step does not come. The rating agencies represent the view of the bondholders and must be concerned when a group announces the proceeds of the sale of a significant stake ($ 13 billion as part of the exit of a joint venture announced end of March 2018). Venture with GlaxoSmithKline) immediately to reinvest in a share buyback program decides. Novartis could also have used the funds to reduce its net debt, which increased from $ 3 billion in 2017 to $ 19 billion.
Measured by the new Moody's rating, Novartis bonds are only of average quality. The group is in good company. Pfizer and Sanofi have the same rating, while Bayer has to settle for Baa1. First class with Aaa is only the credit rating of Johnson & Johnson. The business of drug makers is no longer as defensive as she was. Price pressure in many sales areas reduces earning capacity. In addition, most suppliers have been attracted by expensive purchases in recent years.
Following Novartis' decision to withdraw its Alcon ophthalmology subsidiary, Moody's downgraded the rating of the pharmaceutical company. (Image: Mark Lennihan / AP)
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