The head of Swiss drug-maker Novartis (NYSE:NVS) abruptly announced on Wednesday that he is resigning as chairman and leaving the company.
Investors liked the unexpected news, sending Novartis shares up almost 5% in Wednesday morning trading.
Daniel Vasella, who managed the 1996 merger of Sandoz and Ciba-Geigy, which created the pharmaceutical giant, will be replaced by Bayer (PINK:BAYRY) executive Joerg Reinhardt. Vasella had stepped down as Novartis CEO in 2010, tapping Joe Jimenez as his successor, a move that caused Reinhardt, then a top Novartis executive, to leave the company, Bloomberg noted.
The pharmaceutical maker also said on Wednesday that it expected its 2013 earnings to drop by a mid-single digit percentage. Revenue is expected to tumble by up to $3.5 billion this year as the company’s brand name drugs face increasing competition from generic rivals, but sales are anticipated to match last year’s.
Analysts speculated that the leadership change might mean that Novartis would begin divesting itself of under-performing assets. Among operations that could be sold are its stake in Roche Holding (PINK:RHHBY) and its vaccine business, though the company’s CEO told reporters on Wednesday that he didn’t see a major course correction resulting from the return of Reinhardt.