Novartis AG (NVS)

The acquisition from Nestle will add the world’s eye care leader to Novartis’ portfolio, much of which is focused on prescription drugs that are facing increased competition from generic drug manufacturers. Alcon’s eye care products range includes surgical, pharmaceutical and consumer products.

"This acquisition furthers our strategy of accessing high-growth segments of the healthcare market while balancing inherent risks. The strategic fit of Alcon and Novartis is excellent with our complementary product portfolios and R&D synergies. Eye care will continue to grow dynamically as there is a growing unmet medical need driven primarily by the world’s aging population," Dr. Daniel Vasella, Chairman and CEO of Novartis, said in a statement.

In the optional second step, it can acquire the remaining 52% for a fixed price of $181 per share (about $28 billion) between January 2010 and July 2011. Nestle has the right to require Novartis to buy its remaining Alcon stake.

Novartis’ acquisition of Hexal and Eon Labs strengthens its hold on generic production. Their incorporation into the Sandoz division makes Novartis a true generic powerhouse. The purchase of the entirety of Chiron, a vaccine producer, both diversifies Novartis further and will allow them to capture a larger portion of the vaccine market.

Diovan will remain under patent protection for another five years. It currently makes up 20% of Novartis’ pharmaceutical revenue, and this blockbuster drug's sales are expected to increase in coming years.

Novartis has one of the strongest pipelines in the pharmaceutical industry, and as many as 50 new medications could come through the pipeline in the next 5 years. Additionally, Tekturna, a hypertension medication, was recently approved by the FDA and will hit the market this year.