Novartis and GlaxoSmithKline traded over $20 billion worth of assets on Tuesday, aiming to bolster their best businesses and exit weaker ones as the drugs industry reshapes to cope with healthcare spending cuts and generic competition.
The deals, which include Novartis buying GSK's cancer drugs and GSK acquiring Novartis' vaccines business, came hot on the heels of a newspaper report that AstraZeneca had turned down a $101 billion bid approach from Pfizer - a story that sent shares across the sector surging.
The global pharmaceuticals industry has seen a flurry of dealmaking recently as most large companies seek to focus on a small number of leading businesses, while smaller speciality and generic producers seek greater scale.
Deal values have almost doubled since the start of the year to $77.9 billion compared with the same period in 2013, according to Thomson Reuters data.
The overhaul at Novartis marks the end of a year-long review of its sprawling portfolio after the departure of long-time CEO and chairman Daniel Vasella, the architect of the merger of Ciba-Geigy and Sandoz which led to Novartis' formation in 1996.
The Swiss firm said it had agreed to buy GSK's oncology products for $14.5 billion plus another $1.5 billion that depends on the results of a trial in melanoma.
The deal will strengthen Novartis's world No.2 position in cancer behind cross-town rival Roche.
Novartis said it was also selling to GSK its vaccines, excluding flu, for $5.25 billion plus potential milestone payments of up to $1.8 billion and ongoing royalties, as well as creating a joint venture with GSK in consumer healthcare.
In addition, it is selling its animal health arm to Eli Lilly for approximately $5.4 billion.
"Novartis has agreed an elegant set of transactions that either removes or strengthens its underperforming assets, whilst boosting its oncology portfolio," Jefferies analysts said.
They added the deals also looked good for GSK, which as well as strengthening its vaccines and consumer health businesses will return 4 billion pounds ($6.7 billion) to shareholders.
"This is a landmark deal," said a source familiar with the transactions between Novartis and GSK. "We should see more of these because companies need to drive growth."
At 1220 GMT, Novartis shares were up 2.4 percent to 76.5 Swiss francs. GSK shares were up 5.1 percent to 1,638 pence.
Novartis Chief Executive Joe Jimenez said the revamp would help make the company "fighting fit" to meet the challenges of the global healthcare industry over the next ten