In a move that had been widely expected, Swiss drugs giant Novartis has announced that it will spin off its Alcon eye care division into a separate standalone company.

The transaction, which is expected to be completed in the first half of 2019, will create a Swiss-based medical devices business with around $7 billion in sales (2017) and more than 20,000 employees. Novartis added that Alcon’s American headquarters in Fort Worth, Texas, will remain a key location. The company intends to list Alcon’s shares on both the SIX Swiss and New York Stock Exchanges.

“Our strategic review examined all options for Alcon ranging from retention, sale, IPO to spinoff. The review concluded that a spinoff would be in the best interests of Novartis shareholders,” said supervisory board chairman Joerg Reinhardt.

CEO Vas Narasimhan added: “Alcon has returned to a position of strength and it is time to give the business more flexibility to pursue its own growth strategy as the world’s leading eye care devices company.” Alcon’s sales in the first quarter of 2018 were up 7% year on year at $1.8 billion, beating analysts’ forecasts of $1.6 billion.

Novartis acquired Alcon in 2011, when the business included surgical, vision care and ophthalmic pharmaceuticals. In January 2016, it transferred the latter business, which had 2017 sales of $4.6 billion and included the potential blockbuster drug RTH258 (brolucizumab) for neovascular AMC and diabetic macular edema, to its Innovative Medicines division. Alcon is now fully focused on surgical and vision care.

The spin-off is subject to various conditions as well as shareholder approval. Mike Ball became chairman-designate of Alcon with effect from Jul. 1, stepping down from the executive committee of Novartis. David Endicott, currently Alcon’s chief operating officer, has been named CEO of Alcon, also effective Jul. 1.

In addition, the Basel-based group said it will initiate a share buyback of up to $5 billion by the end of 2019. This will be largely funded from the sale of its 35.6% stake in its consumer health joint venture to partner GlaxoSmithKline (GSK) for $13 billion, but net of the $8.7 billion payment to buy AveXis. The deal to acquire the US clinical stage gene therapy company is expected to close in the second half of this year.