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Novartis and GlaxoSmithKline, two of the world's top drugmakers, have struck a multi-billion-dollar deal to join forces and reshape their businesses.

The deal involves swapping assets and combining their consumer health units.

Novartis will acquire GSK's cancer drugs business for 16bn dollars (£9.5bn) and sell its vaccines division, excluding the flu unit, to GSK for 7.1bn dollars.

In a separate deal, Novartis has agreed to sell its animal health division to Lilly for nearly $5.4bn.

Novartis said the moves would help the firm focus on its key businesses.

"The transactions mark a transformational moment for Novartis," Joseph Jimenez, chief executive of Novartis, said in a statement.

"They also improve our financial strength, and are expected to add to our growth rates and margins immediately."

Source: http://www.bbc.com/news/business-27107416

What does Joseph Jimenez mean by saying, "It marks (the transactions would be a sign of) transformational moment (of change) for Novartis"?

And when he says, "They also improve our financial strength," what does the word "they" refer to? Does it refer to the transactions between GSK and Novartis? Or does it just refer to people and managers of GSK?

Could you also simplify the terms "rate" and "margins"?
A million thanks in advance.

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It's a business buzzword that means that amazing things are happening at the company. I don't really like business buzzwords though. They remind me of sleazy salesmen and upper management types. –  AdmiralAdama Apr 22 at 12:01
    
    
'They' in this case refers to the previously mentioned transactions. –  Doc Apr 22 at 17:31
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3 Answers 3

A "transformation" is when something changes, usually dramatically. Like you could say that boiling transforms water into steam, or that a caterpillar transforms into a butterfly.

So a "transformational moment" is an instant in which things change dramatically. You might say, "The Russian Revolution was a transformational moment in history", meaning it was an event that caused great and important changes. It's fairly common for people to say that some event was a transformational moment in their lives, like "It was a transformational moment for me when I started my own business", etc.

"Growth rate" is simply the speed at which something grows. You might say that a certain plant has a growth rate of 5 inches per year. It's common to talk about the growth rate of a business in terms of the percentage increase in sales year to year. Like, "Our goal is to maintain a 10% annual growth rate", meaning, we expect that each year we will have 10% more sales than we had the previous year.

In this context, "margin" is the difference between two prices or costs, usually the selling price and the purchase price, or the selling price and the cost to manufacture. Like if you own a retail store that sells toasters, and you buy them for $10 and sell them for $15, you would say that your margin is $5 per unit, or 50%.

The word "margin" can be used in many other ways, you have to watch the context.

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Don't think too much into it.

This is a significant agreement and will substantially change how their business operates. That's the 'transformation'.

"They" refers to the transactions, but if he meant or you understood GSK, it wouldn't be completely wrong.

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Let's add and rebold a few more words to understand the context:

Deal #1 -Novartis and GlaxoSmithKline, two of the world's top drugmakers, have struck a multi-billion-dollar deal to join forces and reshape their businesses.The deal involves swapping assets and combining their consumer health units. Novartis will acquire GSK's cancer drugs business for 16bn dollars (£9.5bn) and sell its vaccines division, excluding the flu unit, to GSK for 7.1bn dollars.

Deal #2 -In a separate deal, Novartis has agreed to sell its animal health division to Lilly for nearly $5.4bn.Novartis said the moves would help the firm focus on its key businesses. (The keybusiness of Novartis is to deal with human health)

"The transactions [Deal #1 and #2] mark a transformational moment for Novartis," Joseph Jimenez, chief executive of Novartis, said in a statement."They (referring to the transactions of two deals) also improve our financial strength, and are expected to add to our growth rates (company shall grow faster) and margins (overall profit from the sales) immediately."

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