Drugs giant Novartis has paid €2.79bn for a 20% stake in its struggling domestic rival Roche. Both companies are adamant however that the deal does not pre-empt a full-blown merger, and the Novartis purchase has been described as a long-term investment.

Dr Daniel Vasella, Novartis chairman and CEO, commented: "This is a long-term financial investment, which is also strategic in nature."
CFO at the group, Raymund Breu, revealed that one reason for the purchase was to prevent competitors gaining market advantage through Roche. The smaller company's pharmaceuticals division is "a quality research outfit" with good potential, he said.

Smaller competitor Roche has recently struggled to boost business in its pharmaceuticals arm, battered by poor sales and flagging product development. Last week it revealed it would cut costs in the division.

Speaking of the share buyout, Roche chairman Franz Humer maintained: "We have a change here in one of the shareholders. Apart from that nothing changes for us."