ZURICH/BENGALURU (Reuters) - New Novartis Chief Executive Vas Narasimhan has further reshaped the Swiss drugmaker, announcing on Thursday he is selling U.S. dermatology and generic pill assets to India’s Aurobindo Pharma Ltd for up to $1 billion.

Logo of Swiss drugmaker Novartis is seen at its branch in Schweizerhalle near Basel, Switzerland, March 29, 2018. REUTERS/Arnd Wiegmann

The deal, which comes after price pressure hurt the U.S. pills business, includes some 300 products. An initial $900 million cash payment could be followed by $100 million in performance-based payments to the Basel-based drugmaker.

Novartis said the transaction will result in a roughly $70 million impairment, to be confirmed when it releases third-quarter results in October.

This deal has been in the works for months but some analysts said Aurobindo was paying less than they had penciled in for the assets.

Shares in Aurobindo rose 9 percent on the news, while Novartis stock closed down about 1 percent.

"The acquisition announced today is in line with our strategy to grow and diversify our business in the U.S.," said N Govindarajan, managing director of Aurobindo, adding the deal will make it the second-largest U.S. generics maker by prescriptions. bit.ly/2MRmXqA

Aurobindo will get plants in Wilson, North Carolina, as well as in Hicksville and Melville, New York, Novartis said.

Around 750 employees as well as field representatives from the PharmaDerm branded dermatology business are expected to transfer to Aurobindo.

Narasimhan, who became CEO on Feb. 1, has pushed ahead with efforts to slim down Novartis that began under his predecessor, Joe Jimenez, to focus on higher-margin drugs.

He sold a consumer health joint venture to GlaxoSmithKline this year for $13 billion and plans to spin off his Alcon eyecare unit in 2019.

The U.S. Sandoz pills business has long been a problem child for Novartis, with price pressure hurting results and becoming a main reason the division has pared back its growth targets, most recently in July.

“Through this transaction, we are refocusing our business,” said Richard Francis, the Sandoz division head, adding the disposal would allow him to focus on products such as biosimilars, or near-copies of rival’s biological drug blockbusters whose patents have expired.

Analyst Stefan Schneider at Swiss bank Vontobel said the lackluster $900 million up-front price showed just how deep the U.S. pills business and dermatology assets had fallen.

“We had assumed a price of 1 times sales for such a transaction,” Schneider said. “We realize that pricing pressure in the U.S. generics market is greater that we had anticipated, as last year’s revenues were $1.5 billion for this business and first-half 2018 revenues only $0.6 billion.”

He has a “hold” rating on the shares.

Narasimhan, a U.S. citizen and Harvard-trained doctor, has so far said that Sandoz businesses elsewhere including in Europe remain core parts of Novartis. Overall, Sandoz had nearly $5 billion in sales in the first half.

Following this transaction, the Sandoz U.S. portfolio will include biosimilars as well as complex generics such as its Glatopa copy of Teva’s Copaxone medicine for relapsing multiple sclerosis.