CSL expects its $US275 million ($A297.54 million) acquisition of Novartis's global influenza vaccine business will help it develop a more effective defence against flu.
The blood plasma products and vaccines supplier announced on Monday that it had agreed to buy the loss-making Novartis business unit.
The combination of the larger Novartis business with CSL's flu vaccine subsidiary, bioCSL, will create the world's number two global flu vaccines supplier, behind Sanofi.
CSL chief executive Paul Perreault said the acquisition would transform bioCSL by giving it first-class facilities, global scale, and product and geographic diversity.
He said the market for flu vaccines was growing as more people became aware of the risks associated with flu.
Flu kills 300,000 to 500,000 people each year, so the public health need for flu vaccines is significant.
The current standard flu vaccine is trivalent, which means each dose of vaccine contains three different strains of flu virus.
Both CSL and Novartis are working on a quadrivalent vaccine.
"We're looking to have four strains in each dose to give better coverage of the flu across the seasons," Mr Perreault said.
The global flu vaccine market is worth $US4 billion.
CSL chief financial officer Gordon Naylor said the Novartis flu vaccines business had high-quality assets but was currently not making a profit because money had been pumped into research and development.
The business made a $US138 million loss in calender 2013.
"We expect that over the next few years as we integrate this operation with our own that we will be able to turn this into a successful leading business within the flu sector," Mr Naylor said.
Mr Naylor expects that the Novartis flu business could be profitable within two to three years.
Shares in CSL rose 70 cents, or 0.93 per cent, to $76.36.
Morningstar analyst Chris Kallos said the acquisition would give CSL's flu vaccines business scale, diversified manufacturing technology and broader geographical assets.
"It may not be a company transformation, but this is definitely a positive step," Mr Kallos said.
The level of spending on research and development (at the Novartis flu vaccines business was expected to taper off.
"It's probably a great purchase by CSL given the R&D investment that Novartis has made," Mr Kallos said.
The new combined flu vaccine business will include manufacturing plants in the US, UK, Germany and Australia.
It is expected to achieve sales approaching $US1 billion a year in the next three to five years.
The Novartis flu vaccine business alone generated net sales of $US527 million in 2013.
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