The deal intends to make up ground on larger rivals such as GlaxoSmithKline, who last week expanded its ability to increase vaccines supplies by acquiring a vaccine research and production facility from rivals Wyeth.
The acquisition will give Novartis access to the vaccine market for flu, HIV and other illnesses, which Lehman Brothers analysts say may reach $10.4 billion (€8.3 million) by 2007.
Novartis' intention to purchase the remaining 112 million fully diluted shares from Chiron for $40.00 per share in cash has received a mixed opinion by analysts, who claim that Novartis' offer may not be high enough to convince the Chiron's remaining shareholders.
Chiron has had a difficult few months, which has seen its share price tumble. Analysts have said that investors may only be willing to part with their shares once they have rebounded and the offer price has been raised
In July of this year, Chiron faced a significant shortfall in the volume of influenza vaccine it was be able to ship to markets outside the US due to sterility problems at one of its manufacturing plants.
The facility in Marburg, Germany, which produces another flu vaccine, Begrivac was intended primarily for the UK and German markets.
Novartis currently holds a 42.2 per cent stake in the US biopharmaceutical company and its outright purchase would almost certainly move the company up the list of world drugmakers - it is currently the sixth largest.
The company has already spent almost $8bn this year buying two generic drugmakers, Hexal AG and its US affiliate Eon Labs Inc. for $8.3 billion, and $660m acquiring the non-prescription drug business of rival Bristol-Myers Squibb.
The acquisitions by Novartis does not hide the fact the Swiss giants have not introduced a $1 billion product since 2001. Added to the concern that its stocks have grown poorly compared to its nearest rivals, it all makes for grim reading for the company's CEO, Daniel Vasella.
Novartis introduced the leukaemia treatment Gleevec and the Zometa cancer medicine in 2001. Its success has made Novartis a leader in the Oncology therapeutics field. Its other success story has been its eight-year-old heart medicine Diovan. Chiron's cancer therapeutics franchise is likely to fit in well with this position.
Chiron's vaccine unit sells more than 30 products, including treatments for influenza, the meningococcus bacteria, and travel and paediatric illnesses. The blood testing business sells equipment for testing products used in transfusions, while the biopharmaceuticals unit focuses on infectious diseases and cancer.