By John Miller

ZURICH (Reuters) - Signals from Swiss drugmaker Novartis that it could unload its struggling Alcon eyecare business is the latest step in dismantling former leader Dan Vasella's vision of building a European healthcare giant.

The transformation, however, is not proving to be easy.

Chairman Joerg Reinhardt said at the weekend that Alcon's woes have intensified soul-searching over the unit's future. "All options are open in the future," Chairman Joerg Reinhardt said in an interview in Swiss weekly SonntagsZeitung.

"In the long run, the question arises as to whether we are the best owner for Alcon." Vasella's $52 billion takeover of Alcon from Swiss foodmaker Nestle was completed in 2010 as part of his empire-building.

Since he departed in 2013, Novartis has reversed course, focusing on its prescription drugs business, including an emphasis on cancer medicines and its Sandoz generics unit.

"Novartis under Vasella was going to be the Johnson & Johnson of Europe," said Stefan Schneider, a Bank Vontobel analyst in Zurich. "Since Vasella has gone, they've started transforming the business."

Alcon's uncertain future contrasts with the buoyant mood when Novartis upped its stake. At the time, Vasella lauded it for core operating profit margins of about 35 percent, better than for drugs.

Today, Alcon's sales are shrinking and it posted an operating loss in the first nine months 2016.

A Novartis spokesman on Monday declined to comment further on Alcon's future but said Chief Executive Joe Jimenez had told analysts last month that its position in the company "remains to be seen".

A health care industry banker said Novartis is unlikely to recoup its original investment in Alcon. Disposing of it even at a loss would at least free it from an underperforming business with significant research and development requirements.

A sale could take time, however, as the division head, former Hospira CEO Mike Ball, was only hired in January and has yet to restore sales growth that would make it more attractive to suitors and potentially boost its price.

Alcon had $9.8 billion in sales in 2015, or 20 percent of Novartis revenue, though that included ophthalmologic drugs that have since been moved into the pharma business.

UNWINDING

Vasella did not immediately respond to a request from Reuters for comment.

The unwinding of his legacy started with a 2014 deal in which Eli Lilly bought Novartis's animal health business and GlaxoSmithKline took over its vaccines business. GSK also took control of a joint venture with over-the-counter drugs. Chairman Jimenez said in October he was interested in "bolt-on" deals between $2 billion to slightly more than $5 billion.

Bloomberg reported on Monday that Novartis is in talks to buy privately owned U.S. generics maker Amneal. Novartis declined to comment, calling the report "rumors and speculations", but such an acquisition would fit with its new core business definition.

Novartis pharmaceuticals unit, which received GSK's cancer drugs in the 2014 swap, also this year underwent a separate reorganization, in part to direct its focus to oncology.

Jimenez has also said Novartis would unload the 13 billion Swiss franc ($13.18 billion) stake in rival Roche without a premium, a stake Vasella once amassed to pursue his unrealized dream of marrying the two companies. But a quick fix has proven elusive.

Christophe Eggmann, investment director for healthcare equities at GAM in Zurich, owns Roche but has avoided Novartis in his 200-million-franc fund, due to concerns that persistent problems will be tough to remedy.

Where once vaccines and over-the-counter drugs languished under Novartis control, Alcon-related headaches are being compounded by its Entresto heart failure drug's sluggish start.

Novartis has been forced to spend hundreds of millions to bolster Entresto marketing.

"There is not enough visibility," Eggmann said. "This is always the problem Novartis has faced in the past: One division does well, but the other doesn't."

Reinhardt left Novartis in 2010 for Germany's Bayer after Vasella picked Jimenez as chief executive, but he returned in 2013 to replace Vasella as chairman.

Among his challenges, Reinhardt must navigate a wave of patent expiries, including Novartis's top-selling blood cancer drug Gleevec that now faces increasing generic competition.

Novartis shares shed 16.5 percent this year, compared to Roche's 15 percent decline. The European health care index is down 13 percent.

(Additional reporting to Sophie Sassard, Editing by Angus MacSwan)