Novartis is set to spin-off Sandoz

Home/Pharma News | Posted 16/09/2022 post-comment0 Post your comment

Big pharma company Novartis announced on 25 August 2022 that it will spin off its generics and biosimilars arm, Sandoz.

Guidance V13F21

Rumours about a potential spin-off started to circulate in 2021 [1] when Novartis announced a strategic review of Sandoz. This came after the Sandoz generic drug unit saw its global sales fall 4% to US$7.11 billion in the first nine months of 2021, making it down 17% in the US [2]. It has now been announced that the results of the review suggest that a complete split will be most beneficial to shareholders.

Vas Narasimhan, Chief Executive Officer of Novartis, said that in doing this, ‘Both companies would be able to focus on maximizing value creation for their shareholders by prioritizing capital and resource allocation, employing separate capital structure policies, and increasing management focus on their respective business needs’.

The Swiss company also noted that the separation will allow the two companies to pursue independent strategies. As the largest generics and biosimilars company in Europe by sales and the fourth largest in the US, Sandoz will now focus on leveraging its strong brand and sustain its leading global position as a key player in the biosimilars, antibiotics and generic medicines arena. Novartis will continue to expand its strong position in its five core therapeutic areas of haematology, solid tumours, immunology, cardiovascular and neurosciences, as well as in technology platforms.

The standalone Sandoz would be headquartered in Switzerland.

In creating this spin-off, Novartis is following other big pharma companies that have already separated from their generics and biosimilars arms, such as Merck and Organon [1, 3]. The Novartis–Sandoz split is expected to be finalized in late 2023.

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References
1. GaBI Online - Generics and Biosimilars Initiative. Spinoff updates Merck’s Organon and Novartis Sandoz [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Sep 16]. Available from: www.gabionline.net/pharma-news/spinoff-updates-merck-s-organon-and-novartis-sandoz
2. GaBI Online - Generics and Biosimilars Initiative. Swiss Social democrats for nationalization of Sandoz [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Sep 16]. Available from: www.gabionline.net/pharma-news/swiss-social-democrat-s-for-nationalization-of-sandoz
3. GaBI Online - Generics and Biosimilars Initiative. Organon launches as new global women's health company and appoints leaders in Latin America [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Sep 16]. Available from: www.gabionline.net/pharma-news/organon-launches-as-new-global-women-s-health-company-and-appoints-leaders-in-latin-america

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Source: Novartis, Sandoz

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