Sandoz spins out of Novartis as standalone generic drugmaker
04 Oct 2023
AcquisitionBiosimilar
After almost 140 years of reinvention, the Swiss company Sandoz is standing alone once again, this time as an independent generic drugmaker.
Novartis on Wednesday completed its spinoff of Sandoz, which began trading on the SIX Swiss Exchange under the symbol SDZ. Investors received one share of Sandoz for every five Novartis shares or one Sandoz American depositary receipt for every five held in Novartis at the end of the business day Tuesday.
SandozSandoz immediately becomes one of the largest standalone generic drugmakers in the world, competing with the likes of Teva Pharmaceutical and Viatris. Last year, SandozSandoz brought in more than $9 billion in revenue, with about one-fifth coming from biosimilars, or copycat versions of biologic drugs.
For Novartis, the spinoff marks the final step in a years-long transformation from a sprawling conglomerate to a company focused on high-margin pharmaceuticals. On Wednesday, Novartis reiterated its guidance for sales growth in the high single digits for 2023 and a percentage increase in core operating income as high as the mid-teens.
CEO Vas Narasimhan has overseen a transformation that included more than $100 billion in transactions over the last several years. In March 2018, Novartis agreed to sell its consumer business to GlaxoSmithKline for $13 billion. Soon after, the Swiss drugmaker announced plans to spin out its Alcon eye business.
The company brought in almost $21 billion in cash in 2021 by selling its stake in Roche back to its rival and then undertook a number of moves to restructure its business. In 2022, three top Novartis executives departed as the company reshuffled its business units. A year later, Novartis trimmed 10% of its drug pipeline and then sold off more eye-care assets to Bausch + Lomb.
On the other side of the business development ledger, Novartis has brought in new prescription medicines via acquisitions of companies like Endocyte, The Medicines Company and Chinook Therapeutics.
The company’s transformation matches a broader trend in the pharmaceutical business, as companies including Johnson & Johnson, Pfizer and Merck & Co. have slimmed down their businesses. Novartis says the switch will allow it to offer investors sustained sales and profit growth and continued growth in dividends.
Sandoz began in 1886 as a small chemical company focused on dye production that operated under the name Kern & Sandoz in Basel, Switzerland. As it moved into pharmaceuticals, Sandoz notched milestones including the first oral penicillin in 1951 and the introduction of the first recombinant interferon-alfa in 1980.
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