- The planned spin-off would allow Novartis shareholders to fully participate in the future potential of Sandoz and Novartis Innovative Medicines.
- Novartis’ new strategy is to create a number 1 European generics company and world leader in biosimilars.
- Sandoz is planned to be incorporated in Switzerland and listed on the SIX Swiss Exchange, with an American Depositary Receipt (ADR) program in the United States.
Through a statement Novartis announced its intention to spin off Sandoz’s business, its generics and biosimilars division, into a new independent publicly traded company, through a 100% spin-off. The goal is to maximize shareholder value by creating the number 1 European generics company and world leader in biosimilars.
For both business Innovative Medicines as for Sandoz, the spin-off would allow for greater focus and the ability to pursue independent growth strategies. Sandoz is expected to focus the next wave of growth based on the existing biosimilar portfolio of more than 15 molecules, a strong and experienced management team and organization.
Whereas now Novartis aims to become an innovative medicines company with a financial profile and return of capital more focused on its business characteristics.
The new Sandoz company would be headquartered in Switzerland and listed on the Six Swiss Exchange, with a American Depositary Receipt (ADR) in the United States.
“Our strategic review examined all options for Sandoz and concluded that a 100% spin-off is in the best interest of shareholders. A spin-off would allow our shareholders to benefit from the potential future successes of a more focused Novartis and an independent Sandoz, and would provide distinct and clear investment insights for the individual businesses. Sandoz would become the #1 publicly traded European generics company and world leader in biosimilars headquartered in Switzerland,” said Joerg Reinhardt, Chairman of the Board of Novartis.
Dr. Vas Narasimhan, CEO of Novartis, added that: “For Novartis, the separation from Sandoz will further support our strategy of building a focused innovative medicines company with depth in five core therapeutic areas and strength in technology platforms. Additionally, both companies could focus on maximizing value creation for their shareholders by prioritizing capital and resource allocation, employing separate capital structure policies, and increasing management’s focus on their respective business needs.”
Novartis: Innovative Medicines Company
For its part, Novartis will continue to expand its strong position in five main therapeutic areas (Hematology, Solid Tumors, Immunology, Neuroscience and Cardiovascular), its strength in technology platforms (Gene Therapy, Cell Therapy, Radioligand Therapy, Targeted Protein Degradation and xRNA ), and a balanced geographic footprint.
It will also continue to advance implementation of its new organizational structure announced in April 2022, integrating the Pharma and Oncology business units with separate US and International business organizations supported by a new Strategy and Growth function and, of Operations to increase focus, strengthen competitiveness and drive synergies.
Sandoz: European Generics Company number #1 and World Leader in Biosimilars
Sandoz generated sales of 9.6 billion dollars in the year 2021 and supplied medicines in more than 100 countries worldwide with a leadership position in Europe, as well as in the United States and the rest of the world. It has strong brand recognition and a global leadership position and plans to continue investing in its key strategic areas: Biosimilars, Antibiotics and Generic Medicines.
As an independent company, Sandoz will focus on its vision of providing patients with access to medicines by leveraging the strengths of the business and purpose-driven workforce. It will also execute a growth strategy based on using its resources efficiently and effectively, strengthening key platforms and delivering excellence in off-patent drug launches.
Following the proposed spin-off, Sandoz would aim for an investment grade credit rating, providing enough financial flexibility to meet its growth plans, invest in incremental growth opportunities, with a view to offering attractive dividends.
Additional transaction details
Completion of the proposed spin-off is subject to the fulfillment of certain conditions, including consultation with works councils and employee representatives (as necessary), general market conditions, receipt of favorable tax rulings and opinions, final endorsement by the Novartis AG Board of Directors and shareholder approval.
There can be no guarantee as to the final timing of the proposed transaction or that the transaction will be completed. More details of the proposed spin-off, including the proposed distribution ratio, detailed timeline and composition of Sandoz’s board of directors, will be provided at a later date.
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