Novartis is considering spinning off Sandoz’s generic drug division.


Novartis is considering spinning off Sandoz’s generic drug division.

Novartis, the Swiss pharmaceutical giant, announced Tuesday that it is considering all alternatives for the future of its generic drug division Sandoz, including spinning it off.

Novartis has “commenced a strategic evaluation of the Sandoz Division,” according to the company, which floated its ophthalmology division Alcon independently on the public exchange in 2019.

“The assessment will consider all possibilities, including keeping the firm or splitting up,” it stated in a statement announcing its third-quarter results.

The investigation was “started to maximize shareholder value, with a separation likely widely viewed as the outcome,” according to CEO Vas Narasimhan.

Sandoz has faced intense competition in the United States, where it creates cheaper versions of medications after patents have expired.

The division’s sales fell 1% to $2.4 billion from July to September, compared to the same time previous year, according to the business.

Meanwhile, Sandoz’s sales in the United States dropped by 20%.

In a conference call with journalists, Narasimhan said, “This is the appropriate time… to evaluate its strategic fit within the company and look at all the possibilities that we have.”

Alfred Kern and Edouard Sandoz created Sandoz in 1886, initially creating tinctures before going on to invent various medicines, including LSD.

It merged with Ciba-Geigy in 1996 to form Novartis, which became one of Switzerland’s largest pharmaceutical corporations.

While Sandoz was founded with the intention of creating innovative medications, “over time, we built up a generic unit through acquisitions, and that generic unit was given the name Sandoz,” according to Narasimhan.

In early afternoon trade on Tuesday, Novartis shares were up 1.5 percent.

Sandoz’s strategic review, according to Vontebel analyst Stefan Schneider, was “not unexpected.”

A separation between Novartis and Sandoz was widely considered as the most likely conclusion, according to Jefferies analysts.

Novartis reported a 6% increase in third-quarter sales to $13 billion and a 41% increase in bottom-line net profit to $2.758 billion for the firm as a whole.

Novartis’ innovative medicines sector saw sales increase 8% to $10.6 billion, just beating the $10.5 billion anticipated by Swiss financial news agency AWP.

The Swiss pharmaceutical company kept its prediction for 2021 unchanged, predicting sales growth in the low single digits.


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