Novartis, one of the leading pharmaceutical companies, announced in August its plans to spin off its generics unit Sandoz. This strategic move aims to sharpen Novartis’ focus on its patented prescription medicines and enhance its position as a pure play innovative medicines company. The spinoff of Sandoz was completed on Wednesday, with its shares debuting at 24 Swiss francs during early trading on the SIX Swiss Exchange.
In August, Novartis announced that it would offer stakeholders one Sandoz share for every five Novartis shares via a dividend-in-kind distribution. This allows Novartis to allocate its resources to its core business of innovative medicines.
During an interview with CNBC, Novartis CEO Vas Narasimhan emphasized the company’s efforts to focus on its core business over the past six years. Narasimhan mentioned key strategic moves such as exiting consumer health, Alcon, and its Roche stake, which have helped Novartis become a more focused player in the pharmaceutical industry.
Novartis shares experienced a surge of over 3% in early trade, leading the pan-European Stoxx 600 index.
Novartis reiterates its full-year guidance, expecting sales to grow by a high single-digit percentage. Core operating income is also set to grow in the low double digits to mid-teens. Novartis CEO Narasimhan expressed excitement about this historic moment for Novartis and Sandoz as they begin their journey as independent companies. He believes that Sandoz, with its strong sales growth and global leadership in generics and biosimilars, is well-positioned to make a significant impact on patients and society. Analysts from Jefferies have valued the Sandoz listing at between $12.3 billion and $16.2 billion.
Sandoz CEO Richard Saynor highlighted the benefits of the spinoff, stating that it allows Sandoz to focus on its own strategies and growth opportunities. Sandoz has an extensive pipeline of 25 biologics projects, with five more set to launch in the next two years. Saynor emphasized the importance of focus in driving the company’s growth and delivering more products to patients. With Europe as its primary market, Sandoz aims to expand its profit margin, generate free cash flows, and accelerate its business in North America.
Saynor expressed his optimism about Sandoz’s future, stating that their aim is to continue building on their sales momentum and expanding their profit margin. With a strong focus on their biologics pipeline, Sandoz expects around $3 billion of sales to come from new projects. This represents more than double the sales generated in the previous five years. The company also expects half of its growth to come from biosimilars and anticipates an acceleration of its business in North America.
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