Novartis has successfully completed the spinoff of its generics and biosimilars business, Sandoz. The shares of Sandoz began trading at 24 Swiss francs on the SIX Swiss Exchange following the completion of the spinoff. Novartis had announced its intention to spin off the business in August, offering stakeholders one Sandoz share for every five Novartis shares via a dividend-in-kind distribution.
The move is part of Novartis‘ strategy to focus on being a “pure play innovative medicines company.” This involves divesting non-core businesses and streamlining operations. The CEO of Novartis, Vas Narasimhan, emphasized the company’s efforts over the last six years to focus on innovative medicines, mentioning significant transactions, including the exit from consumer health and the spinoff of Alcon. Novartis shares rose more than 3% in early trade following the spinoff announcement. Sandoz, as an independent company, is starting from a position of strength, with consecutive quarters of sales growth.
Sandoz CEO Richard Saynor highlighted the spinoff’s benefits, stating that it allows the company to focus on growing its generics and biosimilars business. Sandoz aims to continue building on its sales momentum, expand profit margins, and drive free cash flows. Around half of Sandoz’s revenues come from Europe, providing a significant platform for growth.
The company has invested heavily in its biologics pipeline, with 25 projects, and plans to launch around five over the next two years. Sandoz expects approximately $3 billion in sales from its new pipeline, more than twice the previous five years, with half of the growth coming from North America. The spinoff marks a historic moment for both Novartis and Sandoz as they embark on independent journeys.
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