Novartis plans to spin off generics division Sandoz

Sandoz is the last remaining name of the pre-Novartis era. Novartis, founded in 1996, is the product of various mergers over its more than 100 year history. Keystone / Georgios Kefalas

Swiss pharma firm Novartis has said it plans to spin off its generics and biosimilars division Sandoz into a separate entity to allow both companies to pursue their own growth strategies.

The decision was in the best interest of shareholders, said Novartis CEO Vas Narasimhan in a media call on Thursday. 

Late last year the Basel-based company said it was conducting a strategic review of Sandoz and considering all options, including spinning off the company into a separate entity. Many analysts predicted an IPO was the most likely scenario. Sandoz reaped $9.8 billion (CHF9.4 billion) in worldwide sales last year, but it has seen revenue decline in its key market in the US. 

The split will create the largest European generics company and create a “more focused Novartis”, according to a press releaseExternal link.

In April Novartis announced a major restructuring to focus on “innovative medicines” – combining its pharmaceutical and oncology divisions. This led the company to shed 7% of its workforce globally. In Switzerland, it said it would cut 10% of its workforce, which means 1,400 jobs will disappear, many of which are in management positions. 

Since Narasimhan took over the CEO post in 2018, Novartis has been shedding parts of its business. It sold its consumer healthcare unit to GSK and spun off its eyecare division Alcon into a separate entity in 2019. 

Future of Sandoz

Sandoz will list on the SIX Swiss Exchange and will remain a Swiss company. However, the specific location of the company’s headquarters has not been determined. Current Sandoz CEO Richard Saynor will continue to lead the company. The board of directors of the future independent company will be formed shortly, Narasimhan added.

No further layoffs are expected at Sandoz as a result of the spin-off. On the contrary, said Narasimhan, “we are currently building up the necessary functions for an independent company”. Further details on the timeline for the spin-off have not been provided.

Novartis is one of the largest pharmaceutical companies in the world. Prior to the recent restructuring, it employed more than 100,000 people worldwide.

As a key maker of antibiotics and off-patent medicines, Sandoz has played a key role in Novartis’ approach to expanding access to medicines in low- and middle-income countries. In an emailed response to SWI, a Novartis company spokesperson said that Novartis remains committed to its global health programs and targets. “The plan is for Sandoz to continue to supply key products to Novartis for distribution in certain key Global Health markets, primarily in Sub-Saharan Africa,” wrote the spokesperson.