Novartis unit to buy generic drug maker

Novartis business unit Sandoz wants to expand its North American sales Keystone

Sandoz, a Novartis-owned maker of generic drugs, has moved to buy Canada’s Sabex for $565 million (SFr699 million).

The Vienna-based company said the purchase would help boost its position in the North American market for off-patent drugs.

Sandoz said brand-name medicines with sales of up to $14 billion in the United States are set to lose patent protection between 2003 and 2010.

Sabex, which is based in Quebec, is Canada’s sixth-largest maker of what are known as “injectable generics”.

Sandoz is the world’s second-largest maker of generic drugs.

“The deal gives Sandoz a new operational presence in Canada,” Christian Seiwald, the firm’s chief executive, said in a statement.

Too expensive

Analysts expressed support for the move but questioned the price, which is equal to 6.3 times last year’s sales of almost $90 million.

Patrick Burgermeister, a Zurich Cantonal Bank analyst, said it looked “expensive”.

But Eric Bernhardt, a fund manager at Clariden Bank, put a more positive spin on the deal.

“Injectable generics is going to be big business, so looking at the big picture this is a good acquisition,” he said.

The move is part of a general strategy by Novartis to build a strong generic drugs business.

Unlike many of the world’s biggest pharmaceutical firms, Novartis has built Sandoz to tackle big-name rivals by producing cheaper versions of well-known drugs.

The world’s largest market for generic drugs is in the US, where many so-called blockbuster drugs are due to come off patent.

The Sabex deal is due to be completed next month, subject to US and Canadian regulatory approval.

swissinfo with agencies