Novartis to Make Sandoz a Stand-alone Company

Novartis announced early today that it plans to spin off Sandoz, its generics and biosimilars division, into a new publicly traded, standalone company.

In a statement, Novartis said the plan seeks “to maximize shareholder value by creating the number one European generics company and a global leader in biosimilars, allowing Novartis shareholders to participate fully in the potential future upside,” for both Sandoz and Novartis Innovative Medicines.

Sandoz will be incorporated in Switzerland and listed in Swiss Exchange, SIX, with an American Depositary Receipt (ADR) program in the United States, the statement said. Novartis officials said they expect the plan to be tax neutral; while subject to market conditions, tax rulings, and shareholder approvals, it is expected to be complete in the second half of 2023.

As a standalone company, Sandoz will be able to focus its existing biosimilars pipeline of more than molecules. In the statement, Novartis said it aims to become “a focused innovative medicines company with a stronger financial profile and improved return on capital.”

“Our strategic review examined all options for Sandoz and concluded that a 100% spinoff is in the best interest of shareholders,” said Joerg Reinhardt, Chair of the Board of Directors of Novartis, in the statement. “A spinoff would allow our shareholders to benefit from the potential future successes of a more focused Novartis and a standalone Sandoz, and would offer differentiated and clear investment theses for the individual businesses.”

Vas Narasimhan MD, CEO of Novartis, said, “For Novartis, the separation of Sandoz would further support our strategy of building a focused innovative medicines company, with depth in 5 core therapeutic areas, and strength in technology platforms.

In addition, both companies would be able to focus on maximizing value creation for their shareholders by prioritizing capital and resource allocation, employing separate capital structure policies, and increasing management focus on their respective business needs.”

The 5 core therapeutic areas are hematology, solid tumors, immunology, neuroscience, and cardiosvascular medicine.

According to Novartis, Sandoz generated $9.6 billion in 2021 and served more than 100 markets globally, with a strong presence in Europe as well as in the United States. Sandoz plans to continue investment in the key biosimilars, antibiotics and generic medicines.