Aug 25, 2022 - Economy

Novartis to spin off Sandoz generics business

Illustration of many pills and coins falling

Illustration: Annelise Capossela/Axios

Novartis on Thursday announced plans to spin off its Sandoz generic drugs unit into a standalone company whose shares would trade in both Switzerland and the U.S.

Why it matters: This would create Europe's largest generics company by sales, and comes just a few years after Novartis spun off its Alcon eye care business (now valued at over $34 billion).

Backstory: Novartis last November said it was seeking strategic alternatives for Sandoz, which could have included a sale. Blackstone and Carlyle reportedly mulled a $25 billion offer, while other reported suitors included Advent International, KKR and Hellman & Friedman.

  • Bloomberg reports that the LBO financing environment proved too challenging, but that the Swiss drugmaker would still "consider an attractive offer."
  • Novartis says that it never received any formal takeover bids.

The big picture, per The Wall Street Journal: "In response to greater competition, Novartis has pivoted Sandoz toward higher-value generics, such as biosimilars, which are near-replicas of biologic drugs made using living cells. The unit, which has accounted at times for around a fifth of total sales for Novartis, has in the past proven a drag on the company’s growth."

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