Sandoz separates from Novartis, valued at just over $11bn

Sandoz completed its long-heralded separation from Novartis on schedule this morning, with its shares trading at CHF 24 on the SIX Swiss Exchange.

That valued the newly independent company at CHF 10.3 billion (around $11.2 billion), which was a little lower than had been predicted by analysts ahead of the split.

The stock – which is the biggest entrant into the SIX since Novartis’ earlier spin-off of eyecare unit Alcon in 2019 – made its debut at CHF 24 and yo-yoed before settling at around CHF 23.90 at the time of writing.

The company is listed in the Swiss Performance Index (SPI) and the Swiss Leader Index (SLI), and will also be traded on the OTCQX exchange in the US via an American Depositary Receipts (ADR) programme.

Novartis said the separation will allow its shareholders to benefit from “capital and management attention fully focused on innovative medicines”, while Sandoz said it is well placed for “continued profitable growth as a standalone global leader and European champion in generic and biosimilar medicines.”

Sandoz made sales of $4.8 billion in the first half of the year, up 8% at constant currencies, with operating profit up 3% to $1 billion, and the company’s management has told investors it expects to add $3 billion in annual sales from the launch of new products after the separation, mostly from biosimilars and complex generics.

Chief executive Richard Saynor said: “As an independent company, Sandoz will be fully enabled to deliver on its purpose-driven strategy, which targets sustainable leadership in the growing and critical generics and biosimilars industry. We intend to make an even greater impact going forward.”

He added that Sandoz products help to generate $17 billion in annual savings on healthcare spending in the US and Europe alone, with 500 million patients across more than 100 countries treated with Sandoz drugs.

Generics and biosimilars account for an estimated 80% of medicines used worldwide by volume, at about 25% of the total cost, according to the company.

Once a staunch devotee of the diversified life sciences business model, Novartis has been steadily trimming down its focus in recent years, cashing in non-core business to generate billions of dollars and reinvesting the proceeds in its pharma R&D pipeline in line with a general trend towards slimming down across pharma.

It exited a consumer healthcare joint venture with GSK in 2018, sold off its $21 billion stake in Roche in 2021, and within the last decade also sold off its vaccines division to GSK, its animal health unit to Eli Lilly, and a blood diagnostics business to Grifols.