SWITZERLAND — Novartis, a leading pharmaceutical company based in Basel, Switzerland, has announced the intended board members for Sandoz, its generics business set to be spun off to shareholders later this year.
The recommendations of Sandoz Chairman-designate Gilbert Ghostine have been approved, paving the way for the 10-member board to commence preparatory work in June.
Among the notable additions to the board are Francois-Xavier Roger, the current CFO of Nestle, Urs Riedener, former CEO of dairy group Emmi, and Shamiram Feinglass, who brings her expertise as Chief Medical Officer for Life Sciences at medical technology company Danaher.
The board will also feature Karen Huebscher, a former Novartis executive, Aarti Shah from Eli Lilly, and Remco Steenburgen, the CFO of Deutsche Lufthansa.
Maria Varsellona, Chief Legal Officer of Unilever, and Yannis Skoufalos, a former executive at Procter & Gamble, complete the nominations.
Novartis confirmed that the Sandoz Board of Directors will begin its preparatory work in June, with the official transition taking effect following the planned spin-off of Sandoz in the second half of 2023, subject to approval from the Novartis Board of Directors and shareholders.
The spin-off of Sandoz is a crucial element of Novartis’s strategic plan to prioritize its core pharmaceuticals business.
By streamlining its focus, Novartis aims to allocate resources more efficiently, enabling greater investment in research and development to bring innovative medicines to patients.
This spin-off will create a more focused and competitive Novartis, enhancing its ability to cater to the evolving healthcare landscape and generate long-term value for its shareholders.
The anticipated market capitalization of the newly formed Sandoz company is estimated to reach approximately US$20 billion, reflecting its strong presence as a global generics company operating across 150 countries.
Importantly, the spin-off is expected to be tax-free for Novartis shareholders, further bolstering its attractiveness as an opportunity for investors.
The spin-off of Sandoz from Novartis offers strategic benefits by allowing Novartis to focus on its core pharmaceuticals business, driving innovation and meeting evolving patient needs.
This enhances Novartis’s competitiveness, enabling agility in response to market dynamics and staying at the forefront of medical advancements.
Additionally, the spin-off creates long-term shareholder value through two separate entities with dedicated strategic focus, offering targeted investment opportunities and maximizing returns for investors.
Splitting Sandoz would mark the end of an era at Novartis. The Swiss pharma giant was created in 1996 through the merger between Ciba-Geigy and Sandoz.
Big Pharma companies have increasingly embraced spinoffs as a strategic approach in recent years. This strategy involves divesting businesses that are not aligned with their core focus and instead focusing on higher-margin drugs and therapeutic advancements.
Novartis set the trend by spinning off its eye-care unit, Alcon, back in 2019. This move allowed Novartis to concentrate its resources and efforts on its core pharmaceutical business, while Alcon could operate independently and pursue opportunities specific to the eye-care market.
Following Novartis’ lead, Merck & Co. implemented a similar spinoff strategy in 2021. The company separated its biosimilar business, as well as segments dedicated to women’s health and established medicines, into a newly established entity called Organon.
GSK recently completed the demerger of its consumer health joint venture with Pfizer, resulting in the establishment of a separate, independently listed firm called Haleon.
In line with this trend, Johnson & Johnson, a renowned healthcare conglomerate, is also preparing to spin off its consumer health unit, to be named Kenvue.
These spinoff strategies pursued by Big Pharma companies highlight their recognition of the importance of concentrating on core competencies and high-margin drugs to drive sustained growth and profitability.
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