SWITZERLAND —Novartis, the parent company of Sandoz, has successfully completed the spinoff of Sandoz, marking a pivotal moment in the pharmaceutical industry.
Sandoz’s trading debut on the SIX Swiss Exchange under the symbol SDZ signifies a strategic move that has reshaped the landscape.
Investors were at the heart of this transformation, receiving one share of Sandoz for every five Novartis shares they held or one Sandoz American depositary receipt for every five in their Novartis holdings, as of the close of business on Tuesday.
With this spinoff, Sandoz instantly claims its position as one of the largest standalone generic drug manufacturers globally, competing head-to-head with industry giants like Teva Pharmaceutical and Viatris.
Impressively, Sandoz reported revenue exceeding US$9 billion last year, with a notable portion—about one-fifth—coming from biosimilars, which are essentially copycat versions of biologic drugs.
For Novartis, this move marks the culmination of a multi-year transformation journey, evolving from a sprawling conglomerate into a company with a keen focus on high-margin pharmaceuticals.
The company remains steadfast in its guidance for 2023, projecting sales growth in the high single digits and a percentage increase in core operating income reaching as high as the mid-teens.
This transformation has been under the visionary leadership of CEO Vas Narasimhan, who orchestrated a series of transactions exceeding US$100 billion in recent years.
The journey began in March 2018 when Novartis divested its consumer business, raking in US$13 billion from GlaxoSmithKline. Subsequently, the Swiss pharmaceutical powerhouse announced its intention to spin off its Alcon eye business.
In 2021, Novartis further bolstered its financial position by selling its stake in Roche back to its competitor, amassing almost US$21 billion in cash.
The company embarked on a series of strategic moves, restructuring its business units and witnessing the departure of three high-ranking executives in 2022.
In a subsequent move, Novartis streamlined its drug pipeline by 10% and divested additional eye-care assets to Bausch + Lomb.
Simultaneously, on the business development front, Novartis expanded its portfolio with acquisitions of companies such as Endocyte, The Medicines Company, and Chinook Therapeutics.
Novartis’s transformation aligns with a broader trend in the pharmaceutical industry, as companies like Johnson & Johnson, Pfizer, and Merck & Co. have pursued strategies to streamline their operations.
Novartis believes that this shift will enable it to offer investors sustained sales and profit growth, along with ongoing dividend growth.
The story of Sandoz dates back to its humble beginnings in 1886 when it operated as Kern & Sandoz, a small chemical company focused on dye production in Basel, Switzerland.
Evolving into the pharmaceutical sector, Sandoz achieved significant milestones, including the development of the first oral penicillin in 1951 and the introduction of the first recombinant interferon-alfa in 1980.
In 1996, Sandoz merged with Ciba-Geigy to create Novartis, momentarily sidelining the Sandoz brand.
However, in 2003, Novartis resurrected the Sandoz name, organizing its generic drug business under this banner. Notably, in 2006, Sandoz achieved another milestone with the introduction of the first biosimilar.
Sandoz’s journey, from its inception in the dye business to its present status as a leading independent generic pharmaceutical giant, reflects a legacy of innovation and adaptability in the ever-evolving landscape of the pharmaceutical industry.
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