Novartis has announced its intention to separate its generic drugs division Sandoz into a standalone company by way of a 100% spin-off.
The Swiss pharma group said the move would create the ‘number one generics company in Europe and a global leader in biosimilars’, while also supporting Novartis’ strategy of building a focused innovative medicines company.
The spin-off is aimed at maximising shareholder value by allowing Novartis shareholders to ‘participate fully in the potential future upside of both Sandoz and Novartis Innovative Medicines,’ the company said.
“Both companies would be able to focus on maximising value creation for their shareholders by prioritising capital and resource allocation, employing separate capital structure policies, and increasing management focus on their respective business needs,” Vas Narasimhan, chief executive officer of Novartis, said.
Novartis also asserted that the move would enable enhanced focus and the ability for the two companies to pursue independent strategies, outlining that Sandoz would leverage its strong brand and sustain its leading global position by continuing to invest in the key strategic areas of biosimilars, antibiotics and generic medicines.
Meanwhile, Novartis will continue to expand its strong position in five core therapeutic areas – haematology, solid tumours, immunology, cardiovascular and neurosciences – and technology platforms.
The standalone Sandoz is expected to be headquartered in Switzerland and listed on the SIX Swiss Exchange, with an American Depositary Receipt (ADR) programme in the US. Richard Saynor would remain chief executive officer following the spin-off.
The completion of the proposed spin-off is expected to be ‘generally tax neutral’ for Novartis and expected to be completed in the second half of 2023, subject to market conditions, tax rulings and opinions, final board endorsement and shareholder approvals.
Commenting on the decision, Joerg Reinhardt, chair of the board of directors of Novartis, said: “Our strategic review examined all options for Sandoz and concluded that a 100% spin-off is in the best interest of shareholders. A spin-off 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.”