Novartis 'completely committed' to Sandoz, has no split-off plan

[November 15, 2018]  By John Miller

ZURICH (Reuters) - Swiss drugmaker Novartis is "completely committed" to its $10 billion-per-year Sandoz generics business, a spokesman said on Thursday, after a newspaper reported Chief Executive Vas Narasimhan planned to split the unit off.

"We're completely committed to the Sandoz business, and we're looking at transforming it and making it as strong as it can be in the global generics business," Novartis spokesman Sreejit Mohan told Reuters.

Earlier, Swiss newspaper Tages-Anzeiger reported the Basel-based drugmaker was preparing to split off Sandoz, citing an employee representative as well as participants in a Novartis investor event last week in London.

According to the newspaper, Narasimhan outlined plans for the generics business to become an independent unit for which Novartis was reviewing "all strategic options".

Mohan said that Sandoz will be given more autonomy to navigate the dynamic generics environment, where the company has been under price pressure and in September sold its U.S. pills business to Indian's Aurobindo.
 

Still, keeping Sandoz as a pillar of Novartis remains "the fundamental focus right now", he said.

"The whole goal is to try to make Sandoz as agile as possible, to compete in that environment, to give it the autonomy to be as agile as possible," Mohan added.

"That's essentially been the message that we've been delivering, so I have no idea how that led to saying 'split off.'"

Sandoz has faced headwinds beyond U.S. pricing pressure.

Earlier this month, for instance, Sandoz abandoned its pursuit of U.S. regulatory approval for a copy of Roche's $7 billion-per-year blockbuster rituximab, a medication used to treat cancer and rheumatoid arthritis.

Novartis concluded others would be first to market in the United States before it could generate data required by the U.S. Food and Drug Administration.

Even so, Novartis has said it remains committed to Sandoz's biosimilars portfolio -- near copies of biological medicines from rivals that have lost patent protection -- that it hopes will eventually boost the division's margins.

"When you think about how we're going to drive Sandoz moving forward, a lot of it is about executing a strategy of transformation and shifting the focus to complex generics and biosimilars," Narasimhan told analysts last month after releasing third-quarter earnings.

"I think Sandoz is on the right track," he said. "Challenging environment, but I think we're taking the steps necessary to put the division in a place where it can succeed."

Novartis is spinning off its Alcon eyecare unit, with a plan to give the division to shareholders in the first half of 2019.

(Reporting by John Miller; Editing by Adrian Croft)

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