Novartis’ CEO puts Sandoz’s future in question, post its 18-month revamp period

By PharmaCompass

2019-02-07

Impressions: 150 Article

Swiss drug major Novartis AG has put a question mark on its generic unit Sandoz, post a revamp which is due to take 18 months. Novartis CEO Vas Narasimhan said he will be ready to discuss the future of generics unit Sandoz, post the revamp. However, he still called the business “an integral part” of Novartis.

“We consider Sandoz an integral part of Novartis, we’re focused on transforming the business, making it an autonomous entity over the next 18 months that is able to compete as an independent unit within Novartis,” Narasimhan said on a call with analysts last week.

“After we complete all that, then I think we can have further conversations about where we want to head from there.” In November, Novartis had said it was “completely committed” to the US$ 10 billion-per-year generics business.

According to Narasimhan, 2018 was a transformative year in manufacturing for Novartis, as it closed or sold eight facilities and restructured eight others to be more efficient. Overall it cut nearly 2,000 jobs.

During its fourth-quarter earnings call, Narasimhan dodged questions about whether Sandoz is being prepped for a sale or spinoff. He said the plan is to position it to grow sustainably in the medium to long term, which includes making its manufacturing more cost effective.

That will be accomplished, Narasimhan said, by following the current path of focusing on biosimilars and complex, hard-to-manufacture generics and shedding low-margin stock keeping units, which may lead to more manufacturing consolidation. Finally, he said Sandoz will be exiting more geographic areas with product and plant sales like it did with Aurobindo last year (wherein the Indian drug company agreed to pay US$ 1 billion for 300 low-margin generics sold in the US and also took on several manufacturing plants in the country).

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