- The Swiss drugmaker announced in August its intention to spin off the Sandoz business and offer shareholders one Sandoz share for every five Novartis shares through a non-cash dividend.
Novartis announced in August that it planned to spin off its Sandoz generics division to focus more on its patented prescription drugs.
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Novartis on Wednesday completed the spin-off of its generics and biosimilars business Sandoz, with shares trading at 24 Swiss francs in the first minutes of the company’s debut on the SIX Swiss Exchange.
The Swiss drugmaker initially announced in August its intention to spin off the company and offer shareholders one Sandoz share for every five Novartis shares as part of a dividend in kind distribution.
Narasimhan told CNBC that over the past six years, the company has accelerated its efforts to “focus Novartis as a pure-play innovative drug company.”
Pure-play companies refer to companies that target a single product or industry.
“Over the last six years, we have completed over $100 billion in transactions. We exited the consumer health space to create one of the largest consumer health companies, we exited Alcon in the largest public launch in the European capital markets, we exited our Roche stake,” Narasimhan told Julianna Tatelbaum from CNBC.
“Now we’re shooting [off] Sandoz, and what’s left now, is really, in my opinion, where Novartis is best suited to succeed in the long term – a pure innovative drug company focused on research and development efforts and the new drugs that we to bring to markets around the world.”
Novartis shares rose more than 3% in early trading in Zurich to lead the pan-European Stoxx 600 index.
Novartis also reiterated its full-year guidance, with revenue expected to grow in the high single-digit percentage range and core operating income growth in the low double-digit to mid-teens range.
In a statement alongside Wednesday’s announcement, Narasimhan said this was a “truly historic moment for Novartis and Sandoz” as they begin life as independent companies.
“With consecutive quarters of revenue growth, Sandoz starts from a strong position as a global leader in generics and biosimilars, and I am confident that the company is poised to increase its impact on patients and society,” he added.
Jefferies analysts valued Sandoz’s listing at $12.3 billion to $16.2 billion at the start of trading on Wednesday.
Sandoz CEO Richard Saynor also told CNBC on Wednesday that the spinoff would help his company focus its own strategy, which includes a pipeline of 25 biologics projects, with five more launching in the next two years should.
“Ultimately it comes down to concentration. Sandoz is the world’s largest generics and biosimilars company, and now that we are becoming an independent company, we can focus on how we grow this business, how we offer more products to patients and really expand it further.” “The momentum, that we have created over the last few years,” Saynor told CNBC on Wednesday.
Saynor said the company’s overall goals are to continue to build on the revenue momentum of the past seven quarters, increase profit margin over the next few years and increase free cash flow.
Around half of Sandoz’s sales come from Europe, which Saynor says offers the company a “huge growth platform.”
“We have invested heavily in our biologics pipeline, so as we sit here today we have 25 projects in our pipeline and will bring about five to market in the next two years,” Saynor said.
“We led [that] Approximately $3 billion in revenue will come from our new pipeline, more than double what we have seen in the last five years, and we expect half to come from biosimilars and half of the overall growth “We will now see the US business gain momentum in the next few years.”