Zurich (awp) – Novartis has made its decision on the future of Sandoz, having received no firm takeover offer for a subsidiary put on the balance last October. The generics and biosimilars unit will be fully autonomous during the second half of next year and listed on the Zurich market in particular.
Sandoz will therefore follow the path already traced by Novartis for its former ophthalmic subsidiary Alcon, introduced on the flagship index of the Zurich market in the spring of 2019. “It remains premature to speculate on an integration of Sandoz directly into the SMI”, warned in a teleconference statement from Novartis Chief Executive Officer (CEO), Vasant Narasimhan.
Sandoz had contributed last year to the turnover of the group to the tune of 9.63 billion dollars, out of a total of 51.63 billion. Alcon had generated 7.1 billion dollars in 2018, for its last year within the Novartis group.
The independence of Sandoz should give rise to a global giant and European number one in substitution drugs, with headquarters in Switzerland. The listing on SIX will be supplemented by a replica program (ADR) across the Atlantic, said a press release published on Thursday.
Management bodies in formation
On the organizational level, the maintenance of Richard Saynor at the head of Sandoz has already been decided and Novartis hopes to succeed in the coming months in finalizing the composition of the future general management as of the future board of directors.
The reorganization must initially be rather favorable to employment at Sandoz. “The company is in an investment phase for the constitution of its structure”, explained the big boss. “The evolution of the workforce will then depend on the future management”, continued Mr. Narasimhan.
The operation remains subject to formal validation by the Board of Directors and by the shareholders and must be the subject of further information in due course, in particular on the exact location of its future headquarters.
Novartis decided last October to examine all strategic options to maximize Sandoz shareholder value, at the end of yet another complicated quarter for substitute drugs in the United States. The group then undertook to make a decision before the end of the current year.
The current parent company, resized, will be able to focus on its core business in innovative drugs and on its efforts to break into the colossal pharmaceutical market in the United States. With this in mind, the management outlined plans in April for a vast restructuring project, including the elimination of some 8,000 jobs, including 1,400 in Switzerland, out of a total of 108,000 jobs.
Divorce of reason
Vontobel applauds a reasonable divorce. Its analyst Stefan Schneider underlines indeed an increasing complexity in the management of the two segments of activity during the last years.
The Cantonal Bank of Zurich (ZKB), for its part, has doubted for some time now the potential for added value for Novartis shareholders of an outsourcing of Sandoz, in one form or another.
However, analysts remain confident in the outlook for the stock price.
On the Swiss Stock Exchange, the registered Novartis withered by nearly 0.8% to 80.20 Swiss francs, the red lantern of an SMI up 0.46%.
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