Worth eleven billion francs
Novartis subsidiary Sandoz begins stock market career
October 4, 2023, 2:02 p.m
The Swiss pharmaceutical giant Novartis is restructuring and will focus on patent-protected drugs in the future. To do this, he is taking the generics subsidiary Sandoz public. This is the group’s second spin-off.
The Swiss generics manufacturer Sandoz started trading on the stock exchange with an enterprise value of eleven billion dollars. The shares of the company, which was spun off from the pharmaceutical company Novartis, opened on the Swiss SIX stock exchange at a price of 24 francs, but then fell to just under 23 francs. The world’s largest provider of drugs with expired patent protection in terms of gross sales is the largest new addition to the trading floor in Zurich since 2019: At that time, the Swiss-American ophthalmology group Alcon, which was also spun off from Novartis, made its debut at $28 billion.
Unlike Alcon, Sandoz is not immediately included in the Swiss standard value index SMI. SIX initially lists the group in the SMIM index of medium-sized companies. With the spin-off of the comparatively low-margin business with generics and biosimilars, announced more than a year ago, Novartis is taking the last step in a restructuring that has lasted almost ten years and is intended to focus the company entirely on the lucrative business with patent-protected drugs. The drugmaker reiterated its annual forecast following its spin-off from Sandoz. Novatis shares gained 2.6 percent.
Hoping for another IPO in the fall
The stock market value is at the lower end of the range estimated by analysts. Sandoz is also one of the biggest stock market debuts in Europe this year. The largest new addition to the Frankfurt Stock Exchange, the pharmaceutical packaging company Schott Pharma, brings in $4.7 billion. Globally, the British chip designer Arm is in the lead among the newcomers to the stock market, very clearly with almost 53 billion dollars.
However, Sandoz is not a classic initial public offering (IPO) in which fresh capital is raised. Instead, the Sandoz shares were simply booked into the portfolio of Novartis investors. As part of the spin-off, they received one Sandoz share for every five Novartis shares. The value investors attribute to the company was only decided today when trading started on SIX.
Experts hope that the previously subdued IPO year 2023 will gain momentum in the fall. Investors have regained confidence, not least thanks to the declining volatility on the stock markets, recovered valuation levels and the looming end of the interest rate hike cycle in the USA, the European Union (EU) and Switzerland. “The successful IPOs from Arm, Nucera and Schott are a catalyst and fuel for more IPO activity in the fourth quarter,” explained Tobias Meyer, head of transaction accounting and IPO services at the consulting firm EY in Switzerland.
There has been no IPO in the classic sense on the Zurich stock exchange this year. However, six Chinese companies listed Global Depository Receipts (GDR) in Switzerland as part of a secondary listing. The skin care company Galderma and the charging station business of the electrical engineering group ABB are considered IPO candidates.