Novartis cites strong sales growth for $15B Sandoz spin-off as board vote unanimously for separation

By Liza Laws

- Last updated on GMT

© Getty Images
© Getty Images

Related tags spin-off Novartis Sandoz Gene therapy Cell therapy Biosimilars

Novartis’ board of directors has unanimously agreed to separate Sandoz as a 100 per cent spin-off with a $15 billion share buyback.

The Swiss pharma giant has announced, almost exactly a year after​ the plans were mooted, that Sandoz will now become an independent company.

Novartis made a proposal to shareholders on Friday (August 18) of one Sandoz share to every five Novartis shares and said it planned to spin-off the generic medicines division on or around October 4.

The company said in a statement: “If Novartis shareholders approve the proposed special distribution at an extraordinary general meeting (EGM), the spin-off will be implemented through the distribution of a dividend-in-kind of Sandoz shares to Novartis shareholders, and of Sandoz ADRs (American Depositary Receipts) to Novartis ADR holders.”

Proposed spin-off vote

The Swiss drugmaker invited shareholders to an extraordinary general meeting on September 15. At the meeting, they will be invited to vote on the proposed spin-off and a related reduction of the share capital of Novartis AG at the EGM. The invitation, a shareholder brochure and listing prospectus, which will be published by Sandoz, are planned to be distributed (this month) August 2023.

Sandoz​, a leader in generic pharmaceuticals and biosimilars, is planned to be listed on the SIX Swiss Exchange, with an American Depositary Receipt (ADR) program in the US.

In addition to Novartis shareholder approval, completion of the proposed Sandoz spin-off is subject to satisfaction of certain conditions, including obtaining the necessary approvals for the listing of the Sandoz shares, no order prohibiting (and no other event outside the control of Novartis preventing) the spin-off and no material adverse change.

Vas Narasimhan, CEO of Novartis, said: “Novartis delivers another strong quarter of sales growth and robust margin expansion, supporting an upgrade to Group guidance for 2023. The performance was broad-based across core therapeutic areas and key geographies.

“Our growth drivers and rich pipeline continue to provide confidence in our mid-term growth outlook, highlighted by upcoming milestones for Kisqali, Pluvicto and iptacopan. Novartis robust balance sheet and expected future growth allow us to initiate an up-to USD 15 billion share buyback while maintaining the flexibility for continued strategic bolt-on acquisitions.”

Novartis unveiled a new focused strategy in 2022, that announced it is transforming into a “pure-play” innovative medicines business.

High disease burden

Novartis focuses on five core therapeutic areas -cardiovascular, immunology, neuroscience, solid tumors and hematology - with multiple significant in-market and pipeline assets in each of these areas, which it says address high disease burden and have substantial growth potential.

As well as its two established technology platforms in chemistry and biotherapeutics, Novartis says there are three emerging platforms for gene and cell therapy, radioligand therapy, and xRNA which are being prioritized for continued investment into new research and development (R&D) capabilities and manufacturing scale. Geographically, the company says it is focused on growing in its priority geographies - the US, China, Germany and Japan.

The company wants to accelerate growth, deliver returns and strengthen its foundations.

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