Novartis to spin off generics biz sandoz

Novartis plans to spin off its generics unit Sandoz to sharpen its focus on its patented prescription medicines, the Swiss group said on Thursday, acknowledging it had not received any formal offers for the business to date.

The company started a strategic review of Sandoz last October - examining a range of options, including retaining the business, spinning it off or selling it - following a protracted period of underperformance driven largely by mounting pricing pressures in the off-patent drug sector.The company started a strategic review of Sandoz last October - examining a range of options, including retaining the business, spinning it off or selling it - following a protracted period of underperformance driven largely by mounting pricing pressures in the off-patent drug sector.

Novartis has not received any formal binding offers for Sandoz so far - but if any "highly attractive" bids did emerge Novartis would fully consider them, CEO Vas Narasimhan told a media briefing on Thursday.


However, "the most likely case - in all scenarios - is that we will see through a spin," he said.

Although Novartis had reportedly received interest from private equity buyers, the spin-off announcement will not come as a surprise, given it was seen as a likely outcome due to poor market conditions and the struggling broader market for generics, analysts said.

Novartis shares already appropriately reflect the valuation of the two businesses, added J.P. Morgan analysts in a note.