Novartis said in August that it plans to spin off its generics unit Sandoz to sharpen its deal with its patented prescription medicines.
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Novartis on Wednesday accomplished the spinoff of its generics and biosimilars business Sandoz, whose shares began trading at 24 Swiss francs within the early minutes of the corporate’s debut on the SIX Swiss Exchange.
The Swiss drugmaker initially announced intentions to spin off the business in August, offering stakeholders one Sandoz share for each five Novartis shares via a dividend-in-kind distribution.
Narasimhan told CNBC that the corporate had accelerated its efforts over the past six years to “focus Novartis as a pure play modern medicines company.”
Pure play corporations consult with entities that concentrate on a single product or industry sector.
“Over the past six years, we have done over $100 billion of transactions. We exited consumer health to create certainly one of the most important consumer health corporations, exited Alcon in the most important public market spin in European capital markets, we exited our Roche stake,” Narasimhan told CNBC’s Julianna Tatelbaum.
“Now we spin [off] Sandoz, and what’s left now is basically where I believe Novartis is best suited to achieve the long term — a pure play modern medicines company focused on bringing R&D efforts and the brand new medicines we create to markets all over the world.”
Novartis shares climbed greater than 3% in early trade in Zurich to steer the pan-European Stoxx 600 index.
Novartis also reiterated its full-year guidance, with sales expected to grow in a high single-digit percentage and with core operating income set to grow within the low double digits to mid-teens.
In a press release alongside the Wednesday announcement, Narasimhan said this was a “truly historic moment for Novartis and Sandoz” as they start life as independent corporations.
“With several consecutive quarters of sales growth, Sandoz starts out from a position of strength as a world leader in Generics and Biosimilars, and I’m confident they’re poised to deepen their impact on patients and society,” he added.
Jefferies analysts have valued the Sandoz listing at between $12.3 billion and $16.2 billion, when the corporate begins trading on Wednesday.
Sandoz CEO Richard Saynor also on Wednesday told CNBC that the spinoff would help his company focus its own strategy, which incorporates a pipeline of 25 biologics projects, with five more set to launch over the following two years.
“Ultimately, it’s about focus. Sandoz is the world’s largest generics and biosimilars company, and now, by becoming an independent company, we will deal with how we grow that business, how we bring more products to patients, and really proceed to construct on the momentum that we have created over the past couple of years,” Saynor told CNBC on Wednesday.
Saynor said the corporate’s broad goals are to proceed to construct on the sales momentum of the last seven quarters, expanding the profit margin over the following few years and driving free money flows.
Around half of Sandoz revenues come from Europe, which Saynor said gives the corporate a “huge platform to grow.”
“We have invested heavily in our biologics pipeline, so, as we sit here today, we’ve got 25 projects in our pipeline, and we’re within the strategy of launching about five over the following two years,” Saynor said.
“We have guided [that] around $3 billion of sales will come from our latest pipeline, which is greater than twice what we have seen over the previous five years, and we’re expecting half to return from biosimilars and half of the expansion in total will now come from North America, so we’ll see the U.S. business beginning to speed up over the following few years.”
