Novartis Indulges In Some Generic Thinking

February 22, 2005 Over the weekend, Swiss pharma Novartis announced its intention to spend $8.4 billion on a couple of generic drug manufacturers: Hexal of Germany and its majority-owned, semi-public American subsidiary, Eon Labs. After the merger, Sandoz, the generic division of Novartis, will have over $5 billion in annual sales, which puts it ahead of Teva, currently the largest purveyor of generic pharmaceuticals. Generics are a low-margin, low return-on-investment business, much further down the scale than branded pharmaceuticals. Why would Novartis make this purchase? How would they justify it? We take a look...