Novartis: “Completely committed to the Sandoz business.”
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Swiss newspaper Tages-Anzeiger recently reported that the Basel, Switzerland-based Novartis was going to split off its Sandoz generics division. The company rushed to respond, with company spokesman Sreejit Mohan telling Reuters, “We’re completely committed to the Sandoz business, and we’re looking at transforming it and making it as strong as it can be in the global generics business.”
Novartis has been on something of a housecleaning binge since Vasant (Vas) Narasimhan took over the chief executive officer position from Joseph Jimenez in January of this year. On October 30, Novartis indicated it planned to abandon approximately 20 percent of its research projects.
Jay Bradner, president of the Novartis Institutes for Biomedical Research told Bloomberg, “The sadness about these 90 projects is there’s some great science there. These are not bad ideas. Many of them have momentum, but they either are not likely to be transformative for patients, or are ill-suited to the focused business ambitions of Novartis.”
When Narasimhan took over—he was previously global head of Drug Development and chief medical officer—he was expected to place more emphasis on drug development. Despite the cuts, the company does appear to be focusing more on cutting-edge and transformative research, such as cell and gene therapies. For example, Novartis acquired AveXis in April for $8.7 billion. AveXis has a gene therapy candidate, AVXS-101, for spinal muscular atrophy (SMA).
Earlier in the year, Novartis moved away from antibiotic development. And in October, Novartis and Pfizer signed a non-exclusive clinical development deal to develop combination therapies for non-alcoholic steatohepatitis (NASH).
In June, Novartis announced it planned to spin off Alcon, its eye care division, into a separately-traded standalone company. It also is divesting itself of a consumer health joint venture with GlaxoSmithKline.
Tages-Anzeiger, citing an employee representative and participants in a Novartis investor event last week in London, reported that Narasimhan had described plans for the generics business to become an independent unit and that the company was reviewing “all strategic options.”
Mohan, CNBC reports, indicated that Sandoz will be provided more autonomy to deal with the constantly-changing generics market. In September, Sandoz sold its U.S. dermatology and generic drug assets, part of Sandoz, to India’s Aurobindo Pharma for up to $1 billion. There was another potential $100 billion in performance-based payments on the line as well.
At that time, Reuters wrote, “The U.S. Sandoz pills business has long been a problem child for Novartis, with price pressure hurting results and becoming a main reason the division has pared back its growth targets, most recently in July.”
And Richard Francis, the Sandoz division head, told Reuters, “Through this transaction, we are refocusing our business. Sharpening our portfolio focus in the U.S. allows us to devote more time and resources toward our strategy of bringing complex generics, value-added medicines and biosimilars to patients in the U.S., creating higher value and opening up access to important medicines where alternatives are truly needed.”
That deal is expected to close next year. It’s also possible that the deal is behind the apparent misunderstanding—or at least, to-date denied rumors—that Sandoz was going to be spun off. At the time of the Aurobindo sale, Carol Lynch, president of Sandoz and Head of Sandoz North America stated, “We recognize that the transfer of ownership for a business of this size is a complex process, and we are aware that it may create some uncertainties for our associates in the U.S. It is thus a priority for us to make the transition as clear and quick as possible.”
This is something Mohan doubled down on, saying, “The whole goal is to try to make Sandoz as agile as possible, to compete in that environment, to give it the autonomy to be as agile as possible. That’s essentially been the message that we’ve been delivering, so I have no idea how that led to saying ‘split off.’”