Novartis Could Put Sandoz U.S. Generic Pills Business on the Auction Block Within a Few Weeks

Novartis

Less than one week after it scored approval from the U.S. Food and Drug Administration for a generic version of multiple sclerosis drug Copaxone, Novartis may be looking to sell off its generics U.S. Pill business.

Citing unnamed sources “familiar with the matter,” Reuters said Swiss drug giant Novartis is looking to put a “for sale” sign on the U.S. generics pills business of its Sandoz division. Novartis is considering the sale due to stiff competition in the U.S. generics market, Reuters said. News of a possible Sandoz sale by Novartis is not new. The parent company has talked about the possibility on several occasions. Each time the possibility comes up one of the top reasons is concern over the U.S. generics market.

The sources told Reuters that the sale of the U.S. generic pills business could be announced within the next few weeks. Novartis is looking at other pharma companies as well as equity firms as potential buyers, Reuters reported.

During a January call with investors and analysts new Novartis Chief Executive Vasant Narasimhan described the situation Sandoz is facing. Narasimhan pointed to pricing declines and said that Novartis is assessing how best to optimize that given that dynamic,” Reuters reported.

If the generic pull business is put on the auction block it could fetch Novartis about $1.6 billion. Citing the unnamed sources Reuters said that figure is based on estimated 12-month earnings before interests, taxes and depreciation and amortization is factored into the equation. Those factors add up to about $200 million, Reuters said.

Not only did Sandoz snag approval for Glatopa (glatiramer acetate injection), the Copaxone generic, the company is also looking at possible approval of adalimumab, a biosimilar of Humira. Adalimumab is indicated for the treatment of a number of inflammatory diseases including rheumatoid arthritis, plaque psoriasis, Crohn's disease and ulcerative colitis. If it scores approval that would certainly help the generics company after the FDA recently stymied approval of a generic version of GlaxoSmithKline’s asthma drug Advair.  

As the new Novartis CEO Narasimhan said his priorities will be driving the next phase of growth at the company. To do so Narasimhan pledged to deliver “more breakthrough innovation” while the company pivots to become more data centric. Narasimhan took over the role of CEO this month after former CEO Joe Jimenez retired. Novartis is looking at several key revenue drivers including heart drug Entresto, breast cancer treatment Kisqali and the psoriasis drug Cosentyx. Novartis also has the recently approved leukemia drug Kymriah in its arsenal. Last month Narasimhan pointed to breakthrough innovations as a key to future growth.

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