Sandoz, Zolgensma, Drive Strong Q1 for Novartis
Novartis CEO Vas Narasimhan, Courtesy of Novartis
Novartis’ Sandoz business unit saw a strong financial performance in the first quarter of 2022, with overall sales growth of 8%, mostly outside of the United States. Sales for the generics and biosimilar unit benefited from what the company called a normalization of the impacts of COVID-19.
Novartis has been conducting a strategic review of its Sandoz unit, even entertaining the potential sale of the business. During a conference call Tuesday, Novartis CEO Vas Narasimhan said the business dynamics at Sandoz have stabilized. Pointing to the first quarter financial results, Narasimhan said Sandoz’s growth drivers were primarily seen in Europe, particularly due to boosts from the company’s biosimilar products.
The positive first-quarter growth continued the success Sandoz demonstrated in the later part of 2021. The generics unit posted $2.5 billion in sales for the last quarter of the year, which was slightly higher than the previous year. In the first quarter of 2022, sales were $2.4 billion.
In the U.S., Narasimhan suggested that Sandoz has finally found a firmer footing after struggling with declining sales for years due primarily to increased competition in the generics market. However, given continuing geopolitical uncertainty, price erosion and inflationary pressures, Narasimhan said there are some uncertainties in the future.
Despite those uncertainties, Novartis will maintain its full guidance for the year due to the strong growth the business unit has seen over the past several months. Earlier this year, Narasimhan predicted that Sandoz’s revenue would stabilize within the next year, which will allow it to continue making the revenue gains the unit has shown over the last two financial quarters.
“We see Sandoz as having the potential to be the leading generic company in the world,” Narasimhan said during a conference call.
The strategic review of Sandoz is ongoing, and Narasimhan predicted that it will be completed by the end of 2022. Novartis is still assessing possible futures for the company, which could include a sale of the business unit or spinning it out to stand on its own. As BioSpace previously reported, there may already be some buyers interested in acquiring some or all of the Sandoz business.
Last fall, European investment group EQT and the Struengmann family, who own a significant stake in BioNTech, were reportedly considering a deal for the business. Reports suggested that the group could offer about $21.6 billion for Sandoz. Some analysts though have pegged the valuation of the company at closer to $25 billion.
Beyond Sandoz, Novartis began 2022 with a solid start across its value drivers, Narasimhan said. The company unveiled its quarterly report that showed strong sales driven by key branded drugs, Entresto, Kesimpta, Cosentyx and its gene therapy for spinal muscular atrophy, Zolgensma.
Sales of Zolgensma grew 18%, mostly outside the United States. Narasimhan said the company anticipates steady growth with the therapy and anticipates potential annual revenue of about $2 billion. That growth is due to new data that reinforces the clinical benefit of the medication in SMA children. Data released earlier this year showed the therapy, which has a price of about $2.1 million, was significantly improving the lives of pediatric patients.
Narasimhan also pointed to the revenue-driving potential of two newly-approved drugs: Scemblix, approved last year for the treatment of chronic myeloid leukemia, and Pluvicto, the first targeted radioligand therapy approved for adults diagnosed with a certain type of advanced prostate cancer.
Narasimhan said Pluvicto was a key approval for Novartis and the company anticipates approval in Europe later this year. Scemblix, which is already showing its strengths in third-line CML patients, could earn revenue of up to $500 million and, if it is approved in the first-line, could earn even more, Narasimhan suggested.
Another key for Novartis in the first quarter was the hiring of Aharon (Ronny) Gal, as the company’s new chief strategy & growth officer. Gal will join Novartis by Aug. 1 of this year and will lead the company’s newly created Strategy & Growth function that combines corporate strategy, R&D portfolio strategy and business development. Narasimhan touted Gal’s two decades of experience and said he will be a key to the company’s growth strategy outlined earlier this year when Novartis announced its new organizational structure.
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