Novartis said in August that it plans to spin off its generics unit Sandoz to sharpen its focus on its patented prescription medicines.
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Novartis on Wednesday completed the spinoff of its generics and biosimilars business Sandoz, whose shares began trading at 24 Swiss francs in the early minutes of the company’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 every five Novartis shares via a dividend-in-kind distribution.
Narasimhan told CNBC that the company had accelerated its efforts over the last six years to “focus Novartis as a pure play innovative medicines company.”
Pure play companies refer to entities that target a single product or industry sector.
“Over the last six years, we’ve done over $100 billion of transactions. We exited consumer health to create one of the largest consumer health companies, exited Alcon in the largest 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 is left now is really where I think Novartis is best suited to succeed in the long run — a pure play innovative medicines company focused on bringing R&D efforts and the new medicines we create to markets around the world.”
Novartis shares climbed more than 3% in early trade in Zurich to lead 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 in the low double digits to mid-teens.
In a statement alongside the Wednesday announcement, Narasimhan said this was a “truly historic moment for Novartis and Sandoz” as they begin life as independent companies.
“With several consecutive quarters of sales growth, Sandoz starts out from a position of strength as a global leader in Generics and Biosimilars, and I am confident they are 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 company 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 includes a pipeline of 25 biologics projects, with five more set to launch over the next 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 can focus on how we grow that business, how we bring more products to patients, and really continue to build on the momentum that we’ve created over the last couple of years,” Saynor told CNBC on Wednesday.
Saynor said the company’s broad aims are to continue to build on the sales momentum of the last seven quarters, expanding the profit margin over the next few years and driving free cash flows.
Around half of Sandoz revenues come from Europe, which Saynor said gives the company a “huge platform to grow.”
“We’ve invested heavily in our biologics pipeline, so, as we sit here today, we have 25 projects in our pipeline, and we’re in the process of launching about five over the next two years,” Saynor said.
“We’ve guided [that] around $3 billion of sales will come from our new pipeline, which is more than twice what we’ve seen over the previous five years, and we’re expecting half to come from biosimilars and half of the growth in total will now come from North America, so we’ll see the U.S. business starting to accelerate over the next few years.”