Until now, the traditional Sandoz brand was part of the large Novartis corporation. As of today, Sandoz is going its own way and the shares will be traded on the Swiss stock exchange. Business editor Lucia Theiler with the answers to the most important questions.
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Why is Novartis separating from Sandoz?
Sandoz no longer fits the company’s strategy. Novartis wants to focus on the business with patent-protected, more expensive drugs for specific diseases or cancer. Sandoz produces generics and biosimilars. These are copycat products for which the patent protection has expired. The margins are smaller. The business areas of Novartis and Sandoz are completely different. Novartis began focusing on its core business several years ago. For example, the Alcon eye division was independently listed on the stock exchange in 2019.
How will this separation be accomplished?
All Novartis shareholders will receive one Sandoz share for every five shares. In jargon this is referred to as the distribution of a dividend in kind. Shareholders who do not want to keep Sandoz shares can sell them on the stock exchange from today.
Legend: No longer together in the future: Novartis and Sandoz. Konektus Photo/Shutterstock
What price movements are expected?
Estimates compiled by the AWP news agency assume prices will be between 26 and 33 francs when the stock market starts. The price is likely to fall initially. This is because all shareholders were allocated Sandoz shares. But some people don’t want these shares at all and will sell them.
At the same time, it plays a role that Sandoz is not listed in the SMI leading index. All funds that track the SMI will have to sell the shares – regardless of the price.
Where is Sandoz heading?
With its wide range of affordable medicines, Sandoz remains a kind of “pharmacy of the world”. The company sees its competitive advantage in biosimilars. These are copycat products of biological drugs (not chemical ones, like generics). These are more difficult to imitate and have somewhat higher margins than classic generics. In addition, many biological drugs will lose patent protection in the next few years.
Will this make Novartis a competitor to Sandoz?
No, Sandoz is no longer in the business of new drugs sold under patent. Generic drug providers operate in a completely different market. Sandoz’s main competitors are other large generic drug manufacturers, such as Viatris (USA) and Teva (Israel).
Who runs Sandoz?
The Brit Richard Saynor has been running Sandoz since 2019. He is a trained pharmacist. Even after the spin-off, he will remain CEO of Sandoz with around 20,000 employees. The Chairman of the Board of Directors is Gilbert Ghostine, the former head of Firmenich in Geneva. Firmenich was the world‘s largest privately held fragrance and flavors company before merging with DSM in May 2023.