Sandoz is likely headed towards spinoff, says insiders

July 1, 2022

After months of contemplating what to do with its generics business, Novartis is leaning toward a spinoff of Sandoz, according to anonymous Bloomberg sources.

Rumors that Novartis was mulling a sale or spinoff of Sandoz have been swirling since last Oct. when the Swiss drugmaker's CEO, Vas Narasimhan, announced a strategic review of the unit to decide if it’s still a good fit with the company’s long-term growth plans. 

Now, "people familiar with the matter" have told Bloomberg that the spinoff is likely — however Novartis continues to explore its options and hasn’t made a final decision, they said.

Sandoz was originally launched as a generics division of Novartis in 2003. Although Sandoz has become a world leader in generics manufacturing, and its volume of sales has increased in recent years, the company has still been hit by various factors putting downward pricing pressures on the generics industry such as increased competition and consolidation among buyers. 

Its parent company is also battling the turbulent market. Earlier this week, a Swiss newspaper reported that Novartis' previously announced restructuring program may lead to 8,000 jobs being cut —about 7.4% of its global workforce.

Under Narasimhan, Novartis has sharpened its focus on innovator drugs such as gene therapies, which could impact its decision about whether to keep Sandoz under its sphere.