Novartis announced Thursday that it intends to spin off Sandoz as a standalone company.
The Swiss pharma company said that following a strategic review, it determined that spinning off Sandoz was in the best interest of its shareholders and would result in a “more focused” Novartis.
As part of the deal, Sandoz will separate into a publicly traded company and be incorporated in Switzerland. The transaction is expected to be completed in the second half of 2023. The company added that it expects the move to be “generally tax neutral.”
Novartis CEO Vas Narasimhan M.D. said the separation of Sandoz would support the company’s strategy of “building a focused innovative medicines company.”
“In addition, both companies would be able to focus on maximizing value creation for their shareholders by prioritizing capital and resource allocation, employing separate capital structure policies, and increasing management focus on their respective business needs,” Narasimhan said in a statement.
The planned spin-off of Sandoz comes as Novartis continues with a previously announced organizational restructuring that is expected to save the company $1.5 billion by 2024. As part of that effort, Novartis announced in early April that it would combine its pharmaceuticals and oncology units into an innovative medicines segment.
The company also confirmed in late June that thousands of jobs could be cut due to the restructuring, accounting for approximately 7% of its total workforce. Of the cuts in Switzerland, up to half of them will affect those in leadership positions.
Novartis announced its plans for Sandoz more than a month after releasing its latest earnings report, highlighted by declines in operating income, net income and net sales.
Though Sandoz sales fell 3% during the quarter, it still produced $2.3 billion in net sales and Novartis revised its outlook for the segment upwards due to an expectation that sales would grow in low single digits.
In April, Sandoz launched a generic challenger to AbbVie’s Combigan, marking an expansion of Novartis’ ophthalmology portfolio.
