Novartis said in August that it plans to spin off its Sandoz generics unit to focus more on its patented prescription drugs.
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Novartis has completed the spin-off of its Sandoz generics and biosimilars business, which will begin trading on the Swiss SIX Stock Exchange on Wednesday.
The Swiss drugmaker initially announced its intentions to spin off the business in August, offering shareholders one Sandoz share for every five Novartis shares through an in-kind dividend distribution.
Narasimhan told CNBC that the company had accelerated its efforts over the past six years to “focus Novartis as an innovative medicines company only.”
Pure-play companies refer to entities that target a single product or industry sector.
“In the last six years, we have done more than $100 billion in transactions. We exited consumer health to create one of the largest consumer health companies, we exited Alcon in the largest public market turnaround in the markets of European capital, we are exiting our stake in Roche,” Narasimhan told CNBC’s Julianna Tatelbaum.
“Now we turn [off] Sandoz, and what remains now is really where I think Novartis is best poised to succeed in the long term: an innovative medicines company focused on bringing R&D efforts and the new medicines we create to markets around the world “.
Novartis also reiterated its full-year guidance, with sales expected to grow in the high single digits and core operating income to grow in the double digits to mid-teens.
In a statement accompanying Wednesday’s 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 is in a strong position as a global leader in generics and biosimilars, and I am confident that they are prepared to deepen their impact on patients and society,” he added.
Jefferies analysts have valued Sandoz’s stock at between $12.3 billion and $16.2 billion when the company begins trading on Wednesday.
Sandoz CEO Richard Saynor also told CNBC on Wednesday that the spinoff would help his company focus its own strategy, which includes a portfolio of 25 biologics projects, with five more launching over the next two years.
“Ultimately, it’s about focus. Sandoz is the largest generic and biosimilar company in the world and now, by becoming an independent company, we can focus on how to grow that business, how to bring more products to patients and really continue to build on the momentum we’ve created over the past few years,” Saynor told CNBC on Wednesday.
Saynor said the company’s overall goals are to continue building on the sales momentum of the past seven quarters, expanding profit margin over the next few years and driving free cash flows.
About half of Sandoz’s revenue comes from Europe, which Saynor said gives the company a “great platform to grow.”
“We’ve invested heavily in our biologics portfolio, so as we stand here today, we have 25 projects in the pipeline and we’re in the process of launching about five in the next two years,” Saynor said.
“We have guided [that] About $3 billion in sales will come from our new pipeline, which is more than double what we’ve seen in the previous five years, and we expect half of that will come from biosimilars and half of the total growth will now come from the North. “United States, so we will see the American business start to accelerate in the coming years.”