Novartis, the Swiss drugmaker, has announced that it will spin off its generic medicines division, Sandoz, on or around Oct. 4, subject to shareholder approval. The company said it planned to offer shareholders one Sandoz share for every five Novartis shares they own, as part of a special distribution of Sandoz shares.
The company has invited shareholders to an extraordinary general meeting (EGM) on Sept. 15, where they will vote on the proposed spin-off. The board of directors of Novartis has unanimously endorsed and recommended the move, saying it will create value for both Novartis and Sandoz shareholders.
“If Novartis shareholders approve the proposed special distribution at the EGM, the Spin-off will be implemented through the distribution of a dividend-in-kind of Sandoz shares to Novartis shareholders, and of Sandoz ADRs (American Depositary Receipts) to Novartis ADR holders,” the company said in a statement.
Sandoz is one of the world’s leading providers of generic and biosimilar medicines, with sales of $9.6 billion in 2022. It accounted for about 10% of group core operating profit of $16.7 billion in 2022. However, Sandoz has faced increasing competition and pricing pressures in the U.S. off-patent drug sector, which prompted Novartis CEO Vas Narasimhan to launch a strategic review of the division in 2021.
Novartis announced plans for the spin-off in August 2022, saying it would allow Sandoz to operate as an independent company with greater flexibility and focus on its core business. Novartis also said it would retain a significant stake in Sandoz and support its growth strategy.
The spin-off is expected to be tax-neutral for both Novartis and Sandoz shareholders. Sandoz will be listed on the SIX Swiss Exchange and will have its own board of directors and management team. Richard Saynor, currently CEO of Sandoz, will continue to lead the company after the spin-off.
Novartis said it expects the spin-off to be completed by the end of 2023, subject to regulatory approvals and other customary conditions. The company said it remains committed to its strategy of focusing on innovative medicines, data and digital technologies, and global health initiatives.
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