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Novartis to spin off Sandoz generics business

Novartis on Thursday announced plans to spin off its Sandoz generic drugs unit right into a standalone company whose shares would trade in both Switzerland and the U.S.

Why it matters: This might create Europe’s largest generics company by sales, and comes only a few years after Novartis spun off its Alcon eye care business (now valued at over $34 billion).

Backstory: Novartis last November said it had been seeking strategic options for Sandoz, that could have included a sale. Blackstone and Carlyle reportedly mulled a $25 billion offer, while other reported suitors included Advent International, KKR and Hellman & Friedman.

  • Bloomberg reports that the LBO financing environment proved too challenging, but that the Swiss drugmaker would still “consider a stylish offer.”
  • Novartis says that it never received any formal takeover bids.

The picture as a whole, per The Wall Street Journal: “In reaction to greater competition, Novartis has pivoted Sandoz toward higher-value generics, such as for example biosimilars, which are near-replicas of biologic drugs made using living cells. The machine, which includes accounted sometimes for about a fifth of total sales for Novartis, has previously proven a drag on the companys growth.”

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