Fosun joins Aurobindo, PE firms in final bids for Novartis’ $2B U.S. generics assets: report

Novartis headquarters
Fosun Pharma, Aurobindo, Apollo Global Management and CVC Capital Partners are shortlisted to buy a group of Novartis U.S. generics assets. (Wikimedia Commons/Andrew/Flickr)

It turns out India’s Aurobindo is not the only one hot to buy a portfolio of Novartis’ U.S. generic assets, including its dermatology business. 

China’s Fosun Pharma and private equity firms Apollo Global Management and CVC Capital Partners have also been shortlisted to make final offers, Bloomberg reported, citing people with knowledge of the talks.

The combined value of those assets on the for-sale list could reach $2 billion, and a buyer could be determined within the next few weeks, sources told Bloomberg.

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Novartis has said since at least January that it’s looking to sell its U.S. generics oral solids business and other noncore products to concentrate on higher-margin generics. For the first quarter, Sandoz's sales in the U.S. declined 18% as pricing pressure takes a toll on all generic producers.

Novartis definitely has some Sandoz products it will keep. In a statement sent to FiercePharma, Novartis said it has no intention to selling off the Sandoz business in the U.S. altogether, and if it sells off pieces, its remaining U.S. portfolio would still include complex generics, biosimilars, ophthalmics, value-added medicines, injectables and several oral solid portfolios in certain areas like oncology.

RELATED: Aurobindo bids $1.6B for Novartis' U.S. dermatology generics: report

The composition of suitors—Chinese and Indian drugmakers and PE firms—looks familiar for a major generics deal. Aurobindo was previously said to be among four Indian firms, an unidentified Chinese pharma and several PE firms sizing up Sanofi’s European generics business, now on the verge of being sold to Advent for $2.4 billion.

CVC Capital Partners just took in part of Teva’s women’s health assets for $703 million last September. And going back to March of last year, CVC was reportedly talking to both Fosun and Shanghai Pharma about a joint effort in scooping up Stada.

RELATED: China pushes generics over brands with another round of new pharma policies

Both China and India rely heavily on generics. But Indian firms have gone far ahead in their expansions into developed markets, while Chinese generics makers have traditionally only been serving their domestic market. In 2017, only 38 generic drugs approved by the U.S. FDA went to Chinese manufacturers, while Indian firms got 300, according to the Financial Times.

The Chinese government has been pushing to reshape its generics landscape. It’s in the process of a generics re-evaluation campaign aiming to push out small players who live on cheap, low-quality products. And the government just recently rolled out a new policy that promises tax incentives to qualified generics makers. Getting an established business with a portfolio of approved products and existing foreign operations would for sure give a Chinese player like Fosun an easier entry into the Western market.