Amid Novartis' strategic review of generics unit Sandoz, last month came word that Swedish investment group EQT and the Struengmann brothers of Germany were considering a joint move to purchase the business.
Without mentioning EQT, Novartis’ CEO has confirmed there is some interest in Sandoz.
“There have been various requests for more information, but no concrete offers,” Vas Narashimhan told German magazine WirtschaftsWoche.
As primary investors in BioNTech, the billionaire Struengmann twins—Thomas and Andreas—are in position to make another big move and this would qualify. Last month a figure of $21.6 billion for the purchase was reported by German news outlet Handelsblatt, which said the potential deal was drawing other private equity investors. If a deal comes together, it would be the biggest acquisition in the pharma industry this year.
Narashimhan said that Novartis will know the fate of Sandoz by the end of 2022, WirtschaftsWoche reports. “The question we need to clarify by then is: Will Sandoz be more successful in the future within or outside the Novartis organization?”
Sandoz generated $9.7 billion in sales last year.
In selling off its consumer business, Switzerland-based Novartis would join other industry giants—including Merck and Pfizer—that have made similar moves. For its part, Johnson & Johnson last month unveiled a plan to create a new company for its consumer products.
The divestitures are designed to allow companies to focus on the high-risk, high-reward business of developing drugs.
“What is clear is that we want to focus Novartis on innovative medicines,” Narasimhan told WirtschaftsWoche. “We generate 80 to 90% of our profits with new medicines, for example for cancer, cardiovascular problems or genetic diseases.”
Three years ago, when Novartis revealed a plan to grant more autonomy to Sandoz, industry watchers anticipated a big move. At the time, the company was nearing the sale of its United States oral solids and dermatology business to Aurobindo of India for $1 billion, but the deal fell through thanks to an antitrust review setback at the U.S. Federal Trade Commission.
Then, two months ago, Novartis signaled more interest in a potential divestiture when it launched a strategic review of Sandoz, saying all actions were under consideration. In the first nine months of 2021, Sandoz’s sales in the U.S. declined by 17%, and the entire unit’s revenue decreased by 4% year over year.