Novartis floats share distribution scheme as it plots Sandoz spinoff for Oct. 4

Novartis’ Sandoz spinoff is right around the corner, and, to celebrate the occasion, the Swiss pharma is plotting a special stock distribution scheme.

Roughly a year after disclosing plans to spin off Sandoz, Novartis says the separation of its generics and biosimilars business is set to take place on or around Oct. 4.

With the split, Novartis proposes offering shareholders one Sandoz share for every five Novartis shares they own. The company also invited stakeholders to an extraordinary general meeting on Sept. 15 related to the spinoff plans.

Novartis’ board of directors has unanimously endorsed—and recommended shareholders approve—the proposed separation of Sandoz.

Sandoz’s fate has been in flux ever since Novartis kicked off a strategic review of the division back in October 2021. At the time, Novartis said it would keep all options on the table, including retaining the business or a separation.

Novartis settled on spinoff plans last summer. In August 2022, the company said it planned to convert Sandoz into a publicly traded, standalone business, thereby creating Europe’s largest generics company.

Competition and U.S. pricing pressure have been weighing on Sandoz and the broader generics industry for years. Plus, a generics business doesn’t fit Novartis CEO Vas Narasimhan's stated focus on innovative drugs.

“Novartis is confident that the spin-off is in the best interests of shareholders, creating a European champion and a global leader in generics and biosimilars, and a more focused Novartis,” the company said in its latest release.

While Sandoz has seen a revenue decline every year since 2016, that slide could soon come to an end. In June, Sandoz predicted it can generate some sales growth this year, which should continue through 2028.

Novartis isn't the only pharma major that's plotted a business separation in recent years. Other drug giants such as GSK, Pfizer and Johnson & Johnson have split off their consumer units in a bid to focus on prescription medicines.

Leveraging a stock exchange offer—also known as a split-off—J&J last month said it aimed to reduce its stake in its consumer health spinoff Kenvue by roughly 80%. The separation of the company—plus J&J’s massive split-off goal—are designed to “[sharpen]” the company’s focus on its main businesses, which chiefly fall under the pharmaceutical and medtech banners, J&J’s chief executive Joaquin Duato said in a statement at the time.

After more than a year of preparation, J&J formally spun off Kenvue in early May, listing the consumer group on the New York Stock Exchange for $22 per share. At the time, J&J said it was selling more than 172 million Kenvue shares to the public.

Before that, GSK formally split off its consumer group Haleon in July 2022. And Pfizer merged its Upjohn unit with Mylan to form Viatris in November 2020.