Novartis (Sandoz)

2012 Generics Revenue: $8.7 billion

Novartis' ($NVS) Sandoz may have hauled in nearly $9 billion in generics revenues last year, but net sales for the unit decreased by 8%. Sandoz attributed that decline largely to the stagnant markets in the U.S. and Germany, which have forced many drugmakers to look elsewhere for revenue streams.

Luckily for Sandoz, it has some of those itself. Launches of generics for Novartis drug Diovan, Pfizer's ($PFE) Lipitor, GlaxoSmithKline's ($GSK) Imitrex and others helped pick up some of the sales slack in 2012.

The company should have more help on the way, too, in the form of biosimilars. Sandoz already markets three biosimilars and has another 8-10 biosimilar molecules in its pipeline, including one for Roche's ($RHHBY) leukemia drug Rituxan, which pulled in more than $7 billion last year. It also boasts a market-leading lineup of 7 late-stage biosimilar studies on 5 treatments, apparently unfazed by the costs of development that have scared some companies away from biosimilars. Novartis launched its latest study in June, taking aim at Amgen's psoriasis treatment Enbrel, the second-best-selling drug in the world with $8.37 billion in 2012 sales.

Sandoz chalked up another part of the 2012 sales lag to increased competition on enoxaparin, the generic of Sanofi's ($SNY) clot-fighter Lovenox. Sandoz and partner Momenta Pharmaceuticals ($MNTA) hit the blockbuster mark with their version, bringing in $1 billion for Sandoz in 2011; the drug was so successful that Sanofi dropped its own authorized generic late that year. But in 2012, Sandoz managed only $451 million in enoxaparin sales, thanks to a rival copy from Amphastar and Actavis ($ACT). Sandoz and Momenta fought the legal ruling that allowed Amphastar to sell its version, but the Supreme Court in June declined to hear their appeal.

On the flip side, Sandoz got a boost--two percentage points' worth of sales growth, to be precise--from its $1.5 billion pickup of Fougera Pharmaceuticals. The specialty dermatology drugmaker chipped in 5 months' worth of sales for Sandoz's top line in 2012, making the company a leader in dermatology knockoffs virtually overnight. With a growing number of skin care drugs going off patent soon, Sandoz now has the opportunity to expand even further. As Sandoz CEO Jeff George noted at the time of the takeover, "We see great potential to take a business that's a U.S. business and take it globally." 

Another storyline for Sandoz has been its manufacturing troubles. The FDA cited three of the unit's plants, two in North America and one in Canada, in a 2011 warning letter; fixes at the Canadian plant forced the unit to scale back production, creating multiple supply problems there. Since then, Sandoz has highlighted its work to improve operations at the three plants. By the fourth quarter of 2012, FDA had upgraded the compliance status of its site in Broomfield, CO, and Sandoz says fixes at the other two sites are also on track.

That doesn't get Sandoz off the hook, however. In May it recalled two lots of methotrexate because of visible particles. And not long after, Sandoz received another warning letter, this time for a plant acquired in 2009 with Austrian generics maker Ebewe, a specialist in cancer knockoffs. The warning letter also involved visible particles, and the FDA accused managers at the plant of ignoring repeated instructions not to release the affected products in the U.S.

For more:
Sandoz bulls ahead with full slate of PhIII biosimilar studies
Novartis' Sandoz unit stumbles again
Novartis now top dog in skin drugs with $1.5B Fougera buy
Sandoz Canada president explains shortages to House of Commons

Novartis (Sandoz)
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