Sandoz-Hexal looks to an uncertain future.
The pharmaceutical company Novartis recently announced that it would be putting the ailing generics subsidiary from Holzkirchen to the test.
The business is no longer profitable.
Novartis is considering selling Sandoz or giving it independence.
Holzkirchen -
The message from Basel did not come completely out of the blue. Since 2018, the pharmaceutical giant Novartis has had doubts as to whether the market for copycat drugs, for which Sandoz-Hexal is responsible in the group, is still generating enough margins to promote Novartis growth. Rumors of a sale or spin-off were circulating in the industry and the workforce.
A few days ago, Novartis boss Vas Narasimhan let the cat out of the bag.
When presenting the quarterly figures, Narasimhan said it was time to examine the “longer-term strategic positioning of Sandoz”.
There are several options on the table.
The Holzkirchner, who employ 20,000 people worldwide and are one of the three largest generics manufacturers at all, could remain in the group, be sold to competitors or financial investors - or become self-employed, combined with an IPO.
By the end of 2022, the “Strategic Review” should have progressed so far that a decision can be made.
Sandoz needs to do homework and generate more growth
As Steffen Kurzawa, press spokesman for Sandoz, explained on request, the news from Basel did not cause a great deal of crisis among the around 1,700 Holzkirchen employees.
“The teams here at the site are rather calm about the strategy review,” says Kurzawa.
Site manager Peter Stenico had confirmed this impression to him.
Rather, an employee survey immediately after the presentation in Basel showed that a large part of the workforce in the company feels that they are in good hands and believes in the future of the company.
“Novartis won't let Sandoz down,” emphasizes Kurzawa, who, like Sandoz boss Richard Saynor, commutes between Basel and Holzkirchen.
Specifically, no jobs are threatened.
"We now have to ask ourselves what needs to be done so that Sandoz has the best growth prospects."
It's no secret that price pressure on the world's largest healthcare market, the USA, has recently caused Sandoz sales to drop by two percent.
In addition, the demand for off-patent drugs collapsed during the pandemic, even if Sandoz is the largest manufacturer of antibiotics in the world.
A development that Novartis shareholders dislike.
You are chalking the generics subsidiary from Holzkirchen on the fact that its return is lagging behind the beautiful profits from the dominant business with patented drugs.
Sandoz is seen by analysts and shareholders as a brake on the parent company.
Novartis boss Narasimhan is under pressure to take action here.
Who is the best owner for Sandoz?
Novartis has been trying to make the subsidiary more autonomous since 2019. As Kurzawa confirms, Sandoz-Hexal has now set up its own supply chains and production lines. Now there are increasing signs that Novartis is completely separating from its generics unit. The sale to a competitor is considered unlikely because antitrust authorities would presumably intervene. But financial investors could show interest. Or will there be a spin-off and a listing on the stock exchange?
“The question is who is the best owner for Sandoz,” says Kurzawa.
The spokesman does not see that the Holzkirchen site would be in acute danger in the course of the strategy review.
"We recently invested 50 million euros in new buildings here." The employees at Sandoz and the associated brands Hexal and 1 A Pharma are motivated.
"But of course they want clarity on how to proceed."
You can find more information on the topic here.
