- Novartis' Sandoz unit has agreed to acquire Aspen Pharmacare's Japanese business, in a deal announced Monday that outlines up to $441 million in potential payments.
- Most of the money will be upfront, with Sandoz agreeing to an initial cash payment of 300 million euros, or approximately $331 million, upon the deal's close. Aspen could receive up to an additional 100 million euros through unspecified milestone payments.
- Sandoz CEO Richard Saynor called Japan "a stable but growing generics market." The companies expect the deal to close in the first half of 2020.
The last few years have been a turbulent period for Sandoz, with Saynor attempting to forge a path forward in the generics industry.
Saynor joined the Novartis subsidiary in August, with Novartis CEO Vas Narasimhan charging him with leading a multi-year project to make Sandoz a standalone unit within the larger company.
Since taking over in early 2018, Narasimhan has pushed a lean, growth-focused mentality. Under that strategy, Novartis has spun off its eye care unit Alcon and sold its stake in a joint consumer healthcare venture with GlaxoSmithKline.
Those divestitures leave the Sandoz unit sticking out. The subsidiary's sales were down 2% in 2017 and 3% in 2018 under constant currencies, as the generics market has suffered a difficult time, particularly with steady price erosion in the U.S.
But the last financial quarter may signal a turning point for Sandoz, with the business posting sales of $2.48 billion for the three months of July, August and September. That was up 3% from the same period a year ago, with growth attributed to the biologics and ex-U.S. businesses.
Sandoz has emphasized biosimilars and hard-to-make generics as key future growth areas. While the pharma has biosimilar partnerships with Biocon and Gan & Lee, it has also been waiting for its own significant divestment in generics to close.
Last September, Sandoz agreed to sell off its oral solids and dermatology portfolio to India-based Aurobindo Pharma. That deal, worth up to $1 billion, is still held up by the Federal Trade Commission, and Novartis executives have only said they hope the deal to close in the coming months.
While Sandoz keeps waiting for the Aurobindo deal, the Aspen acquisition will give Sandoz a portfolio of about 20 products in Japan. The Japanese subsidiary, called Aspen Global Incorporated, brought in 130 million euros in sales last fiscal year.
Aspen is headquartered in Durban, South Africa, and focuses on generic and specialty drugs in emerging markets. Only 1% of the company's 2018 revenue came from U.S. and Canada while slightly more than half came from Europe and Sub-Saharan Africa.