Sandoz CEO to depart as Novartis doubles down on biosimilars
- Novartis is transforming its generics unit, a process that now includes a change in leadership. On Thursday, the Swiss pharma giant announced Sandoz CEO Richard Francis will step down at the end of the month.
- Francis took the helm of Sandoz in 2014, following 13 years at Biogen where he held various executive roles. Francesco Balestrieri, head of Sandoz's European division, will serve as interim CEO.
- In a statement, Francis pointed to the evolution taking place at Sandoz as the main reason for his departure. "I realize that this is a multi-year journey which I cannot commit to and therefore have decided that now is the right time to step down," he said.
Novartis has been restructuring its business over the past couple years, with particular scrutiny on its slower-growth units. In the past 12 months, the big pharma sold its stake in a consumer health joint venture with GlaxoSmithKline and received shareholder approval to spin off its eye care division, Alcon.
Sandoz is getting some attention as well. Under constant currencies, sales from the unit were down 2% in 2017 and 3% in 2018 — mostly because of larger headwinds facing the generics market, such as price erosion in the U.S.
Novartis is trying to change that trajectory by, in part, doubling down on biosimilars and hard-to-make generics. Sandoz recently formed a collaboration with India-based Biocon to create immunology and oncology biosimilars. It also has a commercialization and supply agreement in place with Gan & Lee for insulin biosimilars.
There's more work to be done, though. Novartis executives noted on the company's most recent earnings call that optimizing Sandoz's portfolio and manufacturing footprint remain high priorities.
"Taken together, over the next 18 months we plan to make Sandoz an autonomous unit within Novartis to enable us to compete in what is an increasingly dynamic and challenging global generic environment," CEO Vas Narasimhan said then.
It will soon be Balestrieri's job to follow through on that plan. Francis is slated to step down on March 31.
Balestrieri comes equipped with 25 years of experience at Novartis, most recently running Sandoz's European division. Though that familiarity is an advantage, his new role requires him to manage a global business, including the increasingly difficult U.S. market.
There, pricing pressures have dealt a blow to generic makers' bottom lines while patent litigation has kept most biosimilars from carving out substantial market share.
Novartis knows the obstacles all too well with the recent slide in Sandoz growth. While one of the unit's biosimilars, a version of Amgen's Neupogen (filgrastim-sndz), was able to break into the U.S., another has yet to launch despite gaining approval from the Food and Drug Administration more than two years ago.
Sandoz's Erelzi (etanercept-szzs) copies another Amgen product, the blockbuster immunology drug Enbrel (etanercept). A legal battle surrounding two key Enbrel patents has blocked Erelzi thus far, and could provide Amgen with market exclusivity until 2029 if courts lean in the biotech's favor.
RBC Capital Markets analyst Kennen MacKay recently told BioPharma Dive he pegs the odds of Sandoz winning the case at 20%.
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