Novartis expects sales at its generic drug division Sandoz to grow this year, even as the Swiss pharmaceutical company continues to consider whether to sell or separate the business unit.
The forecast, given Tuesday alongside second quarter earnings, is an improvement from earlier in the year, when Novartis had predicted Sandoz sales in 2022 would be more or less the same as in 2021. Now, the drugmaker is expecting sales will increase by low single digit percentages, helped by stabilization of Sandoz’s business in the U.S. and growth in Europe, Japan and other markets.
Sandoz has struggled in recent years, hurt by falling prices for generic drugs, particularly in the U.S. A run of declining sales and profits led to Novartis’ announcement last fall that it was considering selling or separating the division, as it had previously done with its eye care unit Alcon.
That review remains ongoing, CEO Vas Narasimhan told investors on a Tuesday conference call, and Novartis plans to give an update by the end of the year.
Harry Kirsch, Novartis’ CFO, added that the company is making “very good progress in line with our plans on the carve-out of financials” and continues to look at “all different options.” The update later this year should give investors “good hints” on what direction Novartis will take, Kirsch said.
A sale or spinout of Sandoz would be substantial, as the business earns Novartis about $2 billion each quarter. Executives have previously indicated that they could decide to retain the division as well.
In addition to generic versions of pharmaceutical drugs, Sandoz has focused on biosimilar copies of top-selling biologic medicines like Neupogen, Neulasta, Enbrel and Humira. In the U.S., however, patents held by branded drugmakers have blocked a number of biosimilars from entering the market, including Sandoz’s Enbrel and Humira copies.
Patents protecting Humira lapse next year, setting up Sandoz and half a dozen other biosimilar competitors to launch.
“I think clearly, the number of entrants when the [Humira] market formation happens will mean that it will be a highly competitive market,” Narasimhan said Tuesday. “But nonetheless, given the size of the opportunity, it will help meaningfully drive growth for the brand.”
The CEO also highlighted biosimilar copies Sandoz is developing for Biogen’s multiple sclerosis drug Tysabri and Amgen’s bone treatment Prolia.
Novartis is also in the midst of a broader restructuring of its pharmaceuticals business, and has previously confirmed plans to lay off as many as 8,000, or about 7%, of its global workforce. On Tuesday, the company said it was targeting $1.5 billion in cost savings by 2024.