Novartis plans to offload Sandoz in fourth quarter of 2023

Novartis HQ in Basel, Switzerland. © Keystone / Georgios Kefalas

The Novartis pharmaceutical firm has announced plans to buy back as much as $15 billion (CHF12.88 billion) in shares as it prepares to spin off its Sandoz generics unit. 

Operating profit excluding some items will likely grow by low double digits this year, the Swiss drugmaker said in a statement, raising its forecast for a second time from a prior estimate of high single-digits gains. The stock rose as much as 4% in Zurich trading. 

Novartis has worked on severing itself from Sandoz for almost a year to hone its focus on more lucrative innovative medicines. The spinoff will take place in the fourth quarter if shareholders endorse it at a meeting on September 15, the company said. 

The drugmaker is in flux as Chief Executive Officer Vas Narasimhan sheds its less profitable projects and divisions to boost growth. The CEO has wrestled with research setbacks even as he reorganized the drugmaker and slashed jobs. 

+ Read more: the 2022 Novartis job cuts announcement

After seeing Novartis deliver strong results from breast cancer drug Kisqali in a clinical trial, investors are now turning their focus to the company’s operating performance, Barclays Plc analyst Emily Field wrote in a note.

Meanwhile, potential generic competitors are on the horizon for Novartis’s biggest drug, heart medicine Entresto. A US judge ruled a patent invalid this month, but the drug probably won’t face generic competition before mid-2025, Chief Financial Officer Harry Kirsch said in a conference call with reporters.

Sandoz spinoff

All of Sandoz will get spun off, Novartis said Tuesday. The stock will trade on the Swiss exchange, with an American Depositary Receipt program in the US. 

Earnings per share excluding some items rose to $1.83 last quarter, exceeding analysts’ estimates of $1.70.