Sandoz Group AG, the maker of copycat medicines, was spun off from drugmaker Novartis AG to begin life as a standalone company on Wednesday when its shares started trading at on Switzerland’s stock exchange.
Sandoz opened at 24 Swiss francs, giving it a market capitalization of nearly 11 billion Swiss francs ($12 billion) in early trading.
The generics leader will now have more freedom to pursue its own growth strategy to challenge industry stalwarts like Viatris Inc. and Teva Pharmaceutical Industries Ltd. It caps years of efforts by Novartis Chief Executive Officer Vas Narasimhan to reshape the Swiss pharma behemoth into a nimbler company focused solely on innovative prescription medicines.
Sandoz’s lead in Europe, a less competitive and volatile generics market than the US, along with its portfolio of cheaper versions of complex biological medicines known as biosimilars, should help it trade at a premium to rivals, analysts said. But the company may need to prove itself as a standalone first.
“While the spinoff is fundamentally a good thing, the timing is very complicated,” John Plassard, a director at Mirabaud & Cie, said in emailed comments. “Investors are in risk-off mode with rising Treasuries yields and the risk of monetary tightening. It will certainly be some time before Sandoz’s core business is fairly valued,” he added.
Sandoz plans to introduce new biosimilars in the coming years, and these drugs command higher prices than generics because they’re more complex.
The duplicates, produced in a soup of cells, aren’t identical to the originals in the same way that traditional generics would be. Regulators therefore demand evidence that the copy is similar enough to the original.
In July, Sandoz launched a biosimilar to the blockbuster arthritis treatment Humira in the US with a private-label commercialization agreement with CVS Health.
Sandoz garnered revenue of $4.8 billion in the first half. The listing is the first non-global depositary receipt one of the year on Swiss exchanges.
Novartis shareholders received one Sandoz share for every five Novartis shares. Novartis trades at 88.8 Swiss francs as of 9:18 a.m. in Zurich, while Sandoz hit a high of 25.2 Swiss francs.
--With assistance from Lisa Pham.
(Adds Sandoz opening price and comments)