(News Bulletin 247) – This IPO project is part of its split from Novartis.

The Sandoz name will, more than 25 years later, return to the Zurich Stock Exchange. The Swiss pharmaceutical group born in 1886 merged in 1996 with Ciba-Geigy, another Basel group, to give birth to Novartis.

Many years later, in the summer of 2022, Novartis decided to split Sandoz via an IPO of 100% of the capital on the Zurich Stock Exchange. At the same time, an ADR program (“American depositary receipt” or certificate of deposit in French), that is to say foreign company ownership titles on the American market, will be launched.

On Friday, Novartis confirmed and clarified this plan to IPO 100% of the capital of Sandoz, the completion of which is now scheduled for “early fourth quarter 2023”. Novartis shareholders will have to approve the transaction at an extraordinary general meeting on September 15.

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Limited synergies between Sandoz and Novartis

Sandoz also filed an IPO on Friday on the Zurich Stock Exchange for 431 million shares with a nominal value of 0.05 Swiss francs per share. According to this document, Sandoz made a profit of $850 million last year and a “core business” profit of $1.22 billion.

Novartis shareholders are expected, subject to approval, to receive on October 4, 1 one Sandoz share for every 5 shares held and so will owners of Novartis ADRs, the document also reads.

“We and Novartis believe that the separation and spin-off will bring a number of benefits to the Sandoz and Novartis businesses and to Novartis shareholders,” Sandoz explains in this prospectus.

Novartis will focus on its innovative medicine business while Sandoz will specialize in generic medicines (treatments made from the same molecule as a previous innovative treatment but whose patent has fallen into the public domain) as well as medicines ” biosimilars”, which are also derived from a first reference molecule, but which are larger and more complex molecules to produce than generics.

Novartis explains that the synergies between these innovative drug and generic businesses are limited because they are “at opposite ends of the biopharmaceutical value chain with significant differences in business dynamics.”

The two companies will therefore pursue independent strategies with separate capital allocation policies.