(News Bulletin 247) – The Sandoz laboratory, resulting from a spin-off from Novartis, entered the Swiss Stock Exchange on Wednesday. The first stock market steps are up compared to its IPO price set at 24 Swiss francs.

The Sandoz laboratory opens at 24 Swiss francs for its IPO, separated from the Swiss pharmaceutical giant Novartis, which for its part is losing 4% in Zurich.

Based in Basel, the Sandoz laboratory specializes in generic and biosimilar drugs, cheaper copies of treatments whose patent has expired.

In this market valued at 208 billion dollars (198 billion euros) globally, the company which employs 22,000 people generated a turnover of 9.1 billion dollars in 2022, half of its sales being made in Europe.

Sandoz, which manufactures treatments for allergies, colds and heartburn, is banking on the growth of biosimilar drugs, which are more complex to manufacture than generics because they are produced from cells or organisms. alive, and not by chemical copy like generics.

It is targeting annual sales growth of around 5% over the next five years. Recently, it received the green light from the European Union for two biosimilars, against breast cancer and multiple sclerosis.

For the moment, however, generic drugs represent 78% of its turnover. Its split was approved in mid-September by Novartis shareholders on the basis of an exchange of one Sandoz share for five Novartis shares. Certificates of deposit are also planned on the American over-the-counter market.

Waza crunchy breads with LSD

The origins of Sandoz date back to 1886 when the chemist Alfred Kern founded a company specializing in dyes in Basel with the businessman Edouard-Constant Sandoz.

Barely ten years later, the company launched the production of a treatment for fever, then created a division specializing in pharmacy in 1917 where it carried out work on ergotamine, derived from a rye parasite.

A first treatment was marketed in 1921 under the name Gynergen to reduce the risk of postpartum hemorrhage before also being used for migraine. It was in the Sandoz laboratories, during research on ergotamine, that chemist Albert Hofmann discovered LSD by chance in 1943 by ingesting a dose of the substance he was working on, revealing its hallucinogenic properties.

In 1963, Sandoz bought the Austrian company Biochemie, specializing in penicillin, and began large-scale production of antibiotics.

While developing in pharmacy, the company diversified into dietetics by purchasing Wander in 1967, the manufacturer of the malted barley drink Ovomaltine. In 1983, he also acquired the Swedish toast brand Wasa.

But these food brands were resold a few years after the merger in 1996 of Sandoz with its Swiss competitors Ciba-Geigy which gave birth to the pharmacy giant Novartis.

Strong competition in the United States

The Sandoz name was shelved after the merger with Ciba-Geigy but was re-used in 2003 to designate a division into which Novartis had grouped its generic drugs.

This division has long been considered an asset for Novartis, which could retain part of its market when its patents expired by continuing to manufacture generic drugs. But these drugs faced stiff competition in the United States and Sandoz sales declined.

After an unsuccessful attempt to sell part of Sandoz’s American portfolio of products to the Indian laboratory Aurobindo, Novartis worked to recover its sales but ultimately decided to IPO it on the stock market to separate itself from it, as it had previously done. already done in 2019 with Alcon, its former subsidiary dedicated to ophthalmological products.

If Alcon had made an IPO with fanfare, analysts at Jefferies nevertheless fear a “lukewarm” reception for Sandoz. The Alcon share was immediately integrated into the SMI, the flagship index of the Swiss Stock Exchange, which is not the case for Sandoz, which will therefore be deprived of the financial windfall of index funds.

“Sandoz is somewhat underestimated,” they admit, however, in a market note.

(With AFP)