A unique opportunity to take patient focus to the next level

Plans announced to spin off Sandoz as an independent, publicly listed company

I normally avoid using this column to write too much about the company I work for, as I believe the real value of social media lies in how we all contribute to conversations about issues of broader social interest.

However, I’m going to make a partial exception today: because we’ve just announced some news that, while firmly about us, I believe is also very relevant for anyone with an interest in global healthcare. Let me explain why.

Our parent company Novartis announced today its intention to separate Sandoz by way of a 100% spin-off, to become an independent, publicly listed company. The press release can be found here:Novartis announces intention to separate Sandoz business to create a standalone company by way of a 100% spin-off | Sandoz.

This is obviously big news for us as a company, and it raises some practical questions for our business partners and stakeholders: from those who would invest in the new business, via those who would (continue to) regulate, buy and prescribe our products, through to those who would (continue to) use them.

More than “just another business story”

Indeed, it’s the implications for those “end users” of our medicines – patients and healthcare systems worldwide – that, in my view, makes today’s news more than “just another business story”. That’s for three related reasons.

First, healthcare, as anyone who either works in it or depends on it on a daily basis knows all too well, really is different to most other industries, because of the direct impact on human lives and wellbeing.

Second, off-patent (generic and biosimilar) manufacturers are the key players when it comes to driving patient access to medicines and ensuring the long-term financial stability of healthcare systems. As I’ve pointed out before, off-patent medicines account for the large majority of medicines prescribed worldwide, particularly in critical segments such as antibiotics and intensive care, at a fraction of the total cost.

Third, Sandoz today is the global leader in the field, as measured by sales of generics and biosimilars. With established market leadership in Europe and a strong presence in North America and emerging markets internationally, Sandoz reaches some 500 million patients per year. This translates in turn into an estimated annual social impact more than an order of magnitude above our annual sales, factoring in, for instance, the economic value of helping people get back to work faster through effective treatment as well as the savings our products bring for healthcare systems worldwide.  

Delivering on the promise to drive access to healthcare for patients

At Sandoz, we firmly put patients at the focus of our efforts to drive for better health outcomes, and our associates are proud to pioneer access to healthcare. Will today’s announcement change this going forward? No, on the contrary: we will continue to focus on making sure that Sandoz delivers the medicines patients need at prices they can afford. What the proposed spin-off would change is that it would lead to a future ownership structure that allows us to focus fully on realizing our long-term ambition: to be both the leading and the most valued company in the off-patent segment, as well as the most patient-focused.

This enhanced level of focus would enable us to prioritize capital and resource allocation, employing capital structure policies specific to Sandoz and optimizing management focus on the requirements of the off-patent industry. In plain English: it would set us up to deliver fully on our purpose and to do what we do best – just better!

Of course, we now have to deliver on that promise. But I’m convinced we can, for two reasons.

First, the opportunity is huge – and that has significant implications for patient access. The global off-patent market is expected to grow from USD 276 bn in sales this year to USD 470 bn in 2031, representing an average annual growth rate of around 6%. Growth will be driven primarily by biosimilars, life-changing biotech medicines that are among the fastest growing healthcare segments, with annual average growth of nearly 17%. But standard generics are also set to grow at 4% per year, with some areas expanding well above the average. For all the challenges, this is and remains an attractive and very important industry that caters to real patient needs and delivers significant savings to healthcare systems worldwide.

Second, a new, standalone Sandoz would be optimally positioned to lead the way in capturing that opportunity – notwithstanding fierce competition. Sandoz has unparalleled expertise with established leadership in Europe and a unique top five position across all three regions (Europe, US, ROW); it has an exciting biosimilar pipeline of 15+ molecules and an ambition to be the sustainable leader in the field, balanced by its strong global generics presence; it has a strong global brand and a unique heritage in areas including generic antibiotics; and it would have a robust financial outlook and a solid capital structure to support capital allocation.

Great share, great responsibility

I’m proud of the progress we have made as a company in recent years -- and even more proud of how we contribute to driving patient access and helping to ensure the sustainability of financially-pressured healthcare systems.

But I’m also very aware that, to coin a phrase, “with great share comes great responsibility”.

We owe it to all those we serve to carry on delivering – and to up our game even further in future. Count on us doing just that!