Our Sandoz Division is a global leader in generic pharmaceuticals and biosimilars and sells products in well over 100 countries. In the first half of 2019, Sandoz achieved consolidated net sales of USD 4.8 billion. Sandoz develops, manufactures and markets finished dosage form medicines as well as intermediary products including active pharmaceutical ingredients.
The Sandoz strategic goal is to be a leader in off-patent medicines, driving sustainable and profitable growth in line with our Purpose: Pioneering for Access. The divisional strategy focuses simultaneously on two pillars: ensuring cost competitiveness across all areas of our leading global generics business, while simultaneously meeting unmet medical need in more differentiated segments (including biosimilars and digital therapeutics).
Sandoz executes on its divisional strategy by focusing on several key priorities, including investing in key selected markets and therapeutic areas where it is best positioned to make a real difference, increasing the performance of its small-molecule Development and Regulatory organization, and maximizing opportunities in biosimilars. Sandoz also focuses on products that add more value for patients, payers and healthcare professionals than standard generics, including seeking opportunities to leverage digital therapies.
Sandoz has a strong and continued strategic focus on biosimilars, which it began developing in 1996 and today sells in more than 80 countries. Sandoz continues to develop a broad and balanced internal and external portfolio, including 10-plus biosimilars in development. In the past 18 months, it has signed three separate deals to further drive global access to biosimilars (with BioCon in 2018 for several early-stage molecules, with Gan&Lee in 2018 to introduce three biosimilar insulins, and with EirGenix in 2019 for a biosimilar trastuzumab -- Herceptin®).
From a regional perspective, Europe continues to drive Sandoz results, delivering more than 50% of global sales, with steady underlying growth. In 2018, in a key strategic step to evolve the Sandoz portfolio toward more differentiated products, Novartis announced an agreement to sell selected portions of its Sandoz US portfolio, specifically the Sandoz US dermatology business and generic US oral solids portfolio, to Aurobindo Pharma USA Inc., for USD 0.9 billion in cash plus USD 0.1 billion in potential earn-outs. The Sandoz US portfolio to be sold to Aurobindo includes approximately 300 products, as well as additional development projects. The sale includes the Sandoz US generic and branded dermatology businesses as well as its dermatology development center. As part of the transaction, Aurobindo agreed to acquire the manufacturing facilities in Wilson, North Carolina, as well as Hicksville, New York, and Melville, New York. These businesses had net sales of approximately USD 1.2 billion in 2018. The transaction is expected to close in the course of 2019 following the satisfaction of customary closing conditions.
The planned US divestment was the first major step in a Sandoz Transformation plan announced by Novartis, which foresees measures to realign the organization followed by increased investments to drive future growth segments. The five-point plan focuses on: 1) shifting the portfolio to more differentiated areas, 2) ensuring timely launches in key markets, 3) ensuring flexible, cost-competitive supply, 4) optimizing resource allocation across markets, and 5) simplifying the operating model.
Sandoz is the market leader in biosimilars with a total of eight approved and marketed products. Availability of our biosimilars varies by country.
We launched Hyrimoz (biosimilar adalimumab) in the EU in October 2018, and Zessly (biosimilar infliximab) in the EU in November 2018. Hyrimoz was also approved in the US in October 2018. However, under the terms of our settlement with AbbVie, we are not entitled to launch Hyrimoz in the US until October 2023.
The US FDA also approved biosimilar Erelzi (etanercept-szzs) in 2016 to treat multiple inflammatory diseases. The launch of this biosimilar in the US is pending litigation with Amgen, which markets Enbrel®.
Our biosimilar pegfilgrastim was approved and launched in the EU as Ziextenzo in November 2018. In the US, we resubmitted our application for a biosimilar pegfilgrastim to the US FDA in April 2019, including requested additional data, following a complete response letter (CRL) in June 2016. We received a CRL from the US FDA in May 2018 for our biosimilar rituximab, and announced in November 2018 that we do not plan to pursue our submission for biosimilar rituximab in the US at this time. Separately, we received a CRL from the US FDA in 2018 for our submission for a generic form of fluticasone propionate and salmeterol inhalation powder, for oral inhalation (GSK’s Advair®), and are now provisionally targeting a launch in 2020.
According to IQVIA (formerly IMS Health), as of end 2018, Sandoz holds a leading global position in sales of generic anti-infectives and oncology medicines. In addition, Sandoz holds leading global positions in key therapeutic areas, including generic cardiovascular, central nervous system, gastrointestinal, metabolism, pain and respiratory medicines.
In the first half of 2019, key product launches in the US included novel prescription digital therapeutic reSET-O™, Symjepi™ (generic epinephrine), Desflurane® (generic Suprane®), buprenorphine and naloxone sublingual film (generic Suboxone®), treprostinil (generic Remodulin®), and Fulvestrant®) (generic Faslodex®).
In 2018, Retail Generics product launches in various European countries included generic darunavir film coated tablets, dasatinib (acute lymphoblastic leukemia indications) film coated tablets, febuxostat film coated tablets, gefitinib, and solifenacin film coated tablets.
Sandoz is organized globally in three franchises: Retail Generics, Anti-Infectives, and Biopharmaceuticals. Details are below:
In Retail Generics, Sandoz develops, manufactures and markets active ingredients and finished dosage forms of pharmaceuticals to third parties. Retail Generics includes the areas of cardiovascular, central nervous system, dermatology, gastrointestinal and hormonal therapies, metabolism, oncology, ophthalmics, pain, and respiratory, as well as finished dosage form anti-infectives sold to third parties.
In Anti-Infectives, Sandoz manufactures and supplies active pharmaceutical ingredients and intermediates – mainly antibiotics – for internal use by Retail Generics and for sale to third- party customers.
In Biopharmaceuticals, Sandoz develops, manufactures and markets protein- or other biotechnology-based products, including biosimilars, and provides biotechnology manufacturing services to other companies.
These materials contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 that can generally be identified by words such as “potential,” “expected,” “will,” “planned,” “pipeline,” “outlook,” or similar expressions, or by express or implied discussions regarding potential new products, potential new indications for existing products, potential product launches, or regarding potential future revenues from any such products; or regarding the potential outcome, or financial or other impact on Novartis, of the proposed divestiture of certain portions of our Sandoz Division business in the US; or regarding the potential impact of the share buyback plan; or regarding potential future sales or earnings of the Group or any of its divisions or potential shareholder returns; or by discussions of strategy, plans, expectations or intentions. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. You should not place undue reliance on these statements. In particular, our expectations could be affected by, among other things: global trends toward healthcare cost containment, including ongoing government, payor and general public pricing and reimbursement pressures and requirements for increased pricing transparency; regulatory actions or delays or government regulation generally, including potential regulatory actions or delays with respect to the proposed transactions or the development of the products described in these materials; the potential that the strategic benefits, synergies or opportunities expected from the Alcon and Sandoz transactions may not be realized or may be more difficult or take longer to realize than expected; the inherent uncertainties involved in predicting shareholder returns; the uncertainties inherent in the research and development of new healthcare products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products that commenced in prior years and will continue this year; safety, quality or manufacturing issues; uncertainties regarding actual or potential legal proceedings, including, among others, product liability litigation, disputes and litigation with business partners or business collaborators, government investigations generally, litigation and investigations regarding sales and marketing practices, and intellectual property disputes; uncertainties involved in the development or adoption of potentially transformational technologies and business models; our performance on environmental, social and governance measures; general political, economic and trade conditions, including uncertainties regarding the effects of ongoing instability in various parts of the world; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; uncertainties regarding potential significant breaches of data security or data privacy, or disruptions of our information technology systems; and other risks and factors referred to in Novartis AG’s current Form 20-F on file with the US Securities and Exchange Commission. Novartis is providing the information in these materials as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.
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