Sandoz flourishes and raises 2024 forecast again
Published: Wednesday, Oct 30th 2024, 13:10
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Sandoz is clearly benefiting from its independence. With the presentation of its sales figures for the first nine months, the former Novartis subsidiary has raised its sales forecast for 2024 for the second time in a row.
The best part is that both divisions clearly accelerated their growth again in the third quarter - including the generics business, with which Sandoz has so often made negative headlines in the years under the Novartis umbrella.
However, as CEO Richard Saynor also makes clear, it is primarily the European business that has recently contributed to the good performance thanks to new market launches. Sandoz wants to maintain its leading market position here and build on it. "We have other goals for the USA - we will be satisfied here if we can maintain the current status quo and business remains at least stable," said the manager in a conference call with analysts on Wednesday.
Specifically, revenue climbed by 8 percent to 7.6 billion US dollars between January and September. At constant exchange rates, the increase would have been 9%. Volume contributed 11 percentage points to growth, while a price erosion of 2 percentage points reduced this growth. The price erosion in the third quarter even fell to a below-average 1%, as Saynor emphasizes.
Generics business picks up in Q3
The generics business contributed just under 5.6 billion dollars to total sales in the first nine months (+1%). In the third quarter, the increase was 3%, following stable sales in the first six months.
The smaller biosimilar division achieved sales of just under 2.1 billion during this period, an increase of 31 percent. This significantly stronger growth was due in part to strong sales of the biosimilar Hyrimoz (anti-inflammatory) in the USA as well as the acquisition of Cimerli (ophthalmic agent) and continued strong demand for the biosimilar Omnitrope (growth hormone). However, the market launch of further copycat products in Europe also supported the development.
Focus on medium-term goals
These strong growth rates have also contributed to the fact that these higher-margin imitators now account for 27% of sales, as CFO Remco Steenberger explained during the conference. The Group is therefore on track to achieve its medium-term goal of reaching a 30 percent share of sales with biosimilars by 2028 at the latest. By comparison, the division contributed 23% to Group sales in 2023.
While the financial experts asked numerous questions about the course of business and future prospects, they did not seem to attach any great weight to the latest political demands. At its party conference in Davos at the weekend, the SP Switzerland called on the federal government to buy Sandoz. The party conference was told that the company would cost around 15 billion Swiss francs. The aim was to improve the supply of generics, standard medicines and new antibiotics.
Political demand not new
According to Sandoz, this is not the first time that "interested political parties in Switzerland have called for Sandoz to be nationalized". As the Group is active in over 100 markets, it has a responsibility towards all the markets in which it operates - not just Switzerland.
The price quoted by the SP is also causing a frown on the market. After all, the market capitalization of the generics group is currently around 17 billion Swiss francs. "In the event of a takeover, the market typically expects premiums on the share price," says one observer. "In the case of an offer, the party would have to think about financing of 25 to 35 billion."
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