Sector News

Novartis eyes $8B Amneal buy to beef up Sandoz

November 15, 2016
Life sciences

Novartis remade itself last year with an asset swap that beefed up its oncology business and sent its vaccines unit packing to GlaxoSmithKline. Now, the Swiss drugmaker is reportedly eyeing another shift in focus.

Novartis is weighing a deal for the generics maker Amneal Pharmaceuticals to expand its already-hefty Sandoz unit, Bloomberg reports, at a time when two of its biggest rivals in the field are integrating big buyouts of their own. The Amneal buy could be worth up to $8 billion, the news service says.

And in a new interview published Sunday, Joerg Reinhardt, chairman of the Swiss drugmaker, made the broadest suggestion yet that Alcon’s days under Novartis’ umbrella are numbered.

The ophthalmology unit has been struggling in recent quarters, and Reinhardt suggested that Alcon needs to recover soon, or face life under new ownership. The business “has not developed over the last two years as we had expected,” Reinhardt said.

“We are concentrating on pushing forward the turnaround,” Reinhardt told the SonntagsZeitung. “In future, however, we will keep all options open. In the long run, the question arises whether we are the best owner for Alcon.”

Hiving off Alcon while expanding Sandoz would be a back-to-the-future sort of approach for Novartis, which acquired Alcon in a multistage, $51 billion buyout wrapped up in 2010. Novartis itself was formed in the merger of Sandoz and Ciba-Geigy in 1996.

It would also give Sandoz, which has focused lately on growing its biosimilars business, a boost for its portfolio of traditional generics. That business has fallen on hard times a bit lately, as pricing pressure has put a damper on sales growth. Sandoz has also posted “significantly fewer” new generic approvals than its rivals since 2012, Bernstein analyst Ronny Gal noted earlier this year.

And this at a time when Sandoz’s top rivals, Teva Pharmaceutical Industries and Mylan, have sewn up big acquisitions of their own. Teva just recently closed on its $40 billion buyout of Allergan’s generics business, and Mylan amped up last year with a $5.7 billion deal for Abbott Laboratories’ ex-U.S. generics.

A deal for Amneal could value the company at up to $8 billion, Bloomberg reports, depending on the structure. Negotiations are underway, the news service’s sources say, but Amneal is working with an adviser as it explores its options — which could mean talks with other potential buyers.

Amneal’s portfolio spans more than 100 products, including pills, topical treatments, patches, injectables and inhaled meds. It has grown partly via acquisition, buying products from Merck, Pfizer, Actavis and Warner Chilcott. It snapped up Actavis Australia and Epsilon India last year, and expanded its inhalation drug capabilities last year by buying a specialty manufacturing plant in Ireland. The company says it is now the seventh-largest generics maker in the U.S. and the fastest-growing worldwide.

Amneal would fit comfortably with Sandoz, a diversified generics maker with operations all over the world. The same cannot be said for Alcon at Novartis. In a restructuring announced earlier this year, Novartis transferred the eye business’ drugs to its pharma division to pare down its focus to consumer products and surgical devices. Novartis transferred its other consumer health products to a joint venture with GSK as part of their sale-and-swap last year, and it’s not a player in the broader medical devices field.

The Swiss drugmaker does appear to be giving the Alcon turnaround a serious try, however. It brought in former Hospira CEO F. Michael Ball to run the unit and boosted its spending on advertising and marketing on the consumer products side. That marketing has delivered some growth in Europe, but not so much in the U.S., and though the surgical business boasts a couple of new product approvals, it’s still struggling. Sales were down 3% for the third quarter.

“We still have work to do on Alcon,” CEO Joe Jimenez said during the call, but later added, “[W]e’re focused today on turning that business and that’s where 100% of our effort is going.”

That latter comment came in response to analyst questions about follow-up sales and acquisitions, now that the GSK deals are wrapped and Novartis’ animal health business, sold at the same time, is firmly ensconced at Eli Lilly & Co.

“In terms of other businesses that we may add or subtract, I wouldn’t want to speculate, but I would say that this is a dynamic process,” Jimenez said. “One of the things that we did learn from the GSK transaction, also with Lilly, is that focus is good on the company, and that’s why we’ve made the changes to our divisions.”

By Tracy Staton

Source: Fierce Pharma

comments closed

Related News

July 14, 2024

Flagship raises $3.6B for biotech investing

Life sciences

Flagship Pioneering said Wednesday that it’s added another $3.6 billion to its capital base, bringing the total raised since 2021 to $6.4 billion. Meanwhile, Flagship announced more than a dozen promotions and new hires in its leadership ranks. The changes include the promotions of Lovisa Afzelius and Paul Biondi to general partner and the addition of Dina Ciarimboli as general counsel and executive partner.

July 14, 2024

Mikael Dolsten set to leave Pfizer, sparking search for CSO successor

Life sciences

After 15 years at Pfizer, including a career-defining pandemic period, the chief scientific officer will leave the Big Pharma once the drugmaker finds his successor. Dolsten joined Pfizer when the company closed a megamerger with Wyeth in 2009. Pfizer made Dolsten president of worldwide R&D the following year. The executive has stayed at the top of Pfizer’s R&D tree ever since.

July 14, 2024

CDMO Lotte breaks ground on $3.3B production plant in Korea, touts growth goals

Life sciences

Late last week, Lotte Biologics broke ground on its flagship facility at the Songdo Bio Campus in Incheon International City, South Korea. The company is pitching the production effort as a key part of its quest to become one of the top 10 contract development and manufacturing organizations (CDMOs) in the world, Lotte said in a press release.

How can we help you?

We're easy to reach