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Novartis to Divest Portions of Sandoz US to Aurobindo

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Novartis’s announcement

Novartis (NVS) announced today, September 6, that it has agreed to sell select portions of its Sandoz US portfolio to Aurobindo Pharma USA for $0.9 billion in cash and $0.1 billion in potential earn-outs. The select portions include the Sandoz US dermatology business and the generic US oral solids business.

The above chart shows some details of the agreement.

The deal includes ~300 products and additional development programs that will be transferred from Sandoz’s US portfolio to Aurobindo.

The deal also includes its US generic and branded dermatology businesses, as well as the dermatology development center.

The manufacturing facilities that Aurobindo Pharma will acquire include Wilson, North Carolina; Hicksville, New York; and Melville, New York.

The company will also transfer to Aurobindo Pharma ~750 employees from Hicksville, Melville, Wilson, and Princeton, and field representatives for PharmDerm, the branded dermatology business. The transaction could be completed in 2019 after the completion of the customary closing conditions.

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Impact on Sandoz

The select businesses reported net sales of $0.6 billion in the first half of 2018.

After the transaction is completed, the Sandoz US portfolio will include biosimilars, complex generics, and value-added medicines. The transaction supports Sandoz’s strategy to achieve sustainable and profitable growth in the US markets.

Carol Lynch, president of Sandoz, commented that the transfer of ownership for this business will be a complex process and may create uncertainties for the company’s associates in the United States.

The Invesco BLDRS Europe Select ADR ETF (ADRU) holds 6.4% of its total investments in Novartis AG ADR (NVS), 2.9% in GlaxoSmithKline ADR (GSK), 2.6% in Novo Nordisk ADR (NVO), and 2.9% in AstraZeneca ADR (AZN).

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