Novartis Sells Parts of Sandoz US in Aurobindo, India for $ 900 Million

(Reuters) – Novartis AG (NOVN.Sannounced Thursday that it would sell Sandoz U.S.'s American dermatological and generic product portfolios in the US to Aurobindo Pharma Ltd (ARBN.NS) for $ 900 million, the Swiss manufacturer seeking to focus on higher growth sectors.

The agreement also includes about 300 additional Sandoz products and development projects and an additional $ 100 million in performance-based payments, Novartis said.

Aurobindo's shares rose more than 5% in the news, while Novartis' shares changed little in the early days.

Analyst Stefan Schneider of Swiss bank Vontobel said in a research note that the sale was not a surprise.

"We had assumed a sale price 1 time for such a transaction, which was not the case. We are aware that price pressure in the US generic market is greater than expected, with last year's revenue of $ 1.5 billion for this business and $ 1 billion for just $ 0 billion. , $ 6 billion.

The 131-year-old Sandoz unit was hit by price pressure in the United States, prompting Novartis chief executive Vas Narasimhan to sell shares of the Sandoz unit. .

He has so far stated that Sandoz's business in other countries remains at the heart of Novartis. Narasimhan also maintains Sandoz Biosimilars' activity – cheaper copies of complex biological drugs whose patents have expired – in the hope that growing demand from cash-strapped governments and insurers seeking to keep costs down will help Sandoz to increase its margins.

Novartis had, earlier this year, expressed its intention to sell the Sandoz unit after reporting disappointing sales on this unit.

"With this transaction, we are refocusing our operations, but we are also working to ensure the continuity of the supply of long-running generic medicines to patients and customers in the United States," said Richard Francis, Executive Director. of Sandoz.

Following the transaction, Sandoz's US portfolio will continue to be substantial and include biosimilars, value-added drugs and complex generics such as injectables, respiratory and eye care products, the company said.

"Overall, the transaction will position Aurobindo as the world's second largest player in dermatology and the second largest generic drug manufacturer in the United States," said N. Govindarajan, managing director of Aurobindo Pharma. bit.ly/2MRmXqA

As part of the deal, Aurobindo Pharma USA Inc, a Hyderabad-based company in India, will acquire the Wilson, North Carolina, and Hicksville and Melville, New York factories.

According to Novartis, approximately 750 employees as well as field representatives of the dermatological activity PharmaDerm should be transferred to Aurobindo.