Richard Francis, CEO of Sandoz will step down at the end of the March. The abrupt announcement will fan the flames of rumours that parent company Novartis is planning a spinoff or sale for its generics arm.
This is a multi-year journey which I cannot commit to and therefore have decided that now is the right time to step down
Richard Francis, Sandoz
Novartis CEO Vas Narasimhan announced his plan to “de-integrate” Sandoz from the rest of Novartis operations in January, with a project to gradually transform Sandoz into an autonomous unit over the following 18 months.
In a statement, Francis said that he was excited by the ongoing transformation at Sandoz but felt that, “this is a multi-year journey which I cannot commit to and therefore have decided that now is the right time to step down.” Narasimhan said that Francis chose to leave now for personal reasons.
Francis’ decision to quit so early in Sandoz’s de-integration process has reignited rumours that Novartis may try to spin-off the generics business, despite noises emanating from the firm that no sales are planned. As pharma M&A expert Christoph Bieri of Kurmann Partners wrote in these pages in November last year, “spinning off Sandoz would be a logical final step in Novartis’ long-running M&A saga.”
Michael Nawrath of Zuercher Kantonalbank told Reuters that, “Even though the Novartis chairman said recently Sandoz isn’t for sale for now, a spin-off like they’re doing with Alcon [the company’s eyecare division – Ed.] would align with the strategy of becoming a focused, pure-play drugmaker.”
Spinning off Sandoz would be a logical final step in Novartis’ long-running M&A saga
Novartis overall saw a five percent growth in sales in 2018, as PharmaBoardroom reported last month, but Sandoz’s sales were down three percent, “due to US price pressure” according to the company.
Under Narasimhan, in charge since 2018, Sandoz has moved from simple generics to more differentiated products such as biosimilars and hard-to-copy generics with higher profit margins.
Sandoz has also recently divested some of its assets, including selling its US dermatology and oral solids business to Indian firm Aurobindo Pharma last year and selling eight US generics drugs to Beximco Pharmaceuticals of Bangladesh in early 2019.
Francis will be replaced by 25-year Novartis veteran Francesco Balestrieri, current head of Sandoz Europe.