Novartis has agreed to sell selected portions of its Sandoz US portfolio, specifically the Sandoz US dermatology business and generic US oral solids portfolio, to Aurobindo Pharma USA for $1 billion, consisting of $900 million in cash plus $100 million of potential earn-outs. Novartis says the transaction supports the Sandoz strategy of focusing on complex generics, value-added medicines, and biosimilars in order to achieve sustainable and profitable growth in the US over the long-term.

The Sandoz US portfolios to be sold to Aurobindo include approximately 300 products as well as additional development projects. The sale includes the Sandoz US generic and branded dermatology businesses as well as its dermatology development center. As part of the transaction, Aurobindo will acquire the manufacturing facilities in Wilson, North Carolina, as well as Hicksville and Melville, New York. The business had net sales of $600 million in the first half of 2018.

“Sharpening our portfolio focus in the US allows us to devote more time and resources toward our strategy of bringing complex generics, value-added medicines and biosimilars to patients in the US, creating higher value and opening up access to important medicines where alternatives are truly needed,” says Richard Francis, CEO Sandoz and Member of the Novartis Executive Committee, in a September 6, 2018 company statement. “Through this transaction, we are refocusing our business but also striving to ensure continuity of supply of important long-used generic medicines for patients and customers in the US.”

As part of the agreement, approximately 750 employees in Hicksville, Melville, Wilson and Princeton, New Jersey, as well as the field representatives for the PharmaDerm branded dermatology business, are expected to transfer to Aurobindo upon closing. “We recognize that the transfer of ownership for a business of this size is a complex process, and we are aware that it may create some uncertainties for our associates in the US. It is thus a priority for us to make the transition as clear and quick as possible”, says Carol Lynch, President of Sandoz Inc. and Head of Sandoz North America, in the company statement.

Following the transaction, the Sandoz US portfolio will include biosimilars, value-added medicines and complex generics such as injectables, respiratory and ophthalmics. Novartis says Sandoz will continue to focus its clinical development, business development and investment efforts on these areas.

The transaction is expected to close in 2019 following the completion of customary closing conditions.

Source: Novartis