Novartis’ OTC future comes into focus

OTCINACTION

Still ranked No.10 globally among OTC marketers, Novartis has nevertheless been gradually disinvesting from the consumer healthcare market in recent years, as it pursues its plan to “become a more focused innovative medicines company”, according to CEO, Vas Narasimhan. Deciding on the future of Sandoz and Alcon is key to this plan, and two developments over the past week have made Novartis’ objectives clearer.

First, Alcon filed an initial Form 20-F registration statement with the US Securities & Exchange Commission in relation to Novartis’ intention to spin off its eye care division Alcon as an independent, publicly-traded company. The deal is expected to complete in H1 2019 – subject to general market conditions, tax rulings and opinions, final endorsement from the Board of Directors and shareholder approval at the 2019 AGM – and “for Alcon, it means more strategic focus and flexibility to pursue compelling growth opportunities in eye care devices, where it has the strongest portfolio and unmatched ability to serve patients worldwide,” says Narasimhan.

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Secondly, despite further spin-off rumours, a Novartis spokesman told Reuters that the company was “completely committed” to Sandoz and “looking at transforming it and making it as strong as it can be in the global generics business.” Novartis recently agreed to sell its Sandoz US dermatology business and generic US oral solids portfolio to Indian-based Aurobindo Pharma. Novartis spokesman Sreejit Mohan said: “The whole goal is to try to make Sandoz as agile as possible … to give it the autonomy to be as agile as possible. That’s essentially been the message that we’ve been delivering, so I have no idea how that led to saying ‘split off.’”

Both developments make the future of the Novartis consumer healthcare business a little clearer, with sales likely to be fairly evenly split between a new standalone Alcon division – including key brands such as Systane, Tears Naturale and Vitalux – and the legacy Novartis OTC business, largely made up of Sandoz. Both these subsidiaries, Sandoz and Alcon, were excluded from the consumer healthcare j-v with GSK, and together have helped establish a Top 10 OTC company – however, split apart, it looks unlikely either will rank in the Top 20 by the second half of 2019.

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