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Novartis’s Sandoz spin-off and Sanofi’s portfolio slim-down reflect pharma push toward specialization

By Brian Buntz | September 18, 2023

Modern Medical Research Laboratory: Portrait of Latin and Black Young Scientists Using Microscope, Digital Tablet, Doing Sample Analysis, Talking. Diverse Team of Specialists work in Advanced Lab

[Gorodenkoff/Adobe Stock]

The pharmaceutical trend toward increasing concentration appears to be gaining momentum. On September 15, Novartis shareholders approved the company’s proposed spinoff of Sandoz, the generics and biosimilars unit. The company anticipates the deal to close in early October. Similarly, Sanofi is also taking a scalpel to its operations, offloading a selection of its central nervous system medications to Pharmanovia.

Sanofi, similar to several other of its pharma peers, is aiming to realign its portfolio, emphasizing areas where it can drive innovation and deliver robust growth.

Last week, Johnson & Johnson, for instance, announced a rebrand that traded its historic ‘Janssen’ pharma moniker for ‘Johnson & Johnson Innovative Medicine.’ The move is part of a broader initiative to prioritize higher-margin prescription drugs and medical devices. The company wrapped up its spinoff of its consumer segment earlier this year.

Novartis’s decision to spin off Sandoz is one of the most significant industry reboots in the history of the generics industry. While Sandoz has long been an important revenue driver for Novartis, the decision to spin off the unit marks a desire to refocus on higher-margin branded drug development.

Similarly, Sanofi CEO Paul Hudson is prioritizing growth in higher-margin areas.

The drive behind pharma specialization has history

The trend towards specialization, however, is not new.

In 2012, Pfizer sold its Wyeth infant milk formula business to Nestlé in 2012 and followed that with a spin-off of its animal health business, creating the publicly traded entity, Zoetis. Later, Pfizer merged its generic drug business with Mylan to form Viatris and even spun off their consumer health products to GSK. Viatris now counts as a top-20 pharma company.

Abbott Laboratories, once also a pharmaceutical behemoth, spun off its branded drug business in 2013, birthing AbbVie, now the third largest pharma company.

Merck, too, has also made similar moves. In 2022, they spun off a $6.5 billion business, including women’s health products and biosimilars, into a new public entity named Organon. This separation allows Merck to focus its resources into high-growth sectors like cancer drugs and vaccines.

Similarly, GSK purchased Novartis’ vaccines unit in 2014, acquired Novartis’ stake in their consumer healthcare joint venture in 2018, and in 2022, spun off their consumer health business to form Haleon.

About The Author

Brian Buntz

The pharma and biotech editor of WTWH Media, Brian is a veteran journalist with more than 15 years of experience covering an array of life science topics, including clinical trials, drug discovery and development and medical devices. Before coming to WTWH, he served as content director focused on connected devices at Informa. In addition, Brian covered the medical device sector for 10 years at UBM. At Qmed, he overhauled the brand’s news coverage and helped to grow the site’s traffic volume dramatically. He had previously held managing editor roles on two of the company’s medical device technology publications. Connect with him on LinkedIn or email at bbuntz@wtwhmedia.com.

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