In 2021, the generics and biosimilars segment accounted for 19% of total net sales to third parties, down from 22% in 2018. I would argue that Novartis' focus on newly developed and generic/biosimilar drugs is a key reason for the company's stagnant performance and comparatively weak profitability. Novartis recently indicated that it is considering a spinoff of Sandoz, suggesting that Blackstone ( BX) and The Carlyle Group ( CG) - which had been rumored to be joint buyers of the segment - have lost interest, most likely due to the increasingly challenging environment for leveraged buyouts.
EARLY 2000S BACKDROP UPDATE
The company is still evaluating possible options for the future of its generics and biosimilars division Sandoz, but expects to provide investors with an update by the end of the year.
In this article, I will discuss recent events and my updated investment thesis, as well as Novartis' performance in the first half of 2022, as the company just released its results for the period. Of course, the good performance against the backdrop of a very weak overall market should not be overemphasized, as the company is in the middle of a major buyback program. Since my first review, the share price has not changed significantly, while the S&P500 declined more than 16%, underscoring the non-cyclical nature of the business and its solid geographical diversification. The main reasons included the company's poor performance, lack of focus, comparatively weak profitability and seemingly unending restructuring efforts. I reported on Swiss pharmaceutical company Novartis ( NYSE: NVS, OTCPK:NVSEF) in early February and concluded that I am not interested in investing in the company at this time. Yuelan/iStock Editorial via Getty Images Introduction
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