SWITZERLAND – According to a German newspaper, Handelsblatt, the Swedish-based investment group EQT and the German Struengmann family are considering a joint bid for Novartis AG’s generics unit, Sandoz, for US$21.6 billion.
The price would make it the largest pharmaceutical transaction of the year. The Struengmann twins, Thomas and Andreas, were early backers of BioNTech when it was founded in 2008.
They have continued to be major shareholders in the company, which has developed one of the leading COVID-19 vaccines in response to the pandemic with Pfizer Inc.
The Struengmann family and EQT, who have already made several joint investments, were looking to form a consortium with additional investors, according to Handelsblatt. They paid US$2.7 billion for Siemens’ hearing aid division in 2014.
Reuters also reports that the Struengmann twins have previously done business with Novartis, selling a generics maker, Hexal, to the company in 2005.
Other pharmaceutical majors have made similar divestitures in order to focus on the business of drug development.
When Switzerland-based Novartis announced a plan to give Sandoz more autonomy three years ago, industry observers expected a bold move, similar to the divestitures made by other pharmaceutical giants to allow them to focus on the high-risk, high-reward business of drug development.
Pfizer Inc merged its generics maker, Upjohn, with Mylan, forming Viatris Inc, and Merck & Co Inc. has created Organon & Co.
There is an industrywide push by big pharmas to spin off their generics and consumer businesses.
General Electric recently announced plans to separate its medical and energy divisions from its aviation division, resulting in three separate publicly traded companies.
Pfizer divided itself into three business units in 2018 after failing to sell its consumer health segment, only to collaborate with fellow pharma leader GlaxoSmithKline (GSK) to merge their two consumer health businesses into a single joint entity with an estimated annual sale of £9.8 billion (US$13.06 billion).
Even more recently, Johnson & Johnson announced the formation of a new publicly traded company to handle its consumer health business.
Novartis was on the verge of selling a portion of its generics business to Aurobindo of India for US$1 billion when the deal was derailed by an antitrust review setback with the US Federal Trade Commission.
They have also retained some generic drug activities, such as ownership of Mega Pharma SA in Uruguay.
A divestment would further simplify Novartis’ structure after it spun off the Alcon eye care business in 2019 and agreed this month to sell nearly one-third of its voting stake in Roche back to its cross-town rival.