Novartis Sees Sandoz U.S. Sales Extending Decline This Year

(Bloomberg) -- Novartis AG said U.S. sales for Sandoz, its ailing generic-drugs unit, will continue to decline this year as the Swiss drugmaker weighs options including a potential sale.

Price pressure kept Sandoz's operating profit stagnant last year, Novartis said Thursday. Meanwhile, earnings overall last quarter were less than analysts estimated at $1.40 a share.

The stock fell in Zurich trading. Sandoz's disappointing results will probably boost the pressure on management to resolve the unit's future, Bloomberg Intelligence analyst John Murphy said. Blackstone Inc. and Carlyle Group Inc. are in talks about potentially teaming up on a bid for the drugmaker's generics unit, which could be valued at around $25 billion, people with knowledge of the matter said on Tuesday.

“We still need to see, of course, concrete proposals,” Chief Executive Officer Vas Narasimhan said in a Bloomberg TV interview. The unit has drawn “a lot of interest” from private equity as well as interest from other generic players, he said. “It's all in flux at the moment. We're very much in a position of listening.”

What Bloomberg Intelligence Says:
While Novartis points to an activity that's stabilizing, Sandoz nonetheless continues to cloud the performance of the larger strongly growing pharma business.
-- John Murphy, BI pharma analyst

The shares dropped as much as 3.7% in Zurich trading. The unit's U.S. sales will probably return to growth in 2023, according to Narasimhan.

Sales and earnings excluding some items will likely increase by a mid-single-digit percentage, the Basel, Switzerland-based company said. A year ago, Novartis predicted the same profit increase and slower sales growth.