Sandoz Wraps Up 2023 On a Solid Footing; New Launches and Margin Improvement Plan Look Promising

Sandoz is one of the largest off-patent pharmaceutical manufacturers in the world. It generates roughly 75% of sales from generic drugs and the remainder from biosimilars and it has a significant presence in Europe, a region that generates around half of its total sales. Generics, on average, suffer low- to mid-single-digit price erosion year over year, but we expect Sandoz to offset cost headwinds through more volume and new product launches. The firm also seeks to dedicate roughly $600 million over the next five years in expanding generics capacity which could help lift margins upon successful integration. We also forecast Sandoz to expand its presence in complex generics, such as injectables. They are more difficult and costly to develop/manufacture but also face less competition which helps to maintain higher price and margins compared with simple generics.