Company Reports

Sandoz delivered 9% revenue growth (7% in constant currency) for its second quarter. Adjusted earnings per share for the first half rose 17%. Shares traded up 7% on Aug. 5.

Sandoz is one of the largest off-patent pharmaceutical manufacturers in the world. It generates roughly 70% of its sales from generic drugs, with the remainder from biosimilars. Europe accounts for 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 to expanding generics capacity, which could help lift margins upon successful integration. We forecast Sandoz to expand its presence in complex generics, such as injectables. They are more difficult and costly to develop/manufacture but face less competition, which helps maintain higher prices and margins compared with simple generics.

President Donald Trump announced on July 21 that generic drugs imported to the US will face a 100% tariff for one year starting in August 2028 and 200% thereafter. The shares of all generic drug manufacturers under our coverage are trading down on the news.

Sandoz reported 11% revenue growth, or 3% in constant currencies, for the first quarter, in line with FactSet consensus. It maintained its full-year guidance for mid- to high-single-digit revenue growth at constant currencies. Shares trended down slightly on the results.

Sandoz is one of the largest off-patent pharmaceutical manufacturers in the world. It generates roughly 70% of its sales from generic drugs, with the remainder from biosimilars, and has a significant presence in Europe, a region that accounts for 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 to expanding generics capacity, which could help lift margins upon successful integration. We forecast Sandoz to expand its presence in complex generics, such as injectables. They are more difficult and costly to develop/manufacture but face less competition, which helps maintain higher prices and margins compared with simple generics.

Sandoz delivered 6% sales growth in constant currencies during the fourth quarter. Full-year results include 5% sales growth in constant currencies, 16% adjusted EBITDA growth, and 34% adjusted earnings per share growth. Shares are up 10% on the readout.

Sandoz is one of the largest off-patent pharmaceutical manufacturers in the world. It generates roughly 70% of its sales from generic drugs, with the remainder from biosimilars, and has a significant presence in Europe, a region that accounts for 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 to 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 maintain higher prices and margins compared with simple generics.

Sandoz reported 9% revenue growth (6% in constant currencies) during the third quarter. Full-year guidance for sales was maintained but EBITDA was slightly lifted, sending shares up 2% as we write.

Sandoz reported second-quarter results, with sales and adjusted EPS up 4% and 33% in constant currency, respectively, which were both higher than FactSet consensus. Management also reaffirmed full-year guidance of mid-single-digit sales growth in constant currency and a 21% core EBITDA margin.

Sandoz is one of the largest off-patent pharmaceutical manufacturers in the world. It generates roughly 75% of sales from generic drugs, with the remainder from biosimilars, and 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 to 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 maintain higher prices and margins compared with simple generics.

No-moat Sandoz reported first-quarter earnings that came in largely as we expected. Total sales of $2.5 billion was down 0.5% year over year but up 3% excluding foreign exchange and divestitures with 6% volume growth and 3% pricing headwinds. In constant currency, biosimilars were up 11% in constant currency and continue to lead the way for growth, and generics were flat as mild volume growth was negated by price erosion. We maintain our fair value estimate of CHF 41 per share and see shares trading in a modestly favorable territory.

On April 2, President Donald Trump announced a 10% tariff on imports from all countries, effective on April 5. As for the generics industry, pharmaceuticals were among the exemptions listed in the full order, as part of Annex II. The news provided a nice boost to the Indian generic manufacturers, including Dr. Reddy’s, which saw a mild uptick in share price upon market opening. For context, India exported roughly $8.7 billion of pharmaceuticals in the US according to Reuters and close to half of all generic drugs prescribed in the US are supplied by Indian manufacturers. This comes as a relief for the Indian generics suppliers, especially since other Indian exports are subject to 26% reciprocal levies. Tariffs on the industry could have meaningfully hurt the cost advantage the Indian manufacturers have over others and put pressure on top and bottom lines.

No-moat Sandoz reported solid fourth-quarter earnings that came in largely in line with our expectations. Total sales of $2.7 billion were up 6.7%, or 9% in constant currency, year over year thanks to strong performance across North America (up 13%) and Europe (up 7%). In the US, the continued uptake of Hyrimoz (adalimumab) led the way for biosimilar growth, and Europe benefited from the recent launch of Tyruko (natalizumab) and Pyzchiva (ustekinumab). Volume contributed 10 percentage points for growth and price resulted in a 1 percentage point headwind as the industry begins to see price erosion returning to low- to mid-single-digit levels. Generics and biosimilars were up 4% and 25%, respectively, in constant currency. After updating our model and inching up our near-term assumptions, we raise our fair value estimate to CHF 41 per share from CHF 39.

Sandoz is one of the largest off-patent pharmaceutical manufacturers in the world. It generates roughly 75% of sales from generic drugs with the remainder from biosimilars and 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.

No-moat Sandoz reported strong third-quarter earnings that came above our expectations. Total sales of $2.6 billion were up 11% year over year, or 12% in constant currencies, with solid performance across regions. Against this backdrop, management raised full-year guidance from mid-single-digit to high-single digit sales growth and maintained its 20% EBITDA margin guidance. After updating our near-term outlook as well as adjusting for CHF/USD rates, we are raising our fair value estimate to CHF 39 per share from CHF 35.50.

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.

No-moat Sandoz hosted a strategic review recently where it laid out a high-level overview of the generics and biosimilars industry, how the firm looks today in these dynamic markets, and where it aims to go. Overall, we think the event addressed nothing materially new to us but instead was used to educate investors what the firm has been working on since spinning off from its Novartis and going public last October. After making minor updates to our model and accounting for time value of money, we inch up our fair value estimate to CHF 35.50 per share from CHF 34.50.

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.

No-moat Sandoz received Food and Drug Administration approval for Enzeevu, biosimilar to Eylea (aflibercept). Enzeevu is approved to treat neovascular age-related macular degeneration. We think this demonstrates Sandoz's biosimilar expertise and bolsters the firm's ophthalmology portfolio, which was enhanced by the Cimerli (ranibizumab) acquisition earlier this year. We think the firm can utilize the salesforce team that came with the acquisition to push Enzeevu to market. We maintain our fair value estimate at CHF 34.50.

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.