$SDZ (-1.76%)
$NOVO B (-1.92%)
$LLY (+0.05%)
$HIMS (-2.06%)

Basel (awp) - In its second year as an independent company, the generics specialist Sandoz has grown as planned. In an interview with journalists, CEO Richard Saynor and CFO Remco Steenbergen emphasized that both divisions and all regions contributed to the good performance.

The CFO said he was particularly proud of the 160 basis point increase in the core EBITDA margin to 21.7%. "This is in line with our medium-term targets for 2028 (between 24% and 26%)." The higher proportion of biosimilars in the sales mix contributed significantly to the margin improvement, Steenbergen adds.

While Sandoz is therefore moving towards its medium-term margin targets, the Group has already achieved another target ahead of schedule. "Our biosimilar mix ratio was already 30 percent in 2025, originally planned for 2028 - so we are ahead of schedule," announces Steenbergen. CEO Saynor adds that the "30 percent was more of a guideline than an exact figure." Ultimately, Sandoz wants to further accelerate this development.

Looking ahead, Sandoz CEO Saynor also emphasizes once again that the Group is facing a "golden decade" in which a record number of biologics patents are expiring, while regulations are also changing.

The generics specialist should clearly benefit from this thanks to its broad and deep product pipeline, the CEO is convinced. "Around 600 billion US dollars in drug patents will expire in the next few years, of which we currently cover around 60 percent." Biosimars account for around half of this.

Both pillars important

With its two main pillars - generics and biosimilars - Sandoz is also well positioned to benefit from future trends, Saynor emphasized in an interview with AWP Financial News after the conference call. "The generics business continues to be important as a stable cash generator, as small molecules can be developed quickly and cost-effectively." Although biologics are more expensive to develop, they offer greater value in the long term. "We see the combination of both segments as our strategic strength."

Challenges exist in the antibiotics segment in particular, where price falls due to global overproduction are putting pressure on profitability. The management is therefore calling for support from the European and Swiss governments to keep these important medicines available. "Europe must recognize how important these products are," appeals Saynor. "We are the last major producer of penicillin antibiotics in the West. Prices for raw materials are falling too much, which is not sustainable."

Meanwhile, the market is expecting new products such as the novel diabetes and weight loss GLP1 preparations to be launched in 2026 as soon as they have been approved in Canada and Brazil. However, no approval has yet been granted. "We expect a launch later this year."

While it $HIMS (-2.06%) will certainly not make it onto the market with their cheap "Wegovy copies", they will soon be joining $NOVO B (-1.92%) and $LLY (+0.05%) another pharmaceutical heavyweight (nice pun) in the GLP-1 sector will soon be entering the market: generics specialist $SDZ (-1.76%) from Switzerland

From Gemini:

Sandoz's planned GLP-1 products are primarily based on the active ingredient semaglutide.

As Sandoz specializes in the development of biosimilars and generics, the company aims to launch more cost-effective versions of the well-known originator products (such as Novo Nordisk's Ozempic® and Wegovy® ) as soon as their patent protection expires.

Details of Sandoz's drug strategy:

• Semaglutide: This is the most important active ingredient in the pipeline. Sandoz is preparing intensively for market entry, particularly in markets such as Canada, where patent protection for semaglutide expires in January 2026. Sandoz is expected to launch its own version there by mid-2026.

• Liraglutide: In addition to semaglutide, Sandoz also has biosimilars for liraglutide (the original preparation is Saxenda® or Victoza®) in development, as the patents here have already expired or will expire shortly in many regions.

• Technology: Sandoz uses both traditional chemical synthesis routes (for generics) and biotechnological processes (for biosimilars) for these complex molecules in order to ensure a high degree of conformity with the original product

Sandoz is a global leader in generics and biosimilars, now operating as an independent player in the market following its spin-off from Novartis in 2023. With a portfolio of around 1,500 products, the company covers almost all important therapeutic areas and relieves the burden on healthcare systems worldwide with low-cost generics. Its pioneering role in biosimilars (biotechnologically produced drugs) and its strong position as one of the last major vertically integrated antibiotics producers in Europe are particularly noteworthy.

At some point, it's time to call it a day and take the profits. Besides, I wanted to reduce my tech share anyway.

Profit flows into $7974 (-3.64%) and pharma top-ups $SDZ (-1.76%) & $SFZN. (-1.91%)

Sandoz Group Q3 2024 $SDZ (-1.76%)

Financial performance

Net sales: In the third quarter of 2024, Sandoz generated net sales of USD 2.6 billion, an increase of 12% in constant currencies compared to the third quarter of 2023. For the first nine months of 2024, net sales increased by 9% to USD 7.6 billion.

Growth in biosimilars: Strong growth of 37% in constant currencies for the third quarter of 2024, driven by the existing portfolio and recent product launches.

Generics growth: Generics sales increased by 4% in constant currencies in the third quarter of 2024.

Earnings situation

Core EBITDA margin: The forecast for the core EBITDA margin in the 2024 financial year is around 20%.

Key figures and profitability ratios

Net debt/core EBITDA ratio: This ratio is expected to remain below 2.0x in the medium term.

Segment information

• Europe: Net sales for Q3 2024 amounted to USD 1.4 billion, an increase of 12% in constant currencies.
• North America: Net sales of USD 598 million in Q3 2024, an increase of 18% in constant currencies.
• International: Net sales of USD 635 million in the third quarter of 2024, an increase of 8% in constant currencies.

Competitive position

Sandoz is the global leader in generics and biosimilars with a strong portfolio and strategic product launches in key regions.

Forecasts and management commentary

Sales forecast: Growth in the high single-digit range in constant currencies is expected for the 2024 financial year.

Product launches: Upcoming launches include Pyzchiva® in the US in the first quarter of 2025 and Wyost®/Jubbonti® in the second quarter of 2025.

Risks and opportunities

Opportunities: A strong biosimilar portfolio and recent approvals, such as for Pyzchiva® and Enzeevu™, create solid growth opportunities for Sandoz.

Risks: Price erosion and potential legal risks associated with new product launches.

Summary

Sandoz shows a strong financial performance with significant growth in biosimilars and generics. The company is strategically well positioned to achieve further growth with a solid pipeline offering and upcoming product launches. Management remains focused on executing the strategy and achieving the financial targets for 2024. Challenges such as price erosion and potential legal risks related to new products remain. Overall, Sandoz is well positioned to maintain its leadership position in the generics and biosimilars market.

Positive aspects

Strong growth in biosimilars: Sandoz recorded an impressive 37% growth in biosimilars in Q3 2024, supported by both established products and recently launched new products, underlining its leading position in this segment.

Increased sales guidance: Sandoz has raised its full-year 2024 sales guidance to high single-digit growth in constant currencies, reflecting strong demand in biosimilars and generics.

Successful product launches: Key milestones include the launch of Pyzchiva® in Europe and the FDA approval of Enzeevu™, strategically strengthening Sandoz's portfolio in essential therapeutic areas.

Confirmation of EBITDA margin: The confirmed EBITDA margin target of around 20% for FY 2024 illustrates Sandoz' operational efficiency and effective cost management.

Geographic expansion: Strong sales growth in all regions, particularly double-digit growth in Europe and North America, demonstrates the successful implementation of strategic launches and an increasing market presence.

Negative aspects

Price erosion: Despite strong volume growth, price erosion impacted net sales by 1 percentage point in the third quarter and 2 percentage points in the first nine months of 2024, which could dampen sales growth.

Decline in generics sales in North America: The generics segment in North America saw a decline due to the timing of new product launches, which could weigh on overall growth in this important market.

Potential legal risks: Future revenues could be jeopardized by potential litigation surrounding new products such as Enzeevu™, which could delay launches and impact growth projections.

Impact of divestments: The divestment of the Chinese business in the second quarter weakened growth in the international segment, indicating potential difficulties with market stability in certain regions.

Debt management: Although Sandoz maintains a net debt to core EBITDA ratio below 2.0x, active management of the debt portfolio to maintain an investment grade rating indicates continued debt risks.

$SDZ (-1.76%) - Approval for Enzeevu

The generics manufacturer has received approval in the USA for the biosimilar Enzeevu. Enzeevu is an active ingredient for the treatment of neovascular age-related macular degeneration, which Sandoz hopes will lead to growth in the important US market. The copycat drug Enzeevu is based on the blockbuster Eylea from Regeneron.

GG

$SDZ (-1.76%) - Convincing quarterly figures from Sandoz

The generics manufacturer generated sales of $2.6 billion in the second quarter of 2024, which corresponds to an increase of 9% in constant currencies. In the first half of 2024, sales rose by 7% to $5.0 billion. The biosimilar business in particular grew by 29%. Based on the positive business performance, Sandoz has raised its full-year sales growth guidance to a mid to high single-digit range in constant currencies.

Own position:

38 shares at 27.60

Happy Investing

GG