New buyers lining up bids for Novartis' giant generics arm
With the fate of Novartis’ generics unit up in the air, more potential buyers are reportedly lining up for what could be one of the largest M&A deals the industry has seen in the last year or so.
Blackstone and the Carlyle Group are considering a joint offer for Sandoz that could value that unit at up to $25 billion, Bloomberg and the Financial Times reported on Tuesday. Someone with knowledge of the matter has confirmed to Endpoints News that Carlyle is in talks with Blackstone regarding a potential offer.
When asked about the reports, a Novartis spokesperson simply said: “We don’t comment on market rumor and speculation.”
The news comes about a month and a half after reports emerged from Germany that EQT and the billionaire Strüngmann brothers were in talks over a $21 billion bid. This wouldn’t be the Strüngmanns’ first rodeo, as they sold Hexal to Novartis in 2005.
Novartis’ Vas Narasimhan confirmed back in December that he’s seen some unspecified M&A interest, though no hard offers were on the table. In October, the chief executive flagged a plan to undertake a strategic review of Sandoz to see whether the generics group should stay inside Novartis, or be sold or spun off into an independent company. Generic drug prices have remained under intense pressure — and now, Narasimhan could follow in the footsteps of Merck, J&J and others and split off from the generics unit entirely.
“What is clear is that we want to focus Novartis primarily on innovative medicines,” Narasimhan told reporters late last year. “We generate 80% of our sales and 80 to 90% of our profits with new medicines, for example for cancer, cardiovascular problems or genetic diseases.”
A $25 billion deal would top last year’s most expensive biopharma acquisition — CSL’s $11.7 billion deal for Vifor Pharma — by a significant amount. M&A in the biopharma space has seen a drastic slowdown since a round of mega-deals in 2019, including AbbVie’s $63 billion acquisition of Allergan and Takeda’s roughly $62 billion takeover of Shire — however, analysts said back in December that they largely expect buyouts to pick up early this year.