(Bloomberg) -- Novartis AG’s generic-drug unit Sandoz could add $3 billion in sales over the next five years from its pipeline of new products, the Swiss company said, as it prepares to spin off the business in the second half of this year.
Net sales will likely grow in the mid-single digits through 2028, Sandoz said in a statement on Thursday, adding that free cash flow is expected to more than double in that period from $800 million last year. The results could enable a full-year dividend of as much as 30% of this year’s core net income, and the unit plans to boost that to as high as 40% in the mid term.
Novartis is spinning off Sandoz amid a push to focus on more profitable innovative medicines. The generic-drug unit in turn is focusing increasingly on copies of complex biological medicines, known as biosimilars, in order to increase its margins. Sandoz, which reported $9.1 billion in sales last year, said it has two dozen such products in its pipeline now.
The unit predicted its margin on earnings before interest, taxes, depreciation and amortization, excluding some costs, will expand to between 24% and 26% by 2028, from this year’s forecast of 18% to 19%. That’s lower than last year, due to inflation and the cost of establishing itself as an independent company, Sandoz said.
Sandoz made the statement ahead of its capital markets day for investors, which is scheduled to begin at 9 a.m. in New York.
©2023 Bloomberg L.P.