(Bloomberg) -- Novartis AG is reviewing options for its Sandoz generic-drug unit, including a separation of the business, as the Swiss pharma giant focuses on developing cutting-edge medicines for cancer and other diseases.

An update is expected before the end of next year, and keeping Sandoz is among the possibilities, the Basel, Switzerland-based company said Tuesday. The unit has struggled this year as demand lagged and public-health measures to stop Covid-19 reduced the cough and cold season. 

“We would explore all options,” Chief Executive Officer Vas Narasimhan said, adding that it’s the right time to reconsider the unit’s strategic fit. “We are in the very early stages.” 

The review follows moves in recent years to spin off the drugmaker’s Alcon eye-care division and ditch a stake in a consumer-health venture. Efforts to improve the Sandoz unit’s performance have sparked speculation that the company would consider a spinoff or initial public offering.

The shares rose as much as 1.5% in Zurich trading.

The unit has suffered from price erosion in the U.S., and Novartis has said previously that it would aim to transform the business to give it more autonomy and focus. Sandoz sales in the U.S. dropped 20% in the third quarter. A separation is viewed as the most likely outcome, analysts at Jefferies wrote in a note.

Novartis also stuck to its forecast, saying this year’s sales will grow by a low- to mid-single digit percentage, while earnings excluding some items increase by a mid-single digit percentage. 

The drugmaker said it’s confident new medicines will fuel growth in the mid- to longer term, raising peak sales estimates for two key products. Annual revenue from psoriasis and arthritis medicine Cosentyx will reach at least $7 billion, while sales of heart medicine Entresto climb to at least $5 billion, Narasimhan said. 

The drugmaker did endure a setback this week for its portfolio of experimental cancer drugs, with potential lung-cancer therapy canakinumab failing in another large study this week. The company hasn’t given up on the drug, saying there were signs it might help a subset of patients.

(Updates to add shares in fifth paragraph)

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