Novartis unit Sandoz sees rising sales, margins post-spinoff

Ahead of its Capital Markets Day in New York on Thursday, Sandoz, the generics drug business of Novartis (NYSE:NVS), announced plans to raise its sales growth and EBITDA margins following its planned spinoff expected in H2 2023.

The company focused on off-patent medications called generics and biosimilars also intends to generate an additional $3B in net sales over the next five years. Sandoz posted $9.1B in sales last year thanks to six consecutive quarters of single-digit growth.

Before the Capital Markets Day, the company projected mid-single-digit net sales growth for 2023 and 2024 – 2028 (mid-term). Its core EBITDA margin is expected to reach 24–26% mid-term from an estimated 18-19% in 2023.

In 2022, Sandoz witnessed a core EBITDA margin of 21.2% due to inflationary pressures and investments required for the proposed separation.

Sandoz also announced plans to more than double its free cash flow by 2028 from $0.8B in 2022. The company said it would enable the management to offer a full-year dividend of 20-30% of FY23 core net income before increasing the payout to 30-40% in the mid-term.

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