Sandoz’s stock market entry sees high hopes meet sobering reality

Sandoz’s entrance into the stock market on Wednesday faced a chillier reception than expected. The biosimilar and generic drugmaker, which recently parted ways from Swiss healthcare behemoth Novartis, began trading at a valuation of 10.3 billion Swiss francs ($11.2 billion). This valuation disappointed many, especially considering that analysts had predicted figures ranging anywhere from $11 billion to a lofty $26 billion.

Sandoz's stock market entry sees high hopes meet sobering reality

Pre-market predictions had set high expectations. Deutsche Bank, for instance, estimated Sandoz’s worth to be between $11-13 billion. Berenberg Bank gave an even more optimistic forecast, pegging it between $17-26 billion, while Jefferies expected an equity value ranging from $12.3-16.2 billion. Interestingly, despite this tepid debut, Sandoz has been crowned the most significant newcomer to the Swiss stock exchange since 2019. This title was previously held by Alcon, another Novartis offshoot, which had secured a valuation close to 28 billion francs during its debut.

September had seen investors flocking to new listings, marking it as one of the most active months for public debuts in the US and Europe since the onset of 2022. Notable listings include Schott Pharma on the Frankfurt stock exchange and other significant European entries such as ThyssenKrupp Nucera and Hidrolectrica in their respective nations. However, the overall stock market mood has been subdued in recent times. Market dynamics suggest a trend of receding stock values as bond yields climb, pointing to an era of high-interest rates that might persist.

On its debut day, Sandoz’s shares opened at 24 francs apiece. These shares, which also began trading as American depositary receipts, witnessed a dip, settling at 23.18 francs by midday. In light of the spin-off, Novartis investors were granted a single Sandoz share for every five shares of Novartis they possessed. The ripple effect of this transaction caused Novartis shares to enjoy a 2.7% uptick.

Novartis’s CEO, Vas Narasimhan, vocalized his optimism for Sandoz’s journey ahead, highlighting its robust foothold in the generics and biosimilars domain. He emphasized the brand’s forward-focused agenda, particularly in the realm of biosimilars – more affordable iterations of complex biotech medications whose patents have expired. Richard Saynor, Sandoz’s CEO, further echoed this sentiment, hinting at the company’s ambitious plans to roll out five additional biologic drugs. However, Sandoz isn’t alone in its pursuits. Heavyweights like Amgen, Fresenius, Organon, and Teva are already making strides in the biosimilars marketplace, making the race for dominance even more intense.