Sandoz has marked its first anniversary as an independent standalone company by raising its full-year guidance for 2024, predicting high-single-digit turnover growth in constant currencies – up from the previous forecast of mid-to-high-single-digit growth – and a core EBITDA margin of around 20%, as its portfolio continues to shift towards high-value biosimilars.
The firm’s management explained during Sandoz’s third-quarter earnings call that strong growth in biosimilars, “limited” price erosion and input cost inflation in the second half of the year, and “further manufacturing efficiencies” would all help to drive profitability. And its recently-announced transformation program was expected to generate around $50m of savings in the second half.
In the third quarter, Sandoz’s sales rose by 12% at constant currencies – and 11% as reported – to $2.60bn, aided by price erosion during the quarter coming in at just 1%, which CEO Richard Saynor observed was “below the historical level,” and was “consistent with the decreasing price erosion we’ve observed in the last quarters, and we’ve assumed a similar low level for the rest of this year.”
For the first nine months of 2024, net sales were up by 9% at constant currencies and by 8% as reported to $7.6bn. “Net sales growth was achieved across generics and biosimilars, with generics accelerating in the third quarter and strong double-digit biosimilars growth in both the third quarter and first nine months,” Saynor observed. “Additionally, all three regions contributed to this strong performance.”
Generics sales up by 4% in Q3 to $1.9bn benefited from accelerated growth in Europe on the back of recent launches, helping to offset a decline in North America “due to timing of new launches” in that region.
Meanwhile, biosimilars growth of 37% reflected uptake for Hyrimoz (adalimumab) in the US, as well as Sandoz’s acquisition of Cimerli (ranibizumab) in the US from Coherus. The firm also pointed to “continued strong demand for our first-ever biosimilar, Omnitrope (somatropin),” as well as contributions from the launches of Tyruko (natalizumab) and the Samsung Bioepis-partnered Pyzchiva (ustekinumab) in Europe.
Meanwhile, in Canada Sandoz launched in August its denosumab-based Wyost and Jubbonti biosimilar rivals to Prolia and Xgeva, with a US launch planned for the second quarter of 2025 under a settlement with Amgen.
Enjoying ‘Considerable Progress’ In Biosimilars
During the call, Saynor highlighted the firm’s “considerable progress” in biosimilars, offering an update on several products in its portfolio and pipeline, with the CEO noting that Sandoz was “progressing well on key biosimilar assets in our pipeline and are well-positioned for upcoming launches in 2025.”
As well as acknowledging that Amgen’s recent at-risk launch of the first US rival to Eylea (aflibercept) “doesn’t change our thinking” in terms of Sandoz’s own approved Enzeevu aflibercept product, Saynor pointed to the upcoming US launch of Pyzchiva in the first quarter of 2025 – among the first wave of US Stelara competitors – as a significant upcoming opportunity.
He also celebrated the progress made by Sandoz with the Hyrimoz rival to Humira in the US. This was partly due to its private-label agreement with CVS’s Cordavis, which the CEO said had put Sandoz in “a leading position in terms of market access and payer coverage amongst adalimumab biosimilars.”
Meanwhile, providing an update on Sandoz’s Tyruko (natalizumab) version of Tysabri, Saynor said the product had been “steadily growing market share” since its launches in European markets that began in late 2023, “and we expect this to continue in the coming quarters.” And in the US, he reiterated that the firm was still working on approval for a JCV assay for Tyruko but expected to launch in that market next year.
Providing an update on Pyzchiva in Europe – which was rolled out from late July – Saynor said the product had been launched into 15 markets by the end of Q3, with uptake so far “very strong” as Sandoz continued to launch into additional markets. “The physicians’ reception is positive, reinforced by the availability of an initiation dose which is key to enabling patient switches,” he commented.
Furthermore, he hinted that the upcoming US launch of Pyzchiva would not only see Sandoz “capable of building a strong franchise on our own right,” but that the firm would also “consider looking at potential partnerships with pharmacy benefit managers if appropriate,” similar to the Cordavis deal on adalimumab.
Finally, Saynor highlighted the continuing success of Omnitrope (somatropin), the first biosimilar launched by Sandoz 18 years ago and for which the firm was “still seeing strong double-digit growth,” with the CEO suggesting that “this ultimately speaks to the sustainability of biosimilars.”
Other biosimilars in Sandoz’s pipeline include a rival to Keytruda (pembrolizumab) that is in Phase I and Phase III trials – with losses of exclusivity anticipated in the US in late 2029 and in Europe early in 2031 – as well as a biosimilar version of Opdivo (nivolumab) for which the firm expects a US LoE at the end of 2028 and a European LoE at the end of 2030.
Initial Focus On Europe, With US As ‘Incremental Opportunity’
In response to a question about Sandoz’s biosimilar pipeline strategy, Saynor said the firm was “generally therapy-agnostic. So, we don’t normally look at our pipeline and think about, we want to index in immunology or oncology,” even if “most biologics tend to be in those spaces anyway.”
Also, he acknowledged, “we don’t disclose the pipeline until we get to Phase III assets. Clearly, I don’t want to make my life any harder with our originators, or our competition, or our other players in the marketplace. But clearly, we look at a mixture of where there are larger opportunities, where we think we can leverage our scale and our technical capabilities, mixed with where we see margin expansion opportunities.”
Saynor also made some revealing comments on how geographies influenced Sandoz’s choices in this area, indicating that “we try and focus on where we see strengths in Europe and then we can see the US becoming an incremental opportunity.”
“I think many times, the trouble with the US market is, if you focus purely on the US, the timing [of] launch is very variable,” he observed. “You’ve got to go through the ‘patent dance’. So, we try and make sure that we file, launch and can leverage in Europe, and then the US can become an incremental opportunity.”
Small-Molecule Generics ‘More Of A Tactical Business’
Ultimately, he said, “our ambition is to become the leading biologics player in the US and, clearly, we’re well on track to deliver that.” But with Sandoz’s small-molecule generics business, “I don’t have the same aspiration,” he admitted. “It’s really much more, I guess, a tactical business. We want to think about where we can launch products and broadly keep that business stable.”
“I think this year, we will see the generics business probably still with a slight decline overall,” he conceded, despite recent high-profile launches such as paclitaxel. “But then, when you again step back, what’s really encouraging is the overall growth of the US business in the far more attractive biologics space.” But “the generics business has always been, for me, a more of a tactical business.”
And in terms of Sandoz’s R&D spend, while “we don’t break out the split between biosimilars and small molecules,” Saynor nevertheless commented that “certainly, I would say more than half of the spend tends to go towards biologics and a smaller proportion to small molecules.” And “I don’t see that change materially shifting.”
“Again, if we look at the broader picture, there’s $400bn of product coming off patent in the next 10 years. In fact, there’s more product coming off patent in the next 10 years than has come off in the history of this industry. So, no shortage of opportunities.”
“Small molecules are still highly attractive,” he emphasized. “We still aim to cover about 80% of LoE in Europe. And actually, 60% of all the products coming off patent I would class as small molecules, so still an attractive share.”
“Clearly, the bulk of, or a larger proportion of our R&D spend tends to go around biosimilars because they’re more expensive. But also, there are a lot of synergies between the two. So, clearly, a lot of the clinical, a lot of the regulatory and medical organizations are a shared resource between both the biologics development and the small molecule development.”
“I would like to overall increase the quantum,” he concluded, “but not necessarily stopping small molecules, because I still think it’s an attractive space and generates the cash momentum that you need for the longer-term investments that you need to make in biosimilars.”
