The 'Biobetter vs. Biosimilar War'

An even harder metric is the leap in LOE (Loss of Exclusivity) coverage—from roughly 50% today to approximately 80% post-2035. This means that over the next decade-plus, Sandoz aims to be present at the table for over 80% of every major biopharmaceutical patent cliff. But reality looms large: only 13 biosimilars are currently on the market, with another 39 in development. According to an industry report jointly published earlier by BIO, Informa Pharma Intelligence, and QLS Advisors, the overall success rate for biosimilars—from Phase I clinical trials through to final regulatory approval—is just 32.2%. Currently, Sandoz initiates about two biosimilars per year into internal development; this number is projected to rise to seven annually by 2035. In June, the company inaugurated a new ~10,000-square-meter development center—further ramping up its in-house R&D capacity. Yet relying solely on its proprietary pipeline cannot sustain Bio100’s ambitious goals. Sandoz must accelerate its 'buy, buy, buy' strategy—to reclaim time before patent cliffs arrive. This year alone, it has forged deep strategic partnerships with Samsung Bioepis (a subsidiary of South Korea’s Samsung Group) and Henlius (a Chinese biopharmaceutical company). Notably, its collaboration with Henlius secures rights to up to ten biosimilars, with an upfront payment of USD 77 million for three of them. Internally expanding R&D capacity while externally acquiring pipelines—both tracks are racing against the clock. Partners choose Sandoz primarily for its globally integrated regulatory and commercialization network. Jefferies notes that this infrastructure delivers greater long-term certainty for Sandoz’s R&D output and subsequent product launch timelines. Capacity expansion is the other critical piece. A new USD 300-million, 8,000-liter manufacturing facility in Ljubljana is scheduled to begin operations in 2029, focusing on low-to-mid-volume drug substance production—and integrating seamlessly with Sandoz’s existing facilities in France, the UK, and Germany. Richard Saynor sums it up as: “The scale of ambition matches the strength of the plan.” / 02 / A Lucrative Business Sandoz’s all-in commitment rests fundamentally on biosimilars having become its second growth engine. Its H1 2026 financial report shows that traditional chemical generic business—dragged down by market headwinds—has nearly stalled, whereas the biosimilar segment posted a 20% growth rate, with North America delivering near 50% explosive growth. In effect, virtually all of Sandoz’s current top-line revenue growth stems from biosimilars. Moreover, despite overall revenue rising only ~5%, Sandoz’s core EBITDA surged 15% year-on-year, with margins improving by ~90 basis points. The company explicitly attributes this profit expansion primarily to biosimilar portfolio optimization—augmented by operating leverage and enhanced manufacturing efficiency, collectively unlocking significant profit elasticity. A business capable of delivering both “high growth + high profit elasticity” is the dream pillar for any generic pharmaceutical company. Ultimately, biosimilars truly are a solid, profitable business. First, individual biosimilar products carry no low revenue ceiling. Biosimilars target mostly blockbuster originator drugs—each generating annual sales exceeding USD 1 billion.

Sandoz: The Independent Path of a Divested Generic Drug Business

The next step—often most underestimated—is this: In 2015, Zarxio (filgrastim) became the first biosimilar approved by the FDA under the 351(k) pathway; in 2024, Wyost/Jubbonti secured the first interchangeable biosimilar designation for denosumab; and Tyruko became the first biosimilar for multiple sclerosis. Sandoz isn’t merely ticking boxes—it’s systematically establishing regulatory precedents, one milestone at a time. II. Expelled from Home In 2018, Novartis announced Sandoz’s operational independence. In 2019, Richard Saynor assumed the CEO role and began sharpening strategic focus. On October 4, 2023, the full 100% spin-off was completed, and Sandoz began trading independently on the Swiss Stock Exchange (SDZ), with a market capitalization hovering around USD 10 billion. Novartis’ public rationale was clean-cut: becoming a “focused innovative pharmaceutical company.” Post-spin-off, it retained only four core therapeutic areas—cardiovascular-renal-metabolic, immunology, neuroscience, and oncology—and doubled down on next-generation platforms such as cell and gene therapy, radioligand therapy, and xRNA. Sandoz’s “generics + biosimilars” business—perceived as slow-growing, story-thin, and low-valuation—was spun off. Doing so improved Novartis’ P/E ratio and allowed investors to concentrate capital more effectively on high-margin innovation. This narrative holds water. Indeed, Novartis successfully shed a low-growth asset and redirected attention toward its high-margin innovative pipeline. Now let’s recalculate why this accounting deserves a second look. III. Numbers Speak Louder: How the ‘Old’ Business Became a Growth Engine Flipping through Sandoz’s 2025 annual report, the most striking figure isn’t top-line revenue—but rather structural composition. Just two-and-a-half years after the spin-off, biosimilars have grown from less than one-third to exactly one-third of total revenue. Meanwhile, core EBITDA margin stood at 21.7% (+160 bps YoY); in H1 2026, it climbed further to 20.9% (+90 bps). Management free cash flow reached USD 1.55 billion. This is hardly the profile of a “discarded burden”—its growth is steadier than Novartis’ innovative portfolio, and its margins continue climbing. Even more telling is the regional breakdown. In H1 2026, Sandoz’s North American biosimilar business grew +47% (constant currency), propelling its combined “generics + biosimilars” ranking in North America from third to second. Overall, net sales rose +3% in Europe, +1% internationally, and +15% in North America—virtually all incremental growth driven by biosimilars, while traditional generics declined slightly by 1% in H1 (only turning positive in Q2). Which segment serves as the engine? The answer is unmistakable. Nineteen consecutive quarters of net sales growth. For a “mature pharmaceutical company,” this sustained double-digit growth stems precisely from the very biosimilar business Novartis once deemed too slow. IV. Historical Financial Data (2019–2025) Placing pre-spin-off figures (as reported under Novartis’ divisional reporting) side-by-side with post-spin-off data (as an independent company) reveals trends far more directly than any narrative. * Profitability: From 2023 onward, figures reflect independent-company core EBITDA margin (non-IFRS); 2022 reflects Novartis divisional core operating margin—different口径, included here for reference only. Net sales converted at 1 USD million = 100 million USD (e.g., 2025’s 11,086m ≈ USD 11.09 billion). Growth rates are reported on a constant-currency (cc) basis; 2022’s USD-based growth was −4%.

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