After the the spin-off from Novartis on the 4th of October the off-patent medicine business Sandoz itself is tradeable on the Swiss Exchange.
Sandoz is a global pharmaceutical leader specializing in off-patent medicines, including generics and biosimilars. Generics face intense competition and pricing pressures, while biosimilars are more complex but offer a more favorable competitive environment. The recent performance of Sandoz has been underwhelming, with declining sales and flat margins. Factors include pricing pressures in the generics market, slower-than-expected biosimilar launches in the US, and management distractions due to business separation activities.
However, the US biosimilars market is now at a turning point, and Sandoz aims to capitalize on it by launching high-value biosimilars in the coming years, with the first already introduced in early July. This strategic shift could lead to an upward trajectory in biosimilar performance in the US.
In this context a Callable Barrier Reverse Convertible offers an attractive coupon as well as a conditional protection with a US Barrier = 80%. On top of that, through the Callability of the product after 6 months (quarterly afterwards) an opportunity for a reinvestment in bullish markets is provided.
Source: Vontobel Research September 2023
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