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Novartis' Generics Unit to Buy Aspen's Japanese Operations

Zacks Equity Research

Novartis AG’s NVS generic unit Sandoz announced that it has entered an agreement to acquire the Japanese business of Aspen Global Incorporated (AGI), a wholly-owned subsidiary of Aspen Pharmacare Holdings Limited.

Per the agreement, Sandoz agreed to pay EUR 300 millioninitially, plus a deferred amount not expected to exceed EUR100 million based on certain conditions being met. The transaction is expected to complete in the first half of 2020.

Shares of the company have gained 3% year to date compared with the industry’s growth of 3.7%.

Further, AGI inked a five-year manufacturing and supply agreement (with an additional two-year extension option) with Sandoz. The deal will be effective from the transaction’s closure for the supply of active pharmaceutical ingredients, semi-finished and finished goods related to the portfolio of divested brands.

The acquisition will enable Sandoz to expand its presence in the third-largest generics marketplace globally. The transaction will fortify Sandoz’s pipeline of hospital generic and biosimilar products with a dedicated sales, marketing and medical organization, thereby enhancing its ability to serve patients and customers in the hospital channel.

Aspen’s portfolio in Japan consists of about 20 products, which generated annual sales of EUR 130 million for the fiscal year ending in 2019. Aspen’s products include off-patent branded medicines, with a focus on anesthetics (including Xylocaine), specialty brands (including Imuran) and local brands.

In a separate release, Novartis announced positive interim results from the final part of its phase IIb FLIGHT-FXR adaptive design study.

The interim analysis showed that higher doses of tropifexor (140 Mu g and 200 Mu g) resulted in improvements in several key biomarkers of non-alcoholic steatohepatitis, including hepatic fat fraction, alanine aminotransferase and body weight, with favorable safety after 12 weeks of treatment.  These results confirm previous interim results and demonstrate a favorable safety profile for tropifexor. Full 48-week biopsy data from the study are expected in the second quarter of 2020. 

 

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Novartis AG Price

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Zacks Rank & Stocks to Consider

Novartis currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the biotech sector are Bristol-Myers Squibb Company BMY, GlaxoSmithKline plc. GSK and Merck & Co. Inc. MRK, all sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bristol-Myers’ earnings per share estimates have increased from $4.28 to $4.33 for 2019 and from $5.16 to $5.30 for 2020 in the past 60 days. The company delivered a positive earnings surprise the trailing four quarters by 8.30% on average.  

GlaxoSmithKline’s earnings per share estimates have increased from $2.89 to $3.08 for 2019 and from $2.96 to $3.02 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters by 17.23% on average.

Merck’s earnings per share estimates have increased from $4.89 to $5.06 for 2019 and from $5.35 to $5.44 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters by 12.51% on average.

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