Sandoz to acquire GSK’s cephalosporin antibiotics business for $500m

Sandoz, a division of the Swiss pharmaceutical giant Novartis, has finalized a deal to acquire the cephalosporin antibiotics business from GSK (GlaxoSmithKline) for up to $500 million. This acquisition grants Sandoz global rights to three major antibiotic brands: Zinnat, Zinacef, and Fortum in over 100 markets, significantly enhancing its position in the antibiotics market.

Exclusions and Financial Details:

The deal notably excludes rights in the United States, Australia, Germany, India, Pakistan, Egypt, Japan, and China, where GSK had previously sold or retained rights. Despite these exclusions, the transaction is significant, given that these three brands had combined sales of approximately $140 million last year in the markets included in the deal.

Cephalosporin Market and Sandoz’s Positioning:

Cephalosporins are a critical class of antibiotics used to treat a variety of bacterial infections and represent the largest antibiotic segment by global sales. With this acquisition, Sandoz not only strengthens its market share but also complements its existing leadership in generic penicillins, thereby consolidating its market dominance in essential antibiotics.

Strategic Importance of the Acquisition:

Richard Saynor, CEO of Sandoz, commented on the acquisition, stating, “This important transaction will further position Sandoz as a global leader in antibiotics—truly essential medicines that are the backbone of modern healthcare systems.” He further emphasized the synergies expected from the deal, including an increased promotional footprint that will support the growth of both the acquired brands and the existing Sandoz portfolio.

Manufacturing and Future Plans:

As part of the agreement, cephalosporin manufacturing will transition from GSK’s facilities to Sandoz following a four-year manufacturing and supply agreement (MSA), with plans for Sandoz to eventually take over the manufacturing operations entirely by 2025. GSK intends to close its cephalosporins manufacturing operations after the transition is complete.

Financial Structure of the Deal:

Sandoz will pay $350 million at closing, with additional milestone payments of up to $150 million contingent on the achievement of certain benchmarks. The transaction is expected to close in the latter half of 2021, subject to regulatory approvals and customary closing conditions.

This acquisition marks a pivotal expansion for Sandoz into a key area of antibiotics, reflecting a strategic move to diversify and strengthen its global product portfolio while supporting the broader health care system with essential medications.