Moody's gives Baa2 to Sandoz

Moody's Investors Service said it assigned first-time Baa2 long-term issuer ratings to Sandoz Group AG, a global generic pharmaceuticals and biosimilars' company, which is being spun off from Novartis AG (A1 positive).

The outlook is stable.

Moody’s said Sandoz's Baa2 long-term issuer ratings reflect its position as one of the global leaders in generic pharmaceuticals and biosimilars, enjoying market leadership in Europe; its technological and manufacturing capabilities to develop and produce complex generic drugs and biosimilars; its very good product and geographic diversification; and positive volume growth fundamentals for the industry.

The Baa2 rating also considers Sandoz' concentration in the off-patent drug business; uncertainty with regard to the timing of launch and revenue contribution of new biosimilars, which Sandoz expects to launch in the U.S. in the next couple of years and will largely drive the company's expected return to growth in this market; execution risks related to the separation from Novartis and to Sandoz's margin improvement plan, the agency added.

Social considerations, which include risks related to litigation and product safety and governance considerations, which include the company's financial policy and track record, were key to the rating action, Moody’s said.

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