Novartis CEO Vas Narasimhan said in January that his company is focused on the "de-integration" of Sandoz from the rest of its operations. But now, the copycat drug unit’s CEO won’t see that plan through, triggering renewed speculation about a potential spinoff or sale.

Richard Francis, 51, Sandoz’s CEO since 2014, will step down as of March 31, Novartis said on Thursday. Taking his place, at least for now, is Francesco Balestrieri, who now heads up Sandoz's European region.

Francis said in a statement that he's excited by the Sandoz overhaul but realized "this is a multi-year journey which I cannot commit to and therefore have decided that now is the right time to step down." Narasimhan said Francis chose to leave now for personal reasons.

Novartis has repeatedly tried to squash rumors that it will sell the generics business. Just last week, Chairman Joerg Reinhardt, Ph.D., told Swiss business newspaper Finanz und Wirtschaft that "Sales are not planned at the moment. There are also no specific considerations that would have the goal of separating Sandoz," according to Reuters.

But now, the surprising departure of the unit’s leader has again fueled that speculation.

"Even though the Novartis chairman said recently Sandoz isn’t for sale for now, a spin-off like they’re doing with Alcon would align with the strategy of becoming a focused, pure-play drugmaker," Zuercher Kantonalbank analyst Michael Nawrath said, as quoted by Reuters.

On Novartis’ fourth-quarter call in late January, Narasimhan said the company considers the generics franchise "an integral part of Novartis." But to "transform the business," he said, Novartis aims to make Sandoz an autonomous entity over the next 18 months. Narasimhan did leave a small window open for other possibilities, though; he said the company will talk more about where Sandoz is headed after its "de-integration" is complete.

Sandoz, like many generics makers in the U.S., has been fighting pricing headwinds for years. While Novartis’ branded drugs business and spinoff-ready Alcon eye care unit both grew in 2018, Sandoz’s net sales dipped 3% at constant exchange rates, hurt by 8 percentage points of price erosion, mainly in the U.S.

After Narasimhan took over last year, Sandoz embarked on a journey away from simple copycat pills and toward more differentiated products with higher profit margins, including biosimilars and hard-to-copy generics.

Later in the year, Sandoz sold its U.S. dermatology and oral solids businesses to India’s Aurobindo Pharma in a $1 billion deal involving 300 products. And early in 2019, it sold eight more U.S. generic drugs to Bangladesh’s Beximco Pharmaceuticals for an undisclosed amount.

In Thursday’s statement, Narasimhan praised Francis for consolidating Sandoz’s position "as a global leader in biosimilars." During his tenure, Sandoz launched a biosimilar to AbbVie’s megablockbuster Humira in Europe in October and a copycat to Remicade in November. On the complex generics front, it recently rolled out Symjepi, an epinephrine injection that could challenge Mylan’s authorized generic EpiPen and Teva’s copycat product.

Not all of Sandoz's prospective launches have come to fruition, though. It ditched a Rituxan biosimilar after the FDA turned it back with a complete response letter. The FDA also rejected Sandoz's copycat version of GlaxoSmithKline’s respiratory blockbuster Advair.

Now, at least on an interim basis, the responsibility for remaking Sandoz will fall on Balestrieri, a 25-year Novartis veteran who spent the last eight years running commercial operations in generics.

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