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Sandoz: A Novartis Division

Abhinav Goyal

School of Nursing, University of San Diego

HCI 558: Strategic Planning and Management of Health Systems

Dr. Jannise Baclig

August 8, 2022
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Sandoz: A Novartis Division

A leader in generic drugs and biosimilars, Sandoz was created in 2003 when Novartis

combined all its generic operations under the umbrella of Sandoz (Sandoz, n.d.-m). The

purpose of this paper is to provide more insight about Sandoz's organizational structure and

strategic foundations.

History

Sandoz is said to have originated from a tiny chemical company named Kern & Sandoz,

which was primarily a dye maker and was established in Basel, Switzerland, in 1886. Antipyrine,

a medication used to treat fevers, became its first pharmaceutical product. The company formed

its first pharmaceutical division by 1917, and in 1929 it launched Calcium Sandoz, which would

go on to serve as the framework for modern calcium treatment. Calcium Sandoz still occupies a

significant spot in the company’s portfolio to this day (Sandoz, n.d.-m).

Kern & Sandoz became Sandoz Ltd. in 1939. Meanwhile, over the border in 1946

postwar Austria, a corporation named Biochemie was created. In 1951, two Biochemie

researchers developed acid-resistant penicillin, which allowed penicillin to be taken orally for the

first time. The finding fueled Sandoz’s further development and fast expansion. The first large-

scale manufacture of antibiotics and biotechnology-based compounds began with Sandoz’s

acquisition of Biochemie in 1963. Novartis was formed in 1996 when Sandoz merged with Ciba-

Geigy. For a few years, the Sandoz name stayed dormant before being revived in 2003.

Sandoz’s portfolio is still led by its top global positioning in generic antibiotics and biosimilars

(Sandoz, n.d.-m).

Organizational Structure

The business operations of Sandoz are managed by the Sandoz executive committee

(SEC), which is led by Richard Saynor. The SEC is run by a diverse group of people with

extensive experience in the generic pharmaceutical and biopharmaceutical sectors. Each

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member of the SEC represents a particular geographical location, company division, or

international position (Sandoz, n.d.-g).

Figure 1

Sandoz Organizational Structure

Note. Adapted from “Leadership,” by Sandoz, n.d.-g (https://www.sandoz.com/about-us/who-

we-are/sandoz-leadership), and “Sandoz – Org chart” by The Org, n.d.

(https://theorg.com/org/sandoz/org-chart).

Business Line

The introduction of Calcium Sandoz in 1929, the development of the first oral penicillin in

1951, and the identification of cyclosporin’s immunosuppressive properties in 1972, which are

now utilized in transplants, are all historical achievements associated with the Sandoz brand. A

broad variety of therapeutic areas are covered by the approximately 1,000 compounds offered

by Sandoz. Approximately 500 million patients use their products annually (Sandoz, n.d.-f).
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The company’s ability to innovate is also demonstrated by biosimilars, authorized

biologics that are equivalent in terms of quality, safety, and efficacy. Biologics are a new therapy

option for many diseases, but patient access is still limited. Biosimilars save healthcare

expenses while providing patients with increased access to biologics. Sandoz has been

developing biosimilars since 1996, with Omnitrope being the first to be released in Europe in

2006 and Zarxio in 2015 in the United States (see Table 1). Sandoz is the world’s leading

manufacturer of generic medicines and biosimilars (Sandoz, n.d.-f).

Table 1

Sandoz Biosimilar Portfolio

Sandoz biosimilar Indication area

Omnitrope® [somatropin]
Erelzi® [etanercept]
Binocrit® [epoetin alfa]
Zarzio®/ Zarxio® [filgrastim]
Ziextenzo® [pegfilgrastim]
Rixathon® [rituximab]
Hyrimoz® [adalimumab]
Zessly® [infliximab]
Endocrinology
Immunology (rheumatology, dermatology)
Oncology (supportive cancer care)
Oncology (supportive cancer care)
Oncology (supportive cancer care)
Oncology (blood cancers), Immunology (rheumatology)
Immunology (rheumatology, gastroenterology,
dermatology)
Immunology (rheumatology, gastroenterology,
dermatology)

Note. Adapted from “Biosimilar Portfolio and Pipeline” by Sandoz, n.d.-b

(https://www.sandoz.com/our-work/biopharmaceuticals/sandoz-biosimilar-portfolio-and-

pipeline).

Conclusion

Sandoz manufactures a wide range of medication delivery systems in addition to

standard generic drugs, such as inhalable, injectables, oral solids, oral films, and transdermal

patches. The company adds value to the healthcare system by providing a range of support

services and value-added drugs, including combination formulations (Sandoz, n.d.-l).

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Mission, Vision, and Values

According to Sandoz (n.d.-m), the Sandoz brand is a seal of quality, and healthcare

professionals all around the globe recognize it as a symbol of high-quality, low-cost drugs.

Mission

Sandoz’s mission statement is to discover new ways to improve and extend people’s

lives (Sandoz CAC, n.d.). According to Sandoz (n.d.-e), despite extraordinary medical

development over the previous century, at least 400 million people globally lack access to

essential health services, and more than two billion cannot afford to buy the medications they

require. Hence Sandoz’s purpose is to meet the world’s expanding healthcare demands by

developing cutting-edge methods to make high-quality medicine more widely available.

In the mission statement, Sandoz emphasizes how important innovation and access is to

its overall brand. The target is to always provide access to high quality medicines. According to

Sandoz (n.d.-k), Sandoz provides a wide selection of over the counter (OTC) medications that

may be obtained directly from a pharmacist without a prescription in addition to a robust and

comprehensive portfolio of prescription and hospital medications. Their OTC products, which

are available in pharmacies all around the world, provide superior value for customers and

include anything from allergy drugs to pain relievers. Thus, OTC medications are one strategy to

increase access to high-quality medications.

A key component of Sandoz’s business strategy is improving access to medicine, but

the company recognizes that there are numerous aspects to positively impacting people. So,

they also conduct a few focused initiatives to assure access for those who need it the most and

these projects are a step towards improving people’s lives (Sandoz, n.d.-e).

World Child Cancer

The survival rate for the 240,000 of the 300,000 children who get cancer each year who

live in developing countries is 10% as opposed to the 80% survival rate for those who live in

developed countries. In 2016, Sandoz collaborated with World Child Cancer, a nonprofit

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organization, by funding the establishment of specialized cancer treatment clinics on Mindanao

Island in the Philippines, where 1,000 cases of childhood cancer are predicted each year. The

collaboration was expanded in 2017 to assist initiatives in Ghana, Mexico, and Myanmar helping

to improve children’s cancer survival rates in these regions, bringing them closer to those in the

developed world. Sandoz supports the establishment of shared care treatment centers in rural

areas so that more children can receive early diagnosis and treatment, as well as raising

awareness of childhood cancer symptoms and supporting the training and professional

development of local healthcare professionals so that they can provide the best possible care

and treatment (Sandoz, n.d.-e).

Malaria Initiative

Novartis and its partners have supplied over 1 billion medications, including over 430

million pediatric doses, to malaria-endemic nations during the last two decades (Sandoz, n.d.-

o).

Vision

Sandoz’s vision statement is to be the world’s leading and most valued generics

company (Sandoz, n.d.-j). Sandoz is the only company in Europe that has produced high-quality

penicillin for more than 70 years. The company has emerged as the world’s largest

manufacturer of generic antibiotics (in terms of volume). Sandoz products were used by 500

million patients in 2020 and Sandoz has evolved into a global generics leader, with annual sales

of over $10 billion (Sandoz, n.d.-m).

Values

The company’s core values include high integrity, transparency, and environmental

sustainability (Sandoz, n.d.). The firm maintains high ethical standards to satisfy and fulfill

society’s norms and expectations of international healthcare companies (Sandoz, n.d.-d).

Sandoz checks the distribution of their medications on a regular basis to ensure compliance
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with their distribution rules and will take any legal action required to guarantee the correct use of

their medicines (Sandoz, n.d.-c).

Sandoz encourages a diverse workforce and gives preference to partners and suppliers

that share these crucial principles to fulfill their commitment to diversity and inclusion, society,

and equity. The firm is also dedicated to transparent reporting, which is a key component of

their United Nations global compact duties. For health, safety and environment, Sandoz tries to

use natural resources wisely and to reduce the environmental impact of their actions and goods

(Sandoz, n.d.-d).

Conclusion

The company’s objective to seek innovative methods to improve and lengthen people’s

lives appears to have taken a significant stride forward when they produced the first

biosimilar as it provides patients with better access to biologics. According to Sandoz (2022), to

tackle global health injustice and inequality, Sandoz recently announced a global initiative called

Act4Biosimilars that aims to increase patient access to biologic medications by improving

biosimilar approval, accessibility, acceptance, and affordability (the four A’s).

The malaria initiative and partnership with World Child Cancer have been some of the

targeted programs by Sandoz to improve medicine access to people who need it in developing

countries. Sandoz’s global presence and diverse product line, which includes OTC medications

and generic antibiotics, are assisting in the realization of its strategic goals.

Situational Analysis

According to Lake (2020), a situation analysis is an examination of a company’s internal

and external elements. It defines a firm’s competencies, customers, future customers, and

business environment, as well as their influence on the organization.

Sandoz’s strengths are the capabilities and resources that it can utilize to establish a

sustainable competitive advantage in the market, while its weaknesses are the areas,

competencies, or skills that it lacks, limiting the firm’s ability to develop a long-term competitive
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advantage. Opportunities are macroenvironmental elements that Sandoz may employ to either

consolidate its current market position or expand further, whilst threats can obstruct Sandoz’s

business strategy (EMBA Pro for Executive MBA Professionals, 2019).

Figure 2

SWOT Analysis

STRENGTHS
Strong brand equity and brand awareness
First mover advantage
Streamlined processes.
Efficient operation management.
Successful go to market track record
Superior product and services quality
Diverse product portfolio
Robust domestic market
Strong financial statement
WEAKNESSES
Little experience of international market
Business model can be easily replicated
Low Return on Investment
Track record on environment
consideration
Lack of Work force diversity
Customer Dissatisfaction

OPPORTUNITIES SWOT THREATS

Growing market size
Lucrative Opportunities in International
Markets.
Increase in Consumer Disposable
Income.
Developments in Artificial Intelligence.
Changing Technology Landscape.
Threats of New Entrants
International Geo-Political Factors
Increasing bargaining power of buyers
Increasing costs component for working in
developed market because of environmental
regulations

After conducting the SWOT analysis (see Figure 2), it was observed that Sandoz brand

recognition is critical for acquiring new customers. The brand portfolio enables them to reach a

wide range of domestic market segments. Sandoz is one of the most efficient organizations in

its sector due to exceptional execution and effective operations management. Its financial

statement is strong, which will benefit the firm in the years ahead. Superior product and service

quality will help Sandoz increase its market share and expand internationally. Sandoz has a
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reputation of creating new products in the local market while also responding to market

demands (EMBA Pro for Executive MBA Professionals, 2019).

Sandoz’s 5% to 7% profitability may result in a lack of capital to invest in new ventures in

the future. Despite the company’s numerous patents and copyrights, the Sandoz business

model is easily replicable and it will need international expertise to access expanding markets.

Sandoz is not diverse enough, considering that most of its growth has come from its domestic

market. Project management is too focused on internal delivery, which may result in poor public

relations and customer dissatisfaction (EMBA Pro for Executive MBA Professionals, 2019).

Sandoz can use artificial intelligence advances to better predict consumer demand and

cater to niche groups, and enhance efficiency, save costs, and modify operations. Sandoz has

sought to diversify by using numerous brands at first, and subsequently introducing various

characteristics according to customer preferences. Sandoz is in a strong position to capitalize

on global market opportunities and gain market share (EMBA Pro for Executive MBA

Professionals, 2019).

With occurrences such as the U.S.–China trade dispute, Brexit, and the rise of yellow

vests in France during the previous three to four years, geopolitical risk has intensified.

Competitors may benefit from the cheap cost of addressing clients via social media and e-

commerce. Sandoz may face greater shipping and packing charges as governments work to

levy higher environmental taxes to encourage greener solutions (EMBA Pro for Executive MBA

Professionals, 2019).

Organizational Strategies

According to Pro (n.d.), Sandoz has an excellent project management record, and is

recognized for meeting project targets which allows the organization to manage time, project

expenses, and maintain project margins. Sandoz’s suppliers have minimal negotiating leverage

since the organization has expanded its supplier range by establishing a strong supply chain

across many nations. This enables them to manage supply interruptions as well as obtain items
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at very competitive pricing. Sandoz has an innovation-driven culture, in which a considerable

portion of income is spent on research and development.

Adaptive Strategies

Sandoz has established three important learning organization characteristics in its

processes and activities—exploration, innovation, and expansiveness (Pro, n.d.). The research

also states that Sandoz is focusing heavily on leveraging the power of analytics in corporate

decision making for marketing optimization, demand forecasting, customer relationship

management, inventory management, information sharing across the value chain, and other

purposes.

According to EMBA Pro for Executive MBA Professionals (2020), consumer behavior

varies greatly during boom and recession times as the customer’s purchasing power is affected

by the employment status and inflation. Sandoz has developed a pricing strategy to tackle

decreased profits from sale prices.

Market Entry Strategies

According to EMBA Pro for Executive MBA Professionals (2020), making marketing

decisions in the face of macroenvironmental uncertainty, competitive pressures and strategies,

and other economic considerations is what marketing strategy is all about. The 5C analysis

(company, customers, competitors, collaborators, and context) is useful for assessing market

conditions. Sandoz’s existing staff has a high skill level, and the company has a strong

marketing department, which allows it to construct creative and profitable marketing campaigns.

The 5C analysis enables marketing managers to assign probabilities to various types of risk

exposure Sandoz faces in the market and build marketing strategies appropriately. Sandoz is

exposed to four key forms of risk: risk associated with technology developments, demand risks,

manufacturing or delivery risks, and international risks.

Sandoz Bio may be vulnerable to patent, copyright, and other intellectual property theft if

it operates in foreign markets. Any marketing and diversification decisions should be made once
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these risks have been assessed. Sandoz’s marketing strategy must achieve two major goals:

carefully choosing target markets and devising marketing efforts to attain desired positioning in

the hearts and minds of the target market (EMBA Pro for Executive MBA Professionals, 2020).

Competitive Strategies

In the context analysis, there are two types of risk exposure: international risks, and

technology and innovation risks. New entrants pose a threat to Sandoz’s profits. Decisions on

product line depth and competitor positioning apply to companies product strategy as well as to

its distribution and supply chain management strategies. Sandoz spends a substantial number

of resources on research and innovation in the fields of product design, process optimization,

marketing tactics, and establishing an IT network to support all promotion and distribution

strategies as a leader in numerous product segments (Pro, n.d.).

Implementation Strategies

Sandoz has high switching costs in its goods and services, resulting in high customer

retention, fewer marketing expenses, and a better capacity for the company to focus on its

customers.

Service/Support

Through Sandoz One Source, Sandoz provides a thorough patient support program

intended to facilitate patients’ access to biosimilars. Patients who are prescribed Zarxio or

Ziextenzo may benefit from the personalized support services provided by the Sandoz One

Source program. Some of the services offered are comprehensive insurance verifications, prior

authorization support as needed by the insurance provider, billing and coding details,

information on claims, denials, and appeals, and payer policy research. Additionally, Sandoz

One Source provides qualifying patients with financial aid (Sandoz, n.d. -i).

Service Action Line Plans

Biosimilars are used to treat and prevent numerous debilitating and potentially fatal

illnesses, including cancer, psoriasis, arthritis, and diabetes. Sandoz recently launched a new
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global effort called ‘Act4Biosimilars’ with the goal of increasing worldwide adoption of biosimilar

medicines by at least 30% in 30 or more countries by 2030. The act lists the 12 goals defined by

the steering committee under the 4As to fulfill the aim. These include equitable pricing, including

patients in treatment decisions, and expediting biosimilar development. The steering committee

is preparing an action plan to offer the strategies, resources, and activities required to equip and

empower stakeholders throughout the 30 nations and beyond to achieve these 12 goals

(Sandoz, 2022).

Summary

With increasing industry-wide competitive pressures and structural market changes,

Sandoz is attempting to keep up with the competition with a two-stage strategic transformation

plan with which it intends to boost its competitiveness and refocus the organization to promote

continuing transformation and future growth. The approach is part of an ongoing effort to

position Sandoz for sustainable growth in the global generics market (Sandoz, n.d.-n).

Consistently high quality is crucial to Sandoz’s long-term business performance and growth, and

they seek to meet and exceed stakeholder expectations by constantly improving standards and

procedures (Sandoz, n.d.-f).

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