Novartis, a Swiss drugmaker, has announced its proposal to spin off its generic medicines division, Sandoz. The company is offering its shareholders one Sandoz share for every five Novartis shares. The spin-off is expected to take place on or around October 4.

The Novartis board of directors has unanimously endorsed and recommended the proposed spin-off. As a result, the company has invited shareholders to an extraordinary general meeting on September 15. At this meeting, Novartis shareholders will have the opportunity to approve the special distribution.

If the proposed special distribution is approved at the extraordinary general meeting, the spin-off will be implemented through the distribution of a dividend-in-kind of Sandoz shares to Novartis shareholders. Sandoz ADRs (American Depositary Receipts) will also be distributed to Novartis ADR holders.

Sandoz, which contributed approximately 10% to Novartis’ group core operating profit of $16.7 billion in 2022, underwent a strategic review by Novartis CEO Vas Narasimhan in 2021. This review was prompted by increasing pricing pressures in the U.S. off-patent drug sector.

Novartis initially announced its plans for the spin-off of Sandoz in August 2022. This strategic move aims to optimize Novartis’ operations and focus on its core business areas.