Sandoz Relocation Heralds Germany Generics Shakeup

Sandoz, the generics business of Swiss drug major Novartis, is to transfer its headquarters to Holzkirchen, Germany, from Vienna, Austria. According to the company, the move reflects trends in the German generics market, which is the world's second largest, as well as the emerging biotech industry in nearby Munich.

In February Sandoz agreed to acquire a leading German generics maker, Hexal AG, as well as US-based producer Eon Labs for roughly US$5.1bn. The expected purchase has effectively granted Sandoz a place at the top table of Germany's US$9.3bn generics industry.

Although Sandoz has pledged to retain its manufacturing plant in Kundl, Austria, the company's decision to transfer its head office is clearly a strategic move, as the German government shows few signs of accommodating ethical pharmaceuticals makers in its drive to cut the country's drugs bill. Prior to Sandoz's purchase, there had been claims that Germany's four leading generics makers constituted an oligopoly controlling over 50% of the market. Sandoz and other leading international producers are now expected to launch competitive products on the lucrative market.