Sandoz shares plunged Wednesday on their market debut after the generic and biosimilar drugmaker's worth was measured at a lower-than-expected 10.3 billion Swiss francs ($11.2 billion) in its spin-off from healthcare giant Novartis.
Analysts have published a wide range of higher valuation estimates. Deutsche Bank had said Sandoz, which accounted for 11% of Novartis' group operating profit in 2022, would likely be valued at $11-13 billion, while Berenberg had forecast $17-26 billion.
Jefferies had seen a likely equity value of $12.3-16.2 billion.
The debut made Sandoz the largest new entrant to the Swiss stock exchange since 2019, when another Novartis spin-off, eyecare company Alcon, was valued at about 28 billion francs.
After a lackluster several months, investors warmed to new listings in September with a slew of major market debuts in the United States and Europe that made for one of the busiest months since the start of 2022.
Among recent European share offerings, medical glass producer Schott Pharma debuted on the Frankfurt stock exchange last month, while German hydrogen firm ThyssenKrupp Nucera and Romanian energy producer Hidrolectrica went public in their home countries.
However, stock markets have generally been retreating over the past few weeks as bond yields surge on the prospect of persistently high interest rates.
Sandoz shares, which opened at 24 francs each, became members of the Swiss Performance Index and the Swiss Leader Index, among other stock market gauges, and American depositary receipts also started trading on Wednesday.
The stock was down 23.18 francs at 0844 GMT, for a total equity value of 10 billion francs.
As part of the debut, Novartis shareholders received one Sandoz share for every five Novartis shares they held.
With the Swiss stock exchange adjusting for the transaction, Novartis shares were up 2.7%.
Novartis Chief Executive Vas Narasimhan said in a statement that Sandoz was starting out from a position of strength as a global leader in generics and biosimilars.
He had put the business under a strategic review in 2021, following mounting pricing pressures in the U.S. off-patent drug sector. Cost inflation has recently taken a further toll on Sandoz's profitability.
Biosimilars, which are lower-cost copies of complex biotech drugs that have lost patent protection, will be a particular focus as the spun-off business seeks to boost sagging profit margins through 2028.
"As an independent company, Sandoz will be fully enabled to deliver on its purpose-driven strategy," said Sandoz CEO Richard Saynor.
Saynor told Reuters last month that the business plans to launch at least five additional biologic drugs.
Among the biotech mega-sellers that Sandoz is seeking to copy are Biogen's multiple sclerosis drug Tysabri, AbbVie's rheumatoid arthritis drug Humira, and Amgen's bone cancer drug Prolia, also known as Xgeva.
But companies such as Amgen, Fresenius, Organon, Teva and unlisted Boehringer Ingelheim are also competing in the biosimilars market.
