Sandoz: The Golden Decade of Biosimilars

"Your margin is my opportunity."

– Jeff Bezos

Patent Cliff.

Few words are feared more in healthcare investing.

And the metaphor is chosen well: this is not a gentle, gradual decline. A patent cliff is the sudden, sharp, often brutal collapse in revenue a pharma company suffers the moment a blockbuster drug loses patent protection — and a flood of cheaper copies pours into the market.

Take Humira, for years the best-selling drug in the world. When its US exclusivity fell in 2023, more than a decade of carefully defended pricing power evaporated within quarters. Billions in annual sales — gone, not slowly, but off a cliff.

And here is the uncomfortable part for Big Pharma: we are now entering one of the largest patent cliff periods ever recorded. Between 2025 and the early 2030s, blockbuster drugs with well over USD 200 billion in combined annual sales will lose exclusivity. Let’s be honest: we both know I cannot even pronounce half of those drugs correctly, but the list reads like the all-star team of modern medicine, and one by one, they all walk toward the edge (chart 1).

For the CEOs of the originator companies, this is the recurring nightmare that keeps strategy departments awake. But every cliff has a bottom. And at the bottom stands an industry with open arms, catching every dollar that falls — an industry you have certainly heard of, but whose scale, and whose split into two very different businesses, you may never have fully understood.

In both of those businesses, there is one global leader. Swiss, of course. And — like a certain aerospace champion we wrote about recently — once a spin-off, too.

Why should you care — both as a patient and as an investor?

And what exactly does this Swiss darling sell?

Enter Sandoz.

Chart 1: The Pharma Patent Cliff — which blockbusters lose exclusivity, year by year

Sandoz and The Art of the Copy

Sandoz was spun off from Novartis in October 2023 — 140 years of heritage, suddenly standing on its own two feet.

Today it sells around 1,300 medicines in more than 100 countries, reached over one billion patients last year, and generated USD 11.1 billion in net sales in 2025.

The business splits into two areas that sound similar but could hardly be more different (chart 2):

• Generics (70% of sales): identical copies of chemically simple pills — think painkillers, blood pressure medication, antibiotics. Once the patent expires, the molecule can be replicated exactly. Development costs a few million dollars, approval is fast, and prices drop by 80–90%. A high-volume, low-margin business — the definition of scale.
• Biosimilars (30% of sales): “copies” of biologics — and here it gets interesting. A biologic (from the Greek bíos, life) is not manufactured by chemistry but grown inside living cells, genetically engineered to brew a specific protein. Think of the antibody therapies that fight cancer or autoimmune diseases — molecules hundreds of times larger and more intricate than a simple pill, folded into three-dimensional shapes no factory can stamp out identically. Where a generic is a perfect photocopy, a biosimilar is a master forger’s reproduction: matched batch by batch until it is clinically indistinguishable, but never an exact copy — hence bio-similar. That difficulty is precisely the point. Development takes up to ten years and USD 100–200 million per asset. The reward: far fewer competitors, higher prices, higher margins.

For you as a consumer, both are unambiguously good news: same medicine, fraction of the price. Sandoz alone generated an estimated USD 26 billion in healthcare system savings in 2025.

Yep, not all heroes wear capes, my beloved arvy’s Weekly reader.

Fun Fact: If you grew up in Switzerland, you are probably already a Sandoz customer. That fizzing orange tablet from your childhood? Calcium Sandoz — on the market for nearly a century.

Sandoz is not just a participant in this industry — it defined it.

Europe’s largest generics player. The company that launched the world’s first-ever biosimilar (Omnitrope, 2006) and the first US biosimilar (Zarxio, 2015), decades before the term entered investor vocabulary.

And here is the thought for your portfolio: Sandoz is the natural hedge to Big Pharma. The very patent cliff that terrifies Roche, Novartis, Pfizer, Merck, Novo Nordisk, Eli Lilly, and AbbVie shareholders is Sandoz’s order book. Its pipeline is, quite literally, a list of its competitors’ bestsellers. Whoever owns innovative pharma and Sandoz owns both sides of the cliff. And that order book?

It has never been fuller than right now.

Chart 2: What does Sandoz do? Two pipelines, each targeting USD ~200 billion of originator sales

Sandoz in the midst of The Golden Decade of Biosimilars

Think of Sandoz as a two-engine aircraft.

Engine one, generics, is the attractively boring foundation: steady volumes, reliable cash generation, growth in the low single digits — the engine that pays for everything else. Engine two, biosimilars, is the kicker: up 18% in the first quarter of 2026 alone, with growth accelerating for eight consecutive quarters.

And engine two is about to hit its richest air corridor in history. The global off-patent market is projected to grow from USD 233 billion in 2023 to USD 443 billion by 2032. Within it, the biosimilar slice explodes from USD 25 billion to USD 122 billion — a 19% compound annual growth rate, driven by exactly that parade of falling blockbusters from chart 1.

My dear reader, who is still reveling in memories of the fizzing of that orange effervescent tablet, this is the Golden Decade of Biosimilars (chart 3).

Sandoz stands at the bottom of the cliff with 32 biosimilars in development, targeting originator drugs with roughly USD 200 billion in combined sales — including a pembrolizumab program aimed at Keytruda’s 2028 US expiry, the single largest revenue pool ever to go off patent. Add a freshly expanded partnership with Samsung Bioepis, margins guided from 21.7% toward 24–26% by 2028, and a Swiss-quality balance sheet that S&P just moved to positive outlook.

The market, of course, is no fool.

Since the spin-off, Sandoz traded at a median forward P/E of around 14. Today it trades at 22. That is multiple expansion in its purest form — investors pricing in the bright future before it arrives. And yet, one number tells you this is not pure euphoria: over the same period, the free cash flow yield actually rose to 2.8%, well above its own historical average of roughly 2%. Read that again. The share price rallied hard — and the company still got cheaper on a cash flow basis, because the cash grew even faster than the price.

Market participants call this “growing into the valuation”. It is one of the best combinations an investor can find.

Still, let us be honest with each other, again, and as always: a wonderful business is not automatically a wonderful investment. Biosimilar prices erode at double-digit rates once competitors pile in. Pfizer and Amgen run biosimilar divisions of their own.

Pfizer and Amgen? Big Pharma?

Mhm, yes, and in case you ask yourself: why doesn’t everyone just run generics and biosimilars in their own business? Mixing the two (innovative pharma, their core, with generics/biosimilars) under one roof creates cultural and operational clashes — different incentives, talent, capital allocation, and management focus. What makes one successful often hurts the other.

So, cannibalization hurts more than it helps. Launching their own lower-priced version eats into the high-margin branded sales they were already making. Why voluntarily slash your own profits when independent generics will do it anyway?

Thus, the only thing that remains is that every single launch invites a courtroom ambush from the originator. And at 22 times earnings, a good part of the Golden Decade is already in the price. Expectations are a debt the future must repay.

Which brings us to the final and most important witness.

What does Mr. Market himself say?

Has he already cast his vote?

Chart 3: The off-patent market nearly doubles by 2032 — biosimilars grow at 19% p.a.

Sandoz Textbook Price Behavior

He has — and loudly.

Stan Weinstein, one of the great masters of stage analysis, described the ideal continuation buy decades ago: a stock in a confirmed uptrend, comfortably above its rising 30-week moving average, pauses.

It moves sideways for weeks.

Crucially, volume dries up during this consolidation — the tell-tale sign that sellers are exhausted. Whoever wanted to sell has sold. Then, one day, the stock breaks above the consolidation to a new high — on a surge of volume. Fresh, determined buyers. Weinstein marked this exact moment with the letter “A”: the ideal buy for a trader.

Now look at Sandoz (chart 4).

A textbook Stage 2 uptrend since the spin-off. A multi-week consolidation just under CHF 67 on visibly shrinking volume. And in June 2026: the high-volume breakout to a new all-time high above CHF 67 — point A, drawn in real time. No signs of fatigue, no distribution, no drama. The line of least resistance points up.

A “Good Story”: the structural winner of the largest patent expiry wave in pharmaceutical history, with a boring cash engine funding a fast-growing one. A “Good Chart”: a fresh all-time high after a picture-book consolidation. When both align, we pay attention.

So, the next time you read the words “patent cliff” and picture a pharma CEO staring anxiously over the edge, remember who is standing at the bottom, arms open, catching what falls.

For most of the industry, the cliff is where the story ends.

For Sandoz, it is where the business begins.

Chart 4: Sandoz weekly — low-volume consolidation, high-volume breakout to a new all-time high. Weinstein’s “Ideal Buy” in real time