Sandoz Group AG: Risk Reward Update

Research evidence excerpt

Sandoz Group AG: Risk Reward Update

UpdateM

Risk Reward – Sandoz Group AG (SDZ.S)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

Group sales growth at CER (%) 5.0 5.9 5.1 4.2

Core group gross margin (%) 50.6 51.1 51.5 51.8

Core group operating margin (%) 18.9 20.4 21.4 22.3

Core EPS growth (%) 34.4 8.3 13.1 9.9

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

5 key biosimilar launches in the US (Humira, RISKS TO UPSIDE FY Dec 2026e

Tysabri, Stelara, Eylea, Prolia/Xgeva) Improvement of the pricing / competitive

contributing to growth in the biosimilar business environment in US generics Sales / 12,059

(30% of 2025 sales). Faster delivery of margin expansion initiatives Revenue 11,892 12,273

Pricing and competition dynamics in the generics than expected (US$, mn) 12,159

business (70% of 2025 sales). Faster uptake of biosimilars than expected

RISKS TO DOWNSIDE 2,440

GLOBAL REVENUE EXPOSURE EBIT

Delays in biosimilar launches due to 1,748 2,615

(US$, mn)

APAC, ex Japan, Mainland development / regulatory / IP / contracting 2,276 0-10% China and India issues

0-10% India Deterioration of the pricing / competitive

0-10% Japan environment for US generics EBITDA 2,725

0-10% MEA Efficiency initiatives do not deliver the margin (US$, mn) 2,411 3,030

0-10% Mainland China improvement expected 2,738

0-10% UK

20-30% North America

OWNERSHIP POSITIONING EPS 3.94 40-50% Europe ex UK 3.65 4.36

(US$)

Source: Morgan Stanley Research Estimate Inst. Owners, % Active 73.1% 4.07

View explanation of regional hierarchies here HF Sector Long/Short Ratio 2.6x

HF Sector Net Exposure 13.1% Mean Morgan Stanley Estimates

MS ALPHA MODELS Source: Refinitiv, Morgan Stanley Research

Refinitiv; MSPB Content. Includes certain hedge fund

3/5 3 Month exposures held with MSPB.