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Sandoz, the generic arm of Novartis (NVS - Analyst Report), continues to advance its pipeline of biosimilars.

Sandoz generated sales of $6.7 billion in the first nine months of 2013 driven by double-digit retail generics and biosimilars sales increases in Western Europe (excluding Germany).

Biosimilars are the growth engine of Sandoz, generating double-digit sales increase driven by continued momentum in its three in-market products – Omnitrope (human growth hormone), Binocrit (epoetin alfa) and Zarzio (filgrastim).

Sandoz recently initiated a phase III clinical trial on its biosimilar version of Abbvie's (ABBV - Analyst Report) Humira (adalimumab).

We note that Humira is approved for the treatment of rheumatoid arthritis, psoriasis, and Crohn's disease.

The phase III study will evaluate the efficacy, similarity, and immunogenicity of adalimumab vis-à-vis Humira in patients suffering from moderate-to-severe plaque-type psoriasis. The positive results from the trial will enable Novartis submit the same to regulatory bodies in the U.S. and EU.

Humira generated sales of $7.6 billion in the first nine months of 2013. Hence, the successful development of a biosimilar version of Humira will be a major boost for Novartis. Apart from adalimunab, Sandoz also has other advanced stage candidates in its biosimilars pipeline, such as etanercept, a biosimilar version of Amgen's (AMGN - Analyst Report) Enbrel.

We are encouraged by the recent business developments at Sandoz. Last week, Sandoz received marketing authorization for AirFluSal Forspiro in Denmark after it proved the safety, efficacy and equivalence of AirFluSal Forspiroin multiple clinical trials.

In addition, Sandoz entered into a collaboration agreement with Taiwan Liposome Company Ltd. As per the agreement, Sandoz will be responsible for the commercialization of the latter's Liposomal Amphotericin B product in the EU and U.S. territories.

Novartis currently carries a Zacks Rank #3 (Hold). Right now, stocks like Shire (SHPG - Analyst Report) look attractive with a Zacks Rank #1 (Strong Buy).

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