(Reuters) - Switzerland's Novartis AG NOVN.S is preparing to auction its U.S. generic pill business, looking to shed a unit that has struggled amid fierce price competition, people familiar with the matter said on Friday.

FILE PHOTO: The logo of Swiss drugmaker Novartis AG is seen at its headquarters in Basel, Switzerland, January 25, 2017. REUTERS/Arnd Wiegmann/File Photo

The move illustrates how the unit has diverged from the fortunes of the rest of Novartis’ $10 billion Sandoz generics and biosimilars division. The company has fared better in manufacturing hard-to-make generic drugs, such as injectables and inhalables, than it has with easier to produce pills.

“It is a unique situation,” new Novartis Chief Executive Vasant Narasimhan told investors and analysts during the company’s fourth-quarter earnings call last month when asked about the future of the U.S. generic pills business.

“There are significant pricing declines. At least in the medium term, we don’t see a shift to that situation, and so we’re assessing how best to optimize that given that dynamic,” Narasimhan added, without saying what Novartis is looking to do with the business.

Novartis’ generic pills business could fetch as much as $1.6 billion based on estimated 12-month earnings before interest, taxes, depreciation and amortization of around $200 million, the sources said. A sale process for the unit will launch in the next few weeks and could attract other pharmaceutical companies or private equity firms, the sources added.

The sources asked not to be identified because the deliberations are confidential. Novartis declined to comment.

Sandoz was established in Basel in 1886 by Alfred Kern and Edouard Sandoz. By 1895 it had produced its first pharmaceutical substance, antipyrine, which was a fever-controlling agent.

In 1996, Sandoz was merged with rival Ciba-Geigy to form Novartis, one of the world’s biggest pharmaceutical companies which now has a market capitalization of 206 billion Swiss Francs ($223 billion).

Novartis has been looking for new blockbusters after its top seller, blood cancer drug Gleevec, lost its cancer protection. It is counting on approvals for new drugs against macular degeneration, a cause of blindness, and migraine, in partnership with U.S. drugmaker Amgen Inc AMGN.O, as well as a pair of new multiple sclerosis drugs, to revitalize its growth.

Novartis also said last year it is considering a spin-off of its eyecare business Alcon.

(This version of the story corrects Novartis’ market capitalization in 8th paragraph)