The Chilean forward was sold by Barcelona to Arsenal for €40m, to create space for Suarez who quit Anfield.
Sanchez has begun his Gunners career in impressive form, hitting 14 goals in 20 matches, while Liverpool are enduring a torrid season.
“[Sanchez] would have been an ideal replacement for Luis Suarez. Goals, tenacity, pressing from the front, loses the ball – it goes past him he runs back,” Neville told Sky Sports.
“Everything Liverpool would have wanted to replace Suarez, obviously you could argue he wouldn’t score the goals Suarez would score, but I think he would have been the perfect replacement for Suarez.