M&A

It’s a seller’s world in biotech M&A, and Novartis CEO Vas Narasimhan has his check book out and pen ready

The Alcon spinoff is officially done today, debuting on the Swiss exchange with a market cap of $25 billion-plus, and Novartis CEO Vas Narasimhan is planning a long-running shopping spree in search of important new biotech products. And he’s been clearly focused on a late-stage strategy that has triggered a flashing red warning light at a world of potential rivals.

In several interviews, including this one with the Financial Times, the youngest CEO in Novartis history is newly liberated. He has a pipeline stuffed with drugs he’s certain are blockbusters-to-be, with 4 late-stage drugs set to launch this year — a remarkable achievement, especially as several of them really are tapped as blockbusters.

But after acquiring a taste for buyouts in oncology with new radiopharmaceuticals — $3.9 billion for Advanced Accelerator Applications and $2.1 billion for Endocyte — in gene therapy with the $8.7 billion acquisition of AveXis and on the anti-inflammatory side of things with its $1.6 billion purchase of the anti-inflammatory portfolio IFM built up doing NLRP3 work, Narasimhan has come to love the a la carte menu.

Narasimhan is budgeting about 5% of market cap — roughly $10 billion — a year for new M&A. That’s all comfortably in the range of a bolt-on for a global giant like this. And it puts them into full shopping mode at a time that M&A overall is surging in the biotech world.

This isn’t desperation. Novartis is doing this standing on the threshold of what could be one of its most productive periods ever. As we reported recently, the pharma giant has 3 of the top 10 blockbusters EvaluatePharma tapped for 2019: Zolgensma (AVXS-101), brolucizumab and Mayzent (siponimod). Those 3 therapies come with 2024 sales projections of more than $4 billion.

Novartis’ development approach, accelerating the late-stage pipeline with selective purchases, poses a real threat to the companies Narasimhan chooses to compete against. Zolgensma is positioned against Biogen’s new — and desperately needed — blockbuster Spinraza. Brolucizumab targets Regeneron’s cash cow Eylea and Mayzent is the closely watched player in multiple sclerosis, with IP that some analysts have warned could prove to be a big hurdle for ozanimod — which could be painful for Celgene buyer Bristol-Myers Squibb.

Oddly, Narasimhan has also been forced to fight a rear guard action to maintain control of one of his new blockbusters — Aimovig. Amgen wants all those rights back, triggering a dust up among allies. But Novartis will fight that one to the last lawyer.

If recent history is a reliable guide on Novartis, Narasimhan’s upcoming acquisitions may well set off alarms throughout the industry. He’s been targeting clear market opportunities, not preclinical, blue sky research. And that’s a threat — if he does it right.


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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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