Novartis’ M&A Medicine Is Under Review After Drug Trial Setbacks
Synopsis
Novartis faces investor scrutiny over its M&A strategy after drug trial failures, while patent expiries and pipeline needs shape its acquisition decisions.
Novartis M&A strategy is facing the scrutiny of investors again following two big clinical setbacks in September, which led to questions about the company's recent acquisitions and its drug pipeline.
The latest setback was from the experimental drug del-desiran for myotonic dystrophy type 1, which was acquired by Novartis, the Swiss pharmaceutical giant, in a $12 billion acquisition of Avidity Biosciences. The latter part of the trial did not meet the primary endpoint.
The drop in Novartis shares by 10.9% in a single session put the company's M&A strategy to the forefront. The drop wiped out nearly $30 billion in market value and erased the stock's year-on-year gains.
Investors Question Recent Deals
Novartis' most important shareholder, Artisan Partners, has proposed improved oversight of acquisitions for the board of the company and has reaffirmed its support for the chief executive Vas Narasimhan.
In the past three years, Novartis has invested over $30 billion in acquisitions and partnerships. Future transactions may be more modest, ranging from $5 billion to $10 billion of money, and may involve drugs in the late stages of development and close to approval, said investor Michael Hannig of DJE Kapital.
The Novartis M&A approach is also being reviewed in the light of the upcoming patent expirations. Novartis has U.S. patents listing expiration dates of 2029 for Cosentyx, 2031 for Kisqali and 2031 for Kesimpta.
Financials Put Pipeline in Focus
First-half 2026 net sales totaled $27.52 billion for Novartis, up from $27.29 billion a year ago. Operating income totaled $8.99 billion and net income was $6.41 billion.
Novartis reported net sales of $54.53 billion and net income of $13.97 billion for the whole year of 2025. The company reiterated its view of low-single digit sales growth and low-single digit decline in core operating income for 2026.
The company still has two other Avidity medicines, del-zota and del-brax, in development. Remibrutinib is the next key pipeline test with further specifics to be expected at a medical meeting in October.
Global M&A Activity
While the pharmaceutical sector remains active in dealmaking globally, the Novartis M&A strategy is being reviewed. The EY 2026 M&A Firepower Report predicted that life sciences M&A activity in 2025 will be $240 billion for a decrease in deals of 12% compared to 2024, despite the increase in spending.
The United States and Europe continue to be important pharmaceutical deal markets, but Chinese alliances were even more prevalent than anticipated. They accounted for 34% of investment from biopharma companies based in the U.S. and Europe in 2025, from 4% in 2020. Of the top 10 highest value alliances in that year, five had China-based companies.
Since Narasimhan became CEO in 2018, Novartis's stock has gained over 60%. During the same time, the Roche share price rose by approximately 108% and the share price of AstraZeneca climbed by approximately 200%.
Source: Reuters
Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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