New deal for Novartis

It is widely understood that new Novartis CEO Vas Narasimhan has a far more aggressive managerial style than his predecessor Joseph Jiménez. Since Narasimhan was appointed CEO, Novartis has entered into M&A agreements for a total of $25.8bn: it has acquired Advance Accelerator Application for $3.9bn and a number of assets of Spark Therapeutics for $170m, it has sold its stake in JV Consumer Health to GSK ($13bn) and, finally, it yesterday announced a $8.7bn agreement with AveXis. This impressive spate of deals contrasts with Joe Jimenez’s policy: the former CEO had always been reluctant to perform acquisitions, especially as the market had started rewarding targets with high premiums.

According to many people, the new Novartis head has much in common with the legendary CEO Daniel Vasella, who lead the group from 1999 to 2013, making radical changes to his predecessor’s policy. Not only has Narasimhan demonstrated outstanding dynamism in M&A, but he has also dramatically changed the group’s R&D strategy, as he wants to enhance the group’s focus on drug discovery and in new areas, such as precision medicine and digitalization.

Moreover, it is clear that the US manager will make momentous decisions on some assets. Specifically, he has shown he plans to put on sale Sandoz’s North-American arm, which manufactures generics and is valued over $2bn. Additionally, he is claimed to have decided to list Alcon–acquired during the Vasella era–which has potential to generate $25 to $35bn. Finally, Novartis might soon sell its stake in Roche, that is 6%, approximately worth $14bn at present.

In order to put this new deal in action, Narasimhan has radically reorganized his management team by appointing new managers and
dismissing others. Despite the large number of deals, Novartis’ shares have remained almost unaltered (Zurich) since the new CEO took office.