Novartis spent $15bn on M&A last year, with more to come

The comprehensive restructuring of Novartis under new CEO Vas Narasimhan resulted in $15 billion in bolt-on acquisitions last year, and he wants to keep up that momentum.

Speaking on Novartis’ fourth-quarter results call, Narasimhan said that an informal target would be a spend of around 5% of Novartis’ market cap on M&A each year, which would equate to around $10 billion, as the process of “redesigning” the company around advanced therapy platforms and data science continues.

Last year’s additions included gene therapy company AveXis, bought for $8.7 billion, and radiotherapy specialists Endocyte which cost $2.1 billion, and Narasimhan said there was an appetite in picking up additional assets in “new technology areas [and] advanced therapy platforms.”

The comments came as Novartis reported a 6% rise in fourth-quarter revenues to $13.3 billion, a little ahead of expectations, with slow-burner heart failure drug Entresto (sacubitril/valsartan) finally breaking into blockbuster territory for the full-year, and psoriasis drug Cosentyx (secukinumab) continuing its buoyant roll-out.

Entresto grew 76% to $1.03 billion in 2018, outstripping even Cosentyx which rose 36% to $2.8 billion, buoyed by new comparative data from the PIONEER-HF trial. Also hitting the $1bn threshold in 2018 for the first time were chronic immune thrombocytopenia drug Promacta/Revolade (eltrombopag) and melanoma duo Tafinlar (dabrafenib) and Mekinist (trametinib), both growing by more than 30% in the year.

There are more blockbusters on the way as well, according to Narasimhan, who said on the call that 10 additional drugs due for launch in the next couple of years could have $1bn sales potential.

Three of those were approved in 2018 – Aimovig (erenumab) for migraine, CAR-T therapy Kymriah (tisagenlecleucel) for leukaemia/lymphoma and radio-oncology drug Lutathera (lutetium Lu 177 dotatate) – with four more due in 2019.

This year’s crop are predicted to be breast cancer therapy alpelisib, siponimod for secondary progressive multiple sclerosis, brolucizumab for sickle cell anaemia, and Zolgensma, Novartis’ much anticipated gene therapy for spinal muscular atrophy which was the primary asset in the AveXis deal.

On the downside, Kymriah is still looking a long way off a $1 billion product, with 2018 sales coming in at just $76 million thanks to manufacturing constraints and slow progress towards access agreements, although Novartis’ new oncology head – Susanne Schaffert – said momentum is building thanks to new capacity and reimbursement agreements.

Also sluggish out of the blocks has been Kisqali (ribociclib), Novartis’ competitor to Pfizer’s fast-growing breast cancer drug Ibrance (palbociclib), although this has started to come to life with sales up 210% to $235 million in 2018.

Narasimhan said he is “confident that with Kisqali over time we can build this into a blockbuster medicine with consistent effort and consistent focus on our new datasets”, such as the MONALEESA-3 and 7 trials.

Novartis also confirmed the spin-off of eyecare division Alcon, which could raise as much as $35 billion, which is expected to complete in the second quarter, and said the revamp of generics business Sandoz would continue to reshape its portfolio towards biosimilars.

https://pharmaphorum.com/news/novartis-spent-15bn-on-ma-last-year-with-more-to-come/