Novartis Agrees to Largest Acquisition in Its History, Spending $12 Billion to Acquire "Rare Disease Specialist" Avidity

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Swiss pharmaceutical giant Novartis has agreed to acquire rare disease-focused biotech company Avidity Biosciences for $12 billion, marking its largest acquisition in more than a decade.

On October 26th, according to media reports, Novartis will acquire Avidity at $72 per share, a 46% premium over Avidity’s closing price last Friday, which was about $49 per share. The deal values Avidity, which has net cash, at $11 billion.

CEO Vas Narasimhan said, two of the three potential drugs in Avidity’s late-stage pipeline are expected to reach peak annual sales in the billions, while the third is expected to generate $500 million to $1 billion in annual revenue at its peak. He emphasized that these late-stage assets could be brought to market before 2030, helping the company address upcoming patent cliffs on major drugs.

This acquisition will increase Novartis’ compound annual growth rate for 2024 to 2029 from 5% to 6%, but will dilute profitability by 1 to 2 percentage points over the next few years. The transaction will not impact this year’s performance guidance. As part of the deal, Avidity will spin off its cardiovascular programs into another company.

Intensive Acquisition Strategy

Narasimhan said, Avidity’s drug for treating muscular dystrophy (a potentially fatal muscle-wasting disease) “completely fits strategic needs,” since Novartis already sells neuromuscular disease drugs, such as the gene therapy Zolgensma for spinal muscular atrophy. The company will be able to use the same sales team for these drugs.

In September this year, Avidity announced positive interim trial results for its main drug Del-zota, which belongs to a new category of RNA-based therapies. The company plans to submit a regulatory application by year-end.

It is reported that, Novartis is offsetting the impact of upcoming patent expirations on its main drugs this year through a series of acquisitions. Narasimhan told the Financial Times:

"These are late-stage assets that we believe can be launched before 2030. In our view, we need to shore up the next five years while also preparing for patent expirations coming in the early 2030s. We are prepared to do whatever it takes to bring in assets that can launch before then and strengthen prospects for growth from 2030 to 2040."

Last month, Novartis acquired cardiovascular biotech company Tourmaline Bio for $1.4 billion. Earlier this year, the company also acquired heart drug biotech company Anthos Therapeutics from Blackstone Life Sciences for up to $3.1 billion, and reached a deal to acquire kidney disease biotech company Regulus Therapeutics for up to $1.7 billion.

Novartis has also entered into an agreement with Chinese company Argo Biopharma worth up to $5.2 billion, obtaining the rights to a cardiovascular drug.

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