Swiss pharma giant Novartis to splash nine billion euros on US firm

Swiss pharmaceuticals giant Novartis announced over the weekend it would dish out $9.7 billion (8.8 billion euros) to acquire US firm Medicines Company, in a move aimed at boosting its cardiovascular treatment portfolio.

Swiss pharma giant Novartis to splash nine billion euros on US firm
Photo: AFP

Novartis said Sunday it had agreed to pay $85 per Medicines Co. share, which was 41 percent over the US company's closing price on Friday. 

The move will mark the latest in a line of acquisitions aimed at enhancing the Swiss company's stable of cutting-edge drugs to treat things like cancer.  

In snapping up Medicines Co., the pharma giant said it will lay its hands on a promising cholesterol drug called inclisiran, described by company chief Vas Narasimhan as a “potentially transformational medicine”.

Inclisiran, which recently completed its phase III study, fights “bad” LDL cholesterol in patients with atherosclerosis, or plaque buildup in their arteries.

The drug, which requires far fewer annual injections than the products currently on the market, is based on RNA interference therapy.

This is a natural phenomenon used to silence specific genes that produce harmful or diseased proteins, whose discovery in the late 1990s earned Craig Mello and Andrew Fire the 2006 Nobel Medicine Prize.

Such therapy is increasingly being used for a range of conditions.

The Medicine Co's drug specifically blocks the liver from making a particular enzyme, PCSK9, which in turn lowers the production of low-density lipoprotein.

Medicines Co has said it plans to request regulatory approval in the United States by the end of the year, and in Europe in early 2020.

Overall sales of anti-cholesterol treatments are on average rising 11 percent annually and are expected to reach $17.7 billion by 2024, according to numbers from analysis firm EvaluatePharma.

High cholesterol is a key factor in coronary artery disease, the most common kind of heart disease and the number one killer of men and women worldwide, according to the World Health Organization.

If the transaction is completed, inclisiran will be added to Novartis's current cardiovascular products, including its heart-failure treatment Entresto, which saw its sales soar 61 percent year on year to $430 million during the third quarter this year.

“Novartis has a longstanding history of delivering breakthrough cardiovascular treatments for patients, and I am very excited about the opportunity to add inclisiran to our cardiovascular portfolio,” Marie-France Tschudin, president of Novartis Pharmaceutical, said in a statement.

Analysts with Jefferies hailed the move, saying there was a “clear strategic rationale” for the acquisition, and for “bolstering Novartis' cardiovascular franchise, notably leveraging Entresto.”

Novartis said it planned to pay for the acquisition with “available cash and short- and long-term borrowings.”

The acquisition, which still needs a green light from antitrust authorities, is expected to be finalised during the first quarter of 2020.

Following Sunday's announcement, Novartis saw its share price inch 0.4 percent higher to 90.14 Swiss francs ($90.40, 82 euros) a piece in midday trading Monday on the Swiss stock exchange.


Novartis slashes thousands of jobs in Switzerland and UK

Pharmaceutical giant Novartis said on Tuesday it will cut more than 2,000 jobs in Switzerland by 2022, while some 400 jobs could go in Britain as part of a global restructuring.

Novartis slashes thousands of jobs in Switzerland and UK

The Swiss group said in a statement there would be a net-loss of 1,000 jobs at different manufacturing facilities across the wealthy Alpine nation, in Basel, Schweizerhalle, Stein and Locarno.

But it stressed that this included the recently announced build up of a cell and gene therapy manufacturing unit in Stein that was expected to create up to 450 new jobs.

Read also: Swiss prosecutors won't pursue Novartis over payments to Trump lawyer

Another 700 jobs would be meanwhile be cut over the same period due to a shift in business functions from Switzerland to other Novartis sites around the world, according to the company, which currently employs some 12,800 people in Switzerland.

In a separate release, the company said it planned to exit its manufacturing site in Grimsby in Britain by the end of 2020.

“Three hundred and ninety-five Novartis employees at the Grimsby site are directly affected by the decision, and additional contactors employed through third parties may also be impacted,” the statement said.

Novartis has already announced adjustments in its manufacturing units in Japan, the US, and other countries as part of a strategy announced in 2015 amid an increased emphasis on specialised and personalised medicines over high-volume products.

“We are continuing our efforts to globally transform Novartis into a more efficient, agile organisation that can sustainably innovate and deliver breakthrough medicines to patients,” company chief executive Vas Narasimhan said in a statement.

“We will do everything possible to help our associates who might be impacted manage through this difficult transition,” he said, stressing that Novartis remained “deeply committed” to its presence in Switzerland.

The company, he said, will continue to have its global headquarters, largest research and development centre, as well as a growing “advanced manufacturing footprint” in the country. 

The Employe Suisse union meanwhile described Tuesday's announcement as “a bitter pill” and asked Novartis to reconsider moving so many jobs abroad, insisting there was no guarantee this would cut the company's costs.

As for the Grimsby site, Novartis stressed that it was “an effective, well-running operation,” and said it was looking at a range of options for it, including divestment, “which could potentially allow the facility to stay 

“We will treat every employee with the utmost respect, sensitivity and fairness during this difficult time,” Haseeb Ahmad, Novartis UK Country President, said in the statement.

Following the news, Novartis saw its share price rise 0.9 percent to 82.54 Swiss francs in early afternoon trading, outperforming the overall Swiss stock exchange's main index.