NOVARTIS ACQUIRES THE MEDICINES COMPANY FOR $9.7 BILLION - COVETS INCLISIRAN

Novartis' latest acquisition drives the company into the center of an enormous healthcare sector with deep competition

Novartis ( NYSE: NVS) has announced it is acquiring cardiovascular therapy-focused The Medicines Company ( NASDAQ: MDCO ) for $9.7 billion. Novartis, based in Basel, Switzerland covets The Medicine Company’s “Inclisiran” agent; a small interfering RNA (siRNA) PCSK9 drug compound being evaluated for its promising ability to lower low-density lipoprotein (LDL) cholesterol ( also known as LDL-C or “bad cholesterol” ). It is not on the market yet but appears to be well-positioned for approval by regulators and is expected to have a favorable administration schedule of just 2 doses annually.

The cholesterol pharmaceutical market is thick with brand and generic competition from an array of heavy hitters

With the exception of Livalo and Praluent, each of these products are available through generic pharmaceutical manufacturers; some have been prescribed for decades:

• Alirocumab ( Praluent - Sanofi / Regeneron - no generic )        
• Atorvastatin ( Lipitor - Pfizer )
• Fluvastatin ( Lescol - Novartis )
• Lovastatin ( Mevacor - Merck )
• Pitavastatin ( Livalo - Kowa - no generic )
•  Pravastatin ( Pravachol - Bristol Myers Squibb )
•  Rosuvastatin calcium ( Crestor - AstraZeneca )
• Simvastatin ( Zocor - Merck )

Novartis is a worldwide healthcare leader

Novartis is a Fortune 500 company ranked at 201. It generates approximately $52 billion in annual sales and employs overs 125,000 workers. Its top ten products each generate over $1 billion annually in sales:

• Affinitor / Votubia ( palbociclib )
• Cosentyx ( secukinumab )
• Galvus ( vildagliptin )
• Gilenya ( fingolimod )
• Gleevec ( imatinib )
• Lucentis ( ranibizumab )
• Promacta / Revolade ( eltrombopag )
• Sandostatin ( ocretride acetate )
• Tafinlar w/ Meknist ( dabrafenib + trametinib )
• Tasigna ( nilotinib )

The Medicines Company is a clinical development company with a strategy centered on researching compounds that have fallen short of expectations and not able to meet approval standards by the Food and Drug Administration and other regulators in earlier commercial product development ventures. They revisit the data and assess options to refine certain product attributes as well as clinical trial designs and related approval trial processes to determine if a product can be reinvestigated, entered into clinical trials once again and perhaps be approved.

Novartis planning for the future

Coincidentally, Novartis ( formed from the merger of Ciba-Geigy and Sandoz ) with a market capitalization of approximately $207 billion and The Medicines Company were both founded in 1996. Novartis has two primary business units:

• Innovative Medicines ( which will house Inclisiran if it is approved )
• Sandoz ( Sandoz manufactures generic and biosimilar or biogeneric products)

Novartis has been assertively working on transforming their organization into a pure pharmaceutical / biotech company. Earlier in 2019, Novartis spun off their blue chip consumer product brand, prescription drug and contact lens eyecare unit, Alcon, into a fully independent company ( NYSE / SXC: ALC) with a market capitalization of $28 billion. In 2018 it sold off its 36.5% stake in a consumer health product joint venture to their partner, GSK, for $13 billion.

Novartis a global player in billion dollar acquisitions

Mergers and acquisitions are almost routine in the healthcare industry. Novartis is well versed in the exercise. Some of their largest deals include:

• In 2018 Novartis made two acquisitions; AveXis for $8.7 billion and Endocyte for $2.1 billion
• Genzyme was bought by Novartis for $21 billion in 2011
• In 2008, Novartis began acquiring Alcon from Nestle for almost $60 billion in two separate transactions. 
• Chiron was purchased by Novartis in 2006 for $5.1 billion
• Novartis bought Hexal AG for $8.3 billion in 2005

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