Novartis Backs Down on Cytokinetics Acquisition

Novartis stops a purchase operation. Some sources from the biotechnology company have told the Reuters news agency that the planned purchase agreement for the biopharmaceutical company Cytokinetics will not continue from now on. Other large firms interested in the acquisition are AstraZeneca or Johnson&Johnson, although Novartis was the one that had the most numbers compared to the other laboratories.

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The execution of the purchase was up in the air until last Tuesday, January 8th

The CEO of Novartis, Vasant Narasimhan, stated in an interview on Cnbc that the pharmaceutical company’s strategy involves not exceeding acquisitions of more than $5 billion. The agreement with Cytokinetics meant a larger investment, since, after the announcement of the possible acquisition, its value increased. Last Wednesday its market capitalization was almost $10 billion, but it has suffered a 6% drop in the stock market in recent days following Narasimhan’s statements.

Cytokinetics primarily works on developing drugs that help patients with cardiovascular and neuromuscular diseases related to impaired muscle function.

According to sources such as analyst Srikripa Devarakonda, from the financial services company Truist Securities, the biopharmaceutical is attractive thanks to the potential of its key drug, still in the experimental process, “aficamten”, tested for the treatment of hypertrophic cardiomyopathy. In its preclinical phase, it managed to reverse and reduce the thickening and stiffness of the heart, according to the institution.

Novartis sets its strategy for acquisitions of less than $5 billion, while Cytokinetics has a capitalization of $10 billion

Novartis reported sales of $50.545 billion in 2022 and has targeted annual sales growth of 5% through 2027, as well as a core operating income margin of around 40% for that same year. Likewise, the Swiss company had a core operating margin of 35% in 2022 and announced that it wanted to focus on the development of its medicines in the four therapeutic areas of cardio-renal care, immunology, neuroscience, oncology and hematology.

Novartis is a pharmaceutical and biotechnology company based in Basel, Switzerland. The company was born as a result of the merger between Cibba-Geigy and Sandoz in 1996. The company focuses its activity on three divisions: innovative medicines, vision care and generic and biosimilar medicines.

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