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Novartis plans to purchase U.S. biotech company for $9.7 billion

Novartis is planning to buy U.S. East Coast biotechnology company The Medicines in New Jersey and close the transaction in 2020. Novartis has offered $85 per share bringing the transaction to around $9.7 billion. Novartis is interested in The Medicine’s cholesterol-lowering Incilisiran designed for heart patients, a product which complements Novartis’ own heart drug Entresto.

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Just in time for black Friday the Basel-based pharmaceutical group Novartis is going on a shopping spree on the U.S. East Coast. The biotech company called The Medicines Company based in New Jersey is the target. According to Novartis, the leaders of both companies have unanimously decided to trade.

Novartis has offered $85 per Medicines share. The transaction is expected to close in the first quarter of 2020. The acquisition will be financed by existing capital as well as by short and long-term debt.

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Medicines’ most successful drug is cholesterol-lowering Inclisiran for heart patients, which could complement Novartis’ growing business with its heart failure drug Entresto.

If the deal is completed in the first quarter of 2020, Novartis is expecting Inclisiran to generate profits from 2021. It has the potential to become one of the largest medicines in the product range.

Patent expiration gap

The deal fits the strategy of Novartis CEO, Vas Narasimhan, to strengthen the drug portfolio with new products and technologies through acquisitions. The top management expects to expand the core margins in the Innovative Medicines division to “mid-thirties” in the near future and to “mid to mid-thirties” in the medium term.

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Novartis had a strong cardiovascular business in the past, but lost ground when Diovan lost patent protection in 2012 and failed to launch an innovative follow-on product to address the $6 billion gap in annual sales.

The deal should help support Novartis’ growth, which is threatened by patent expirations, and help the company remain competitive with similar medicines such as Amgen drug from Amgen and Praluent from Regeneron Pharmaceuticals.

Other major purchases

The Medicines was not the first major purchase by the Novartis: this year, the company paid up to $5.3 billion for Xiidra, a drug to treat dry eyes. Last year, the pharmaceutical company also bought Endocyte, the U.S. based company, for $2.1 billion.

And with last year’s AveXis deal, Novartis added Zolgensma gene therapy to its portfolio. The drug is currently the most expensive single treatment for spinal muscular atrophy, costing $2.1 million.

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(Featured image by Floriane Vita via Unsplash)

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First published in Bluewin, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Suzanne Mitchell juggles the busy life of a full-time mom and entrepreneur while also being a writer-at-large for several business publications. Her work mostly covers the financial sector, including traditional and alternative investing. She shares reports and analyses on the real estate, fintech and cryptocurrency markets. She also likes to write about the health and biotech industry, in particular its intersection with clean water and cannabis. It is one of her goals to always share things of interest to women who want to make their mark in the world.

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