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Novartis to acquire AveXis in US$8.7Bn Deal to count on Gene Therapy

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Published on : Apr 10, 2018

Pharmaceutical giants are showing a penchant for cutting-edge gene therapies to bolster their pipelines. To this end, a few globally prominent drugmakers are entering into strategic acquisitions with biotechnology companies. Awash with funds, a large Swiss pharmaceutical company, Novartis International AG, on April 9, 2018 entered into $8.7 billion acquisition deal with a U.S.-based biotech company AveXis. The $218-per-share cash deal with the Nasdaq-listed US company will tentatively close by middle of this year. Acquiring the company specializing in spinal muscular atrophy will fortify Novartis’s portfolio in neuroscience and rare disease treatments, leading to large promising gains for the Swiss pharmaceutical.

Of note, this is the second such deal by Novartis, the first was US$105 million in cash upfront spent on acquiring ex-US rights Spark Therapeutics' Luxturna, a rare, inherited retinal disease robbing patients of vision. The one-time treatment for the rare disease was pegged at US$850,000.

Deal to help Swiss Drugmaker bolster Gene Therapy Expertise and Manufacturing Capabilities

With the strategic move, Novartis will gain access to the vast expertise in gene therapy of the Illinois-based pharmaceutical company. Moreover, the Swiss dealmaker will also bolster its manufacturing capabilities. According to Novartis Chief Executive, the company is looking to leverage the potential of the AveXis’s lead drug candidate AVXS-101. The drug holds promising for treating deadly spinal muscular atrophy (SMA). The acquisition can hit adversely its core operating income this year and the next on account of massive research and development cost, stated the company, but will confer huge profits by 2020 end.  

Similar Moves Entered by Several Players to add Promising Drugs to its Portfolio to bolster Sales Growth

Several Novartis’s rivals have entered into similar strategic moves by adding promising candidates. Sanofi S.A., a French pharmaceutical behemoth, agreed to acquire a U.S. biotech company Bioverativ Inc., who specializes in treatments for haemophilia for US$11.6 Bn. It also agreed to buy Ablynx, a Belgium-based biopharmaceutical company. In another notable development in the last month, a prominent U.S. biotech company Celgene Corporation completed the acquisition of Juno Therapeutics, Inc., in a move to bolster cellular immunotherapy portfolio.

Novartis was advised by Dyal Co LLC for the deal while the U.S. company was advised by Goldman Sachs.