Chris Hughes, Columnist

Biotech Buyer Prays a Monster Premium Will Be Enough

Novartis will have to hope a big price is a sign of an auction completed.

April 9, 2018 at 11:10 AM UTC

Chris Hughes is a Bloomberg Opinion columnist covering deals. Previously, he worked for Reuters Breakingviews, the Financial Times and the Independent newspaper.

Novartis laboratory — Photographer: Qilai Shen/Bloomberg

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In a typical takeover, a bidder usually offers up to 50 percent more than its target's share price to clinch the deal. Not in biotech.

Novartis AG's new boss Vas Narasimhan has just reinforced the vogue for bidding high for drug discovery companies by agreeing to pay an 88 percent premium for Nasdaq-listed gene therapy specialist AveXis Inc. He deserves the benefit of the doubt.