This Biotech Deal Is a $10 Billion Leap of Faith
The Swiss drug giant Novartis is gambling that a new cholesterol drug will be its biggest winner yet. It may take a while to prove it's worth the price.
Making a bold bet on biotech.
Photographer: Jason Alden/BloombergNovartis AG’s latest biotech bolt-on requires a big leap of faith. The Swiss drugmaker’s $9.7 billion deal to buy Medicines Co. pays the U.S. cardiovascular specialist’s shareholders a huge chunk of the potential gains to be had from its novel treatment for lowering bad cholesterol. Investors will have to console themselves that Novartis is big enough to absorb the cost of failure if things go awry.
Hopes for loss-making Medicines Co. rest entirely on its inclisiran drug. Novartis sees a host of benefits here compared to existing anti-cholesterol medicines, not least that inclisiran can be administered just twice a year during regular checkups. The determinant of success, however, will be the treatment’s ultimate cost-effectiveness versus existing remedies. That right now is hard to gauge given it has yet to be launched and the competitive response is unknown.