Novartis Acquires The Medicines Company for USD 9.7 Billion

Published on: 25 Nov, 2019

Novartis (NYSE: NVS) announced on Sunday that the Company has agreed to acquire The Medicines Company (NASDAQ: MDCO) for a total value of USD 9.7 Billion. The Medicines Company shares rose by 22.2% on Monday morning.

Under the transaction’s agreements, Novartis acquired The Medicines Company for USD 85.00 per share, representing a 41% premium over the Company’s 30-day volume weighted average price of USD 60.33 per share and approximately 24% premium over its closing share price of USD 68.55 on November 22.

The combined Company will allow Novartis to continue building its pipeline in a key therapeutic area and is also aligned with the Company’s strategic priority of delivering transformational medicines for patients.

Novartis noted that the deal would potentially add first-in-class siRNA inhibition targeting PCSK9 with the potential to change the treatment of elevated LDL-C in high risk patients.

Moreover, The Medicines Company is expected to file regulatory submissions for its inclisiran in the U.S. in the fourth quarter of 2019 and in Europe in the first quarter of 2020. The near-term product launch is expected to contribute to the Group sales from 2021.

Furthermore, the transaction is also expected to expand Novartis’ cardiovascular portfolio and enable the Company to leverage its core commercial capabilities including its strong cardiovascular field in both the U.S. and internationally.

“The prospect of bringing inclisiran to patients also fits with our overall strategy to transform Novartis into a focused medicines company and adds an investigational therapy with the potential to be a significant driver of Novartis’ growth in the medium to long term,” said Novartis Chief Executive Officer Vas Narasimhan.

The deal is expected to close in the first quarter of 2020.

Assuming the deal closes then, Novartis expects inclisiran to start contribute to Group and IM Division sales from 2021. It is also expected to further drive growth of the Cardiovascular-Renal-Metabolism franchise with the potential to become one of the largest products by sales in the Novartis portfolio, leveraging Novartis’ global cardiovascular commercial capabilities.

Novartis said the deal is expected to modestly dilute core EPS versus a no deal scenario during the next few years as the Company invests for a successful launch of inclisiran. Novartis expects the transaction to be significantly accretive to Group core operating income and core EPS in the medium term, driven by sales growth and operational synergies, leveraging the worldwide footprint of the cardiovascular business.  

Lastly, Novartis expects to continue to expand IM Division core margins to reach mid-thirties in the near term, and mid to high-thirties in the medium term, while investing in launches, including inclisiran. This guidance assumes that no Gilenya generics will enter the US market in 2020.

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Bryan Shin

Email: Bryan@financialinsiders.com

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