Novartis Agrees $12 Billion Biotech Deal for Avidity

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00:00Novartis has agreed to buy Avidity Biosciences in a $12 billion biotech deal,

00:06the biggest acquisition for the Swiss drug maker in more than a decade.

00:10Joining us now is Bloomberg Intelligence Senior Pharmaceutical Analyst Sam Fazeli.

00:14Sam, thanks for joining us on the show.

00:16What does this deal tell us about potential M&A activity across the pharma space?

00:22Well, good morning to you.

00:24So this is, by my count, we keep a tally of this, of course, Bloomberg.

00:28Look, this will be the 21st deal for 2025 where large pharma companies are buying a biotech.

00:36Of course, there's many more deals when biotechs are buying biotechs.

00:39We saw one a couple of weeks ago for GenMap.

00:42Here, this is Novartis, which needed to do a deal to bring in assets that would help them to keep their growth momentum post-2029, post-2030,

00:52after one of their drugs, Cosentix, is going off-pipend.

00:55If you look at our MODL function, you'll find that the revenue for Cosentix, a big drug, $7.4 billion by 2029,

01:03is beginning to decline from that point because there's biosimilars coming.

01:08So the company needed, and this is a really good fit for Novartis.

01:11And as I said, this becomes the 21st deal where large pharma is buying small biotechs.

01:17And it's really helped.

01:19These spate of deals has helped the biotech sector take off.

01:24Well, how well received is that, Sam, when it comes to some of these major kind of pharmaceutical companies

01:29that are looking to perhaps make these acquisitions globally and, of course, in the United States,

01:33in the face of always the tariff threat that seems to be looming over every sector's head?

01:38Just kind of connect the dots for us here.

01:39Yeah, so I think what you might notice is that since kind of the end of the summer,

01:46the spate of deals, biotech biotech and large pharma biotech has picked up a little bit.

01:52And I think that's because we've got some levels of certainty now into some levels of certainty

01:57into the conversation with regards to the most favoured nations, tariffs they've got to reprieve on.

02:04So I think the whole setup here, as the companies are doing more and more deals

02:08on those pricing conversations with the administration in the U.S.,

02:12has given them confidence to be able to go and do this and not feel overexposed in terms of risks.

02:20And one thing to note here also is that the deal that Novartis is doing is for assets that we call for rare diseases.

02:26So they are orphan drugs, which are often much less scrutinized in terms of pricing and regulation

02:35and maybe the Inflation Reduction Act impact than standard drugs of large diseases.

02:44So here, this is also another advantage for the deal between Novartis and Avidity.

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