Novartis investors are placing increased pressure on Novartis’ dealmaking strategy after facing setbacks to drugs acquired through mergers and acquisitions hit its shares this week, raising concerns about the company's pipeline.

Eight shareholders told Reuters that the failure of muscle-wasting disorder drug del-desiran in a late-stage study, the second major trial setback for Novartis in days, had raised questions over last year's $12 billion Avidity purchase and the company's other acquisitions.¹

On the heels of the trial setbacks, Novartis shares slumped 11% in a single day, wiping nearly $30 billion off its market value and erasing all the gains it had made since the start of the year.¹

What are shareholders saying?

Gillian Hollenstein, lead manager at Point Capital Navigator Fund, which holds shares in both Novartis and rival Roche, says confidence will take time to rebuild. "It's going to take a while for confidence to return. They would have been better off doing some more smaller acquisitions, bolt-on ones rather than trying to hit it out of the park," said Hollenstein.

Michael Hannig, portfolio manager at Novartis shareholder DJE Kapital, and one of the company’s top investors said to rebuild confidence the drugmaker should pursue deals in the $5 billion to $10 billion range for late-stage assets or drugs nearing approval, which could help address the company's looming patent expiration.¹

Hannig added that due diligence was needed to ensure a strategic fit and quality of clinical evidence behind any future deal. "Larger transactions will likely be assessed carefully by investors considering the mixed market reception to several prior deals," Hannig said.

Is CEO Vas Narasimhan's job at risk?

Chief executive Vas Narasimhan is now in the spotlight of investor concerns, specifically over how he plans to steer Novartis through the looming patent expirations.¹ Narasimhan became chief executive back in 2018 and has now held the role longer than his predecessor, Joe Jimenez.¹ In his time at the company, Narasimhan has committed more than $30 billion over the past three years to acquisitions and partnerships and told investors at the time of the Avidity deal that it represented an "appropriate risk."² A source familiar with the matter says there are currently no plans to change the company's approach to M&A or business development.¹

"While dealmaking is essential, it remains challenging, with up to 68% of deals failing to meet projected growth,” said Subin Baral, global life sciences deals leader at EY, who spoke with Pharmaceutical Executive about the challenges around M&A acceleration.

Earlier this week, Novartis shareholder Artisan Partners called for a shake-up of the board to address the M&A oversight, while continuing to support Narasimhan. David Samra, managing director at Artisan Partners was the first investor to call for a change up, asking Novartis chairman Giovanni Caforio to take action.

"I think he needs to make changes at the board level. One of them should be on improving the team that's doing these deals because clearly they have been uninspiring at best," said Samra.

Daniel Bolanowski, portfolio manager at investor Arctic Asset Management, says the scale of the share sell-off suggested investors were questioning more than the value of del-desiran alone, pointing to a "deeper trust issue" about business development.

He noted that Novartis still has two other Avidity drugs, del-zota and del-brax, in development that could generate revenue, adding: "It's a little bit premature to call for heads at this point."¹

Where does Novartis stand with investors?

In response to the increased investor concerns, Novartis is pointing to strong returns under Narasimhan. According to Reuters, the company shares are up more than 60% and have delivered total returns of about 120%, including reinvested dividends, since he took over, compared with about 108% for Roche and roughly 200% for AstraZeneca.¹

Some shareholders say Novartis remains on firm footing, citing promising drugs such as remibrutinib still in the pipeline. Generics unit Sandoz, spun off from Novartis in 2023, has also outperformed its former parent, some analysts say.

Guy Bettschart-Ghassabi, healthcare analyst at Bellevue Asset Management, another Novartis investor, says the del-desiran failure was painful but that the Harbor study assessing the drug had been designed before Novartis acquired Avidity. He notes that myotonic dystrophy is a challenging condition to treat, and says he retains confidence in the company's management.¹

Markus Manns, portfolio manager at Union Investment, another Novartis shareholder, says the two trial failures were unfortunate but fell within normal probabilities for drug development success. He points to the next major test for Novartis, detailed data for remibrutinib in relapsing multiple sclerosis, due at a medical meeting in October.

Sources

1. Novartis investors turn spotlight on M&A after trial setbacks Reuters September 11, 2026, https://www.reuters.com/legal/transactional/novartis-investors-turn-spotlight-ma-after-trial-setbacks-2026-09-11/
2. Avidity Biosciences Enters into Agreement to be Acquired by Novartis AG Avidity Biosciences October 6, 2025 https://www.prnewswire.com/news-releases/avidity-biosciences-enters-into-agreement-to-be-acquired-by-novartis-ag-302594703.html