# [Novartis CEO: We're never done with M&A](https://www.youtube.com/watch?v=UaRmQgb-zC8)
**Visibility**: Public
**Uploaded by**: [CNBC International Live](http://www.youtube.com/@CNBCInternationalLive)
**Uploaded at**: 2025-10-28T05:16:24-07:00
**Published at**: 2025-10-28T05:16:24-07:00
**Length**: 08:26
**Views**: 3626
**Likes**: 18
**Category**: News & Politics
## Description
```
Vas Narasimhan, CEO of pharmaceuticals company, Novartis, discusses the company's latest $12 billion acquisition of Avidity Biosciences, and ongoing negotiations with the U.S. administration over potential pharmaceutical tariffs.
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# [Novartis CEO: We're never done with M&A](https://www.youtube.com/watch?v=UaRmQgb-zC8)
**Visibility**: Public
**Uploaded by**: [CNBC International Live](http://www.youtube.com/@CNBCInternationalLive)
**Uploaded at**: 2025-10-28T05:16:24-07:00
**Published at**: 2025-10-28T05:16:24-07:00
**Length**: 08:26
**Views**: 3626
**Likes**: 18
**Category**: News & Politics
## Description
```
Vas Narasimhan, CEO of pharmaceuticals company, Novartis, discusses the company's latest $12 billion acquisition of Avidity Biosciences, and ongoing negotiations with the U.S. administration over potential pharmaceutical tariffs.
-----
Subscribe: @CNBCInternationalLive
Subscribe to CNBC International: @CNBCInternational
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```
## Transcript
You've really been spoiling the markets over the last 10 quarters. You've always beat expectations and then subsequently you were able to raise your guidance. You beat this time around even though it was a very narrow beat, but you didn't quite manage to raise your guidance. Talk to us about what you saw this quarter and why you're a little more cautious than in previous quarters maybe. Well, I think this is the first time in many quarters where we've had some generic expiries hit us. you know when you actually look at the underlying performance of the business I think what's really exciting is our growth drivers albe quite significantly so on the one hand we had entrustto our large heart failure drug go off patent so that I think made us a little more cautious on the outlook for the remainder of the year but Cascali our breast cancer medicine beat significantly plto our prostate cancer medicine beat significantly casima our multiple sclerosis medicine beats our cancer medicine beat so those beats are what matter I think that will really drive our growth going into 26 and beyond. A loss of exclusivity, something that your company, the pharma sector overall deals with all the time. This is a fact of life. However, where do we see the brunt of the the the erosion when it comes to the sales when it comes to inresto, which has been one of your blockbuster drugs? Yeah, I think we'll see kind the first uh full effect of Inresto in quarter 4. I mean, that's been the full quarter without inresto exclusivity in the US and we'll see those impacts going into quarter 1 and quarter two of next year. But as those growth drivers continue to perform really strongly, we'll come out of that, I think, coming back to that strong growth profile that investors have gotten used to. And I think that's what we're really focused on. And Tresto is a fact of life in our industry. What really matters are those launches and also getting the next wave of pipeline assets into the into the registration and ultimately to launch the pipeline. A lot of catalysts are not until 2026. What should investors at this point in time be most excited about? Well, we just got an approval of Rapsido, which is a which is a drug for chronic spontaneous herdicaria, a dermatological condition, which we think will be the first of many approvals for this medicine that could be a multi-billion dollar asset that drives us into the next decade. Similarly, we're going to have the approval in prostate cancer of another indication for plto that will be really exciting. And I think those two will be big drivers. And then actually later this week we'll be announcing the full data set for the first medicine ever to show efficacy in Shoggrren's disease. One of the most common conditions in rheumatology. That will be another important growth driver that we expect to get approval on next year. So three big approvals next year to then drive growth into the future. Mhm. So, it seems as though you're pretty excited about what's to come, about what has been launched and your ability to offset the generics competition, but still you felt the need to do a massive M&A deal over the weekend. $12 billion is something that you shelled out for aidity um in the US. That is your biggest deal in more than a decade. Talk to us about the rationale here. Look, when I think when I saw aidity, I saw the opportunity. I think we saw the opportunity to bolster our neuromuscular pipeline. I mean we really believe these are diseases that don't have approved medicines. They are debilitating conditions and they affect you know 50,000 80,000 100,000 patients depending on the geography plus. And so the opportunity here to bring a first-in-class breakthrough medicines for three different diseases two of which have multi-billion dollar potential. This has really nothing to do with our near-term patent experies. What I think this does is bolsters our growth profile 2030 to 2040. These are medicines that have patent protection to 2042 2043. They're not sus susceptible to the US IRA uh which is gives us a big advantage there and so and we have a huge footprint already in neuromuscular disease. So it's a great strategic fit three latestage assets and so we're quite excited about the opportunity. You've been super active when it comes to M&A. You've done I believe more than 35 deals over the last uh 12 months or so. Many of them though bolt-on smaller than $5 billion a piece. Now this one of obviously that was the big one. Do you feel like you're done now? Look, I think in our sector we can never be done. We always have to look for great assets. But I think for us it's all driven by the science and the technology. If it's a fit with our strategic areas of focus, if it's a fit with our technology areas, and in this case neuroscience, RNA therapeutics, this was a perfect fit for us, then we'll of course keep keep doing the right deals. When you look at our free cash flow, I mean it's approaching $20 billion a year. So we have adequate firepower to do deals like this to bolster the growth profile of the company. When I last spoke to you, I believe end of January this year, you were uh pretty optimistic about a more permissive FTC. Was this one of the the driving forces behind that continued deal making flow? Look, I think we of course are watching that, but in this case, this really wasn't a consideration, and there's really no overlaps here of note. I mean, I think this is really one where we felt like the strategic fit is what drove the deal. Let's talk about the US and let's talk about the tariff situation. To be honest, to be completely frank, I'm a little confused because everything is You're not the only one. You're not. Okay, good. Um, it's such a fluid situation. Now, recently some of your competitors, Fiser, Astroenica, struck a most favored nation deal with the White House. The analyst community is expecting for you to to do the same. Can you tell us something? We've been in conversations with the White House really since the beginning of this year and we continue those conversations regularly. We're in touch on a weekly basis. We're of course looking to find a good solution to the challenges they've put forward. Uh I think also importantly we're also trying to tackle some of the bigger structural issues here. Pharmacy benefit managers 340B the fact that outside of the United States innovation is not appropriately rewarded. So we're confident we'll come to an appropriate solution before the end of the year. But I think that's really right now something that's ongoing and we'll hopefully be able to provide more updates soon. But if you do strike a deal with the White House, that means the drug prices that that you can charge in the US are going to fall and in some cases they might fall by 70 80%. What is that going to do to profits even if that means that you're shielded from tariffs? I think really what's going to happen here is you're going to have fewer launches in public markets in the target countries outside of the United States. So I think prices in the US will adjust but they'll adjust modestly. I think really what you're going to have is a situation that unless overseas countries uh these particularly as the administration is focused on the G7 plus Switzerland and Denmark if they don't raise their prices up to reward innovation and on par with the US companies won't launch in the public market in those in those countries. So really that's I think the administration's core goal is how do you get countries overseas to reward innovation and pay their fair share of the innovation ecosystem that the US has historically been supporting and and that's how I think this will ultimately play out. Do you think these G7 nations plus Switzerland are they they happy to raise prices? Not necessarily. So I think this is going to be a challenge. It's going to take years to unfold. I think there's multiple elements to that. Of course we want better rewarding of innovation. There's also a number of mechanisms like clawback mechanisms that claw back excess revenues. There's hidden taxes. I mean, I think all of these things will have to get addressed, but as you point out, it will not get addressed overnight. And this will be a multi-year effort to hopefully better have those countries better reflect the innovation that we bring. Vas, while I have you here now, the White House also threatened 100% tariffs on branded pharmaceuticals uh unless new ground has been broken on US facilities. I saw in a press release you spent 20 or investing $23 billion and you're hoping to break ground on a number of facilities in the US. Does that also mean that you're shielded? as best as we can understand that as long as we continue to build our factories in the US and we continue to work towards an appropriate uh agreement with the US, we can manage through the tariff situation. That's why we don't expect it to impact our near or midterm guidance. We have five facilities we'll break ground on before the end of this year. We'll be in a position hopefully relatively soon where we can produce our US products for the US. And with respect to all the different tariff uh investigations, I've learned a lot about tariffs, I'd say, in the last six months. We're an industry that was never exposed to tariffs before, and now this has become a topic. But I think our teams have done a good job to navigate it. So, we feel confident with where we are and we'll just keep rolling with the the various investigations.