Artisan Partners, one of Novartis AG's 20 largest shareholders, called on Wednesday for a overhaul of the Swiss pharmaceutical company's board-level dealmaking oversight, intensifying public pressure on management after two late-stage clinical failures sent shares tumbling.
Novartis shares fell 11% in a single session this week, erasing approximately $30 billion in market value and wiping out all gains for 2026. The sell-off followed consecutive Phase III disappointments: pelacarsen failed its cardiovascular outcomes trial earlier in September, and del-desiran subsequently missed its primary endpoint in Duchenne muscular dystrophy.
David Samra of Artisan Partners told Reuters that "the party is over" and urged Chairman Giovanni Caforio to replace the team responsible for acquisitions. Samra stopped short of criticizing CEO Vas Narasimhan, saying he has performed well since taking the helm in 2018. According to Reuters, eight shareholders have separately raised concerns about Novartis's M&A strategy.
The criticism centers on the approximately $12 billion acquisition of Avidity Biosciences, which brought three late-stage rare-disease programs into Novartis's portfolio. Del-desiran targeted Duchenne muscular dystrophy, del-brax addresses facioscapulohumeral muscular dystrophy, and del-zota is aimed at the same condition. While del-desiran's failure weakens the original investment thesis, Novartis is advancing the other two Avidity programs.
Novartis maintains its financial guidance of a 5% to 6% compound annual sales growth rate through 2030 and emphasized that its pipeline remains broad. One source of optimism is remibrutinib, which delivered positive Phase III results in multiple sclerosis earlier in September, offering a potential growth driver as investors reassess the portfolio.
The shareholder activism comes at a time when patent expirations are increasing the stakes for successful capital allocation. Hedge fund participation in Novartis rose during the spring — the number of holding funds climbed to 38 in the second quarter from 31 in the first, with aggregate position values reaching $3.66 billion from $3.02 billion — before the clinical setbacks and governance concerns surfaced in September.
The episode underscores a broader tension at Novartis: the company must replenish its growth pipeline as existing blockbusters face expiry while defending its dealmaking approach against shareholders who question whether acquisitions are delivering expected returns.
