Artisan Partners, one of Novartis' top 20 shareholders, publicly demanded changes to the Swiss pharmaceutical giant's board of directors following a string of clinical trial failures and acquisition missteps that have eroded shareholder value.
David Samra, managing director at Artisan Partners and founding partner of its International Value Group, told Reuters on Thursday that "the party is over" and urged 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," Samra said.
The activism comes in the wake of two consecutive disappointment: on Tuesday, Novartis disclosed that a muscle-wasting disorder drug — acquired through its $12 billion takeover of U.S. firm Avidity — failed a late-stage clinical study. The news sent Novartis shares tumbling more than 10%, erasing nearly $30 billion from the company's market value. The day before, Novartis stock had fallen 3% after disappointing results from heart drug pelacarsen were released on Monday.
Samra argued that accountability must follow such losses. "If you do a $12 billion deal and it goes to zero, the management needs to be penalised for that," he said. He noted that while CEO Vas Narasimhan — who has led the company since 2018 — had done a "very good job" running day-to-day operations, he questioned whether the board was exercising sufficient scrutiny over strategic deals.
The Avidity acquisition is not the only transaction drawing scrutiny. In 2024, Novartis acquired German biotech MorphoSys, but investor enthusiasm faded after the company wrote down the value of the deal only months later.
Following Samra's remarks, Novartis shares traded over 1.6% higher in Thursday pre-market activity.
Novartis responded with a statement defending its capital-allocation strategy. "We continue a disciplined and shareholder-friendly approach to capital allocation by investing in the organic business, pursuing value-creating bolt-ons, and returning capital to shareholders through a growing annual dividend and share buybacks."
The activist campaign intensifies pressure on Caforio and the Novartis board as investors weigh whether the company's pipeline execution can recover after what has been described as a series of uninspiring deals and late-stage clinical setbacks.
