Novartis AG (ADR)(NYSE:NVS) completed a couple of deals in Israel in past one year. It invested $35 million in Gamidal Cell and acquired a 35% stake in the company. The deal was completed with an additional option where the Swiss Big Pharma can acquire the firm and its stem cell therapies for $165 million.
Acquisition goes on
After four months, it acquired a stake in Bioline RX Ltd (NASDAQ:BLRX) for $10million. Acquiring stake in two companies of Israel clearly indicates what Novartis is looking for in the coming years. It is an attempt to rectify the past mistakes and improve geographical focus of business development activities.
Novartis is trying hard and taking all important decisions to become a part of Israeli biotech industry. As per strategic plans, it is gradually acquiring small stakes in Israeli companies. David Epstein, the CEO of Novartis Pharma, said that after a thorough evaluation of company’s investment portfolio, it was evident that the company didn’t have any major exposure to Israel market. It prompted management to consider measures that can act as strong foundation for making a strong entry into Israeli markets.
Penetration of market
The market in Israel are still not penetrated and teaming up with Bioline enables Novartis to get acquainted with Israeli Pharma industry. Bioline will identify the startups and then get the rights to develop their trademark technologies. If possible, the company will try to purchase these technologies from small firms.
The acquisition of the stake in two companies provides Novartis with a direct line to the Israeli research and development ecosystem. The industry has spawned several biotech firms. Bioline can greatly help Novartis explore the available options so that it can increase the probability of identifying the next drug candidate to join Copaxone. Novartis will make sure that it doesn’t repeat the problems like Hyperion Therapeutics Inc (NASDAQ:HPTX) acquisition of Andromeda biotech.