Image source: Walt Disney, Traci J. Brooks Studios

What's going on?

Swiss pharmaceutical giant Novartis announced it’s buying a promising US drugmaker: the $9.7 billion price tag might be a little hard to swallow, but a spoonful of sugar should help The Medicines Company go down.

What does this mean?

Novartis has made a string of acquisitions lately, and it’s likely decided to add The Medicines Company to that roster because of a particularly encouraging drug. The treatment looks set to help the millions at risk of cholesterol-related heart problems – making the drug a potential blockbuster if it’s approved. That might explain why The Medicines Company’s share price had tripled this year, even before the deal was announced…

Novartis’s purchase is its CEO’s latest attempt to transform the pharma company. Since he took the helm almost two years ago, he’s been aggressively getting rid of parts of the company not important to its core business, focusing instead on buying up the real money-spinners: cutting-edge cancer drugs and treatments for widespread diseases.

Why should I care?

The bigger picture: Drug deals.
Big pharma companies have recently tended to buy other companies’ drugs to keep their portfolios fully stocked, rather than develop their own. Novartis, for one, plans to spend up to 5% of its market value every year on takeovers. It may be more expensive to buy out an entire company than create a drug from scratch, sure. But it’s safer, too: a pharma company can acquire a proven treatment that’s already passed its initial trial stages.

Zooming out: Merger Monday.
Another takeover making the rounds on Monday was luxury conglomerate LVMH, which bought US jeweler Tiffany & Co in the biggest luxury goods deal ever. LVMH agreed to pay a sparkling $16 billion for the jeweler – $1 billion more than it’d previously offered. Tiffany’s will hopefully enable it to better challenge Cartier-owner Richemont for dominance in the global jewelry business – one of the fastest-growing categories in the luxury goods sector.

Originally posted as part of the Finimize daily email.

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Darth Schwab

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