Novartis announced plans to acquire U.S.-based biotech Excellergy for up to $2 billion, marking its second multi-billion dollar deal in a week as it seeks to bolster its immunology portfolio and offset looming patent expirations [1]. The acquisition will bring Excellergy's early-stage drug candidate, Exl-111, into Novartis' allergy pipeline, with the asset expected to remain several years from market launch [1]. Novartis will pay Excellergy through a combination of upfront and milestone payments, and the transaction is anticipated to close in the first half of 2026, pending regulatory approvals [1].
This deal follows Novartis' recent acquisition of Synnovation subsidiary Pikavation Therapeutics for up to $3 billion, targeting an experimental breast cancer drug, and its February purchase of Avidity Biosciences, which added three late-stage neuromuscular programs with potential launches before 2030 [1]. The sector is experiencing a wave of M&A activity, with Merck agreeing to buy Terns Pharmaceuticals for up to $6.7 billion earlier this week, and GSK and AstraZeneca also pursuing several deals in recent months [1]. GSK's global head of business development, Chris Sheldon, noted a preference for mid-stage acquisitions in the $1 billion to $2 billion range, where biology is validated but drug outcomes remain uncertain, echoing Novartis' bolt-on strategy [1].
Novartis faces a challenging outlook as many best-selling drugs approach loss of exclusivity, a phenomenon known as the "patent cliff," which threatens hundreds of billions in sector revenue by the decade's end [1]. The company warned of profit declines in early 2026 due to generic competition for heart medicine Entresto and other key products, with Cosentyx expected to lose exclusivity around 2029 [1]. Incoming CFO Mukul Mehta highlighted the tough prior year base for the first half of 2026, citing generics for Entresto, Promacta, and Tasigna entering the U.S. market in mid-2025 [1]. Despite these challenges, Novartis is seeing strong growth in other medicines, including cancer drug Kisqali and multiple sclerosis treatment Kesimpta [1].
Novartis shares traded sideways in Zurich following the announcement, though the stock is up 33% over the past 12 months [1]. Excellergy, based in Palo Alto, remains privately held [1].
CONCLUSION
Novartis' acquisition of Excellergy for up to $2 billion underscores its strategic response to the impending patent cliff and generic competition. While the deal is expected to strengthen its immunology pipeline, market reaction has been muted, with shares trading sideways. The company continues to pursue bolt-on deals to diversify its portfolio and mitigate revenue risks from loss of exclusivity.