Novartis Just Had Its Worst Month in Years. Now Shareholders Want Heads to Roll.
A major Novartis shareholder is demanding a board overhaul after back-to-back trial failures and a record stock drop. When your $12 billion acquisition produces a drug that flunks its biggest test, someone has to answer for it.
A Record-Breaking Fall
Imagine spending $12 billion on a house, only to find out the foundation is cracked. That's roughly where Novartis finds itself after a brutal September that saw back-to-back clinical trial failures, patient deaths in an experimental therapy, and a record stock drop. Now one of the company's biggest shareholders is done watching quietly.
Artisan Partners, a major Novartis investor, has publicly called for a board shake-up. David Samra, the firm's managing director, wants Chairman Giovanni Caforio to overhaul how the board oversees acquisitions, bring in stronger directors, and create a dedicated acquisition committee. The target of his frustration isn't CEO Vas Narasimhan, whom Samra described as having done a "very good job." It's the board itself, and whether it exercised enough scrutiny over the deals that got Novartis into this mess.
This isn't just one angry investor venting. Reuters reported that other shareholders have also raised concerns about Novartis's M&A strategy. And in the world of activist investing, one public demand often opens the floodgates for more.
Three Strikes in Rapid Succession
To understand why investors are furious, you need to see how fast things unraveled.
First came pelacarsen, Novartis's big bet on preventing heart attacks and strokes. The drug successfully lowered a blood fat called lipoprotein(a), which was supposed to be the key to reducing cardiovascular events. But in its Phase 3 trial (the final, make-or-break stage), patients didn't actually have fewer heart attacks or strokes. The drug did what it was designed to do biologically; it just didn't help patients. Think of it like a car that accelerates beautifully but can't stop at red lights.
Then came the one that really stung: del-desiran, an RNA therapy for a rare muscle-wasting disease called myotonic dystrophy type 1. This drug came from Novartis's roughly $12 billion acquisition of Avidity Biosciences, making it perhaps the single most important test of the company's dealmaking strategy. It failed its Phase 3 trial, missing the primary endpoint (the main thing the study was designed to prove). Reuters noted this meant Novartis had now missed this year.
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two of three key pipeline tests
As if that weren't enough, Novartis also had to halt eight of ten studies of its experimental CAR-T cell therapy, called rap-cel, after three patients died from inflammatory complications. CAR-T is a type of treatment that reprograms a patient's own immune cells to fight disease. When it works, it's revolutionary. When it goes wrong, the consequences are devastating.
The $12 Billion Question
The del-desiran failure is the one keeping investors up at night, because it calls into question something much bigger than a single drug: Novartis's entire acquisition playbook.
Novartis has been spending aggressively to fill its pipeline. R&D spending climbed from $10 billion in 2024 to $11.2 billion in 2025, with much of the increase tied to recently acquired assets. The company announced a $23 billion plan to expand its U.S. manufacturing and research footprint over five years. It built a whole corporate function, called Strategy & Growth, to combine portfolio strategy with business development.
All of that sounds great on paper. But when your marquee acquisition produces a drug that fails its most important clinical trial, investors start to wonder: who was minding the store?
James Eugene from Verso Investment Management, another Novartis shareholder, put it bluntly. He called the failed drug something that "should have been a 'must win'" and said the failure would only increase pressure on dealmaking. Jefferies analyst Michael Leuchten warned that concerns about post-2030 growth would now resurface, since these pipeline bets were supposed to be the answer to looming patent cliffs.
Why the Board, Not the CEO, Is in the Crosshairs
Samra's critique is surgical. He's not calling for Narasimhan's head. Instead, he's pointing at the people who are supposed to provide oversight and asking why billion-dollar acquisitions weren't scrutinized more carefully.
He also took aim at executive compensation, arguing that Novartis relies too heavily on "adjusted performance measures" that conveniently exclude writedowns. In plain English: when a deal blows up, the losses get swept under the rug, and executives still get paid as if everything went fine. Samra argued this doesn't reflect "real economic outcomes."
The Novartis board currently has 12 members, chaired by Caforio. The 2026 annual meeting saw one director, Daniel Hochstrasser, step down while oncologist Charles Swanton joined. Directors serve one-year terms, which means every seat comes up for a vote annually. That's important: it gives shareholders a regular mechanism to push for change without launching a full proxy fight.
The Bigger Picture for Big Pharma
Novartis isn't the first major pharma company to face activist pressure, and it won't be the last. Historically, these campaigns in life sciences tend to end one of four ways: a settlement, a strategic review that leads to asset sales, board or leadership changes, or the campaign quietly fading away. Among public campaigns in the sector since January 2024, only about 9% went to a shareholder vote. Most get resolved through backroom negotiations.
But the pattern is clear. Activists typically target companies showing strategic drift or underperformance, and the most common demand in healthcare over the past five years has been leadership changes. Companies like Pharmacyclics, Medivation, and Alexion all faced activist pressure that ultimately contributed to them being acquired by larger rivals.
Nobody is suggesting Novartis, one of the world's largest pharma companies, is about to get bought. But the underlying message is the same one activists have been sending across the industry: if you're going to spend billions on acquisitions, you'd better have the governance infrastructure to make sure those bets pay off.
What Comes Next
Novartis still has meaningful pipeline catalysts ahead, including drugs like zigakibart, Fabhalta, remibrutinib, and Leqvio in various stages of development and regulatory review. The company's portfolio spans four core therapeutic areas (cardiovascular, renal and metabolic, immunology, neuroscience, and oncology), and it still has 103 projects in its pipeline, including 46 new molecular entities.
The numbers say the machine is still running. But the September debacle exposed something numbers can't easily fix: a trust gap between management and investors. Analysts broadly rate the stock around Hold, reflecting a wait-and-see posture that's polite code for "prove it."
Artisan Partners has fired the opening shot. Whether Novartis's board listens, or whether more shareholders pile on, will likely play out over the next few months as the annual meeting cycle approaches. One thing is certain: the era of writing $12 billion checks and asking questions later is over.
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