On September 10, 2026, Reuters reported that Artisan Partners, among Novartis AG (NYSE:NVS)’ 20 largest shareholders, publicly called for a shake-up of the Swiss drugmaker’s board to improve oversight of its acquisitions, after Novartis shares suffered an 11% one-day drop this week. It wiped out nearly $30 billion in market value and erased all of the stock’s 2026 gains following back-to-back clinical trial failures. Artisan’s David Samra told Reuters that “the party is over” and urged Chairman Giovanni Caforio to change the team overseeing dealmaking, though he stopped short of blaming CEO Vas Narasimhan, saying he has done “a very good job” since taking over in 2018.
Bull Case
Novartis AG (NYSE:NVS) retains substantial pipeline and financial support despite the recent trial setbacks. The business said its financial guidance remains unchanged and emphasized that its pipeline remains broad. Remibrutinib delivered positive Phase III results in multiple sclerosis earlier in September. That gives Novartis other potential growth drivers as investors reassess the failed pelacarsen and del-desiran programs.
The shareholder criticism targets M&A oversight rather than CEO Vas Narasimhan. Artisan Partners’ David Samra specifically praised Narasimhan’s record since becoming CEO while calling for stronger board oversight of acquisitions. It includes a dedicated acquisition committee and improved deal vetting. That distinction could allow Novartis to address governance concerns without disrupting its management strategy or day-to-day operations.
The Avidity acquisition still contains assets beyond the failed del-desiran program. Novartis paid approximately $12 billion for Avidity and acquired three late-stage AOC programs. It includes del-desiran, del-brax for facioscapulohumeral muscular dystrophy, and del-zota for Duchenne muscular dystrophy. Although del-desiran’s Phase III failure weakens the original investment thesis, Novartis is advancing the other Avidity programs, leaving the acquisition with additional opportunities to generate value.
Bear Case
Shareholder criticism exposes growing concerns about Novartis AG (NYSE:NVS)’ M&A discipline. Artisan Partners, one of Novartis’ top 20 shareholders, has called for changes at the board level after the company suffered back-to-back clinical setbacks. Reuters also reported that eight shareholders have raised concerns about Novartis’ M&A strategy. This increases the possibility of investor pressure if future deals fail to replenish the pipeline.
The $12 billion Avidity acquisition now faces a much higher burden of proof after del-desiran failed its Phase III primary endpoint. Novartis acquired Avidity to obtain three late-stage neuromuscular programs and expected the transaction to strengthen its long-term growth profile. Del-desiran’s failure does not eliminate the value of the remaining programs. But it reduces the probability that the acquisition will deliver the multi-billion-dollar opportunity originally envisioned and gives shareholders a stronger basis to question the company’s deal-selection process.
Novartis now needs stronger pipeline execution as patent expirations increase the importance of successful capital allocation. Pelacarsen failed its Phase III cardiovascular outcomes trial earlier in September. Del-desiran subsequently missed its primary endpoint. Novartis has maintained its 5%-6% five-year sales CAGR target for 2025-2030. However, the recent failures increase the pressure on remibrutinib, the remaining Avidity programs, and future acquisitions to replenish growth as the company approaches significant patent expirations.
Hedge Fund Sentiment
Novartis AG (NYSE:NVS)’ hedge fund count grew to 38 in the second quarter from 31 in the first, with position value rising to $3.66 billion from $3.02 billion, according to Insider Monkey’s database, positioning that was built before this week’s trial failures and shareholder pushback emerged. That gap between rising institutional interest through June and the governance concerns now surfacing in September underscores how quickly sentiment can shift following a cluster of unexpected clinical setbacks.
Conclusion
Novartis AG (NYSE:NVS) enters a more demanding period for capital allocation after two significant late-stage setbacks exposed weaknesses in parts of its pipeline and prompted public criticism from a major shareholder. The business still has strengths, including an unchanged financial outlook, a broad pipeline, positive remibrutinib data, and more Avidity programs that could create value. But investors now have greater reason to scrutinize how Novartis selects acquisitions and measures their long-term returns. The key question is whether the remaining pipeline and future deals can replenish the growth opportunities lost through the recent failures while restoring confidence in the company’s M&A discipline.
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