Novartis points to strong returns under Narasimhan.
Its shares are up more than 60% and have delivered total returns of some 120% including reinvested dividends since he took over, compared with about 108% for Swiss rival Roche and some 200% for British-based drugmaker AstraZeneca AZN.L.
Daniel Bolanowski, portfolio manager at investor Arctic Asset Management, said the scale of the share sell-off suggested investors were questioning more than the value of del-desiran, with a "deeper trust issue" about business development.
But Novartis still has two other Avidity drugs, del-zota and del-brax, in development that could generate revenue, Bolanowski said, adding: "It's a little bit premature to call for heads at this point".
Narasimhan's M&A strategy would now be viewed more critically, investors said. Generics unit Sandoz, spun off in 2023, has also far outperformed Novartis, some analysts said.
However, while the del-desiran flop was painful, the HARBOR study assessing it was designed before Novartis bought Avidity, said Guy Bettschart-Ghassabi, healthcare analyst at Novartis investor Bellevue Asset Management. He noted myotonic dystrophy, the disease it targeted, is challenging.
He reaffirmed his confidence in the company's management.
Markus Manns, portfolio manager at Novartis shareholder Union Investment, said the two failures were unfortunate but were within normal drug development success probabilities.
The next major test for Novartis is detailed data for remibrutinib in relapsing multiple sclerosis, due at a medical meeting in October. While the oral drug met the main goals of two late-stage studies, investors are waiting for fuller evidence on efficacy, disability progression and safety.
"They have to work harder to fulfill their post-2030 goals. But it's in the same camp as most other pharma companies," Manns said, adding that while the M&A strategy needed to be better, Narasimhan had a strong vision and had boosted Novartis value.
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