* $2.1 bln deal fits CEO's push to tighten Novartis focus
* Swiss firm has shed generics, over-the-counter drugs
* Analysts say Q3 results take back seat to deal (Adds comments from CEO, shares, details throughout)
By John Miller
ZURICH, Oct 18 (Reuters) - Novartis is paying $2.1 billion for nuclear medicine specialist Endocyte in Chief Executive Vas Narasimhan's latest deal to reshape the Swiss drugs group from a pillmaker to a producer of sophisticated therapies.
Narasimhan, who raised Novartis's 2018 revenue forecast on Thursday as he released third-quarter results, is counting on Endocyte's treatment for prostate cancer topping $1 billion in sales after it hits the U.S. market in 2021.
Some analysts said the deal, seen closing next year, fitted his push into high-margin specialty treatments, but was very expensive.
Since taking over in February, Narasimhan has shed over-the-counter medicines and generic pills while pushing a spinoff of Novartis's Alcon eyecare unit come 2019.
Meanwhile, the 42-year-old U.S. doctor spent $8.7 billion on gene therapy company Avexis to get hold of its spinal muscular atrophy treatment that offers hope of a cure for some children.
With Endocyte, Narasimhan is intensifying his drive into nuclear medicine - the use of radioactive substances to research, diagnose and treat illnesses - that began with the $3.9 billion purchase of Advanced Accelerator Applications (AAA) last October.
"I'm looking for acquisitions that strengthen us in our key therapeutic areas, or that help us build out these three platforms: cell therapy, gene therapy and radioligand therapy," he said.
Novartis reported third-quarter core net income rose 2 percent to $3.1 billion, beating analysts' average forecast of $3 billion in a Reuters poll. Sales rose 3 percent to $12.78 billion, shy of the $12.84 billion poll average.
It now sees 2018 revenue growing by a mid-single-digit percentage range, above the previous forecast of low-to-mid-single-digit growth.
But analysts said investors were more keen on Narasimhan's progress in recasting the broad European healthcare giant that former Chairman Daniel Vasella envisioned before his 2013 exit into a focused, data-driven drugmaker.
"Today is less about the earnings number and more about the company’s transition to much more of a pure-play pharma business, which seems to be going down well with investors," Berenberg analyst Laura Sutcliffe said.
Novartis, whose shares were up 1.7 percent at 0830 GMT, has agreed to pay $24 per share in cash for Endocyte, more than 15 times its value in September 2017 and a 54 percent premium to Wednesday's closing price.
'BELOW-AVERAGE REACTION TIME'
Still, some analysts worried Narasimhan waited too long.
"Note a below-average reaction time at the business development department considering that the Endocyte market cap was at $110 million only 12 months ago," Baader Helvea's Bruno Bulic said.
Endocyte complements the nuclear medicine technology Novartis acquired with France's AAA, including its Lutathera medicine for neuroendocrine tumours like the one that killed Apple founder Steve Jobs.
Narasimhan said that transaction prompted Novartis to expand relationships with U.S. and European nuclear medicine centres. After building his supply chain, Narasimhan needed more treatments.
"We said, 'What other products can we bring in to leverage that global network we acquired earlier this year?'" he said. "With Endocyte, we saw a great fit."
Endocyte's and AAA's treatments attach a radioactive atom to a molecule attracted to certain tumours, a process meant to kill the cancer while bypassing healthy tissues.
Endocyte Chief Executive Mike Sherman cited Novartis's "global reach and expertise" as critical to getting its main medicine, PSMA-617 for castration-resistant prostate cancer (CRPC), as well as its broader portfolio quickly to patients.
Centerview Partners advised Endocyte, with Jefferies assisting. PJT Partners advised Novartis. (Reporting by John Miller; Editing by Michael Shields and Mark Potter)