Novartis Silences Generic Fears With Blowout Quarter, Packed Pipeline

Novartis AG (NYSE: NVS ) reported better-than-expected second-quarter earnings on Tuesday as strong demand for its priority medicines offset the impact of generic competition, while the Swiss drugmaker reaffirmed its full-year 2026 guidance.

Adjusted earnings came in at $2.41 per share, topping the analyst consensus estimate of $2.13.

Revenue rose to $14.41 billion from $14.05 billion a year earlier, ahead of expectations of $14.04 billion.

Net sales increased 3% year over year, or 1% at constant currencies, to $14.41 billion.

Volume growth contributed 18 percentage points, largely offset by a 14-point impact from generic competition and a 3-point drag from pricing.

CEO Commentary Novartis CEO Vas Narasimhan said the company returned to sales growth in the second quarter, driven by continued strength in key growth brands including Kisqali, Kesimpta, Scemblix and Pluvicto.

He said recently launched therapies Rhapsido for chronic spontaneous urticaria and Itvisma are showing an encouraging early trajectory, while the pipeline also advanced with updated overall survival data for Kisqali in early breast cancer and the FDA submission seeking accelerated approval for del-zota in Duchenne muscular dystrophy.

Narasimhan added that Novartis expects several important clinical readouts in the second half of the year and remains on track to achieve its full-year guidance and mid-term outlook.

Narasimhan also confirmed he has “no change of plans” and intends to remain at the helm for the company’s next growth phase.

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Multiple sclerosis treatment Kesimpta increased 32% to $1.42 billion, while leukemia drug Scemblix surged 89% to $562 million.

Radioligand therapy Pluvicto climbed 43% to $651 million, cholesterol drug Leqvio advanced 59% to $480 million and Cosentyx gained 10% to $1.82 billion.

Together, the company’s priority growth brands expanded 36% at constant currencies during the quarter.

Despite the revenue growth, operating income fell 2% to $4.75 billion, while net income declined 19% to $3.26 billion due to higher income taxes and increased interest expense.

Core operating income was flat at $5.94 billion, and free cash flow decreased 12% to $5.56 billion.

Outlook Reaffirmed Novartis reaffirmed its fiscal 2026 guidance.

The company continues to expect low single-digit net sales growth and a low single-digit decline in core operating income for the year.

The company also highlighted pipeline progress during the quarter, including European Commission and Japan approvals for Rhapsido in chronic spontaneous urticaria, European approval for Itvisma in spinal muscular atrophy, an FDA accelerated approval filing for del-zota in Duchenne muscular dystrophy and updated long-term survival data for Kisqali in early breast cancer.

The news agency, citing Barclays analysts, also said the earnings beat was largely driven by disciplined operating expense management.

However, Novartis’ decision to maintain its 2026 guidance suggests spending is expected to increase in the second half of the year.

NVS Price Action: Novartis shares were up 3.02% at $154.08 during premarket trading on Tuesday, according to Pro data.

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