Key Highlights
- Second quarter revenue reached $14.41 billion, representing 3% growth in US dollar terms, powered by volume expansion
- Core operating profit climbed to $5.94 billion, surpassing the analyst consensus of $5.31 billion
- Kisqali revenue surged 44% to $1.7 billion; Scemblix sales nearly doubled, reaching $562 million
- Entresto revenue plummeted 50% to $1.18 billion amid intensifying US generic competition
- Company maintained its 2026 outlook while shares advanced approximately 2% in morning trading
Swiss pharmaceutical giant Novartis reported second quarter net sales of $14.41 billion on Tuesday, marking a 3% increase in US dollar terms, as strong performance from its emerging drug portfolio helped offset significant declines in heart medication Entresto.
Shares climbed approximately 2% during early trading hours after the earnings announcement, pushing the company’s market capitalization to roughly $310 billion following a 14% year-to-date appreciation.
The company’s core operating profit, a critical non-IFRS metric closely monitored by Wall Street analysts, reached $5.94 billion. This figure significantly exceeded the average analyst projection of $5.31 billion compiled by Visible Alpha.
Barclays research analysts highlighted that the profit outperformance stemmed primarily from disciplined expense management. Core selling, general and administrative costs declined 6% to $3.24 billion during the quarter.
Reported net income decreased 19% to $3.26 billion, pressured by elevated income tax obligations and interest expenses. Diluted earnings per share fell 17% to $1.71.
Among growth products, Kisqali, the company’s breast cancer treatment, expanded 44% to $1.7 billion. Scemblix demonstrated remarkable momentum with 89% growth to $562 million. Kesimpta increased 32% to $1.42 billion, Pluvicto rose 43% to $651 million, and Leqvio advanced 59% to $480 million.
These positive developments were partially neutralized by Entresto’s steep 50% decline to $1.18 billion as generic alternatives gained traction in the United States market. Analyst projections had anticipated $1.23 billion. Tasigna similarly contracted 58% to $142 million.
Full-Year Outlook Maintained
Novartis retained its complete 2026 financial guidance without modification. Management anticipates net sales will expand at a low single-digit percentage rate while core operating income is projected to decrease by a low single-digit percentage on a constant currency basis.
Chief Executive Officer Vas Narasimhan characterized the quarter as demonstrating a “solid” return to revenue growth and affirmed the organization remains “on track to deliver our full-year guidance and mid-term outlook.”
Free cash flow contracted 12% to $5.56 billion. Net debt expanded to $39.4 billion as of June 30, increasing from $21.9 billion at year-end 2025. The elevation reflected $15.3 billion deployed toward acquisitions and intangible assets, a $9.1 billion dividend distribution, and $3.1 billion in share repurchase programs.
Development Pipeline Under Scrutiny
Market participants are closely monitoring three investigational compounds — pelacarsen, remibrutinib, and del-desiran. Analyst projections suggest this trio could collectively achieve up to $10 billion in peak annual revenue.
The pipeline assumes heightened importance as Cosentyx and Kisqali, two current revenue pillars for Novartis, face patent exclusivity expirations after 2030.
Cosentyx delivered 12% growth to $1.82 billion in the second quarter, with performance partially enhanced by an approximately $100 million one-time US market benefit.
In July, Novartis announced an agreement to acquire Myricx Bio, a biotechnology company specializing in antibody-drug conjugate development, with transaction completion anticipated during the latter half of 2026.
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