This article first appeared on GuruFocus.
Net Sales: $14.4 billion, a growth of 1% in constant currencies.
Core Operating Income: Flat at $5.9 billion.
Core Operating Income Margin: 41.2% of net sales, a decline of 70 basis points year-over-year.
Free Cash Flow: $5.6 billion for the second quarter.
Growth Drivers: Up 26% in constant currencies.
Kisqali Sales: Up 43% in constant currencies, over $1 billion in the US.
Kesimpta Sales: Up 32% in the US and internationally.
Pluvicto Sales: Up 43%, with 83% growth in new patients outside the US.
Leqvio Sales: Up 59%, with 55% growth in the US.
Scemblix Sales: Up 89% in constant currency.
Cosentyx Sales: Up 10% in constant currency.
First Half Net Sales: Declined 2%.
First Half Core Operating Income: Declined 7%.
First Half Free Cash Flow: $8.9 billion.
Share Buyback Program: $2.1 billion repurchased, with $5.6 billion remaining.
Full Year Guidance: Net sales to grow low single digits, core operating income to decline low single digits.
Release Date: July 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Novartis AG (NYSE:NVS) delivered strong performance across priority brands and launches, with a 1% growth in constant currencies.
Kisqali showed a 43% increase in constant currencies, outpacing the CDK4/6 market, with strong performance in both the US and international markets.
Kesimpta experienced a 32% growth, increasing its share in key markets, particularly in the US and Europe.
Pluvicto grew by 43%, driven by the PSMA population in the pre-taxane mCRPC, with strong growth outside the US.
Leqvio saw a 59% increase, driven by strong demand globally, with significant growth in the Medicare Part B segment in the US.
Negative Points
Core operating income was flat at $5.9 billion, indicating challenges in maintaining profitability.
The core operating income margin declined by 70 basis points due to incremental costs and lower gross margins.
Free cash flow was impacted by one-time phasing items, which are expected to reverse in the second half.
Net sales declined by 2% in the first half of the year, with core operating income declining by 7%.
There are ongoing challenges in China for Cosentyx due to increased competition, affecting global performance.
Q & A Highlights
Q: Can you provide an update on the accelerated approval potential for branaplam in Huntington’s disease? A: Vasant Narasimhan, CEO: We are engaging with the FDA on the Phase II data. Our base case remains that a Phase III study will be required. We expect more clarity in the second half of the year, and we continue to follow Phase II patients for additional data.
Story Continues
Q: Could you elaborate on the one-off events impacting Q2 top line and operating profit margin? A: Mukul Mehta, CFO: The 1% impact on the top line was primarily due to inventory-related changes, while the cost side was affected by clinical trial-related costs moving from Q2 to Q3. Together, these factors impacted core operating income by about 5%.
Q: What gives you confidence that remibrutinib can improve upon the annualized relapse rate in MS? A: Vasant Narasimhan, CEO: We don’t have Phase II data, but we are basing our confidence on other BTK inhibitors’ performance. We monitor blinded rates for safety and relapse rates, which gives us confidence that the study is performing as expected.
Q: How have you controlled for drop-ins of existing therapies in the HORIZON trial for pelacarsen? A: Vasant Narasimhan, CEO: Pelacarsen is studied on top of optimized background lipid-lowering therapy. We estimate that less than 10% of patients were on incretin-based therapies, so we don’t expect this to impact the results significantly.
Q: Could you discuss the P&L dynamics and cost control measures for the second half of the year? A: Mukul Mehta, CFO: H2 typically has higher spend. We focus on productivity in manufacturing operations and SG&A as a percentage of sales. We continue to invest in R&D, particularly for new assets, while maintaining productivity efforts.
Q: What is Novartis’ current stance on larger M&A deals? A: Vasant Narasimhan, CEO: There is no change in our M&A strategy. We focus on steady deals in the sub-$2 billion range and selectively do larger deals when there is a compelling asset that fits our platform or therapeutic area strategy.
Q: Can you provide an update on the potential for abelacimab and its readout timeline? A: Vasant Narasimhan, CEO: We remain excited about abelacimab, a monthly monoclonal antibody. We are on track for a readout before the end of the year at 75% of events. Additional studies in secondary stroke prevention are being evaluated.
Q: How do you view the commercial potential for Leqvio in China? A: Vasant Narasimhan, CEO: We initially saw strong uptake in the private segment, and post-NRDL listing, we see strong performance in hospital segments. We expect Leqvio to potentially become our largest medicine in China, similar to Entresto.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.