Key Takeaways:
Novartis AG (NVS) reported a 5 percent decline in first-quarter net sales as growth from its priority brands was unable to offset the impact of generic competition in the US for its top-selling heart medicine, Entresto.
"Novartis delivered a strong start to 2026 across our priority brands and launches, while US generic erosion weighed on results in Q1 as expected," Chief Executive Vas Narasimhan said in a statement.
The Swiss drugmaker’s core operating income fell 14 percent in constant currencies to $4.9 billion, missing the average analyst expectation of $5.1 billion. Core earnings per share declined 15 percent to $1.99. The company’s free cash flow was $3.3 billion, which was broadly in line with the prior-year quarter.
The results from Novartis come during a week heavy with corporate earnings and a key Federal Reserve meeting. Investors are closely watching for signs of resilience in corporate profits amid geopolitical tensions and higher energy prices.
Despite the headline declines, Novartis saw continued strong performance from its priority brands. Sales of cancer drug Kisqali jumped 55 percent, while Pluvicto, a prostate cancer therapy, surged 70 percent. Other growth drivers included Kesimpta for multiple sclerosis, which grew 26 percent, and leukemia treatment Scemblix, which was up 79 percent.
The company also highlighted several innovation milestones, including a positive opinion in Europe for Remibrutinib for a type of chronic hives and a priority review designation from the US Food and Drug Administration for Ianalumab in Sjögren's disease.
Novartis reaffirmed its full-year 2026 guidance, expecting net sales to grow in the low single-digits and core operating income to decline by a low single-digit percentage. The guidance suggests that the company expects the growth from its newer drugs to increasingly offset the impact of generic competition as the year progresses.
The company's ability to manage the transition from blockbuster drugs facing patent expirations to a new portfolio of growth products is a key focus for investors. The performance of recently launched drugs and the progress of late-stage pipeline assets will be critical in the coming quarters. Investors will be looking for more details on the company's strategy during the upcoming earnings call.
This article is for informational purposes only and does not constitute investment advice.
