Full-Year Sales and Profitability
FY2025 sales up 8% (constant currency); Core operating income up 14% to $21.9 billion; achieved 40.1% core margin (target met 2 years early); core EPS up 17% to $8.98; record free cash flow $17.6 billion (+8%).
Novartis
· NVS
February 4th, 2026
Summary
- Earnings Call Date:
- 2026-02-04
- Change Since:
- +2.10%
- Next Earnings Date:
- 2026-07-21
Earnings Call Sentiment
PositiveThe call conveyed strong multi-product commercial momentum, record profitability and cash generation, and a robust late-stage pipeline with multiple potential catalysts in 2026. Management acknowledged notable near-term headwinds — chiefly mid-2025 generic entries (Entresto, Promacta, Tasigna), noisy Q4 gross-to-net adjustments, the largest GX impact expected in 2026, and some clinical/regulatory timing uncertainties (pelacarsen event rates, remibrutinib monitoring, zigakibart timing). However, the breadth of blockbuster growth across key brands, record margins and cash flow, clear capital allocation, and a defined plan to return to 40%+ core margins by 2029 outweigh the near-term challenges.
Company Guidance
Novartis guided 2026 sales to grow low single‑digit while core operating income is expected to decline low single‑digit (reflecting a 1–2 percentage‑point core‑margin dilution from the Avidity deal); core net financial expenses are expected at about $1.7 billion and the core tax rate around 16.5%. Management said 2026 will be a year of two halves — H1 sales down low single‑digit and H1 core operating income down low double‑digit (Q1 also affected by a ~2% positive gross‑to‑net in the Q1‑2025 base), then H2 sales up mid‑single‑digit and H2 core operating income up mid‑ to high‑single‑digit — producing the full‑year low‑single‑digit top‑line guidance; at late‑January FX levels they expect a ~+2–3 percentage‑point boost to sales and ~+1 percentage‑point to core operating income. They reiterated a 5–6% sales CAGR for 2025–2030 and a return to 40%+ core margin in 2029 (after achieving a 40.1% core margin, $21.9B core operating income, $8.98 core EPS and $17.6B free cash flow in 2025), and announced a proposed dividend of CHF 3.70 (up 6%) plus a new up‑to‑$10B buyback (≈$7.7B remaining).
Kisqali Strong Growth and Market Traction
Kisqali up 57% for the year (Q4 growth 44%; adjusted global growth 54%; U.S. +62% when removing RD adjustments). Management reiterates $10 billion peak sales outlook and notes >60% U.S. eBC NBRx and >80% NBRx share in Germany early breast cancer.
Multiple Blockbuster Brand Performances
Kesimpta +36% to $4.4 billion (expanding first-line adoption to ~50% of NBRx); Pluvicto +42% CC, reached $2 billion (U.S. pre-taxane +75%, PSMA share up 4x to 16%); Scemblix blockbuster with Q4 +87% and 41% U.S. NBRx share across all lines; Leqvio blockbuster (FY +57%, Q4 +46%).
Cosentyx and Specialty Launches
Cosentyx up 8% to $6.7 billion (Q4 +11%); #1 prescribed IL-17 across indications; U.S. growth driven by hidradenitis and IV revenue; U.S. polymyalgia rheumatica submission completed.
Renal Portfolio and Lifecycle Advances
IgAN brands (Vanrafia, Fabhalta) drove 50% of NBRx market growth year-over-year; Fabhalta approved in C3G in 45 countries; management expects full eGFR datasets and filings for Fabhalta and Vanrafia in H1 2026.
Rhapsido Launch Momentum
U.S. launch showing encouraging early demand: >2,000 HCP starts via sampling/bridge program, positive feedback from allergists/dermatologists, expect stronger uptake as access expands (notable pick-up expected in 2H2026).
Pelabresib & Other Pipeline Advances
Pelabresib 96-week MANIFEST data showed deep/durable responses and comparable safety vs ruxolitinib; EU filing path in 2026 and new U.S./China/Japan Phase III planned targeting high-TSS50 patients. Company expects 7 pivotal readouts in 2026 to drive midterm outlook.
Global Health Progress
KLU156 (ganaplacide + lumefantrine) shows strong malaria cure rates (adjusted 99.2% vs 96.4% comparator) and potential to be first new malaria medicine in ~25 years, supporting Novartis' global health mission.
Capital Allocation and Shareholder Returns
Invested >$10 billion in R&D (+8% YoY); completed $15 billion buyback and launched new up-to-$10 billion buyback (≈$7.7 billion remaining); proposing CHF 3.70 dividend (+6% in CHF; 29th consecutive CHF increase).
Operator
Good morning and good afternoon, and welcome to the Novartis Q4 Full Year 2025 Results Release Conference Call and Live Webcast. [Operator Instructions] The conference is being recorded. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. With that, I would like to hand over to Ms. Sloan Simpson, Head of Investor Relations. Please go ahead, madam.
Sloan Simpson
Thank you, Sarah. Good morning and good afternoon, everyone, and welcome to our Q4 2025 Earnings Call. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Please refer to the company's Form 20-F on file with the U.S. Securities and Exchange Commission for a description of some of these factors. The discussion today is not a solicitation of a proxy nor an offer of any kind with respect to the securities of Avidity Biosciences or SpinCo. The parties have filed relevant documents with the U.S.
SEC, including a proxy statement for the transactions and a registration statement for the spinoff. We urge you to read these materials that contain important information when they become available. Before we get started, I also want to remind our analysts to please limit yourselves to one question at a time, and we'll cycle through the queue as needed. And with that, I will hand over to Vas.
Vasant Narasimhan
Terrific. Thank you, Sloan, and great to be wit...
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