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Shares in Swiss drugmaker Novartis were seen down 3.3% in pre-market trade on Tuesday after the company reported third-quarter profitability below market expectations, even as higher sales from key medicines helped offset losses from expiring patents.
On the Swiss Exchange, the share price of the drugmaker was down by 3.76%.
The Basel-based pharmaceutical group posted a core operating income of $5.46 billion for the quarter, up from $5.14 billion a year earlier but shy of the $5.54 billion forecast by analysts polled by Jefferies.
Net profit rose to $3.93 billion from $3.19 billion last year, while sales climbed to $13.91 billion, in line with market expectations.
Swiss brokerage Vontobel said Novartis’ profitability fell short by about 2% versus consensus, while revenue performance was “broadly as expected.”
“Novartis’s third-quarter results were okay considering the impact of generic competition for heart drug Entresto, but this challenge won’t disappear,” Vontobel’s Stefan Schneider wrote.
“The introduction of generic competition for the blockbuster Entresto heart treatment weighed on growth and profitability as expected. Still, the loss of exclusivity for several top treatments will continue to put pressure on the Swiss pharma giant over the fourth quarter,” Schneider said.
Entresto erosion challenges margins
Entresto, launched a decade ago, remains Novartis’ biggest product despite the loss of US patent protection earlier this year.
Third-quarter sales of the drug reached $1.88 billion, slightly ahead of expectations but largely unchanged from a year earlier.
A US federal judge in July rejected Novartis’ attempt to block generic competition from MSN Pharmaceuticals, opening the market to rivals.
Entresto generated $7.82 billion in sales in 2024 and is expected to cross $8 billion this year, before falling to about $6 billion by 2026, according to LSEG data.
Other key treatments showed mixed results. Psoriasis drug Cosentyx brought in around $1.7 billion in quarterly sales, flat from last year amid competition from UCB’s Bimzelx.
Meanwhile, breast cancer drug Kisqali, launched in 2024, posted sales of $1.33 billion, highlighting its growing role in Novartis’ oncology portfolio.
CEO says US tariffs won’t affect outlook
Chief Executive Vas Narasimhan sought to reassure investors that Novartis’s US operations would remain unaffected by potential trade tensions.
Speaking on an earnings call, he said the company expected no impact from President Donald Trump’s proposed 100% tariffs on imported patented drugs.
“We expect five different groundbreakings before the end of the year at manufacturing sites in the US. So no impact from tariffs on our guidance for the remainder of this year and next year,” said Narasimhan.
The company reaffirmed its full-year guidance, citing stable US demand and progress in ongoing drug-pricing negotiations with the Trump administration.
Peers such as Pfizer and AstraZeneca have already struck agreements with Washington on pricing frameworks.
Strategic expansion and acquisitions
Novartis has been pursuing acquisitions to strengthen its drug pipeline and reduce exposure to generic erosion.
This week, it announced a $12 billion deal to acquire US biotech firm Avidity Biosciences, a move analysts say should enhance its position in RNA-based therapies.
With sales growth driven by oncology and cardiovascular drugs, Novartis continues to balance short-term patent challenges with long-term innovation efforts.
Analysts expect the company’s upcoming pipeline developments to be key to sustaining growth as older blockbusters lose exclusivity.
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