Novartis Q2 Earnings Call Highlights

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Novartis (NYSE:NVS) said it returned to sales growth in the second quarter of 2026, supported by strong gains across priority medicines and launches, while reaffirming its full-year outlook despite continued pressure from U.S. generic erosion tied to Entresto.

Chief Executive Officer Vas Narasimhan told analysts that Novartis “delivered strong performance across our priority brands and launches while advancing the pipeline,” with the company posting 1% constant-currency sales growth in the quarter. Core operating income was flat at $5.9 billion. Chief Financial Officer Mukul Mehta said second-quarter net sales rose 1% to $14.4 billion, helped by growth drivers and productivity measures that offset significant generic erosion in the first half.

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Mehta said second-quarter core operating margin was 41.2% of net sales, down 70 basis points from a year earlier, mainly due to incremental costs from Avidity, with lower gross margin offset by productivity gains. Free cash flow for the quarter was $5.6 billion. He noted that certain one-time phasing items benefited quarterly net sales by about one percentage point and core operating income by about five percentage points, and that those effects are expected to reverse in the second half.

Growth Drivers Led by KISQALI, Pluvicto, Leqvio and Scemblix

Narasimhan said Novartis’ growth drivers rose 36% in constant currencies during the quarter, citing strong performances from KISQALI, Cosentyx, Scemblix and Leqvio, as well as solid results for Pluvicto.

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KISQALI sales increased 43% in constant currencies, with U.S. sales up 39% and surpassing $1 billion for the first time. Narasimhan said the breast cancer therapy continued to outpace the CDK4/6 market and maintained leadership in metastatic breast cancer, while also strengthening its position in early breast cancer. Outside the U.S., KISQALI grew 49%, with approval in 76 countries and reimbursement in 42. Novartis reiterated confidence in its $10 billion peak sales goal for the medicine.

The company also announced updated six-year follow-up data for KISQALI in early breast cancer, which Narasimhan said showed clinically meaningful overall survival in the “broadest at-risk” population. The data, including invasive disease-free survival and overall survival, will be presented at an upcoming medical congress.

Kesimpta grew 32% in the quarter, with Narasimhan highlighting share gains in the U.S. B-cell and multiple sclerosis markets and continued strength in Europe and other international markets. He said two-thirds of patients outside the U.S. remain on older therapies rather than B-cell therapies, creating room for further growth.

Pluvicto sales rose 43%, driven mainly by use in PSMA-positive and pre-taxane metastatic castration-resistant prostate cancer. In the U.S., pre-taxane use now accounts for more than 70% of new patients, Narasimhan said. He also pointed to updated NCCN guidelines that removed routine use of a second ARPI in the relevant setting, which he said could support further growth. Novartis expects a third-quarter approval in hormone-sensitive prostate cancer, which the company said would expand the eligible patient pool by 75%.

Leqvio grew 59%, with U.S. sales up 55% and monthly total prescriptions rising 49%. Narasimhan said the Medicare Part B segment remains the most important U.S. opportunity, where Leqvio has a 23.3% share, up 3.6 percentage points year to date. Outside the U.S., he said inclusion on China’s National Reimbursement Drug List has unlocked significant demand.

Scemblix posted 89% constant-currency growth, including 93% growth in the U.S. Narasimhan said Novartis expects Scemblix to reach first-line new-to-brand prescription leadership in the U.S. in the second half of the year. Outside the U.S., the product is still largely driven by third-line and later use, though early-line adoption is beginning to increase.

Cosentyx, Rhapsido and Ianalumab Updates

Cosentyx grew 10% in constant currencies, partly helped by one-time factors, with U.S. sales up 16%. Narasimhan said underlying U.S. growth remained in the mid-single digits, consistent with prior guidance. He also highlighted phase III data in polymyalgia rheumatica, where Cosentyx showed sustained remission at 52 weeks that was twice as high as placebo. Novartis expects FDA approval for that indication in the second half and continues to guide for $8 billion in peak sales.

Rhapsido continued its launch in chronic spontaneous urticaria, with more than 4,000 prescribers and more than 10,000 patients treated. Narasimhan said 60% of patients are being treated in the first-line setting and that two of the three major pharmacy benefit managers now cover the drug with prior authorization to label. He cautioned that Novartis expects steady access expansion rather than a sudden inflection, citing discipline around reimbursement given the company’s broader ambitions for remibrutinib.

Novartis also highlighted data for ianalumab in Sjögren’s disease, including pooled NEPTUNUS results showing statistically significant ESSDAI benefits versus placebo and 108-week extension data supporting maintained benefit over time. Narasimhan said the company remains on track for a U.S. launch in Sjögren’s disease in the second half and sees multi-blockbuster potential for ianalumab across indications.

Pipeline and Regulatory Milestones

Narasimhan said Novartis is preparing for a busy second half of 2026, with pivotal readouts expected for pelacarsen, remibrutinib and del-desiran, as well as additional results for ianalumab, Rhapsido in hidradenitis suppurativa, and phase II programs in ALS and other areas.

Novartis also provided updates on programs acquired from Avidity. The company submitted del-zota to the FDA for accelerated approval in Duchenne muscular dystrophy exon 44 skipping, using dystrophin as a surrogate biomarker, and expects a potential first launch in the first half of 2027. For del-brax in facioscapulohumeral muscular dystrophy, Narasimhan said a phase I/II study met primary and key secondary biomarker endpoints at the dose moving into phase III. The company’s base case remains a 2028 submission, but Novartis plans to engage regulators on whether biomarker data could support an earlier filing.

Guidance Reaffirmed as Entresto Pressure Eases

Mehta said Novartis is reaffirming full-year 2026 guidance, with net sales expected to grow low single digits and core operating income expected to decline low single digits. For the first half, net sales declined 2%, core operating income fell 7% and core operating margin declined 2.3 percentage points to 39.4%. Free cash flow for the first half was $8.9 billion.

Looking to the second half, Mehta said Novartis expects net sales to grow mid-single digits as the company moves beyond the impact of U.S. generic erosion, though he noted that third-quarter comparisons still include about $800 million of U.S. Entresto sales in the prior-year base. Core operating income in the second half is expected to grow mid- to high-single digits, with continued investment in growth drivers and the R pipeline.

Mehta also said Novartis paid $9.1 billion in dividends and repurchased $2.1 billion of shares in the first half under its current up to $10 billion buyback program. The company has $5.6 billion remaining under the program and continues to target completion by the end of 2027.

Analyst Questions Focus on Pipeline, M and Commercial Execution

During the question-and-answer session, analysts pressed management on regulatory paths for several pipeline assets. Narasimhan said the company’s base case for votoplam in Huntington’s disease remains that a phase III study will be required, though Novartis is engaging with the FDA on phase II data. On pelacarsen, he said the company views a mid-teens cardiovascular risk reduction as clinically meaningful, noting that patients have no other option targeting lipoprotein(a).

Narasimhan said there is no change in Novartis’ M strategy, which remains focused on steady deals generally below $2 billion upfront, with selective larger transactions when assets fit the company’s therapeutic area or platform strategy. He cited Avidity as a deal that fit both criteria.

On Leqvio, Narasimhan said the recent approval of an oral PCSK9 inhibitor did not change Novartis’ view of Leqvio’s commercial potential. He said the company continues to focus on patients and physicians seeking infrequently administered, physician-administered therapies, particularly in the U.S. Part B buy-and-bill setting, while noting strong demand for siRNA medicines in Asia and the Middle East.

Narasimhan closed by saying Novartis remains focused on upcoming readouts and expects a strong second half, with pipeline progress that could support the company’s mid- to long-term growth outlook.

About Novartis (NYSE:NVS)

Novartis is a Swiss multinational pharmaceutical company headquartered in Basel that researches, develops, manufactures and commercializes prescription medicines and related health-care products. Formed through the 1996 merger of Ciba-Geigy and Sandoz, Novartis operates globally and focuses on bringing therapeutics from discovery through clinical development to commercial markets worldwide.

The company's activities center on innovative pharmaceuticals across several therapeutic areas, including oncology, immunology, cardiovascular and metabolic diseases, neuroscience and ophthalmology, alongside capabilities in advanced therapies such as biologics, cell and gene therapies.

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