New therapies drive quarterly revenue increase
Novartis AG (NYSE:NVS) reported higher second-quarter sales on Tuesday, with strong demand for its newer medicines helping to offset the continued impact of generic competition and supporting the company’s decision to reaffirm its full-year 2026 outlook.
Net sales reached $14.41 billion, increasing 3% in US dollars and 1% at constant exchange rates.
The company said volume growth contributed 18 percentage points to revenue, while generic competition reduced sales by 14 percentage points. Pricing lowered sales by 3 percentage points, although currency movements added 2 percentage points.
Growth portfolio continues to expand
Several of Novartis’ newer products delivered robust growth during the quarter.
Sales of Kisqali increased 43% at constant currencies to $1.70 billion, while Kesimpta climbed 32% to $1.42 billion. Scemblix generated $562 million after rising 89%, Pluvicto advanced 43% to $651 million, and Leqvio recorded 59% growth to $480 million.
The gains helped compensate for continued declines in older medicines facing generic competition. Entresto sales dropped 51% at constant currencies to $1.18 billion, while Tasigna revenue fell 58% to $142 million.
Profitability pressured despite stable core earnings
Operating income declined 2% to $4.75 billion, or 3% at constant currencies, as lower gross profit outweighed savings in selling, general and administrative expenses.
Net income fell 19% to $3.26 billion, reflecting higher tax charges and increased interest expenses. Earnings per share decreased 17% to $1.71, although the lower average share count provided some support.
Core operating income, the company’s preferred non-IFRS profitability measure, remained unchanged at $5.94 billion. The core operating margin edged down 0.7 percentage points at constant currencies to 41.2% of net sales, while core earnings per share slipped 1% to $2.41.
Free cash flow decreased 12% to $5.56 billion due to lower operating cash generation.
Acquisitions drive higher debt levels
For the first six months of 2026, Novartis generated net sales of $27.52 billion, representing growth of 1% in US dollars but a decline of 2% at constant currencies. Operating income for the period fell 6%, or 7% at constant currencies, to $8.99 billion.
Net debt increased significantly to $39.4 billion at the end of June from $21.9 billion at the end of 2025.
The company said the increase primarily reflected acquisition spending and intangible asset transactions totaling $15.3 billion, which exceeded free cash flow of $8.9 billion. Additional cash outflows included the annual dividend payment of $9.1 billion and $3.1 billion related to treasury share transactions.
Company maintains full-year guidance
Despite ongoing generic competition, Novartis reaffirmed its outlook for 2026, forecasting low single-digit growth in net sales and a low single-digit decline in core operating income at constant exchange rates.
“Novartis delivered a solid second quarter, returning to sales growth driven by continued momentum from Kisqali, Kesimpta, Scemblix and Pluvicto…We are on track for multiple important readouts ahead in the second half, and remain on track to deliver our full-year guidance and mid-term outlook,” Chief executive Vas Narasimhan said in a statement.
The company also noted that its previously announced acquisition of antibody-drug conjugate developer Myricx Bio, agreed in July, is expected to close during the second half of 2026.
