Novartis Inc Earnings - Q4 2025 Analysis & Highlights
Novartis AG's Q4 2025 earnings call highlighted strong financial performance, achieving its core margin goal two years ahead of schedule, driven by robust growth in key brands and disciplined cost management, while also providing guidance for 2026 amidst significant generic impacts and strategic investments in its pipeline and acquisitions.
Key Financial Results
Novartis delivered high-single-digit growth and achieved its 40% core margin goal two years ahead of plan.
For the full year, sales were up 8%, and core Operating Income (OpInc) was up 14%.
The core margin reached 40.1%, with core OpInc at $21.9 billion.
In Q4, sales declined 1%, impacted by gross to net adjustments and the Entresto LOE.
Core OpInc in Q4 was up 1%.
Core EPS for the full year rose 17% to $8.98.
Free cash flow grew 8% to $17.6 billion for the full year.
Q4 core EPS was $2.03, up 2%.
Business Segment Results
Kisqali grew 57% for the full year to $4.8 billion, outpacing the CDK4/6 market.
Kisqali's Q4 growth was 44%, with global sales up 54% and US sales up 62% when removing US RD adjustments.
Kesimpta grew 36% to $4.4 billion for the year.
Kesimpta saw 27% growth in Q4 in the US.
Pluvicto showed 42% constant currency growth, reaching $2 billion in sales globally.
Pluvicto sales grew 75% in the US.
Leqvio reached blockbuster status in Q4, with 57% growth for the full year and 46% in Q4.
Scemblix also achieved blockbuster status, with 87% growth in Q4.
Cosentyx grew 8% overall for the year, reaching $6.7 billion, with 11% growth in Q4.
Cosentyx had 9% growth in the US, driven by demand in hidradenitis and IV.
The renal portfolio, including Vanrafia and Fabhalta, contributed 50% of the NBRx market growth.
Rhapsido's US launch is delivering encouraging results with strong demand and over 2,000 HCP starts in its sampling and bridge program.
Itvisma, a one-time gene therapy, has a total potential of $3 billion-plus across IV and IT.
Capital Allocation
Novartis invested more than $10 billion in R&D, an 8% increase versus prior year.
The company announced four acquisitions and 10 licensing deals.
A $15 billion share buyback program was completed in early July, and a new program of up to $10 billion was launched, with approximately $7.7 billion remaining.
$7.8 billion was distributed in dividends during the first half of 2025.
A dividend of CHF 3.70 per share is proposed, a 6% increase in Swiss francs.
Industry Trends and Dynamics
The B-cell class continues to expand within the MS market.
Novartis aims to expand B-cell therapies in the 67% of MS patients not currently on them.
The advanced lipid-lowering market is being outpaced by Leqvio in the US.
The HS market has a potential of $3 billion to $5 billion, with opportunities for further growth.
Competitive Landscape
Kisqali's eBC NBRx is above 60% in the US and over 80% in Germany, demonstrating strong preference.
Kesimpta is leading in NBRx share in 9 out of 10 major markets outside the US.
Scemblix has NBRx leadership in the US and Japan.
Cosentyx is the number one prescribed IL-17 across indications and the NBRx leader in naïve HS patients with 51% share.
In the HS market, Cosentyx performs well in the naïve population, while a competitor performs well in the switch segment.
Growth Opportunities and Strategies
Novartis expects to grow in 2026 despite the largest patent expiry in its history, due to strong performance of key growth brands and pipeline replacement power.
Kisqali has a $10 billion peak sales outlook.
Kesimpta is on track to achieve its peak sales guidance of $6 billion-plus.
The next phase for Pluvicto is the launch in the hormone-sensitive setting, which adds 75% additional patients.
New manufacturing sites for Pluvicto are coming online in California, Florida, Japan, and China.
Leqvio's NRDL listing in China is expected to drive rapid uptake.
Scemblix aims to drive growth in the first-line setting, where it is already in the mid-20% range.
Cosentyx has completed submission with the US FDA for polymyalgia rheumatica.
Rhapsido is seen as a multi-indication opportunity with potential in CSU, CIndU, HS, and food allergy.
Rhapsido has the potential to become one of the largest brands in Novartis' history.
Pelabresib has a path forward for EU filing in 2026 and a new Phase III study for the US, China, and Japan.
Novartis is advancing KLU156 (ganaplacide plus lumefantrine) as the first new malaria medicine in 25 years.
Seven pivotal readouts are expected in 2026, including pelacarsen and ianalumab.
Novartis is evaluating other opportunities within its pipeline and externally to bolster its food allergy portfolio.
Financial Guidance and Outlook
For 2026, sales are expected to grow low-single digit, and core operating income is expected to decline low-single digit.
This reflects a 1% to 2% core margin dilution related to the Avidity deal.
Novartis remains confident in its 5% to 6% sales CAGR for the 2025-2030 period.
Core margin is expected to return to 40% plus in 2029.
Core net financial income expenses are expected to be around $1.7 billion in 2026, higher than 2025 levels due to Avidity deal funding costs.
The core tax rate is expected to remain around 16.5%.
2026 is expected to be a year of two halves, with H1 sales declining low-single digit and core operating income declining low-double digit.
H2 2026 is expected to see sales growing mid-single digit and core operating income growing mid to high-single digit.
If exchange rates remain at late January levels, a positive 2% to 3% impact on full-year sales and a positive 1% impact on core operating income is expected.
Pipeline and R&D
Remibrutinib achieved submission in the most common type of CIndU based on positive Phase III results.
Remaining readouts for two other subtypes of chronic inducible urticaria are expected in the first half of this year.
Pelabresib's 96-week data from the Phase III MANIFEST program showed deep and durable responses and a comparable safety profile to ruxolitinib.
Pelacarsen for CVRR is expected to have a readout mid-year, potentially leading to a US submission this year.
Submissions for ianalumab in Sjögren's disease and del-zota DMD US submission are on track.
Ianalumab readouts in hematology could drive significant long-term potential.
The del-desiran DM1 Phase III readout and DUX4 interim data readout are also expected.
Novartis is initiating a broad Phase III program in food allergy based on positive food allergy data.
The RMS readout for Rhapsido is expected in the middle of this year.
Zolgensma IV has 7,500 children, teens, and adults not yet treated.
Itvisma has been approved in the UAE, and Europe and Japan submissions are completed.
DII235, an Lp(a) program, has the potential for an annual dosing interval and is prepared to move directly into Phase III based on HORIZON data.
