Novartis Inc Earnings - Q3 2026 Analysis & Highlights
Novartis reported Q3 sales growth and core margin expansion, highlighted strong performance from priority brands, updated 2026 profit guidance, and discussed pipeline milestones, capital returns, and launch opportunities.
Key financial results
Q3 net sales rose 4% to $14.5 billion in constant currencies, while core operating income increased 10% to $6 billion.
Core operating margin was 41.6%, up 2 percentage points year over year, supported by gross-margin improvement and productivity, particularly in SG&A.
Core EPS increased 8% to $2.46.
Reported operating income was $1.8 billion, down 61%, and net income was $1.2 billion, down 71%; reported operating income included a $1.9 billion partial del-desiran impairment.
Free cash flow was $5.1 billion in Q3, below the prior year primarily because of lower operating cash flow; for the first nine months, sales were flat, core operating income declined 2%, and free cash flow was $14 billion.
Business segment results
The call discussed results mainly by brand rather than providing a business-segment revenue and profit breakdown.
Priority brands grew 29%, with strong performance from Kisqali, Kesimpta, Scemblix, and Leqvio; Cosentyx had a solid quarter.
Kisqali grew 37%; US sales growth was 38%, while growth outside the US was 35% in constant currencies.
Kesimpta grew 22%, including 21% US growth, with its overall US multiple-sclerosis market share reaching 16%.
Pluvicto grew 20% in constant currencies, with 9% US growth and 68% growth outside the US.
Leqvio grew 63% overall, including 60% in the US and 65% outside the US.
Scemblix grew 67%, driven by strong US momentum.
Cosentyx grew 9% in constant currencies; management said growth was in the mid-single digits after adjusting for gross-to-net effects.
Rhapsido had strong launch momentum, and Novartis raised its combined CSU and CIndU peak-sales outlook to more than $4 billion.
Capital allocation
Novartis said its capital-allocation approach balances investment in the business with returns to shareholders.
The company completed the Myricx Bio acquisition and exercised its option to acquire Sironax’s blood-brain-barrier delivery platform during Q3.
It repurchased $2.8 billion of shares in the first nine months under its share-buyback program, with $4.9 billion remaining to execute.
Management reaffirmed its commitment to complete the $10 billion buyback program by the end of 2027, while continuing its dividend, business investment, and selective M&A priorities.
Industry trends and dynamics
Management described continued demand and growth across major brands, including Kisqali, Kesimpta, Leqvio, Pluvicto, and Scemblix.
Pluvicto’s HSPC launch was still at an early stage; management cited an expected 5–10 week lead time for new patients due to testing and scheduling, and anticipated further acceleration the following year.
Management said Novartis expected less generic pressure in 2027 than in 2026, while Entresto’s European generic impact would need to be managed country by country.
Competitive landscape
Kisqali’s US NBRx share increased 3 points versus the prior quarter, and its first-line metastatic share reached 55%; management also cited high early-breast-cancer shares in Germany, the UK, and China.
Kesimpta gained 3 points in the overall US MS market and 4.5 points in the B-cell class; management said it was monitoring a potential competitor subcutaneous launch but did not expect it to disrupt Kesimpta’s peak-sales outlook.
Scemblix reached 33% US first-line share and had 77% share in later-line treatment across key markets outside the US.
Management characterized anti-APRIL medicines as having changed the IgAN treatment landscape and said Novartis was reassessing how to position Vanrafia and Fabhalta in that context.
US Xolair biosimilars are expected to reduce sales and Novartis’s related “other revenue” contribution over the next couple of years, putting pressure on margins.
Macroeconomic environment
Novartis said foreign exchange rates at late-October levels would add 1 percentage point to its 2026 net-sales and core-operating-income growth; if those rates continued into 2027, the expected impact would be negative 1 percentage point on sales and neutral on core operating income.
Management cited US generic erosion for Entresto as a factor affecting first-half 2026 sales and operating income, with European Entresto genericization also a consideration for 2027.
The call also discussed US Xolair biosimilar competition as a source of expected margin pressure.
Growth opportunities and strategies
Novartis said its priority brands and launches were demonstrating the business’s replacement power as the company navigated US expiries for Entresto, Tasigna, and Promacta.
For Pluvicto, management identified continued opportunity in earlier mCRPC use and HSPC, alongside growth in markets such as Japan and China; it said changing physician behavior would take time.
Management cited Leqvio’s ongoing outcomes studies and broader evidence base as potential support for continued growth.
Remibrutinib filings were on track, and management described opportunities in CSU/CIndU and MS, including new starts and switching patients from other therapies.
Pipeline milestones included remibrutinib data, Rhapsido’s FDA approval, Pluvicto approvals for HSPC in the US and China, pelabresib’s European filing, and FDA priority review for del-zota in DMD44.
Management said it was evaluating further development of DII235 after the pelacarsen Phase 3 HORIZON study missed its primary endpoint.
Financial Guidance and Outlook
Novartis raised its 2026 core-operating-income outlook from a low-single-digit decline to in line with or growing by low single digits, while maintaining its expectation for low-single-digit net-sales growth.
For the second half of 2026, management expected net sales growth of mid- to high-single digits and core operating-income growth of high single digits to low double digits.
Management expected Q4 core margin to decline versus Q3 due to typical year-end spending, higher royalties as growth brands scale, and lower other income related to US Xolair biosimilars.
Novartis reaffirmed its 5%–6% constant-currency sales growth outlook for 2025–2030 and its mid-single-digit long-term growth outlook.
Management said it expected dynamic growth to return in 2027, supported by growth drivers and launches including Kisqali, Kesimpta, Leqvio, Pluvicto in HSPC, remibrutinib, Scemblix, and ianalumab; detailed 2027 guidance was deferred to the Q4 results.
The company reaffirmed its commitment to reach a 40% core operating margin by 2029; management pointed to top-line growth and productivity, particularly SG&A, while noting expected pressure from Xolair biosimilars and Entresto genericization.
