Novartis Inc Earnings - Q4 2025 Analysis & Highlights
Novartis delivered strong full-year 2025 results with high-single-digit sales growth and record core margins, achieving its 40% core margin target two years ahead of schedule, while navigating significant generic competition and positioning for mid-single-digit growth through 2030 despite the largest patent expiry in company history.
Key Financial Results
Full-year 2025 sales grew 8% in constant currencies, with core operating income increasing 14%.
Core operating margin reached 40.1% at $21.9 billion in core operating income, achieving the company's 40% core margin goal two years ahead of plan.
Fourth quarter sales declined 1% due to gross-to-net adjustments and Entresto loss of exclusivity (LOE), while core operating income increased 1%.
Excluding US revenue distribution (RD) adjustments, underlying fourth quarter sales growth would have been positive 3%.
Core earnings per share (EPS) rose 17% to $8.98 for the full year.
Fourth quarter core EPS was $2.03, up 2%.
Free cash flow reached an all-time high of $17.6 billion, growing 8% versus prior year.
Over the last five years, the company delivered an 8% sales average growth rate and a 15% core operating income average growth rate.
Core margin expanded by more than 1,000 basis points in constant currencies over the last five years.
Business Segment Results
Kisqali (CDK4/6 inhibitor) grew 57% on the full year to $4.8 billion, with fourth quarter growth of 44% (or 54% excluding US RD adjustments).
Kesimpta (B-cell therapy for MS) grew 36% to $4.4 billion on the year, with 27% growth in the fourth quarter in the US.
Scemblix (BCR-ABL inhibitor) achieved blockbuster status with 85% full-year growth and 87% growth in the fourth quarter.
Pluvicto (PSMA radioligand therapy) showed 42% constant currency growth and reached $2 billion in global sales, with 75% US sales growth.
Leqvio (PCSK9 inhibitor) reached blockbuster status with 57% full-year growth and 46% fourth quarter growth.
Cosentyx (IL-17 inhibitor) grew 8% overall in the year to $6.7 billion, with 11% growth in the fourth quarter.
Growth portfolio (Kisqali, Kesimpta, Scemblix, Pluvicto, Leqvio, Cosentyx) achieved 35% growth collectively.
Renal portfolio (Vanrafia, Fabhalta, and C3G treatments) contributed 50% of the IgAN NBRx market growth versus prior year.
Rhapsido (oral JAK inhibitor for chronic urticaria) US launch is delivering encouraging results with strong demand and over 2,000 HCP starts in sampling and bridge programs.
Capital Allocation
The company completed its $15 billion share buyback program in early July 2025 and launched a new up to $10 billion program, targeted to be completed by the end of 2027, with approximately $7.7 billion remaining to be executed.
Dividends distributed during the first half of 2025 totaled $7.8 billion.
The company is proposing a dividend of CHF 3.70 per share, a 6% increase in Swiss francs.
This represents the company's 29th consecutive dividend increase in Swiss francs since company creation in 1996.
The company invested more than $10 billion in R&D, an 8% increase versus prior year.
Four acquisitions and 10 licensing deals were announced, strengthening key platforms and pipeline across all four therapeutic areas.
Industry Trends and Dynamics
The company is navigating the largest patent expiry in Novartis history in 2026, with significant generic entries for Entresto, Promacta, and Tasigna occurring mid-2025.
The B-cell class continues to expand within MS, with Kesimpta driving continued steady performance.
The CDK4/6 inhibitor market continues to grow, with Kisqali outpacing the overall market.
The PSMA radioligand therapy market is expanding, with Pluvicto gaining significant market share since approval.
The hidradenitis suppurativa (HS) market is growing, with Cosentyx maintaining strong position in the naïve patient population.
The renal disease treatment market is expanding with multiple new agents entering the space.
Competitive Landscape
Kisqali maintains strong competitive position with 60%+ NBRx share in early breast cancer (eBC) in the US and over 80% NBRx share in Germany.
Kesimpta is leading in 9 out of 10 major markets in NBRx share outside the US.
Scemblix has achieved 41% NBRx share across all lines of therapy in the US and 72% share in third-line setting across major markets.
In Japan, Scemblix has 45% frontline market share with 74% NBRx share in second line.
Cosentyx is the number one prescribed IL-17 across indications and is the leading originator biologic in the EU and China.
Pluvicto has achieved a 4x increase in PSMA share since approval, now reaching 16% in the pre-taxane setting.
In the HS market, Cosentyx maintains 51% NBRx share in naïve patients and 47% overall, with the naïve market being two-and-a-half times the switch market.
Competitors are gaining traction in the HS switch market, but Novartis remains focused on the naïve market where it has a strong position.
Macroeconomic Environment
The company is managing the impact of the US Most Favored Nation (MFN) agreement, which affects pricing strategies for key assets like Rhapsido and ianalumab.
The MFN approach creates tighter pricing corridors for global launches, requiring strategic management of launch timing and pricing.
Exchange rate impacts are expected to provide a positive 2-3 percentage point impact on full-year 2026 sales and a positive 1 percentage point impact on core operating income if rates remain at late January levels.
Growth Opportunities and Strategies
Remibrutinib achieved submission in the most common type of chronic inducible urticaria (CIndU) based on positive Phase III results, with remaining readouts for two other subtypes expected in the first half of 2026.
Pelabresib now has a path forward for both EU and US markets based on positive Phase III MANIFEST program data showing deep and durable responses comparable to ruxolitinib.
Rhapsido is being studied in multiple indications including CSU (launched), CIndU (positive data for one type), HS (readout in 2028), food allergy (positive Phase II data with Phase III program initiating), RMS (readout mid-2026), SPMS, and myasthenia gravis.
Itvisma (intrathecal gene therapy) brings one-time gene therapy to children two years and older with a broad label across non-sitters, sitters, and walkers, with approvals already secured in UAE, Europe, and Japan submissions completed.
Pluvicto is expanding into the hormone-sensitive setting, which adds approximately 75% additional patients to the existing VISION and PSMAfore population.
New manufacturing sites for Pluvicto are coming online in California, Florida, Japan, and China, with over 440 treatment sites now established outside the US.
Leqvio achieved NRDL listing in China with early signals showing very strong uptake in the China market.
Scemblix is advancing first-line indication in EU markets with launches expected in 2027.
Cosentyx has completed submission with the US FDA for polymyalgia rheumatica and is on track to file in the EU and Japan in the first half of 2026.
Fabhalta eGFR readout in IgAN is expected soon, with filing for full approval in IgAN to follow.
Vanrafia full eGFR data set is expected in the first half of 2026.
Zigakibart Phase III protocol has been amended to align UPCR readout with interim eGFR readout expected in the first half of 2027 to optimize label positioning.
KLU156 (ganaplacide plus lumefantrine) represents the first new malaria medicine since Coartem in 25 years, with 99.2% cure rate and potential for three-day course with transmission-blocking capability.
YTB cell therapy is in pivotal studies aligned with FDA over four indications in autoimmune disease, with first readouts expected in SLE lupus nephritis.
DII235 (Lp(a) lowering therapy) has potential for annual dosing interval and is prepared to move directly into Phase III based on HORIZON data.
Pipeline and Clinical Development
The company met the vast majority of milestones and trial starts in 2025, demonstrating strong execution in R&D.
Seven pivotal readouts are expected in 2026 with potential to strengthen mid-term outlook, including pelacarsen for cardiovascular risk reduction, ianalumab in Sjögren's disease, del-zota DMD US submission, remibrutinib readouts, del-desiran DM1 Phase III readout, and DUX4 interim data readout for FSHD.
Pelacarsen HORIZON trial is expected to read out in the middle of 2026 (second half), with potential for US submission in 2026 if positive.
Ianalumab readouts in hematology could have significant potential to drive the brand to very large long-term potential.
Financial Guidance and Outlook
For 2026, the company expects low-single digit sales growth and low-single digit core operating income decline.
The company expects to grow top line through the highest Gx (generic) impact in company history in 2026.
The company remains confident in 5% to 6% sales CAGR for the 2025-2030 period.
The company expects to return to 40% plus core margin in 2029.
For 2026, core net financial income expenses are expected to be around $1.7 billion, higher than 2025 levels due to anticipated funding costs related to the Avidity deal.
Core tax rate is expected to remain around 16.5% in 2026.
2026 is expected to be a year of two halves, with first half sales declining low-single digit and core operating income declining low-double digit, while second half sales are expected to grow mid-single digit and core operating income to grow mid to high-single digit.
Kisqali is expected to reach $10 billion peak sales.
Kesimpta is expected to achieve peak sales guidance of $6 billion-plus.
Scemblix is expected to achieve $4 billion plus outlook.
Cosentyx is forecast to have mid-single-digit growth on average over coming years as it reaches $8 billion peak sales potential.
Leqvio is expected to continue strong growth trajectory.
Pluvicto is expected to have accelerating growth with Japan and China launches upcoming.
Itvisma has a $3 billion-plus total potential across IV and IT indications.
Rhapsido is expected to become one of the largest brands in Novartis' history over time.
The company expects the Avidity deal to close in the first half of 2026.
The 5% to 6% sales CAGR guidance for 2025-2030 includes the impact of Entresto LOE and the US MFN agreement.
Management Transitions
Harry Kirsch, Chief Financial Officer, is stepping down after 13 years in the role and 23 years at Novartis.
Mukul Mehta, Head of Business Planning and Analysis, Digital Finance and Tax, will assume the CFO role in mid-March 2026.
