Strong Innovative Drug Sales Offset Impact of Generic Drugs! Novartis (NVS.US) Q2 Results Exceed Expectations, Signaling a Return to Growth

According to Zhitong Finance APP, Novartis (NVS.US) announced second-quarter results that exceeded market expectations. The strong performance of next-generation cancer drugs offset the impact from the blockbuster heart medication Entresto facing generic competition, signaling a return to growth for the company.

The financial report shows that Novartis’ second-quarter sales grew by 3% year-on-year to $14.408 billion, better than analysts’ average estimate of $14.042 billion; core operating profit was $5.94 billion, surpassing the average estimate of $5.34 billion; core earnings per share were $2.41, also higher than the analysts’ average expectation of $2.13.

The increase in sales was primarily driven by a portfolio of innovative drugs. Among them, CDK4/6 inhibitor Kisqali’s sales grew by 44% year-on-year to $1.695 billion; the blockbuster B-cell therapy Kesimpta’s sales grew by 32% to $1.424 billion; STAMP inhibitor Scemblix (used for treating chronic myeloid leukemia) saw sales grow by 89% to $562 million; radioligand therapy product Pluvicto—a targeted radioactive ligand therapy (RDC) for certain types of prostate cancer—grew 43% to $651 million in sales; Leqvio, the world’s first small interfering RNA drug to reduce LDL cholesterol, saw sales surge 61% to $480 million; one of the drugs set to drive future growth, Rhapsody, a new oral medication for treating chronic skin diseases, achieved sales of $64 million, surpassing market expectations.

Meanwhile, key products facing generic competition—Entresto, Tasigna (chronic myeloid leukemia medication), and Promacta (thrombocytopenia treatment)—experienced year-on-year sales declines of 50%, 57%, and 64%, respectively, in the second quarter.

Novartis CEO Vas Narasimhan’s innovation-focused pharmaceutical development strategy is undergoing a key test this year. As former best-selling products like Entresto see declining sales due to generic competition and as a sufficient number of new drugs have not yet fully taken over to drive growth, the company is grappling with the pressures of a patent cliff. However, some analysts believe the last quarter may have been the period of greatest impact from the patent cliff for Novartis.

Apart from the aforementioned range of innovative drugs, other new products are still in clinical trial phases. Novartis expects to announce important clinical trial results for several experimental therapies covering fields such as heart disease and multiple sclerosis. These include Del-desiran, the first medication targeting muscular disease that addresses the genetic cause, acquired through Novartis’ $12 billion acquisition of the Avidity Biosciences product pipeline.

To boost growth momentum, Narasimhan announced acquisitions totaling more than $15 billion in the past year. These include the acquisition of Avidity and its RNA drug research pipeline, Tourmaline Bio which focuses on treatments for inflammation-related heart diseases, and Synnovation Therapeutics, which develops experimental drugs targeting oncogenic proteins. Recently, Novartis also agreed to acquire Myricx Bio, an ultra-early-stage cancer drug company whose candidates have just entered clinical trials.

Novartis has also committed to building seven new manufacturing facilities in the US as part of its $23 billion US capacity expansion plan to increase local manufacturing capability and mitigate industry tariff impacts. Most of these investments will focus on radioligand therapy (RLT), which uses targeted drugs to deliver radioactive material directly to tumors. Currently, Novartis is the only company globally with two approved radioligand therapy products—Pluvicto and Lutathera.