Novartis Beats Q2 Profit Estimates as New Drugs Offset 50% Entresto Sales Decline

Novartis beat second-quarter profit expectations as newer cancer and multiple sclerosis medicines offset a 50% plunge in sales of its former blockbuster heart drug Entresto. Core operating profit came in at $5.94 billion, roughly 12 percent above consensus estimates, and net sales rose 3 percent in dollar terms to $14.4 billion, returning to growth after a 1 percent decline in the first quarter.

Net sales rose 1 percent at constant currency to $14.41 billion, ahead of analysts' expectations. Core earnings per share hit $2.41, up 12 percent year-on-year. The company reiterated its full-year 2026 guidance for low-single-digit sales growth and a low-single-digit decline in core operating profit, both excluding currency swings. Temporary sales and cost benefits boosted second-quarter sales by about 1 percent and core operating profit by about 5 percent, but the chief financial officer said these would reverse in the second half as Novartis increases research and launch spending.

Entresto sales plunged 50 percent to $1.18 billion, accelerating from a 42 percent drop in the first quarter, as US generic competition took hold. Entresto accounted for 14 percent of prior-year sales, and its European patent protection starts expiring in November. Novartis expects Entresto sales to decline by $4 billion this year. The company is also dealing with generic competition to cancer therapy Tasigna and platelet booster Promacta, as well as upcoming patent expiries for Kisqali and Cosentyx before 2030.

Growth was driven by Kisqali, which rose 44 percent to $1.7 billion, Kesimpta, which climbed 32 percent, and Leqvio, which surged 59 percent. Scemblix nearly doubled to $562 million after moving into first-line therapy, and Cosentyx grew 12 percent to $1.82 billion, helped by a roughly $100 million US stocking benefit. Germany's Federal Joint Committee certified a 'considerable additional benefit' for Scemblix in first-line therapy in June.

On the regulatory front, the US Food and Drug Administration granted full traditional approval to Fabhalta (iptacopan) for IgA nephropathy, backed by Phase III data showing a 48 percent reduction in the rate of eGFR decline compared with placebo over two years. The European Commission authorized the gene therapy Itvisma for spinal muscular atrophy and Rhapsido (remibrutinib) for chronic spontaneous urticaria. Rhapsido generated $64 million in quarterly revenue after launching in the US and China, exceeding estimates.

Investors are now focused on high-stakes late-stage data for three experimental drugs - pelacarsen in cardiovascular disease, remibrutinib in multiple sclerosis and del-desiran in myotonic dystrophy type 1 - which analysts estimate represent a roughly $10 billion peak annual sales opportunity. The chief executive said 'that first batch should come in the coming months' and did not give a more precise timing. Del-desiran came from Novartis's $12 billion acquisition of Avidity Biosciences.

To bolster growth, Novartis has announced more than $15 billion of acquisitions over the past year, including Avidity Biosciences, Tourmaline Bio, Synnovation Therapeutics, and Myricx Bio. The company has also pledged to build seven new US facilities as part of a $23 billion manufacturing expansion, with much of the investment directed toward radioligand therapy. Novartis is the only company with two approved medicines in that field, Pluvicto and Lutathera.

Core SG&A expenses fell 6 percent to $3.24 billion, helped by productivity gains, but analysts expect costs to rise from the third quarter as Novartis absorbs its Avidity acquisition and launches newer drugs. The company's $15 billion share repurchase program launched in July 2023 had roughly $5.4 billion outstanding at mid-year, while a separate $10 billion program initiated in July 2025 had about $6.1 billion remaining.

Novartis shares rose as much as 3.25 percent on Tuesday and have climbed about 12 percent so far this year. The company has a market capitalization of about $310 billion. Novartis is scheduled to report third-quarter and nine-month results on October 27.