Financial Data and Key Metrics Changes - Novartis reported an 11% increase in sales in constant currency for Q2 2025, with core operating income rising by 21% [5][44] - Core margin improved to 42.2%, reflecting a 340 basis point increase, and core EPS was $2.42, up 24% [44] - Free cash flow reached $6.3 billion, a 37% increase, while for the first half of the year, sales grew by 13% and core operating income by 24% [44][45] Business Line Data and Key Metrics Changes - Priority brands saw a 30% increase in sales in constant currencies, with notable growth from Kisqali (up 64%), Kisimta (up 33%), and Pluvicto (up 30%) [7][8][14] - Kisqali achieved TRx leadership in metastatic breast cancer, with a 100% increase in the US for Q2 [8][9] - Lexio grew by 61% in the quarter, with a 47% increase in the US, and Semblix saw a 79% growth [18][22] Market Data and Key Metrics Changes - In the US, Kisqali's NBRx share reached 61% in early breast cancer, while outside the US, it grew by 25% [9] - Cosentyx growth moderated to 6% in Q2, impacted by higher rebates and competitive pressures, particularly in China [24][26] - The company expects continued growth in China, albeit at a lower rate than the previous year, due to tightened healthcare spending [68] Company Strategy and Development Direction - Novartis is focused on maintaining strong growth momentum through key launches and pipeline advancements, including the acquisition of Regulus Therapeutics to enhance its renal portfolio [46][57] - The company has initiated a new $10 billion share buyback program, reflecting confidence in its long-term growth outlook [46][57] - Novartis aims to expand the use of B cell therapies and strengthen its position in the market, particularly for Kisqali and Kisimta [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the mid to long-term growth outlook, despite facing challenges such as potential generic competition for Entresto [57][49] - The company anticipates a strong performance in Q3 based on continued momentum in priority brands, while Q4 may see a step down in growth due to the full impact of potential generics [52][53] - Management acknowledged the ongoing discussions with the administration regarding drug pricing and emphasized the importance of maintaining US leadership in biopharmaceutical innovation [76] Other Important Information - Novartis is advancing its pipeline with significant readouts expected, including for Plavicto and remibrutinib [57] - The company is committed to a balanced capital allocation strategy, including dividends and share buybacks, while continuing to invest in R&D [46][57] Q&A Session Summary Question: Update on Sjogren's Phase III data confidence - Management acknowledged the excitement around Sjogren's but noted the risks involved, emphasizing the importance of robust data from both studies for the filing process [62] Question: Impact of healthcare spending tightening in China on Cosentyx - Management confirmed a notable slowdown in China, with expectations of high single-digit to low teens growth moving forward, while acknowledging the impact on the broader portfolio [68] Question: Competitive environment for Cosentyx - Management indicated that while there is an initial impact from new competitors, the market typically stabilizes, and they remain confident in Cosentyx's long-term growth potential [84] Question: Direct negotiation impacts from IRA on Cosentyx - Management confirmed that the IRA has been factored into guidance, estimating that about 30% of Cosentyx sales are exposed to Medicare pricing, which is manageable [90] Question: Performance expectations for ramibutinib in food allergy - Management expressed confidence in the compelling data for ramibutinib compared to existing treatments and highlighted the potential for a significant commercial launch [104]

Core Insights - Royalty Pharma plc has appointed Carole Ho and Elizabeth (Bess) Weatherman to its Board of Directors, enhancing its leadership team with expertise in biopharmaceuticals and finance [1][2][3] Group 1: Board Appointments - Carole Ho is the Chief Medical Officer and Head of Development at Denali Therapeutics, with 20 years of experience in biopharma, previously serving as Vice President of Clinical Development at Genentech [2][3] - Bess Weatherman has 35 years of experience as an investor in the healthcare industry and is currently a Special Limited Partner at Warburg Pincus, having joined the firm in 1988 [3] Group 2: Company Overview - Royalty Pharma, founded in 1996, is the largest buyer of biopharmaceutical royalties and a key funder of innovation in the biopharmaceutical sector, collaborating with various innovators [4] - The company has a portfolio that includes royalties on over 35 commercial products and 16 development-stage product candidates, indicating a strong position in the market [4] Group 3: Corporate Governance - The appointment of the new board members increases independent representation on the board to over 90%, reflecting Royalty Pharma's commitment to enhanced corporate governance [5]

Q2 2025 Financial Performance - Novartis delivered double-digit sales growth and core margin expansion in Q2 2025 [134] - Q2 sales reached USD 141 billion, an increase of 11% in constant currencies (cc) compared to Q2 2024 [14] - Core operating income for Q2 2025 was USD 59 billion, a 21% increase in constant currencies (cc) compared to Q2 2024 [14] - Core margin improved to 422%, a 340 basis points increase [14] - Free cash flow for H1 2025 increased by 46% to USD 97 billion [104] FY 2025 Guidance and Capital Allocation - FY 2025 core operating income guidance upgraded to low-teens growth from low double-digit [15] - A new share buyback program of up to USD 10 billion was initiated, to be completed by the end of 2027 [108] - The company assumes Entresto US generic entry in mid-2025 for forecasting purposes [112] Key Products Performance - Kisqali grew by 64% cc in Q2, achieving TRx leadership in mBC [23] - Kesimpta grew by 33% cc in Q2, driven by strong demand growth [31] - Pluvicto grew by 30% cc in Q2, with promising uptake since pre-taxane indication approval in the US [36] - Leqvio grew by 61% cc in Q2, on track for blockbuster status in 2025 [45] - Scemblix grew by 79% cc in Q2, with strong momentum in early lines and global leadership in 3L+ CML [52]

[Operating Performance Review](index=4&type=section&id=OPERATING%20PERFORMANCE%20REVIEW) Novartis's Q2 and H1 2025 performance review highlights strong financial growth, strategic focus, and product commentary [Key Figures (Q2 & H1 2025)](index=4&type=section&id=Key%20figures) Novartis reported strong Q2 and H1 2025 financial performance, with significant growth in sales, income, EPS, and free cash flow Key Financial Figures (Q2 2025 vs Q2 2024) | Metric (USD millions) | Q2 2025 | Q2 2024 | % change (USD) | % change (cc) | | :-------------------- | :------ | :------ | :------------- | :------------ | | Net sales | 14,054 | 12,512 | 12 | 11 | | Other revenues | 782 | 360 | 117 | 116 | | Gross profit | 11,514 | 9,699 | 19 | 18 | | Operating income | 4,864 | 4,014 | 21 | 25 | | Net income | 4,024 | 3,246 | 24 | 26 | | Basic EPS (USD) | 2.07 | 1.60 | 29 | 32 | | Free cash flow | 6,333 | 4,615 | 37 | - | Key Financial Figures (H1 2025 vs H1 2024) | Metric (USD millions) | H1 2025 | H1 2024 | % change (USD) | % change (cc) | | :-------------------- | :------ | :------ | :------------- | :------------ | | Net sales | 27,287 | 24,341 | 12 | 13 | | Other revenues | 1,169 | 651 | 80 | 79 | | Gross profit | 21,907 | 18,723 | 17 | 18 | | Operating income | 9,527 | 7,387 | 29 | 33 | | Net income | 7,633 | 5,934 | 29 | 31 | | Basic EPS (USD) | 3.91 | 2.91 | 34 | 37 | | Free cash flow | 9,724 | 6,653 | 46 | - | [Strategy](index=5&type=section&id=Strategy) Novartis focuses as a 'pure-play' innovative medicines company, prioritizing core therapeutic areas, technology platforms, and key geographies - Novartis is a "pure-play" innovative medicines company, focusing on **four core therapeutic areas**: cardiovascular-renal-metabolic, immunology, neuroscience, and oncology[6](index=6&type=chunk) - Investment is prioritized in **two established technology platforms** (chemistry and biotherapeutics) and **three emerging platforms** (gene & cell therapy, radioligand therapy, and xRNA)[6](index=6&type=chunk) - Geographic focus for growth includes the **US, China, Germany, and Japan**[6](index=6&type=chunk) - Strategic priorities include accelerating growth through high-value medicines and launch excellence, delivering returns via operational excellence and disciplined capital allocation, and strengthening foundations by empowering people, scaling data science/technology, and building trust[11](index=11&type=chunk) [Financials - Second Quarter](index=5&type=section&id=Financials%20-%20Second%20Quarter) Novartis's Q2 financials showed robust growth, with net sales, operating income, net income, and free cash flow all significantly increasing Q2 2025 Net Sales Performance | Metric | Q2 2025 (USD bn) | % Change (USD) | % Change (cc) | | :----- | :--------------- | :------------- | :------------ | | Net Sales | 14.1 | 12 | 11 | | US Sales | 6.2 | 21 | - | | RoW Sales | 7.8 | 6 | 4 | - Sales growth was mainly driven by strong performance from Kisqali (**+64%**), Entresto (**+24%**), Kesimpta (**+35%**), Scemblix (**+82%**), and Leqvio (**+64%**), partly offset by generic competition for Tasigna and Lucentis[8](index=8&type=chunk) Q2 2025 Operating Income and Margin | Metric | Q2 2025 (USD bn) | % Change (USD) | % Change (cc) | Margin (%) | | :----- | :--------------- | :------------- | :------------ | :--------- | | Operating Income | 4.9 | 21 | 25 | 34.6 | | Core Operating Income | 5.9 | 20 | 21 | 42.2 | - Operating income growth was primarily due to higher net sales, partially offset by increased investments in priority brands and launches, and net expense from legal matters[10](index=10&type=chunk) Q2 2025 Net Income, EPS, and Free Cash Flow | Metric | Q2 2025 (USD bn/USD) | % Change (USD) | % Change (cc) | | :----- | :------------------- | :------------- | :------------ | | Net Income | 4.0 | 24 | 26 | | Basic EPS | 2.07 | 29 | 32 | | Free Cash Flow | 6.3 | 37 | - | - The tax rate favorably impacted net income, decreasing to **11.2%** from **15.5%** in the prior year, mainly due to changes in uncertain tax positions and profit mix[15](index=15&type=chunk) [Financials - First Half](index=6&type=section&id=Financials%20-%20First%20Half) Novartis sustained strong H1 2025 financial performance, with net sales, operating income, net income, and free cash flow all showing significant increases H1 2025 Net Sales Performance | Metric | H1 2025 (USD bn) | % Change (USD) | % Change (cc) | | :----- | :--------------- | :------------- | :------------ | | Net Sales | 27.3 | 12 | 13 | | US Sales | 12.0 | 23 | - | | RoW Sales | 15.3 | 5 | 6 | - Sales growth was mainly driven by strong performance from Entresto (**+22%**), Kisqali (**+59%**), Kesimpta (**+38%**), Cosentyx (**+11%**), and Scemblix (**+79%**), partly offset by generic competition for Lucentis, Gilenya, and Tasigna[21](index=21&type=chunk) H1 2025 Operating Income and Margin | Metric | H1 2025 (USD bn) | % Change (USD) | % Change (cc) | Margin (%) | | :----- | :--------------- | :------------- | :------------ | :--------- | | Operating Income | 9.5 | 29 | 33 | 34.9 | | Core Operating Income | 11.5 | 21 | 24 | 42.1 | - Operating income growth was primarily due to higher net sales and contingent consideration adjustments, partially offset by increased investments in priority brands and launches[23](index=23&type=chunk) H1 2025 Net Income, EPS, and Free Cash Flow | Metric | H1 2025 (USD bn/USD) | % Change (USD) | % Change (cc) | | :----- | :------------------- | :------------- | :------------ | | Net Income | 7.6 | 29 | 31 | | Basic EPS | 3.91 | 34 | 37 | | Free Cash Flow | 9.7 | 46 | - | - The tax rate for the first half was **14.6%**, slightly lower than the prior year, favorably impacted by changes in uncertain tax positions[28](index=28&type=chunk) [Product Commentary (Q2 Performance)](index=8&type=section&id=PRODUCT%20COMMENTARY%20(RELATING%20TO%20Q2%20PERFORMANCE)) Novartis's Q2 2025 product performance showed strong growth in key innovative medicines across core therapeutic areas, offset by declines in Established Brands Q2 2025 Sales by Therapeutic Area | Therapeutic Area | Q2 2025 (USD m) | % Change (USD) | % Change (cc) | | :----------------- | :-------------- | :------------- | :------------ | | Cardiovascular, Renal and Metabolic | 2,655 | 28 | 26 | | Immunology | 2,549 | 10 | 9 | | Neuroscience | 1,457 | 19 | 17 | | Oncology | 4,293 | 22 | 20 | | Established Brands | 3,100 | -8 | -8 | - Entresto sales grew by **24%** (**22% cc**) driven by heart failure and hypertension indications across regions, despite ongoing litigation with a generic manufacturer in the US[34](index=34&type=chunk) - Kisqali sales increased by **64%** (**64% cc**), including **100%** growth in the US, reflecting strong share gains in HR+/HER2- metastatic and early breast cancer[42](index=42&type=chunk) - Scemblix sales surged by **82%** (**79% cc**) across all regions, addressing high unmet needs for CML patients and benefiting from early-line approvals[47](index=47&type=chunk) - Promacta/Revolade sales declined by **8%** (**9% cc**) due to discontinued promotion and generic entry in the US in May 2025[43](index=43&type=chunk) - Lucentis sales declined by **37%** (**39% cc**) in ex-US markets due to increased competition[51](index=51&type=chunk) [Cash Flow and Balance Sheet](index=11&type=section&id=CASH%20FLOW%20AND%20BALANCE%20SHEET) This section reviews Novartis's Q2 and H1 2025 cash flow and balance sheet, detailing changes in assets, liabilities, equity, and net debt [Cash Flow - Second Quarter](index=11&type=section&id=Cash%20flow%20-%20Second%20Quarter) Novartis reported a significant increase in Q2 2025 net cash flows from operating activities, with lower investing outflows and increased financing outflows Q2 2025 Cash Flow Summary | Metric (USD billions) | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :------- | | Net cash from operating activities | 6.7 | 4.9 | 37 | | Net cash used in investing activities | -2.2 | -3.2 | 30 | | Net cash used in financing activities | -5.2 | -3.2 | -63 | | Free cash flow | 6.3 | 4.6 | 37 | - Increase in operating cash flows was mainly driven by higher net income, favorable hedging results, and favorable changes in working capital, partly offset by higher income taxes paid[53](index=53&type=chunk) - Investing outflows were mainly for acquisitions (Anthos Therapeutics, Inc. for **$0.8 billion** and Regulus Therapeutics Inc. for **$0.7 billion**) and purchases of property, plant, and equipment[55](index=55&type=chunk) - Financing outflows were primarily due to **$2.7 billion** for net treasury share transactions and **$2.5 billion** for Swiss withholding tax on the annual dividend[58](index=58&type=chunk) [Cash Flow - First Half](index=11&type=section&id=Cash%20flow%20-%20First%20Half) For H1 2025, net cash flows from operating activities significantly increased, investing outflows decreased, and financing outflows rose substantially due to dividends and share transactions H1 2025 Cash Flow Summary | Metric (USD billions) | H1 2025 | H1 2024 | % Change | | :-------------------- | :------ | :------ | :------- | | Net cash from operating activities | 10.3 | 7.1 | 44 | | Net cash used in investing activities | -1.9 | -4.1 | 54 | | Net cash used in financing activities | -13.8 | -8.4 | -64 | | Free cash flow | 9.7 | 6.7 | 46 | - Operating cash flows increased due to higher net income and favorable changes in working capital[61](index=61&type=chunk) - Investing outflows were driven by purchases of intangible assets (**$1.5 billion**) and acquisitions (**$1.5 billion**), partially offset by proceeds from marketable securities (**$1.8 billion**)[63](index=63&type=chunk) - Financing outflows were mainly due to **$7.8 billion** for annual dividend payment and **$5.4 billion** for net payments for treasury share transactions[67](index=67&type=chunk) [Balance Sheet - Assets](index=13&type=section&id=Balance%20sheet%20-%20Assets) As of June 30, 2025, total non-current assets increased by **USD 5.9 billion**, while total current assets decreased by **USD 3.8 billion**, mainly due to reduced cash and cash equivalents - Total non-current assets increased by **USD 5.9 billion** to **USD 78.5 billion** compared to December 31, 2024[70](index=70&type=chunk) - Intangible assets (excluding goodwill) increased by **USD 2.3 billion**, and goodwill increased by **USD 0.8 billion**, both partly due to favorable currency translation adjustments[70](index=70&type=chunk) - Total current assets decreased by **USD 3.8 billion** to **USD 25.9 billion** compared to December 31, 2024[72](index=72&type=chunk) - Cash and cash equivalents decreased by **USD 4.8 billion**, as cash outflows for dividends, treasury shares, and acquisitions exceeded inflows from operating activities[73](index=73&type=chunk) - Trade receivables increased by **USD 1.6 billion**, mainly due to higher net sales[75](index=75&type=chunk) [Balance Sheet - Liabilities](index=13&type=section&id=Balance%20sheet%20-%20Liabilities) Total non-current liabilities increased by **USD 1.2 billion**, while total current liabilities increased by **USD 3.0 billion**, driven by higher provisions and income tax liabilities - Total non-current liabilities increased by **USD 1.2 billion** to **USD 30.6 billion** compared to December 31, 2024[76](index=76&type=chunk) - Non-current financial debts increased by **USD 1.1 billion** due to unfavorable currency translation adjustments[76](index=76&type=chunk) - Total current liabilities increased by **USD 3.0 billion** to **USD 31.7 billion** compared to December 31, 2024[78](index=78&type=chunk) - Provisions and other current liabilities increased by **USD 1.8 billion**, mainly due to higher provisions for revenue deductions and legal matters[78](index=78&type=chunk) - Current income tax liabilities increased by **USD 1.2 billion**[78](index=78&type=chunk) [Balance Sheet - Equity](index=13&type=section&id=Balance%20sheet%20-%20Equity) Total equity decreased by **USD 2.1 billion** to **USD 42.1 billion** as of June 30, 2025, primarily due to dividend payments and treasury share purchases - Total equity decreased by **USD 2.1 billion** to **USD 42.1 billion** compared with December 31, 2024[79](index=79&type=chunk) - The decrease was mainly driven by annual dividends to shareholders (**USD 7.8 billion**) and purchase of treasury shares (**USD 5.5 billion**)[79](index=79&type=chunk) - Net income of **USD 7.6 billion** and favorable currency translation differences of **USD 2.8 billion** partially offset the decrease in equity[79](index=79&type=chunk) [Net Debt and Debt/Equity Ratio](index=14&type=section&id=Net%20debt%20and%20debt%2Fequity%20ratio) As of June 30, 2025, Novartis's liquidity decreased, while financial debts increased, leading to a rise in both the debt/equity ratio and net debt - Liquidity amounted to **USD 7.0 billion** as at June 30, 2025, down from **USD 13.5 billion** as at December 31, 2024[81](index=81&type=chunk) - Total non-current and current financial debts increased to **USD 30.8 billion** as at June 30, 2025, from **USD 29.6 billion** as at December 31, 2024[81](index=81&type=chunk) - The debt/equity ratio increased to **0.73:1** as at June 30, 2025, from **0.67:1** as at December 31, 2024[81](index=81&type=chunk) - Net debt increased to **USD 23.8 billion** as at June 30, 2025, from **USD 16.1 billion** as at December 31, 2024[81](index=81&type=chunk) [Innovation Review](index=15&type=section&id=INNOVATION%20REVIEW) This section reviews Novartis's R&D portfolio, recent innovative medicine approvals, regulatory decisions, and pipeline updates [R&D Portfolio Focus](index=15&type=section&id=R%26D%20Portfolio%20Focus) Novartis strategically focuses its R&D portfolio on high-value medicines with transformative potential, with approximately **100 projects** in clinical development - Novartis prioritizes high-value medicines with transformative potential for patients in its R&D portfolio[82](index=82&type=chunk) - The company is currently focusing on approximately **100 projects** in clinical development[82](index=82&type=chunk) [Selected Innovative Medicines Approvals in Q2](index=15&type=section&id=Selected%20Innovative%20Medicines%20approvals%20in%20Q2) In Q2 2025, Novartis secured key approvals for innovative medicines like Vanrafia in the US and Kisqali in China, expanding market presence Selected Innovative Medicines Approvals in Q2 2025 | Product | Active ingredient/Descriptor | Indication | Region | | :-------- | :--------------------------- | :------------------------------------------ | :------------ | | Vanrafia | atrasentan | IgA nephropathy | US | | Kisqali | ribociclib | HR+/HER2- early breast cancer (adjuvant) | China | | Scemblix | asciminib | 1L chronic myeloid leukemia | Japan and China | | Fabhalta | iptacopan | C3 glomerulopathy | Japan | | Coartem Baby | artemether and lumefantrine | Malaria (<5kg patients) | Switzerland | [Selected Innovative Medicines Projects Awaiting Regulatory Decisions](index=15&type=section&id=Selected%20Innovative%20Medicines%20projects%20awaiting%20regulatory%20decisions) Novartis has several innovative medicine projects awaiting regulatory decisions, with recent Q1 and Q2 2025 submissions for key indications Selected Innovative Medicines Projects Awaiting Regulatory Decisions | Product | Indication | US Submission | EU Submission | Japan Submission | News Update | | :---------------- | :-------------------------- | :------------ | :------------ | :--------------- | :-------------------------------------------- | | LOU064 (remibrutinib) | Chronic spontaneous urticaria | Q1 2025 | Q1 2025 | - | - | | Scemblix | 1L chronic myeloid leukemia | Approved | Q1 2025 | Approved | Japan and China approvals | | OAV101 | Spinal muscular atrophy (IT formulation) | Q2 2025 | Q2 2025 | - | EU and US submissions | | Lutathera | Gastroenteropancreatic neuroendocrine tumors, 1L in G2/3 tumors | - | Q2 2024 | - | EU submission withdrawn (unrelated to quality, efficacy or safety) | | Beovu | Diabetic retinopathy | - | - | Q4 2024 | - | [Selected Innovative Medicines Pipeline Projects](index=15&type=section&id=Selected%20Innovative%20Medicines%20pipeline%20projects) Novartis's pipeline includes numerous Phase 2 and 3 projects, with updates on Ac-PSMA-617 in prostate cancer and the MorphoSys acquisition for myelofibrosis - Ac-PSMA-617 (Metastatic castration-resistant prostate cancer) has started **Phase III** development[85](index=85&type=chunk) - The MorphoSys acquisition adds DAK539 (pelabresib) for myelofibrosis, with longer follow-up needed for regulatory path determination[85](index=85&type=chunk) - Pluvicto (Metastatic hormone sensitive prostate cancer) met its primary endpoint in the PSMAddition study, showing significant and clinically meaningful benefit in rPFS[86](index=86&type=chunk) - Cosentyx's PhIII GCAptAIN study for Giant cell arteritis did not meet its primary endpoint[85](index=85&type=chunk) - TQJ230 (pelacarsen) for secondary prevention of cardiovascular events received **FDA Fast Track** and **China Breakthrough Therapy** designations[86](index=86&type=chunk) [Condensed Interim Consolidated Financial Statements](index=17&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents condensed interim consolidated financial statements, including income, comprehensive income, balance sheets, equity changes, and cash flows [Consolidated Income Statements](index=17&type=section&id=Consolidated%20income%20statements) The consolidated income statements for Q2 and H1 2025 reflect strong revenue growth and improved profitability across key metrics Consolidated Income Statement (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 | Q2 2024 | | :------------- | :------ | :------ | | Net sales | 14,054 | 12,512 | | Gross profit | 11,514 | 9,699 | | Operating income | 4,864 | 4,014 | | Income before taxes | 4,531 | 3,841 | | Net income | 4,024 | 3,246 | | Basic EPS (USD) | 2.07 | 1.60 | Consolidated Income Statement (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Net sales | 27,287 | 24,341 | | Gross profit | 21,907 | 18,723 | | Operating income | 9,527 | 7,387 | | Income before taxes | 8,938 | 6,970 | | Net income | 7,633 | 5,934 | | Basic EPS (USD) | 3.91 | 2.91 | [Consolidated Statements of Comprehensive Income](index=19&type=section&id=Consolidated%20statements%20of%20comprehensive%20income) The consolidated statements of comprehensive income show a substantial increase for Q2 and H1 2025, driven by higher net income and positive currency translation effects Consolidated Statements of Comprehensive Income (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 | Q2 2024 | | :------------- | :------ | :------ | | Net income | 4,024 | 3,246 | | Currency translation effects, net of taxes | 2,114 | 40 | | Total other comprehensive income | 1,988 | 205 | | Total comprehensive income | 6,012 | 3,451 | Consolidated Statements of Comprehensive Income (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Net income | 7,633 | 5,934 | | Currency translation effects, net of taxes | 2,834 | -1,364 | | Total other comprehensive income | 3,029 | -1,058 | | Total comprehensive income | 10,662 | 4,876 | [Consolidated Balance Sheets](index=20&type=section&id=Consolidated%20balance%20sheets) The consolidated balance sheets as of June 30, 2025, show increased total assets driven by non-current assets, decreased current assets, and changes in liabilities and equity Consolidated Balance Sheet (June 30, 2025 vs Dec 31, 2024) | (USD millions) | Jun 30, 2025 | Dec 31, 2024 | | :------------- | :----------- | :----------- | | Total non-current assets | 78,456 | 72,542 | | Total current assets | 25,939 | 29,704 | | Total assets | 104,395 | 102,246 | | Total equity | 42,054 | 44,126 | | Total non-current liabilities | 30,627 | 29,428 | | Total current liabilities | 31,714 | 28,692 | | Total liabilities | 62,341 | 58,120 | [Consolidated Statements of Changes in Equity](index=21&type=section&id=Consolidated%20statements%20of%20changes%20in%20equity) The consolidated statements of changes in equity for Q2 and H1 2025 illustrate the impact of net income, OCI, dividends, and treasury share transactions, resulting in a net decrease for H1 - Total equity at June 30, 2025, was **USD 42,054 million**, a decrease from **USD 44,126 million** at January 1, 2025[93](index=93&type=chunk) - Key drivers for the change in equity during H1 2025 included net income of **USD 7,647 million**, other comprehensive income of **USD 3,027 million**, dividends of **USD 7,818 million**, and purchase of treasury shares of **USD 5,509 million**[93](index=93&type=chunk) [Consolidated Statements of Cash Flows](index=23&type=section&id=Consolidated%20statements%20of%20cash%20flows) The consolidated statements of cash flows for Q2 and H1 2025 show strong operating cash generation, strategic investing activities, and significant financing outflows Consolidated Statements of Cash Flows (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 | Q2 2024 | | :------------- | :------ | :------ | | Net cash flows from operating activities | 6,664 | 4,875 | | Net cash flows used in investing activities | -2,243 | -3,207 | | Net cash flows used in financing activities | -5,213 | -3,200 | | Net change in cash and cash equivalents | -410 | -1,566 | Consolidated Statements of Cash Flows (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Net cash flows from operating activities | 10,309 | 7,140 | | Net cash flows used in investing activities | -1,913 | -4,106 | | Net cash flows used in financing activities | -13,761 | -8,364 | | Net change in cash and cash equivalents | -4,803 | -5,490 | [Notes to Condensed Interim Consolidated Financial Statements](index=25&type=section&id=Notes%20to%20condensed%20interim%20consolidated%20financial%20statements) This section provides detailed notes to the interim consolidated financial statements, covering accounting policies, acquisitions, equity, financial instruments, cash flow, legal, and revenue [Basis of Preparation](index=25&type=section&id=Basis%20of%20preparation) The condensed interim consolidated financial statements are prepared in accordance with IFRS Accounting Standards and IAS 34 Interim Financial Reporting, adhering to historical cost - Financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) Accounting Standards as issued by the International Accounting Standards Board[97](index=97&type=chunk) - They conform to IAS 34 Interim Financial Reporting and accounting policies outlined in the 2024 Annual Report[98](index=98&type=chunk) [Accounting Policies](index=25&type=section&id=Accounting%20policies) Novartis's accounting policies align with IFRS, involving management estimates and assumptions, with no material impact from new IFRS standards in 2025, but IFRS 18 is being assessed for 2027 - The company's accounting policies are consistent with IFRS Accounting Standards, requiring management to make estimates and assumptions[99](index=99&type=chunk) - Goodwill and intangible assets are evaluated for impairment annually or when circumstances warrant, with potential for significant future impairment charges[101](index=101&type=chunk) - No new IFRS Accounting Standards or amendments effective in 2025 had a material impact, but IFRS 18 (effective Jan 1, 2027) is currently being assessed[103](index=103&type=chunk)[104](index=104&type=chunk) [Significant Acquisitions of Businesses](index=26&type=section&id=Significant%20acquisitions%20of%20businesses) Novartis completed significant acquisitions in 2024 and 2025, expanding its pipeline in gene, radioligand, and oncology therapies, involving substantial cash and contingent considerations - In H1 2025, Novartis acquired Regulus Therapeutics Inc. for **USD 0.8 billion** cash plus up to **USD 0.9 billion** in CVRs, focusing on microRNA therapeutics for ADPKD[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - Also in H1 2025, Anthos Therapeutics, Inc. was acquired for **USD 0.9 billion** cash plus up to **USD 2.1 billion** in milestones, adding abelacimab for stroke prevention[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - In 2024, significant acquisitions included Kate Therapeutics Inc. (**USD 427 million** cash + up to **USD 700 million** milestones) for gene therapies, Mariana Oncology Inc. (**USD 1.04 billion** cash + up to **USD 750 million** milestones) for radioligand therapies, and MorphoSys AG (approx. **EUR 2.6 billion**) for oncology[105](index=105&type=chunk)[106](index=106&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - A **USD 0.9 billion** impairment of goodwill attributable to the MorphoSys business was recognized in the second half of 2024[121](index=121&type=chunk)[122](index=122&type=chunk) [Summary of Equity Attributable to Novartis AG Shareholders](index=29&type=section&id=Summary%20of%20equity%20attributable%20to%20Novartis%20AG%20shareholders) The summary of equity attributable to Novartis AG shareholders details movements in equity, highlighting the impact of share repurchases and annual dividend payments Summary of Equity Attributable to Novartis AG Shareholders (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Balance at beginning of year | 44,046 | 46,667 | | Shares acquired to be canceled | -5,350 | -2,698 | | Dividends | -7,818 | -7,624 | | Net income | 7,647 | 5,934 | | Other comprehensive income | 3,027 | -1,054 | | Balance at June 30 | 41,985 | 41,733 | - The annual gross dividend to shareholders of Novartis AG amounted to **USD 7.8 billion** in 2025 (2024: **USD 7.6 billion**)[133](index=133&type=chunk) - Novartis amended its share buyback arrangement in June 2025 to repurchase an additional **10.7 million shares** to mitigate the impact of share deliveries under equity-based compensation plans[134](index=134&type=chunk) [Financial Instruments](index=30&type=section&id=Financial%20instruments) The financial instruments note provides a hierarchical valuation of financial assets and liabilities, including cash, marketable securities, and contingent considerations, and details net investment hedges Financial Instruments at Fair Value (June 30, 2025) | (USD millions) | Level 1 | Level 2 | Level 3 | Total | | :------------- | :------ | :------ | :------ | :---- | | Financial assets | | | | | | Debt securities | 50 | - | - | 50 | | Derivative financial instruments | - | 268 | - | 268 | | Current contingent consideration receivables | - | - | 125 | 125 | | Long-term financial investments | 169 | 8 | 1,493 | 1,670 | | Financial liabilities | | | | | | Current contingent consideration liabilities | - | - | -197 | -197 | | Derivative financial instruments | - | -278 | - | -278 | | Non-current contingent consideration liabilities | - | - | -478 | -478 | - Novartis designated a portion of its long-term euro-denominated straight bonds as hedges of translation risk for net investments in foreign operations with euro functional currency[140](index=140&type=chunk) - In H1 2025, **USD 233 million** (net of taxes) of unrealized losses were recognized in other comprehensive income related to these net investment hedges[140](index=140&type=chunk) [Details to the Consolidated Statements of Cash Flows](index=31&type=section&id=Details%20to%20the%20consolidated%20statements%20of%20cash%20flows) This section provides detailed breakdowns of non-cash adjustments, changes in working capital, and cash flows related to acquisitions and divestments, offering further insight into cash flow drivers Reversal of Non-Cash Items and Other Adjustments (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Depreciation, amortization and impairments | 2,447 | 2,482 | | Change in provisions and other non-current liabilities | 847 | 367 | | Equity-settled compensation expense | 529 | 517 | | Income taxes | 1,305 | 1,036 | | Net financial expense | 583 | 386 | | Total | 5,666 | 4,897 | Cash Flows from Changes in Working Capital (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | (Increase)/decrease in inventories | 11 | -146 | | Increase in trade receivables | -1,210 | -1,421 | | Decrease in trade payables | -315 | -551 | | Change in other current liabilities | 440 | 744 | | Total | -1,326 | -1,751 | - Cash flows used for acquisitions by applying the optional concentration test amounted to **USD 1.5 billion** in 2025, net of cash acquired[149](index=149&type=chunk) [Legal Proceedings Update](index=32&type=section&id=Legal%20proceedings%20update) Novartis is involved in various legal proceedings, including competition law matters in France, civil lawsuits in Greece, and litigation concerning the 340B Drug Pricing Program - France's Supreme Court overturned the Paris Court of Appeal's decision in the Lucentis/Avastin® matter, entitling the French Competition Authority to re-impose its original fine of approximately **USD 452 million** (**USD 443 million** expense recorded in June 2025)[152](index=152&type=chunk)[153](index=153&type=chunk) - In Greece, Novartis Hellas is facing civil lawsuits seeking moral damages, including a **USD 225 million** claim from the Greek State (rejected by court, subject to appeal) and a **EUR 229 million** claim from the National Social Security Fund[154](index=154&type=chunk) - Regarding the 340B Drug Pricing Program, HRSA found no overcharge in a 2023 case, and a civil investigative subpoena from the Vermont AG has seen no further action since 2021[155](index=155&type=chunk) [Operating Segment](index=33&type=section&id=Operating%20segment) Novartis operates as a single global segment focused on innovative medicines, with the ECN serving as the chief operating decision-maker for resource allocation and performance - Novartis operates as a single global operating segment, focusing on innovative medicines across core therapeutic areas[158](index=158&type=chunk) - The Executive Committee of Novartis (ECN), chaired by the CEO, acts as the chief operating decision-maker (CODM) for resource allocation and performance assessment[159](index=159&type=chunk) [Revenues and Geographic Information](index=34&type=section&id=Revenues%20and%20Geographic%20Information) This section provides a comprehensive breakdown of Novartis's net sales by geographic region, therapeutic area, and top brands for Q2 and H1 2025, including other revenue streams [Net Sales to Third Parties by Region (Q2 & H1)](index=34&type=section&id=Net%20sales%20to%20third%20parties%20by%20region%20(Q2%20%26%20H1)) Net sales to third parties showed strong growth in the US for both Q2 and H1 2025, with positive contributions from Europe and emerging markets Net Sales by Region (Q2 2025 vs Q2 2024) | Region | Q2 2025 (USD m) | % change (USD) | % change (cc) | | :----- | :-------------- | :------------- | :------------ | | US | 6,249 | 21 | 21 | | Europe | 4,170 | 8 | 3 | | Asia/Africa/Australasia | 2,713 | 5 | 3 | | Canada and Latin America | 922 | 2 | 15 | | Total | 14,054 | 12 | 11 | Net Sales by Region (H1 2025 vs H1 2024) | Region | H1 2025 (USD m) | % change (USD) | % change (cc) | | :----- | :-------------- | :------------- | :------------ | | US | 11,961 | 23 | 23 | | Europe | 8,075 | 6 | 5 | | Asia/Africa/Australasia | 5,485 | 6 | 6 | | Canada and Latin America | 1,766 | -2 | 12 | | Total | 27,287 | 12 | 13 | [Net Sales to Third Parties by Core Therapeutic Area and Established Brands (Q2 & H1)](index=35&type=section&id=Net%20sales%20to%20third%20parties%20by%20core%20therapeutic%20area%20and%20established%20brands%20(Q2%20%26%20H1)) Innovative medicines across core therapeutic areas demonstrated robust sales growth in Q2 and H1 2025, while Established Brands declined due to generic competition Net Sales by Therapeutic Area (Q2 2025 vs Q2 2024) | Therapeutic Area | Q2 2025 (USD m) | % change (USD) | % change (cc) | | :----------------- | :-------------- | :------------- | :------------ | | Cardiovascular, renal and metabolic | 2,655 | 28 | 26 | | Immunology | 2,549 | 10 | 9 | | Neuroscience | 1,457 | 19 | 17 | | Oncology | 4,293 | 22 | 20 | | Established brands | 3,100 | -8 | -8 | Net Sales by Therapeutic Area (H1 2025 vs H1 2024) | Therapeutic Area | H1 2025 (USD m) | % change (USD) | % change (cc) | | :----------------- | :-------------- | :------------- | :------------ | | Cardiovascular, renal and metabolic | 5,173 | 26 | 26 | | Immunology | 4,958 | 13 | 13 | | Neuroscience | 2,759 | 24 | 23 | | Oncology | 8,199 | 21 | 22 | | Established brands | 6,198 | -9 | -8 | [Net Sales to Third Parties of the Top 20 Brands (Q2 & H1)](index=37&type=section&id=Net%20sales%20to%20third%20parties%20of%20the%20top%2020%20brands%20in%202025%20(Q2%20%26%20H1)) The top 20 brands drove significant sales growth in Q2 and H1 2025, with strong performance from Kisqali, Entresto, and Scemblix, especially in the US Top 5 Brands by Q2 2025 Net Sales | Brand | Q2 2025 (USD m) | % change (USD) | % change (cc) | | :---------------- | :-------------- | :------------- | :------------ | | Entresto | 2,357 | 24 | 22 | | Cosentyx | 1,629 | 7 | 6 | | Kisqali | 1,177 | 64 | 64 | | Kesimpta | 1,077 | 35 | 33 | | Tafinlar + Mekinist | 573 | 10 | 7 | Top 5 Brands by H1 2025 Net Sales | Brand | H1 2025 (USD m) | % change (USD) | % change (cc) | | :---------------- | :-------------- | :------------- | :------------ | | Entresto | 4,618 | 22 | 22 | | Cosentyx | 3,163 | 11 | 11 | | Kisqali | 2,133 | 59 | 60 | | Kesimpta | 1,976 | 38 | 38 | | Tafinlar + Mekinist | 1,125 | 13 | 13 | - Kisqali showed exceptional growth in Q2 2025, with **100%** increase in US sales[171](index=171&type=chunk) [Other Revenues (Q2 & H1)](index=41&type=section&id=Other%20revenues%20(Q2%20%26%20H1)) Other revenues significantly increased in Q2 and H1 2025, primarily driven by a substantial royalty settlement income, profit sharing, and milestone income Other Revenues (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 | Q2 2024 | | :------------- | :------ | :------ | | Profit sharing income | 356 | 268 | | Royalty income | 318 | 5 | | Milestone income | 35 | 14 | | Total other revenues | 782 | 360 | Other Revenues (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Profit sharing income | 613 | 482 | | Royalty income | 326 | 24 | | Milestone income | 89 | 20 | | Total other revenues | 1,169 | 651 | - Royalty income in Q2 and H1 2025 includes a royalty settlement of **USD 0.3 billion**[175](index=175&type=chunk) [Other Interim Disclosures](index=41&type=section&id=Other%20interim%20disclosures) This section covers interim disclosures including depreciation, amortization, asset additions, debt repayments, tax rate changes, and significant future R&D and acquisition commitments Depreciation, Amortization, and Impairment Charges (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Property, plant and equipment depreciation | -456 | -437 | | Intangible assets amortization | -1,721 | -1,711 | | Intangible assets impairment charges | -94 | -194 | Additions to Assets (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Property, plant and equipment | 563 | 506 | | Intangible assets other than goodwill | 3,041 | 1,175 | - Novartis repaid a **USD 1.0 billion** US dollar denominated bond and a **CHF 500 million** Swiss franc denominated bond at maturity in H1 2025[179](index=179&type=chunk) - The Basel-Stadt cantonal tax rate change (**6.5%** to **8.5%** effective Jan 1, 2026) required revaluation of deferred tax balances, but the impact was not material[180](index=180&type=chunk) - The US OBBBA tax reform enacted July 4, 2025, is not expected to have a material impact on consolidated financial statements[181](index=181&type=chunk)[182](index=182&type=chunk) - Total commitments for R&D and acquisition agreements amounted to **USD 14.2 billion** as of June 30, 2025, with **USD 10.1 billion** due thereafter[184](index=184&type=chunk) [Events Subsequent to June 30, 2025](index=42&type=section&id=Events%20subsequent%20to%20the%20June%2030%2C%202025%2C%20consolidated%20balance%20sheet%20date) Subsequent to June 30, 2025, the US enacted new tax reform legislation, and the company entered into a new lease agreement with a significant commitment - On July 4, 2025, the United States enacted tax reform legislation (One Big Beautiful Bill Act - OBBBA)[186](index=186&type=chunk) - On July 7, 2025, the Company entered into a lease agreement with an undiscounted commitment amount of **USD 0.8 billion**[185](index=185&type=chunk)[186](index=186&type=chunk) [Supplementary Information](index=43&type=section&id=SUPPLEMENTARY%20INFORMATION) This section provides supplementary information on non-IFRS measures, including core results, constant currencies, and free cash flow, with detailed reconciliations [Non-IFRS Measures as Defined by Novartis](index=43&type=section&id=Non-IFRS%20measures%20as%20defined%20by%20Novartis) Novartis utilizes non-IFRS measures like core results, constant currencies, and free cash flow to assess performance and provide a clearer view of underlying business trends - Novartis uses non-IFRS measures (core results, constant currencies, free cash flow) to measure performance, especially for year-on-year comparisons[187](index=187&type=chunk) - Core results exclude amortization/impairment of intangible assets, certain gains/losses, acquisition/divestment items, restructuring, and legal-related items to enhance comparability[191](index=191&type=chunk) - Constant currency calculations eliminate exchange rate effects to show underlying changes in the income statement[194](index=194&type=chunk)[195](index=195&type=chunk) - Free cash flow is defined as net cash flows from operating activities less purchases of property, plant and equipment, focusing on core operating activities and available cash for investment or shareholder returns[200](index=200&type=chunk)[201](index=201&type=chunk) - Net debt is calculated as current and non-current financial debts less cash and cash equivalents and marketable securities, serving as an indicator of liquidity and financial flexibility[202](index=202&type=chunk)[203](index=203&type=chunk) [Core Results - Reconciliation from IFRS Accounting Standards](index=45&type=section&id=CORE%20RESULTS%20-%20Reconciliation%20from%20IFRS%20Accounting%20Standards%20results%20to%20non-IFRS%20measure%20core%20results) This section provides detailed reconciliations from IFRS to non-IFRS core results for operating income, income before taxes, and net income for Q2 and H1 2025, illustrating adjustments for amortization, impairments, and acquisition expenses Reconciliation to Core Operating Income (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 IFRS | Amortization | Impairments | Acquisition/Divestment | Other Items | Q2 2025 Core | Q2 2024 Core | | :------------- | :----------- | :----------- | :---------- | :--------------------- | :---------- | :----------- | :----------- | | Operating income | 4,864 | 770 | 93 | 37 | 161 | 5,925 | 4,953 | | % of net sales | 34.6% | - | - | - | - | 42.2% | 39.6% | Reconciliation to Core Net Income (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 IFRS | Q2 2025 Core | Q2 2024 Core | | :------------- | :----------- | :----------- | :----------- | | Net income | 4,024 | 4,710 | 4,008 | | Core basic EPS (USD) | 2.07 | 2.42 | 1.97 | Reconciliation to Core Operating Income (H1 2025 vs H1 2024) | (USD millions) | H1 2025 IFRS | Amortization | Impairments | Acquisition/Divestment | Other Items | H1 2025 Core | H1 2024 Core | | :------------- | :----------- | :----------- | :---------- | :--------------------- | :---------- | :----------- | :----------- | | Operating income | 9,527 | 1,559 | 94 | 29 | 291 | 11,500 | 9,490 | | % of net sales | 34.9% | - | - | - | - | 42.1% | 39.0% | Reconciliation to Core Net Income (H1 2025 vs H1 2024) | (USD millions) | H1 2025 IFRS | H1 2025 Core | H1 2024 Core | | :------------- | :----------- | :----------- | :----------- | | Net income | 7,633 | 9,192 | 7,689 | | Core basic EPS (USD) | 3.91 | 4.69 | 3.77 | [Non-IFRS Measure Free Cash Flow](index=48&type=section&id=NON-IFRS%20MEASURE%20FREE%20CASH%20FLOW) This section reconciles IFRS consolidated cash flow statements to the non-IFRS measure of free cash flow for Q2 and H1 2025, detailing adjustments to highlight cash from core operations Reconciliation to Free Cash Flow (Q2 2025 vs Q2 2024) | (USD millions) | Q2 2025 IFRS Cash Flow | Adjustments | Q2 2025 Free Cash Flow | Q2 2024 IFRS Cash Flow | Adjustments | Q2 2024 Free Cash Flow | | :------------- | :--------------------- | :---------- | :--------------------- | :--------------------- | :---------- | :--------------------- | | Net cash flows from operating activities | 6,664 | - | 6,664 | 4,875 | - | 4,875 | | Net cash flows used in investing activities | -2,243 | 1,912 | -331 | -3,207 | 2,947 | -260 | | Net cash flows used in financing activities | -5,213 | 5,213 | 0 | -3,200 | 3,200 | 0 | | Non-IFRS measure free cash flow | - | - | 6,333 | - | - | 4,615 | Reconciliation to Free Cash Flow (H1 2025 vs H1 2024) | (USD millions) | H1 2025 IFRS Cash Flow | Adjustments | H1 2025 Free Cash Flow | H1 2024 IFRS Cash Flow | Adjustments | H1 2024 Free Cash Flow | | :------------- | :--------------------- | :---------- | :--------------------- | :--------------------- | :---------- | :--------------------- | | Net cash flows from operating activities | 10,309 | - | 10,309 | 7,140 | - | 7,140 | | Net cash flows used in investing activities | -1,913 | 1,328 | -585 | -4,106 | 3,619 | -487 | | Net cash flows used in financing activities | -13,761 | 13,761 | 0 | -8,364 | 8,364 | 0 | | Non-IFRS measure free cash flow | - | - | 9,724 | - | - | 6,653 | [Additional Information](index=50&type=section&id=ADDITIONAL%20INFORMATION) This section provides additional information on net debt, share information, and currency fluctuation effects on key financial figures [Net Debt](index=50&type=section&id=Net%20debt) Novartis's net debt increased significantly in Q2 and H1 2025, driven by decreased cash and increased financial debts, reflecting strategic financial activities Condensed Consolidated Changes in Net Debt (H1 2025 vs H1 2024) | (USD millions) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | Net change in cash and cash equivalents | -4,803 | -5,490 | | Change in marketable securities, commodities, time deposits, financial debts and derivatives financial instruments | -2,840 | -3,087 | | Change in net debt | -7,643 | -8,577 | | Net debt at January 1 | -16,141 | -10,183 | | Net debt at June 30 | -23,784 | -18,760 | Components of Net Debt (June 30, 2025 vs Dec 31, 2024) | (USD millions) | Jun 30, 2025 | Dec 31, 2024 | | :------------- | :----------- | :----------- | | Total financial debts | -30,784 | -29,598 | | Total liquidity | 7,000 | 13,457 | | Net debt at end of period | -23,784 | -16,141 | [Share Information](index=50&type=section&id=Share%20information) Key share information for Novartis as of June 30, 2025, indicates decreased shares outstanding and increased ADR price and market capitalization Share Information (June 30, 2025 vs June 30, 2024) | Metric | Jun 30, 2025 | Jun 30, 2024 | | :----- | :----------- | :----------- | | Number of shares outstanding | 1,935,853,188 | 2,024,579,175 | | Registered share price (CHF) | 96.17 | 96.17 | | ADR price (USD) | 121.01 | 106.46 | | Market capitalization (USD billions) | 233.5 | 216.5 | [Effects of Currency Fluctuations](index=51&type=section&id=Effects%20of%20Currency%20Fluctuations) Currency fluctuations notably impacted Novartis's key financial figures for Q2 and H1 2025, with positive effects on net sales but negative effects on operating income, net income, and EPS Principal Currency Translation Rates (Average Rates H1 2025 vs H1 2024) | (USD per unit) | H1 2025 | H1 2024 | | :------------- | :------ | :------ | | 1 CHF | 1.161 | 1.125 | | 1 EUR | 1.093 | 1.081 | | 1 GBP | 1.297 | 1.265 | | 100 JPY | 0.674 | 0.658 | Currency Impact on Key Figures (Q2 2025) | Metric | Change in USD % | Change in constant currencies % | Percentage point currency impact | | :----- | :-------------- | :---------------------------- | :------------------------------- | | Net sales | 12 | 11 | 1 | | Operating income | 21 | 25 | -4 | | Net income | 24 | 26 | -2 | | Basic EPS | 29 | 32 | -3 | Currency Impact on Key Figures (H1 2025) | Metric | Change in USD % | Change in constant currencies % | Percentage point currency impact | | :----- | :-------------- | :---------------------------- | :------------------------------- | | Net sales | 12 | 13 | -1 | | Operating income | 29 | 33 | -4 | | Net income | 29 | 31 | -2 | | Basic EPS | 34 | 37 | -3 | [Disclaimer](index=52&type=section&id=DISCLAIMER) This section contains a standard disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties, and stating no obligation to update - The press release contains forward-looking statements subject to significant known and unknown risks and uncertainties, which could cause actual results to vary materially[228](index=228&type=chunk) - Risks include uncertainties in global healthcare cost containment, success of key products, R&D, intellectual property protection, strategic benefits from external opportunities, digital technologies, IT systems, legal proceedings, safety/quality issues, ESG compliance, macroeconomic developments, and currency fluctuations[228](index=228&type=chunk) - Novartis provides information as of the current date and does not undertake any obligation to update forward-looking statements[228](index=228&type=chunk) [About Novartis](index=53&type=section&id=About%20Novartis) Novartis is an innovative medicines company dedicated to improving and extending lives globally, reaching over **250 million** people, and provides investor information via its website - Novartis is an innovative medicines company focused on reimagining medicine to improve and extend people's lives[231](index=231&type=chunk) - Its medicines reach more than **250 million** people worldwide[231](index=231&type=chunk) - Novartis conducts conference calls with investors and provides detailed financial results and presentations on its investor relations website[232](index=232&type=chunk)[233](index=233&type=chunk) - Upcoming important dates include Q3 2025 results (Oct 28, 2025), Meet Novartis Management 2025 (Nov 19-20, 2025), Social Impact & Sustainability annual investor event (Dec 1, 2025), and Q4 & Full Year 2025 results (Feb 4, 2026)[234](index=234&type=chunk)

Core Viewpoint - Novartis reported strong Q2 2025 results with double-digit growth in net sales and core operating income, driven by successful product launches and pipeline advancements, alongside a commitment to a significant share buyback program [3][4][5]. Financial Performance - Q2 2025 net sales reached USD 14.1 billion, a 12% increase year-over-year, with constant currency growth of 11% [4][30]. - Operating income for Q2 2025 was USD 4.9 billion, reflecting a 21% increase, while net income rose to USD 4.0 billion, up 24% [4][9]. - Core operating income was USD 5.9 billion, a 20% increase, with a core operating income margin of 42.2% [10][30]. - Free cash flow for Q2 2025 was USD 6.3 billion, a 37% increase compared to the previous year [10][30]. - For H1 2025, net sales totaled USD 27.3 billion, up 12%, and core operating income increased by 21% to USD 11.5 billion [11][13]. Product Performance - Key growth drivers included Kisqali (+64% cc), Entresto (+22% cc), Kesimpta (+33% cc), Scemblix (+79% cc), Leqvio (+61% cc), and Pluvicto (+30% cc) [5][16]. - The top 20 brands generated USD 11.6 billion in Q2 2025, with a 16% increase year-over-year [17][18]. Strategic Initiatives - Novartis announced an up-to USD 10 billion share buyback program to enhance shareholder returns [3][5]. - The company raised its full-year 2025 guidance for core operating income growth to low teens, while maintaining high single-digit sales growth expectations [5][28]. Research and Development - Significant pipeline milestones included positive Phase III results for Pluvicto in hormone-sensitive prostate cancer and FDA approval for Vanrafia for IgAN [5][19][21]. - Ongoing trials and studies showed promising results for various therapies, including Kisqali and Scemblix, with plans for further regulatory submissions [22][23]. Capital Structure - As of June 30, 2025, net debt increased to USD 23.8 billion, primarily due to cash outflows for dividends and share repurchases [26]. - The company maintains a strong capital structure with a focus on balanced capital allocation [24][25].

Core Insights - Novartis AG is set to report its second-quarter 2025 results on July 17, with revenue expectations at $14.04 billion and earnings at $2.38 per share [1] - The company has a strong earnings surprise history, beating estimates in the last four quarters with an average surprise of 7.12% [1] Earnings Prediction - The Earnings ESP for Novartis is -0.28%, indicating a lower likelihood of an earnings beat this quarter [3] - The company currently holds a Zacks Rank of 2 (Buy) [3] Growth Drivers - Novartis operates in four core therapeutic areas: cardiovascular-renal-metabolic, immunology, neuroscience, and oncology following the spin-off of the Sandoz business [4] - Key products driving growth include Entresto, Kisqali, Kesimpta, Leqvio, and Scemblix, with strong sales expected in Q2 [4][8] Product Performance - Entresto's sales are estimated at $2.3 billion, benefiting from increased demand in China and Japan [5] - Kisqali's sales are projected at $1 billion, driven by its recognition in breast cancer treatment [6][7] - Kesimpta's sales are also expected to reach $1 billion, reflecting increased demand [7] - Cosentyx is anticipated to generate sales of $1.73 billion, supported by recent launches and volume growth [9] - Leqvio's sales estimates are $284 million, indicating strong growth in cholesterol management [10] - Pluvicto's sales are projected at $410 million, bolstered by FDA approval for expanded use [11] - Scemblix continues to see growth in chronic myeloid leukemia treatment, with strong demand expected [12] Recent Developments - Novartis acquired Regulus Therapeutics for $0.8 billion, adding farabursen to its pipeline, which targets autosomal dominant polycystic kidney disease [14] - Year-to-date, Novartis shares have increased by 27.3%, significantly outperforming the industry average of 1.8% [15]

Core Viewpoint - Analysts project that Novartis will report quarterly earnings of $2.38 per share, reflecting a 20.8% year-over-year increase, with revenues expected to reach $14.04 billion, a 9% increase from the same quarter last year [1]. Revenue Estimates - Revenues from Solid Tumors for Tafinlar + Mekinist are estimated at $570.15 million, indicating a 9% increase year-over-year [4]. - Other revenues are projected to be $407.49 million, suggesting a 13.2% year-over-year increase [4]. - Revenues from Solid Tumors for Kisqali are expected to reach $1.09 billion, reflecting a significant 52.6% increase from the prior-year quarter [4]. - Hematology revenues from Promacta/Revolade are estimated at $545.35 million, showing a slight increase of 0.3% year-over-year [5]. - Hematology revenues from Tasigna in the US are projected at $221.75 million, indicating a decrease of 3.6% from the prior-year quarter [5]. - Revenues from Immunology for Cosentyx in the US are expected to be $993.18 million, reflecting a 14.4% year-over-year increase [6]. - Cardiovascular revenues from Entresto in the US are projected to reach $1.19 billion, indicating a 26% increase from the prior-year quarter [6]. - Revenues from Solid Tumors for Tafinlar + Mekinist in the ROW are estimated at $348.88 million, suggesting an 8.7% year-over-year increase [7]. - Immunology revenues for Cosentyx in the ROW are expected to be $740.74 million, reflecting a 12.6% year-over-year increase [8]. Stock Performance - Over the past month, Novartis shares have returned +1.3%, compared to a +4% change in the Zacks S&P 500 composite [8]. - Novartis currently holds a Zacks Rank 2 (Buy), indicating potential outperformance in the near future [8].

Group 1 - Novartis' stock price has increased by over 15% since the publication of the article, reaching a new historic peak and its 52-week high [1] - The article emphasizes the consistent performance of Novartis, which has beaten expectations [1] - Allka Research, with over two decades of experience, focuses on identifying undervalued assets in various sectors including pharmaceuticals [1] Group 2 - Allka Research aims to simplify investment strategies and provide substantial returns to its clients [1] - The organization is committed to empowering investors by sharing knowledge and insights through platforms like Seeking Alpha [1] - Allka Research seeks to foster a community of informed investors capable of navigating the complexities of the financial markets [1]

Core Viewpoint - U.S. investors may be overlooking better investment opportunities in international stocks due to the fear of missing out on U.S. market gains, particularly as the S&P 500 reaches record highs [1][2] Group 1: International Exposure - Increasing international exposure is suggested as a safer and smarter alternative to investing more in the U.S. economy, as foreign stocks are currently trading at cheaper valuations and performing better [2][10] - The iShares Core MSCI EAFE ETF (IEFA) is highlighted as a suitable vehicle for gaining international exposure [4] Group 2: Historical Performance - Historical data shows that foreign stocks outperformed the S&P 500 between 2002 and 2009, primarily due to a weaker U.S. dollar [5][6] - Analysts predict a potential reversal of the recent U.S. stock performance dominance, leading to a recovery in non-U.S. stocks [8][9] Group 3: Valuation Comparison - The S&P 500 is currently priced at 24.5 times trailing earnings and 23.6 times forward-looking earnings, which is high compared to the MSCI EAFE's 10-year average P/E of 14.2 and trailing-12-month P/E of 16.7 [12][14] - Analysts emphasize that international stocks are closer to their historical averages, suggesting greater price appreciation potential compared to overvalued U.S. stocks [14] Group 4: Diversification Strategy - Adding international exposure is recommended to shield portfolios from economic and political uncertainties in the U.S. [16] - The iShares Core MSCI EAFE ETF includes quality foreign companies such as SAP, ASML, Nestlé, and Novartis, providing a diversified investment option [17]

Core Insights - GSK's Specialty Medicines segment is a significant contributor to its sales, accounting for nearly 40% of total revenue and expected to exceed 50% by 2031 [6] Sales Growth - The Specialty Medicines unit has experienced a 17% sales increase in Q1 2025, driven by successful launches in Oncology and long-acting HIV medicines [2][10] - Key products such as Nucala and Dovato are major revenue drivers, alongside new long-acting HIV treatments like Cabenuva and Apretude, and oncology drugs Jemperli and Ojjaara [3] Research and Development - GSK is increasing R&D investments in long-acting and specialty medicines across various therapeutic areas, including Respiratory, Immunology & Inflammation, Oncology, and HIV [4] - The approval of Blujepa for uncomplicated urinary tract infections and Nucala for chronic obstructive pulmonary disease (COPD) supports the growth trajectory [4][10] Regulatory Approvals - Regulatory applications for Blenrep combinations for multiple myeloma and depemokimab for chronic rhinosinusitis and asthma are under review, with FDA decisions expected in 2025 [5] Competitive Landscape - GSK faces significant competition in the Specialty Medicines segment from major pharmaceutical companies such as AstraZeneca, Merck, and Pfizer [7][8] Stock Performance and Valuation - GSK's stock has increased by 16.3% year-to-date, outperforming the industry average of 0.3% [9] - The company's shares are trading at a forward price/earnings ratio of 8.34, which is lower than the industry average of 14.93 and below its 5-year mean of 10.21 [12] Earnings Estimates - The Zacks Consensus Estimate for GSK's earnings per share has risen from $4.38 to $4.41 for 2025, while the estimate for 2026 has slightly declined [14]