Novartis AG (NYSE:NVS) projects a stronger growth trajectory through 2030, lifting expectations for several key medicines and outlining a pipeline strategy it believes will sustain momentum well into the next decade. • NVS is having a challenging session. See the full story here.The company updated its mid-term outlook ahead of its Meet Novartis Management event in London, emphasizing higher confidence in long-term demand drivers and upcoming drug launches.The drugmaker now anticipates a compound annual sal ...

Core Insights - Novartis has updated its mid-term sales guidance for 2025-2030 to a compound annual growth rate (CAGR) of +5-6% at constant currencies, reflecting strong growth momentum from existing products and upcoming launches [2][7] - The company has raised peak sales guidance for key products, now identifying eight de-risked, in-market assets with peak sales potential ranging from USD 3 billion to USD 10 billion [2][8] - Novartis anticipates over 15 potentially submission-enabling readouts in the next two years, supported by a robust pipeline of more than 30 high-value medicines [3][7] Financial Performance - Novartis achieved a core operating income margin of 41.2% in the first nine months of 2025, ahead of its plan, and expects to maintain margins above 40% by 2029 despite some dilution from the acquisition of Avidity Biosciences [4][5] - The company has executed over 30 strategic deals in the past two years, enhancing its pipeline and long-term growth outlook [5] Product and Pipeline Highlights - Key products Kisqali and Scemblix have seen their peak sales forecasts increased, with Kisqali now projected to exceed USD 10 billion and Scemblix expected to reach over USD 4 billion [8] - The pipeline includes over 30 potential high-value medicines, with more than 10 licensed or acquired in the last two years, positioning Novartis for sustainable growth beyond 2030 [3][7]

Core Insights - Novartis will present new data from 33 abstracts related to its Cardiovascular, Renal, and Metabolic (CRM) disease portfolio at the upcoming ASN Kidney Week 2025 and AHA Scientific Sessions 2025, showcasing its commitment to advancing therapies for heart and kidney conditions [1][2] Group 1: Presentation Highlights - The data includes studies on both approved and investigational therapies, emphasizing Novartis's dedication to providing meaningful solutions for patients with various CRM diseases [2] - Key highlights from ASN include analyses of Fabhalta and Vanrafia Phase III studies, real-world treatment patterns for Fabhalta, and C3 glomerulopathy studies that reinforce Fabhalta's long-term safety and efficacy [4][3] - AHA presentations will cover the impact of inclisiran-based treatment strategies on quality of life and muscle-related pain, as well as adherence and goal attainment data supporting inclisiran's addition to lipid-lowering therapy [5][4] Group 2: Product Information - Novartis is focused on redefining the approach to CRM conditions, leveraging a robust portfolio and pipeline to address significant unmet needs in cardiovascular and renal health [7] - The company has a 40-year legacy in cardiovascular care and is expanding its portfolio to target underlying causes of kidney diseases, aiming to transform outcomes and improve lives for patients with CRM diseases [7][9]

Financial Performance - Novartis reported a 7% increase in net sales and core operating income for Q3 2025, with a core margin of 39.3% [5][27] - Core EPS rose by 10% to $2.25, and free cash flow totaled $6.2 billion for the quarter [28][27] - For the first nine months, net sales grew by 11%, core operating income by 18%, and core EPS increased by 21% to $6.94 [28][29] Business Line Performance - Key brands showed strong growth: Kisqali grew 68%, Pluvicto 45%, Leqvio 54%, and Scemblix 95% in constant currency [6][10][14][16] - Kisqali's U.S. growth was particularly strong at 91%, with a market-leading position in both metastatic and early breast cancer [7][9] - Pluvicto's growth was driven by new patient starts, with U.S. sales up 53% [11][12] - Leqvio is on track for over $1 billion in sales, with significant growth in both the U.S. and international markets [14][15] - Scemblix is expected to become the most prescribed TKI in the U.S. [16] Market Performance - The U.S. experienced negative growth due to net true-ups related to Medicare Part D redesign, but underlying growth would have been 9% without these adjustments [27][28] - Outside the U.S., Kisqali saw 37% growth in constant currency, and Pluvicto is expanding in Europe, Canada, and Brazil [7][12] - The renal portfolio, particularly IGAN, grew 98% in the U.S., significantly outpacing market growth [20][21] Company Strategy and Industry Competition - Novartis is focused on driving growth through its priority brands and pipeline advancements, despite facing generic erosion from products like Entresto [5][28] - The company is pursuing strategic acquisitions, including Avidity Biosciences, to enhance its growth trajectory [35][36] - Novartis aims to maintain a core margin of around 40% despite expected short-term dilution from new product launches [35][36] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in mid to long-term growth, reaffirming guidance for high single-digit growth in net sales and low teens growth in core operating income for the full year [31][38] - The company anticipates challenges in the first half of 2026 due to generic competition but expects a stronger second half [33][34] - Management highlighted the importance of addressing pricing and reimbursement issues with the administration to support innovation [41][42] Other Important Information - Novartis is preparing for regulatory submissions for several products, including remibrutinib and ianalumab, with expectations for rapid uptake in the market [22][24] - The company is focused on enhancing its R&D capabilities and expanding its manufacturing base in the U.S. [43] Q&A Session Summary Question: Impact of Medicaid and tariffs on the industry - Management indicated that while some companies have reached agreements with the administration, Novartis is in ongoing discussions to find suitable solutions [41][42] Question: CapEx and cash flow modeling - Management clarified that the majority of the $23 billion commitment over five years is for R&D OpEx, with CapEx expected to remain stable at 2.5%-3% of sales [42][43] Question: Market reaction to ATR abstract - Management expressed confidence that detailed data presentation would improve market perception and emphasized the importance of patient benefits over statistical measures [46][47] Question: Pluvicto launch curve and peak sales ambition - Management stated that Pluvicto is on a strong growth trajectory, expecting to reach peak sales of $5 billion with ongoing efforts to tackle commercialization challenges [55][56][58] Question: Remibrutinib ramp-up and European adoption - Management highlighted the focus on payer negotiations and the potential for rapid uptake in the U.S. and Europe, emphasizing the innovative profile of remibrutinib [62][64] Question: Ianalumab study results and secondary endpoints - Management explained the statistical significance achieved in primary endpoints and the importance of patient-relevant outcomes for future discussions with physicians [68][71] Question: Cosentyx market share and new formulation - Management noted that there has been no significant impact from competitor launches and emphasized ongoing efforts to maintain market share in a growing market [74]

Financial Performance - In Q3 2025, net sales grew by 7% year-over-year, and core operating income also increased by 7%, with a core margin of 39.3% [4][26] - Excluding negative adjustments, underlying growth would have been 9% for net sales and 11% for core operating income, driven by priority brands and new launches [26][27] - Core EPS reached $2.25, reflecting a 10% increase, and free cash flow totaled $6.2 billion [27][28] - For the first nine months, net sales grew by 11%, core operating income increased by 18%, and core EPS was up 21% at $6.94 [27][28] Business Line Performance - Kisqali experienced a 68% growth in Q3, with U.S. growth at 91%, making it a leader in both metastatic and early breast cancer markets [5][6] - Pluvicto grew by 45% in constant currency, with U.S. sales up 53%, driven by new patient starts [10][11] - Leqvio sales increased by 54%, on track for over $1 billion in annual sales, with strong performance in both the U.S. and international markets [13][14] - Scemblix grew by 95% in constant currency, becoming the most prescribed TKI by NBRx in the U.S. [15] - Cosentyx had a mixed quarter, with a slight decline in growth due to one-time effects, but remains on track for mid-single-digit growth for the full year [16][17] Market Performance - Kisqali's early breast cancer indication is approved in 56 countries, with significant growth potential outside the U.S. [6][10] - Pluvicto is expected to reach peak sales potential with ongoing approvals in Japan and China [12] - Leqvio shows strong uptake in various international markets, particularly in China and the Middle East [14] - Scemblix is gaining traction in both first-line and second-line settings, with a strong launch momentum in Japan [15] Company Strategy and Industry Competition - The company is focused on driving growth through its priority brands while managing the impact of generic erosion from key products [4][5] - The proposed acquisition of Avidity Biosciences is expected to enhance long-term growth prospects and support mid-single-digit growth over the long term [33][34] - The company is committed to maintaining a strong pipeline and investing in R&D to support future growth [28][29] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in navigating generic headwinds and reaffirmed guidance for high single-digit growth in net sales and low teens growth in core operating income for the full year [29][30] - The company anticipates a challenging first half of 2026 due to the impact of generics but expects to emerge stronger in the second half [31][32] - Management highlighted the importance of addressing pricing and reimbursement challenges in the current regulatory environment [38][61] Other Important Information - The company achieved significant pipeline milestones, including FDA approvals and positive phase 3 results for several key products [4][20] - Management emphasized the importance of cash flow for reinvestment and shareholder returns, with a new $10 billion share buyback program announced [28][29] Q&A Session Summary Question: Industry response to Medicaid and tariffs - Management noted ongoing discussions with the administration and emphasized the need for solutions that address underlying industry issues [38] Question: CapEx over the next five years - Management clarified that the majority of the $23 billion commitment is for R&D OpEx, with no significant increase in CapEx expected [39][40] Question: Market reaction to ATR abstract - Management expressed confidence that detailed data presentation would improve market appreciation of the product [43][44] Question: Impact of Ocrevus subcutaneous launch on Cosentyx - Management indicated no significant impact from Ocrevus, with Cosentyx maintaining its market share [69][70] Question: Pluvicto launch curve and peak sales ambition - Management stated that Pluvicto is on a strong growth trajectory, with expectations of reaching $5 billion in peak sales [52][56]

Core Viewpoint - Novartis announced that its Fabhalta drug has demonstrated a significant ability to slow the progression of a rare type of kidney disease based on the final results of a late-stage trial [1] Group 1 - The late-stage trial results indicate a meaningful impact of Fabhalta on disease progression [1]

Core Viewpoint - President Trump's trade policies, particularly aggressive tariffs on imports, are impacting Wall Street and could increase costs for companies, affecting their margins and stock performance. However, certain healthcare companies like Eli Lilly and Novartis present investment opportunities despite these challenges [1][2]. Eli Lilly - Eli Lilly has committed to investing $50 billion in U.S.-based manufacturing since 2020, with half of this announced in the first quarter [4]. - The company aims to manufacture 100% of medicines for U.S. patients domestically, which will help mitigate the impact of tariffs [5]. - Eli Lilly has shown significant innovation in diabetes and obesity treatments, with new products like Mounjaro and Zepbound generating billions in revenue [5]. - In Q1, Eli Lilly's revenue rose 45% year over year to $12.7 billion, and net income increased by 23% to $2.8 billion [6]. - The company has a strong pipeline, including a promising oral GLP-1 candidate, orforglipron, which could attract patients seeking convenience [7]. - Eli Lilly has increased its dividend payout by 102.7% over the past five years, making it a solid choice for growth and income investors [8]. Novartis - Novartis plans to invest $23 billion over the next five years to enhance its U.S. manufacturing capabilities [9]. - Despite potential short-term impacts from tariffs, Novartis is expected to manage these challenges effectively [10]. - In Q1, Novartis reported a 12% increase in net sales to $13.2 billion and a 22% rise in net income to $4.5 billion [10]. - The company is facing a loss of U.S. patent exclusivity for its heart failure drug Entresto, which generated $2.3 billion in sales in Q1, a 20% increase year over year [11]. - Novartis has prepared for this loss with new medicines like Fabhalta and cancer drugs Scemblix and Pluvicto, which have shown promising sales [11][12]. - The company has increased its dividend for 28 consecutive years, currently offering a forward yield of 3.3%, which is significantly higher than the S&P 500 average [13].

Core Insights - Novartis will present data from 60 abstracts at the 2025 ASCO Annual Meeting and EHA 2025 Congress, showcasing advancements in oncology and hematology [1][2] - The company emphasizes its leadership in oncology with key products such as Kisqali, Pluvicto, Scemblix, and Fabhalta, and aims to improve patient outcomes through partnerships and innovative therapies [2][3] ASCO Highlights - Key abstracts include: - Kisqali's efficacy and safety in various settings, including a real-world analysis in Black patients with early breast cancer [4][5] - Pluvicto's clinical outcomes in metastatic castration-resistant prostate cancer [6] - Scemblix's results in chronic myeloid leukemia, demonstrating its efficacy compared to other treatments [6] EHA Highlights - Key abstracts include: - Fabhalta's efficacy in patients with paroxysmal nocturnal hemoglobinuria [7] - Scemblix's superior tolerability compared to nilotinib in chronic myeloid leukemia [8] - Pelabresib's long-term efficacy in myelofibrosis patients [8] Company Strategy - Novartis focuses on improving the lives of cancer patients through innovative medicines and partnerships with advocacy groups, emphasizing early detection and patient-centered care [9][10]

Group 1: Johnson & Johnson - Johnson & Johnson plans to increase its U.S. manufacturing investments to over $55 billion over the next four years, which is 25% more than the previous four years [2] - The company is facing challenges such as thousands of talc-related lawsuits and potential revenue loss due to the Inflation Reduction Act, which allows Medicare to negotiate drug prices [3] - Despite these challenges, Johnson & Johnson has a strong business model, significant adaptability, and has generated consistent revenue, making it a reliable investment option [4][5] - The company has maintained a AAA credit rating from Standard & Poor's and has increased its dividends for 63 consecutive years, establishing itself as a Dividend King [5][6] Group 2: Novartis - Novartis is investing $23 billion over five years to enhance its U.S. manufacturing capabilities, aiming to locally produce 100% of the medicines sold in the U.S. [7] - The company anticipates a compound annual growth rate (CAGR) of 5% in revenue through 2029, despite losing U.S. patent exclusivity for its heart failure medicine Entresto, which generated $7.8 billion in sales last year [8] - New products, such as Fabhalta, are expected to help fill the revenue gap from off-patent drugs, supporting Novartis's growth trajectory [9] - Novartis has increased its dividends for 28 consecutive years, making it appealing to income-focused investors [10]