Novartis Q2 2026 Results Beat Estimates

Novartis AG (NVS) reported Q2 2026 results on July 21, 2026, showing a return to sales growth as priority oncology and immunology drugs offset generic pressure from Entresto. Management reaffirmed full-year 2026 guidance despite weaker free cash flow.

Quarter Results and Margins

For the three months ended June 30, 2026, Novartis reported net sales of USD 14.4 billion, up 1% in constant currency and 3% in U.S. dollars compared with the prior year. Core operating income was USD 5.94 billion, essentially flat year-on-year, with a core operating margin of 41.2%, down 70 basis points in constant currency. Reported operating income declined 3% in constant currency to USD 4.8 billion, while net income fell 19% to USD 3.3 billion, pressured by higher taxes and interest expenses. Core earnings per share were USD 2.41, down 1% in constant currency but above analyst estimates. Free cash flow weakened 12% to USD 5.6 billion. For the first half of 2026, net sales totaled USD 27.5 billion, down 2% in constant currency and up 1% in U.S. dollars, while core operating income declined 7% in constant currency.

Priority Brands and Drivers

Growth was driven by priority oncology and immunology launches. Kisqali sales rose 43% in constant currency, Kesimpta 32%, Scemblix 89%, Pluvicto 43%, and Leqvio 59%. Volume contributed 18 percentage points to sales growth, offset by a 14-point decline from generic competition and a 3-point pricing headwind, with currency adding 2 points. CEO Vas Narasimhan said, “Novartis delivered a solid second quarter, returning to sales growth driven by continued momentum from Kisqali, Kesimpta, Scemblix and Pluvicto.”

Entresto Decline and Outlook

Entresto sales fell roughly 50% year-on-year to about USD 1.18 billion in Q2, reflecting U.S. generic competition and gross-to-net adjustments. The drug accounted for 14% of Novartis’ total net sales in 2025. Its U.S. patent expired in 2025, and European exclusivity is expected to lapse from November 2026, with a less steep decline anticipated in Europe during the second half. Management projects Entresto could reduce 2026 revenues by approximately USD 4 billion.

Novartis reaffirmed full-year 2026 guidance, expecting low single-digit net sales growth and a low single-digit decline in core operating income on a constant-currency basis. The company cited pipeline and launch momentum as a hedge against patent erosion, highlighting updated Kisqali overall survival data supporting potential earlier-stage breast cancer use, an FDA accelerated-approval submission for del-zota in Duchenne muscular dystrophy, and encouraging early results for recent launches such as Rhapsido and Itvisma. A U.S. inventory benefit for Cosentyx and tight cost control also supported the quarter. Established-brand phasing is expected to reverse in Q3, with analysts anticipating higher R&D and launch spending in the second half. The weaker free cash flow remains a concern as the company budgets for upcoming trial readouts and product rollouts.