Swiss pharmaceutical giant Novartis reported second-quarter core operating income of $5.94 billion on Tuesday, surpassing analyst expectations of approximately $5.31 billion, according to Visible Alpha. The beat was driven by lower-than-anticipated costs, which helped offset a steep 50% decline in sales of its top-selling heart failure drug Entresto.
Entresto, which accounted for 14% of Novartis' total net sales last year, generated $1.18 billion in the quarter, slightly below the $1.23 billion consensus estimate. The drop was steeper than the 42% decline seen in the first quarter, reflecting intensifying generic competition in the U.S., its largest market. The drug is also set to lose patent exclusivity in Europe starting in November.
Novartis expects the Entresto sales decline to moderate in the second half of the year, but the company has previously guided for a $4 billion revenue hit from generics in 2025. The patent cliff remains a central challenge as the company navigates a transition period.
Despite the headwinds, growth from newer medicines helped support the broader business. Kisqali, Scemblix, and Cosentyx all delivered strong performances, partially cushioning the impact of Entresto's decline. The company reaffirmed its full-year guidance and mid-term outlook, excluding currency effects.
CEO Vas Narasimhan stated, “We are on track for multiple important readouts ahead in the second half, and remain on track to deliver our full-year guidance and mid-term outlook.”
Investor attention is increasingly shifting to Novartis' pipeline, particularly late-stage data for three experimental drugs: pelacarsen, remibrutinib, and del-desiran. These programs are expected to be critical for sustaining growth beyond 2030 as patent expiries continue to pressure established products.
The company's performance comes amid a broader earnings season where several firms have faced similar patent-related challenges. For context, Domino's Q2 Revenue Tops Estimates as Supply Chain Growth Offsets Restaurant Weakness and Intuitive Surgical Tumbles 12% on 2026 Procedure Growth Forecast Despite Q2 Beat highlight how diverse sectors are managing growth and headwinds.
Novartis' ability to balance near-term generic pressures with pipeline innovation will be key for investors. The upcoming trial readouts could provide clearer signals on whether the company can maintain momentum as its product cycle evolves.
This article is for informational purposes only and does not constitute financial advice.
