Published Tue, Jul 21, 2026 · 05:35 PM
[BASEL, SWITZERLAND] Novartis reported higher-than-expected profit last quarter as newer cancer medicines offset the ageing blockbuster Entresto’s loss of sales to generic rivals.
Earnings excluding some items were unchanged at US$5.94 billion in the second quarter, the company said Tuesday (Jul 21), topping the US$5.34 billion average estimate of analysts surveyed by Bloomberg. Sales were also better than anticipated, signalling a return to growth.
Chief executive officer Vas Narasimhan’s strategy to focus on innovative medicines faces a key test this year as former best-sellers like the heart drug Entresto lose sales to cheaper copies before enough new medicines are ready to power earnings.
Last quarter probably marked the worst of the patent cliff for Novartis, analysts said. The company reiterated its forecast for the year, with sales rising but core operating profit showing a low single-digit decline as well as the second half.
“We are surprised that the good second quarter does not trigger a guidance upgrade,” said Stefan Schneider, an analyst at Vontobel.
Among the medicines meant to boost growth is a new pill for chronic skin disease called Rhapsido, which garnered US$64 million in revenue last quarter after launching in the US and China, exceeding estimates.
Others are still going through clinical tests, with Novartis set to report key trial results for experimental treatments for heart disease and multiple sclerosis, including the first medicine Del-desiran, which targets the genetic cause of a muscle disease, from its US$12 billion acquisition of Avidity Biosciences.
The company said Tuesday it remains focused on those results, which could raise its mid- to long-term outlook.
Entresto, once Novartis’s top seller, plunged 50 per cent last quarter, more than analysts expected.
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To bolster growth, Narasimhan has announced more than US$15 billion of deals over the past year. Acquisitions include Avidity and its pipeline of RNA medicines, Tourmaline Bio, which is working on inflammation linked to heart disease, and Synnovation Therapeutics, whose experimental compounds target cancer-driving proteins. More recently, Novartis agreed to buy Myricx Bio, an unusually early-stage bet on cancer drugs that have only just entered clinical tests.
The company has pledged to build seven new facilities in the US, part of a broader US$23 billion push to expand its manufacturing footprint there and avoid industry tariffs. Much of the investment will focus on radioligand therapy, which uses targeted drugs to deliver radiation directly to tumours. Novartis is the only company with two approved medicines in the field, Pluvicto and Lutathera.
Novartis shares have climbed about 12 per cent so far this year, more than those of Swiss rival Roche Holding, which will also report earnings this week. BLOOMBERG
