Key Highlights

  • Novartis reported third quarter net sales of USD 14.5 billion, up 4% in constant currency.
  • Core operating income grew 10% in constant currency to USD 6.0 billion, with core margin expanding 2.0 percentage points to 41.6%.
  • Core earnings per share grew 8% in constant currency to USD 2.46 for the quarter.
  • The company raised full year 2026 core operating income guidance to in line to growing low single digit, an upgrade from a prior decline forecast.

Priority Brand Growth Offsets Generic Competition

Novartis AG (NYSE:NVS) reported third quarter net sales of USD 14.5 billion, up 4% in constant currency, driven by 14 percentage points of volume growth partly offset by generic competition on legacy products. Core operating income grew 10% in constant currency to USD 6.0 billion, with core operating margin expanding 2.0 percentage points to 41.6% of net sales, supported by gross margin improvements and productivity initiatives in SG&A.

Core earnings per share grew 8% in constant currency to USD 2.46, benefiting from gross margin gains and a lower weighted average share count. Kisqali revenue grew 37% in constant currency to USD 1.8 billion, fueled by market share gains in early breast cancer and continued leadership in the metastatic setting.

Reported Results Reflect a Pipeline Impairment

On a reported basis, operating income declined 61% to USD 1.8 billion, primarily due to higher research and development expenses that included a USD 1.9 billion partial impairment related to delgocitinib, following a Phase 3 readout in a dermatomyositis trial that did not meet its primary endpoint. Reported net income for the quarter was USD 1.2 billion, a decline of 71%, reflecting the lower operating income.

Free cash flow for the quarter was USD 5.1 billion, below the prior year period, primarily due to lower net cash flow from operating activities. The company said it continues to engage with health authorities on next steps for the delgocitinib program following the updated clinical data.

Raised Guidance and Pipeline Milestones

The company raised full year 2026 core operating income guidance to in line to growing low single digit, an upgrade from its previous guidance of a low single digit decline, while maintaining full year net sales guidance of low single digit growth. The company reported positive Phase 3 data for remibrutinib in relapsing multiple sclerosis, alongside an upgraded peak sales estimate of over USD 4 billion for Rhapsido across chronic spontaneous and chronic inducible urticaria combined.

During the quarter, the company completed its acquisition of Myricx Bio and exercised an option for Sironax's brain delivery platform, extending its oncology and neuroscience pipeline investments. Through the first nine months of 2026, the company repurchased USD 2.8 billion of shares under its up to USD 10 billion buyback program, with USD 4.9 billion still to be executed.

Pipeline and Guidance Metrics to Track

Progress on the remibrutinib regulatory filing, expected in the fourth quarter with a priority review voucher, continued Kisqali market share gains relative to the 37% growth reported this quarter, and full year core operating income relative to the upgraded guidance range are among the items the company has flagged for investors. The company's planned Meet Novartis Management event is the venue for further detail on its 2026 to 2031 growth outlook.