Novartis Q1 Earnings Call Highlights

Key Points

• Novartis said its growth drivers were up 34%, led by Kisqali, Pluvicto, Leqvio and Scemblix, but Q1 sales fell 5% and core operating income dropped 14% as U.S. generic erosion and higher R&D drove a 4.1 percentage‑point core margin decline.
• Management reaffirmed 2026 guidance — expecting low single‑digit sales growth and a low single‑digit decline in core operating income — calling it a “year of two halves” with H1 pressured by generics and a stronger H2; the company paid $9.1 billion in dividends and is executing an up to $10 billion buyback with about $6.1 billion remaining.
• Pipeline and launches: Rhapsido (remibrutinib) is off to a strong U.S. CSU launch with positive CIndU results, ianalumab received breakthrough designation in Sjögren’s while a warm autoimmune hemolytic anemia study failed, and pelacarsen’s HORIZON cardiovascular readout remains on track for H2.

Novartis NYSE: NVS executives said the company delivered “a strong start to the year” in the first quarter of 2026, led by fast growth across its priority brands and launches, while results reflected expected pressure from U.S. generic erosion and higher R&D spending.

Quarter performance shaped by launches and generic erosion

CEO Vas Narasimhan said Novartis’ “growth drivers were up 34% in constant currency,” citing particularly strong performance from Kisqali, Pluvicto, Kesimpta, Leqvio, and Scemblix. He added that the base business was “largely stable,” but the company saw “significant GX erosions as we’ve guided to.”

Chief Financial Officer Mukul Mehta said first-quarter results were “strong despite significant U.S. generic entries,” but still reflected the anticipated impact from those entries. In Q1, sales declined 5% and core operating income declined 14% (both in constant currency). Mehta also noted a year-over-year gross-to-net dynamic in the base period: “We did have a positive gross net in our base from Q1 last year that also had a negative impact on the overall quarterly growth rate.”

Core margin declined 4.1 percentage points in Q1. Mehta attributed this mainly to “higher R&D investments” and the gross-margin impact of generics. In a later exchange, he broke down the margin decline: “3 percentage points of that comes from R&D spend, and 1 percentage point comes from the GX impact on gross margin.”

Key product highlights: Kisqali, Pluvicto, Leqvio, and Rhapsido

Narasimhan highlighted broad-based momentum across several brands:

• Kisqali: Up 55% in Q1, with Narasimhan pointing to momentum in early and metastatic breast cancer. He said U.S. “NBRX share now in the Early Breast Cancer setting is very strong, 65%,” and in metastatic breast cancer “47% NBRX and 41% TRX.” Ex-U.S., he called out Germany, where early breast cancer share was “approaching 80%.”
• Pluvicto: Novartis posted 76% growth in U.S. sales, with “over 70% of that business now coming from the pre-taxane setting.” Narasimhan said more than 60% of new-to-brand prescriptions are coming from the community, which he said supports the company’s goal of making radioligand therapy broadly accessible. Outside the U.S., he reported 48% growth and said NBRXs were up 92%, driven by uptake in Europe as well as a “solid start in Japan” and initial launch stages in China.
• Leqvio: U.S. sales rose 31%, and Narasimhan said the “next inflection point” in the U.S. could come with outcomes data in the first part of next year in secondary prevention. Ex-U.S. sales grew 106%, led by China after an NRDL listing. Narasimhan cautioned it is “early days” and the company will watch whether demand reflects a “bolus versus a steady demand.”
• Rhapsido (remibrutinib) in CSU: Narasimhan described the U.S. chronic spontaneous urticaria launch as “off to a strong start,” citing 3,000 prescribers and 6,000 patient starts. He estimated NBRX share at 24% and said access will build over the course of the year, calling the conversion from free drug to paid scripts “a steady uptake… not a fast inflection.”

Pipeline and regulatory updates

Narasimhan said Novartis is maintaining its full-year guidance while advancing multiple pipeline programs. He highlighted Rhapsido’s positive chronic inducible urticaria readout, calling it the “first time a medicine has delivered” significantly higher complete responses versus placebo across all three CIndU types, with a favorable safety profile.

He also discussed remibrutinib’s phase II food allergy results and said Novartis is on track to initiate phase III in the second half of the year. The 100 mg dose produced “86.7% responders,” and the company’s modeling supported moving forward with a 75 mg twice-daily dose to achieve “full target engagement,” in part to align with expectations for adolescent studies.

On ianalumab, Narasimhan said it received a breakthrough therapy designation and priority review in Sjögren’s disease. However, he also noted the warm autoimmune hemolytic anemia readout “did not meet statistical significance,” and the company will not take that forward, adding it does not expect it to be a “read-through” to ITP.

Narasimhan also provided an update on pelacarsen’s HORIZON study, saying there was “no change” to the expected timing, with a readout anticipated “in the early part of the second half of the year.” He said Novartis modeled the trial as “fully powered for a 20% relative risk reduction” in one patient group and “25%” in a higher Lp(a) subgroup, while noting the importance of testing rates and that the market would likely be “slow-building.”

China outlook, Europe pricing pressure, and portfolio decisions

Addressing China, Narasimhan said the company has seen “a stabilization in the early part of this year” and believes its China business can grow in a “high single-digit to low double-digit growth range,” though he said it likely will not return to the “really high growth rates” of several years ago. He also cited increasing competition across segments, including in China for Cosentyx, where Novartis faces “multiple local NRDL entrants.”

On Europe pricing and access, Narasimhan said Novartis is engaging with governments in Europe and Japan but is “not seeing the progress that we had hoped to see at the pace that we had hoped to see.” He warned that without urgency, the share of medicines available in the U.S. but not Europe “could… grow,” pointing to delays in EU launches. He framed this as “a 2027 story” as policy dynamics begin to affect launches.

In breast cancer, Narasimhan was asked about whether oral SERDs could reduce CDK4/6 use. He said Novartis does not view the market that way and expects physicians to continue combining endocrine therapy with CDK4/6 inhibition for higher-risk early breast cancer patients. He also said Novartis does not see an impact on Kisqali’s outlook and highlighted ongoing lifecycle efforts and combination studies.

Capital allocation, acquisitions, and guidance reaffirmed

Mehta said free cash flow in Q1 was “broadly in line” with the prior year, supported by favorable working capital movements. He reiterated Novartis’ “balanced, shareholder-friendly” approach to capital allocation while increasing R&D investment. The company closed the Avidity acquisition in the quarter and announced early-stage deals supporting oncology and immunology.

Mehta said Novartis paid $9.1 billion in dividends in March and April and continued executing an up to $10 billion share repurchase program, with about $6.1 billion remaining and completion targeted by the end of 2027.

Management reaffirmed 2026 guidance, with Mehta stating the company still expects low single-digit sales growth and a low single-digit decline in core operating income. He reiterated the company expects “a year of two halves,” with first-half results pressured by a tough comparison base after U.S. generics for Entresto, Promacta, and Tecfidera, and a stronger second half as that impact eases.

Narasimhan said Novartis has “fully factored” the impact of most-favored-nation (MFN) dynamics into guidance and that the company has become “even better now at modeling the MFN impact.” He added that, given that confidence, Novartis no longer felt it needed to highlight MFN on slides.

About Novartis NYSE: NVS

Novartis is a Swiss multinational pharmaceutical company headquartered in Basel that researches, develops, manufactures and commercializes prescription medicines and related health-care products. Formed through the 1996 merger of Ciba-Geigy and Sandoz, Novartis operates globally and focuses on bringing therapeutics from discovery through clinical development to commercial markets worldwide.

The company's activities center on innovative pharmaceuticals across several therapeutic areas, including oncology, immunology, cardiovascular and metabolic diseases, neuroscience and ophthalmology, alongside capabilities in advanced therapies such as biologics, cell and gene therapies.

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