Novartis AG reported first‑quarter 2026 results with net sales of $13.113 billion, a 1% year‑over‑year decline and a 5% drop on a constant‑currency basis. Core operating income fell 12% to $4.9 billion, and the core operating margin contracted to 37.3% from 42.1% in the same quarter a year earlier, reflecting the combined impact of generic competition and higher research and development spend.
Compared with Q1 2025, net sales were $13.233 billion and core earnings per share were $2.28. The Q1 2026 core EPS of $1.99 missed the consensus estimate of $2.11, a shortfall of $0.12, while revenue also fell short of the $13.56 billion estimate. The miss is largely attributable to the erosion of Entresto sales in the United States, where generic entry has accelerated, and to increased R&D outlays that have not yet been offset by new product launches.
Priority brands continued to drive growth. Kisqali sales rose 55% on a constant‑currency basis, far exceeding the 18% figure previously reported, while Kesimpta grew 26% cc. Other oncology and neuroscience products also posted gains, but the momentum was partially offset by the decline in Entresto, which accounted for a significant share of the legacy portfolio.
CEO Vas Narasimhan said the company had "delivered a strong start to 2026 across our priority brands and launches, while US generic erosion weighed on results in Q1 as expected." He added that the firm remains "on track to deliver our full‑year guidance and look forward to multiple readouts in the second half that could raise our mid‑ to long‑term growth outlook."
Novartis reaffirmed its full‑year 2026 guidance, maintaining expectations for low‑single‑digit sales growth and a modest core operating income decline. The guidance signals management’s confidence that the company can navigate the upcoming patent cliffs while continuing to invest in high‑margin innovative medicines.
Investors reacted negatively to the earnings miss, citing the stronger-than‑expected generic erosion in the United States and the shortfall in core earnings as key concerns.
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