Novartis AG (NVS) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary and Q&A reveal strong financial performance, growth in key products, and strategic market expansion. Despite some uncertainties, management's optimistic guidance and robust pipeline, including new drug approvals and market opportunities, indicate positive sentiment. The announced growth in free cash flow and strategic focus on oncology and global launches further bolster confidence. Adjustments in the HORIZON trial timeline and management's evasive responses slightly temper the outlook, but overall, the sentiment remains positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Key Financial Performance
Full Year Sales Growth Sales were up 8% year-over-year. This growth was attributed to strong operational performance and the success of key growth brands.
Core Operating Income (Core OpInc) Core OpInc increased by 14% year-over-year, reaching $21.9 billion. This was driven by operational efficiencies and strong sales performance.
Core Margin Achieved a 40.1% core margin, which was 2 years ahead of the planned target. This reflects disciplined cost management and operational improvements.
Kisqali Sales Kisqali sales grew 57% year-over-year to $4.8 billion. Growth was driven by strong volume growth across geographies and increased market share in early breast cancer settings.
Kesimpta Sales Kesimpta sales increased by 36% year-over-year to $4.4 billion. Growth was driven by increased adoption in naive patients and expansion in major markets outside the U.S.
Pluvicto Sales Pluvicto sales grew 42% year-over-year, reaching $2 billion. Growth was driven by strong uptake in the U.S. pre-taxane setting and approvals in Japan and China.
Leqvio Sales Leqvio sales grew 57% year-over-year, achieving blockbuster status. Growth was driven by strong uptake in the U.S. and rapid adoption in China following NRDL listing.
Scemblix Sales Scemblix sales grew 87% year-over-year, achieving blockbuster status. Growth was driven by increased market share in the U.S. and Japan, particularly in the frontline setting.
Cosentyx Sales Cosentyx sales grew 8% year-over-year to $6.7 billion. Growth was driven by higher demand in hidradenitis and IV indications, as well as strong performance in the naive market.
Free Cash Flow Free cash flow reached $17.6 billion, an 8% increase year-over-year. This was attributed to strong core operating income growth and disciplined financial management.
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Operating Highlights
Remibrutinib: Submission achieved in the most common type of CIndU based on positive Phase III results and FDA interactions. Remaining readouts for 2 other subtypes of chronic inducible urticaria expected in the first half of the year.
Pelabresib: Path forward established for both EU and U.S. based on 96-week Phase III MANIFEST data showing deep and durable responses in myelofibrosis.
Kisqali: Achieved 57% growth on the year to $4.8 billion, with strong volume growth across geographies. U.S. eBC NBRx above 60%, and Germany NBRx share over 80% in early breast cancer setting.
Kesimpta: Grew 36% to $4.4 billion, with increasing adoption in naive patients (50% of NBRx in first line). Leading NBRx share in 9 out of 10 major markets outside the U.S.
Pluvicto: Achieved $2 billion in sales globally, driven by strong U.S. uptake and approvals in Japan and China. Hormone-sensitive setting launch expected to add 75% additional patients.
Leqvio: Reached blockbuster status with 57% growth on the year. Strong uptake in China following NRDL listing.
Scemblix: Achieved blockbuster status with 87% growth in Q4. U.S. NBRx share at 41% across all lines of therapy, with strong uptake in Japan (45% frontline market share).
Cosentyx: Grew 8% to $6.7 billion, driven by higher demand in hidradenitis and IV. Leading IL-17 prescribed across indications.
Rhapsido: U.S. launch delivering strong demand with over 2,000 HCP starts. Positioned as the only FDA-approved oral therapy for patients symptomatic despite antihistamine therapy.
Itvisma: U.S. approval achieved for SMA treatment in children 2 years and older. Broad label across patient types with submissions completed in Europe and Japan.
China Market Expansion: Strong uptake for Leqvio following NRDL listing. Approvals for Pluvicto in Japan and China expected to drive growth.
Global Health Impact: Positive data for KLU156 (ganaplacide plus lumefantrine) for malaria treatment, marking the first novel malaria medicine in 25 years.
Core Margin Achievement: Achieved 40% core margin goal two years ahead of plan, demonstrating strong operational performance.
Free Cash Flow: Record free cash flow of $17.6 billion in 2025, reflecting the strength of a focused pharma business.
Pipeline Execution: Met the majority of 2025 milestones and trial starts, with 7 pivotal readouts expected in 2026.
Avidity Deal: Anticipated closure in the first half of 2026, expected to impact core margin by 1-2 percentage points.
Focus on Priority Brands: Dynamic growth expected from key brands like Kisqali, Kesimpta, and Pluvicto to drive mid- to long-term growth.
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Risk or Challenges
Entresto LOE (Loss of Exclusivity): Sales decline in Q4 due to the loss of exclusivity for Entresto, impacting revenue.
Gross to Net Adjustments: Negative impact on Q4 sales due to adjustments, particularly in the U.S., affecting financial performance.
Largest Patent Expiry in Novartis' History: Expected to occur in 2026, posing a significant challenge to revenue growth.
Regulatory and Competitive Challenges for Kisqali: Missed consensus expectations due to one-time RD adjustments; upcoming launches in Italy and Spain in 2026 may face hurdles.
Access and Reimbursement for Rhapsido: Access challenges in the U.S. market could delay sales growth, with a more significant pickup expected in the second half of 2026.
Manufacturing Capacity for Pluvicto: Need for new manufacturing sites to meet demand, which could delay scaling and impact sales.
Avidity Deal Funding Costs: Anticipated funding costs for the Avidity deal, primarily debt-funded, will increase financial expenses in 2026.
Generic Entries for Key Drugs: U.S. generic entries for Entresto, Promacta, and Tasigna in mid-2025 have impacted sales and will continue to affect financial performance in 2026.
Economic and Currency Risks: Potential currency fluctuations could impact financial results, with a 2-3% positive impact on sales and 1% on core operating income if rates remain stable.
Pipeline and R&D Investments: High R&D investments and the need for successful pivotal readouts to sustain long-term growth.
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Guidance & Outlook
2026 Sales Growth: Novartis expects sales to grow at a low single-digit rate in 2026, despite facing the largest generic impact in the company's history.
Core Operating Income for 2026: Core operating income is expected to decline by low single digits in 2026, reflecting a 1-2 percentage point core margin dilution related to the Avidity deal.
Second Half 2026 Performance: Sales are expected to grow mid-single digits and core operating income mid- to high-single digits in the second half of 2026.
Long-Term Sales Growth (2025-2030): Novartis remains confident in achieving a 5-6% compound annual growth rate (CAGR) in sales from 2025 to 2030.
Core Margin Outlook: The company expects to return to a 40%+ core margin by 2029.
Pipeline and Product Launches: Key pipeline readouts and product launches in 2026 include pelacarsen for cardiovascular risk reduction, Ianalumab in Sjogren's disease, and remibrutinib in multiple indications. The company also plans to file for regulatory approvals in various regions for these products.
Pluvicto Expansion: Pluvicto is expected to launch in the hormone-sensitive setting in 2026, adding 75% more patients to its addressable market.
Leqvio Growth in China: Leqvio is expected to see rapid uptake in China following its NRDL listing in early 2026.
Scemblix Expansion: Scemblix is expected to launch in additional EU markets in the frontline setting by 2027, with strong growth anticipated in Japan and other regions.
R&D Investments: Novartis plans to continue significant investments in R&D to support its pipeline and future growth.
Avidity Deal Impact: The Avidity deal, expected to close in the first half of 2026, will primarily be debt-funded and is anticipated to impact financials in the short term but support long-term growth.
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Shareholder Return Plan
Dividend Increase: Proposed a dividend of CHF 3.70 per share, a 6% increase in Swiss francs and double-digit increase in dollars. This marks the 29th consecutive dividend increase in Swiss francs since 1996.
Share Buyback Program: Completed a $15 billion share buyback program in early July 2025 and launched a new up to $10 billion program targeted for completion by the end of 2027. Approximately $7.7 billion remains to be executed.
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Key Q&A
Q:Can you provide insights on FDA conversations regarding liver monitoring for remibrutinib in MS and its efficacy targets?
A:The CEO explained that remibrutinib has an approved label without liver safety discussions, indicating no off-target toxicities. FDA requested limited liver monitoring due to competitor findings, but the company plans to advocate for the current label if no liver signals are observed. Regarding efficacy, the company is confident in remibrutinib's design and target saturation, expecting strong efficacy based on competitor findings.
Q:What are your updated thoughts on the commercial opportunities for remibrutinib in MS and the risks for pelacarsen's event-based study?
A:The CEO stated that remibrutinib's commercial opportunity depends on data, with oral drugs potentially appealing to patients avoiding injectables. The MS market has significant potential, especially with brain-penetrant properties. For pelacarsen, the study is adequately powered despite lower event rates, attributed to optimal patient management. The company remains optimistic about creating a new class of medicines.
Q:What are the options to extend the Kisqali franchise in breast cancer, and is oncology a focus for business development?
A:The CEO mentioned ongoing CDK2/4 programs and radioligand therapies like HER2 RLTs to extend Kisqali's franchise. Oncology remains a focus for business development, with efforts to build on existing assets like Scemblix, Pluvicto, and Kisqali.
Q:How are you approaching ex-U.S. launch plans for Rhapsido and ianalumab given the MFN world?
A:The CEO explained that Rhapsido's global launch is manageable despite tighter pricing corridors. For ianalumab, launching in G7 countries by 2027 is complex due to MFN pricing impacts, but strategies are being developed to balance global launches without affecting the U.S. market.
Q:What is causing the delay in the HORIZON trial readout for pelacarsen?
A:The CEO stated that the delay could be due to lower-than-expected event rates, possibly from optimal patient management. The company is confident in its baseline risk estimates and awaits data to determine the treatment effect.
Q:What is the expected ramp for Itvisma in the U.S. and ex-U.S. markets?
A:The CEO expects a fast ramp for Itvisma as it penetrates the prevalent patient pool within 2-3 years, followed by a steady state. Strong access and warehouse patients are expected to support the launch.
Q:What are the gross-to-net impacts on Kisqali and the risks posed by oral SERDs?
A:The CFO clarified that higher gross-to-net impacts in Q4 were one-time effects, with expectations to normalize as the early breast cancer launch accelerates. The CEO noted that oral SERDs might become standard endocrine therapy but expects CDK4/6 inhibitors like Kisqali to remain dominant in combination therapies.
Q:What is the overall food allergy opportunity within the portfolio, particularly for remibrutinib?
A:The CEO highlighted remibrutinib's potential in food allergy, with Phase II data showing promise. The company sees a multibillion-dollar opportunity, especially with a safe oral option for children, and is exploring further pipeline opportunities in this area.
Q:What are the expectations for pelacarsen's efficacy and commercial prospects?
A:The CEO stated that the study is powered for a 20-25% CVRR reduction but could succeed with a lower reduction. The commercial prospects depend on the data, with potential for a strong market presence if the study is positive.
Q:What is the expected ramp for Scemblix in the U.S. frontline setting?
A:The CEO noted steady share growth in the frontline setting, with ambitions to reach 40-50% share. Efforts are focused on overcoming access perception issues and addressing Gleevec loyalists.
Q:Why was the Zigakibart data timeline adjusted, and what is the strategy?
A:The CEO explained that the timeline was adjusted to include eGFR data at launch, providing a compelling data package to differentiate from competitors. The strategy aims to leverage a strong nephrology portfolio with multiple medicines showing eGFR benefits.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific reasons for the delay in the HORIZON trial readout for pelacarsen, citing only general possibilities like lower event rates or treatment effects without providing concrete data or insights.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Alcon
Avidity deal
Del
EU
Entresto
Japan China
RD adjustment
RMS
Sandoz
Scemblix
TSS
brand history
chart
closure Avidity
core margin
day course
dermatology launch
digit core
eGFR
flow generation
frontline
health
increase franc
malaria
margin year
market focus
outlook brand
path
patient Slide
pelabresib
pickup
point margin
provider setting
remark
ruxolitinib
sale digit
sale potential
side
spleen volume
type
volume reduction
zigakibart
NVS Transcript
Novartis AG (NVS) Q4 2025 Earnings Call Transcript
Positive2-4
The earnings call summary and Q&A reveal strong financial performance, growth in key products, and strategic market expansion. Despite some uncertainties, management's optimistic guidance and robust pipeline, including new drug approvals and market opportunities, indicate positive sentiment. The announced growth in free cash flow and strategic focus on oncology and global launches further bolster confidence. Adjustments in the HORIZON trial timeline and management's evasive responses slightly temper the outlook, but overall, the sentiment remains positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Novartis AG (NVS) Presents at 44th Annual J.P. Morgan Healthcare Conference Transcript
Neutral1-12
Novartis AG (NVS) Q3 2025 Earnings Call Transcript
Positive10-28
The earnings call summary indicates a positive outlook with strong sales growth, strategic product expansions, and a significant share buyback program. Despite some margin pressure from generic competition, Novartis plans to offset it with productivity improvements. The Q&A reveals confidence in product launches and market strategies, with no major negative sentiments from analysts. The upgraded guidance and share buyback plan further support a positive sentiment, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
Novartis AG (NVS) Q2 2025 Earnings Call Transcript
Positive7-21
The earnings call summary shows strong financial performance, innovative product development, and strategic market positioning, with positive guidance on sales and income growth. The Q&A section supports optimism with management's confidence in product growth and strategic initiatives. Shareholder returns are strong with ongoing buybacks. Despite some uncertainties in pricing policies, the overall sentiment is positive, suggesting a likely stock price increase.
NVS Report
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