Novartis: 13% drop in net profit in Q1 2026

Context

In brief

• Novartis net profit -13% in Q1 2026
• Entresto sales plummeted by 42%
• Revenue at 13.1 billion dollars

Key facts

• What: Novartis net profit decline
• When: First quarter 2026
• Where: Switzerland
• Who: Novartis
• Amount: 3.2 billion dollars (2.5 billion francs)

The pharmaceutical group Novartis recorded a 13% drop in net profit in the first quarter of 2026, amounting to approximately 3.2 billion dollars (2.5 billion francs). This decline was primarily attributed to the competition from generic drugs against Entresto, a medication for heart failure. Entresto sales plummeted by 42%, according to a statement released by the pharmaceutical giant.

The group's revenue decreased by 1% compared to the first quarter of 2025, reaching 13.1 billion dollars. At constant exchange rates, the turnover decreased by 5%. In the fourth quarter of 2025, revenues had still increased by 1% and by 8% in the third quarter. Analysts had predicted revenue of 13.4 billion dollars.

Analysis of the decline

The decline in operating profit was 9%, at 4.2 billion dollars. Despite this, CEO Vas Narasimhan expressed optimism about the medium-term prospects. "From the third quarter, we will be able to review our current forecasts in more detail, as that is when we expect the data relating to the main candidate drugs in our pipeline," he stated.

Regarding Entresto, the CEO and CFO Mulkul Mehta argued that "everything is proceeding as planned." "It has always been clear that this first quarter would be particularly marked," Mehta recalled. Narasimhan insisted on new treatments and the launch of new products, arguing that the group is "on the right track" to achieve its annual goals.

Future prospects

This year, Novartis still aims for "low single-digit sales growth." The Basel-based group must face a wave of patent expirations for fundamental therapies but relies on its new drugs, such as Kesimpta (for the treatment of multiple sclerosis) or Pluvicto (prostate cancer), to support its growth.

Yesterday, Novartis announced that it had obtained approval in the European Union for a drug against chronic spontaneous urticaria, marketed under the name Rhapsido. The medication had already been authorized at the end of September in the United States. To expand its portfolio of drugs in development, the group has also made numerous acquisitions. At the end of February, it concluded the acquisition of the Californian company Avidity Biosciences for approximately twelve billion dollars, which should allow it to strengthen its position in the field of genetic neuromuscular diseases.

Market impact

At 10:52, the Novartis share price marked a significant decline of 2.59%. The performance of the group's shares affected the entire index of leading values (SMI), which lost 0.57%. Market observers simultaneously highlighted the excellent performance of Novartis shares over the last two years.

European regulation

The setting of prices in the United States and Europe constituted another important topic of the teleconference. According to the CEO, the governments of the EU countries should seek "solutions in terms of reimbursement" that guarantee an "adequate valuation" of innovations. On the contrary, "the United States and China are creating a favorable context for innovation," he added. Narasimhan also expressed his disappointment with the austerity plans of the German government, on which a decision is expected today. "It is a negative signal."

Operational details

Analysis of the implications

The decline in Novartis' net profit has raised concerns among investors and pharmaceutical sector analysts. The competition from generic drugs, particularly for Entresto, has had a significant impact on the group's sales and profit. This decline could influence Novartis' future strategies, which will have to face a wave of patent expirations related to fundamental therapies.

Growth strategies

Novartis is betting on new drugs like Kesimpta and Pluvicto to support its growth. Kesimpta is a drug for the treatment of multiple sclerosis, while Pluvicto is used in the treatment of prostate cancer. These new products could offset the decline in Entresto sales and ensure long-term growth.

Impact on the stock market

The decline in Novartis' stock has had a significant impact on the SMI index, which lost 0.57%. This decline could influence investor confidence and lead to greater volatility in the pharmaceutical sector. However, market observers highlight the excellent performance of Novartis' shares over the last two years, which could mitigate the negative short-term impact.

Regulation and pricing

Price setting in the United States and Europe is a crucial issue for Novartis. CEO Vas Narasimhan has emphasized the need for solutions in the area of reimbursement that ensure adequate valuation of innovations. This is particularly important for new drugs like Kesimpta and Pluvicto, which could have a significant impact on the market.

Acquisitions and development

Novartis has recently acquired Avidity Biosciences, a California-based company specializing in genetic neuromuscular diseases. This acquisition could strengthen Novartis' position in the rare diseases sector and ensure long-term growth. In addition, the group has obtained approval in the European Union for Rhapsido, a drug against chronic spontaneous urticaria, which could help diversify the product portfolio.

Future prospects

Despite the first-quarter decline, Novartis remains optimistic about medium-term prospects. The group aims for low single-digit sales growth and new treatments to achieve its annual targets. However, it will have to face significant challenges, including competition from generic drugs and price regulation in Europe and the United States.

Conclusion

The decline in Novartis' net profit in the first quarter of 2026 is a worrying sign, but the group seems well positioned to face future challenges. With new drugs in development and strategic acquisitions, Novartis could continue to grow and maintain its leadership position in the pharmaceutical sector.

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Key points

Concrete actions for investors

Investors who own Novartis shares should closely monitor the group's next moves. Here are some concrete actions they can take:

Monitor quarterly results

Novartis will publish its second-quarter results in July 2026. Investors should pay attention to progress in new treatments and the impact of generic drug competition.

Evaluate acquisitions

Novartis recently acquired Avidity Biosciences. Investors should assess the impact of this acquisition on the group's long-term growth and market prospects.

Analyze regulation

Pricing in Europe and the United States is a crucial topic for Novartis. Investors should monitor government decisions regarding reimbursement and the valuation of innovations.

Use analysis tools

Investors can use financial analysis tools to evaluate Novartis' performance and compare it with other pharmaceutical groups. This can help make informed decisions and better manage their portfolio.

Participate in conference calls

Novartis organizes conference calls to discuss quarterly results and future strategies. Investors can participate in these calls to get direct information from management and ask questions.

Conclusion

The decline in Novartis' net profit in the first quarter of 2026 is a concerning signal, but the group seems well positioned to face future challenges. Investors should closely monitor quarterly results, evaluate acquisitions, analyze regulation, and use analysis tools to make informed decisions. With a well-defined strategy, investors can better manage their portfolio and achieve the best possible results.

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Source: tvsvizzera.it