Novartis Warns of 2026 Profit Decline as Key Drug Patents Expire
Novartis Forecasts First Annual Drop in Operating Profit in a Decade
Novartis, a leading Swiss pharmaceutical company, has forecasted its first annual drop in operating profit in a decade. Despite this, the company remains optimistic about its long-term prospects, particularly in offsetting the impact of patent expirations on its established products such as the heart drug Entresto.
The company announced that its 2026 operating profit, adjusted for one-off factors, would decrease by a low single-digit percentage, excluding currency fluctuations. This marks the first decline since 2016, which was influenced by the spin-off or sale of certain businesses.
To counter the challenges posed by patent expirations, Novartis is focusing on its cancer drugs, Kisqali and Scemblix, as well as the $30 billion spent on deals in the previous year. These moves aim to mitigate the loss of market exclusivity on blockbuster drugs like Entresto for heart failure and Xolair for allergy treatment.
In its 2026 guidance, Novartis projected low single-digit gains in group sales, though specific numbers were not provided. This contrasts with an analyst consensus from Visual Alpha, which predicted a revenue increase of approximately 6.6% to $58.2 billion for the current year.
Analysts at Jefferies noted that the lower end of Novartis’ implied 2026 profit guidance range of $21.3-$22 billion, assuming a 1% foreign-exchange tailwind, could lead analysts to revise their estimates downward. Current estimates stand at an average of $21.8 billion.
Novartis shares experienced a decline of 1.8% at 0957, reaching a two-day low.
Company Optimistic of Hitting Mid-Term Goals
Despite the forecasted decline, CEO Vas Narasimhan expressed confidence in meeting mid-term targets. He emphasized the company’s long-term growth potential and projected sales growth for the current year, even amidst competition from generic drugmakers.
“In 2026, we expect to grow through the largest patent expiry in Novartis history, underscoring the strength of our business, and remain well on track to deliver our mid-term guidance,” he stated.
Narasimhan, who has been at the helm for eight years, received a compensation package of 24.9 million Swiss francs ($32.08 million) for 2025, representing a 30% increase. This was driven by a three-year share price performance of 64%, according to the annual report.
Mukul Mehta, set to become CFO in March, highlighted that adjusted operating income “really starts to grow in the second half of the year, which bodes very well for 2026 second half and 2027 and beyond.”
Strong Fourth-Quarter Performance
Novartis reported a 1% increase in fourth-quarter operating profit to $4.92 billion, aligning with market expectations. This growth was attributed to higher sales of breast cancer drug Kisqali, multiple sclerosis drug Kesimpta, and psoriasis drug Cosentyx, among others.
($1 = 0.7761 Swiss francs)
(Reporting by Ludwig Burger and Patricia Weiss in Frankfurt, Bhanvi Satija in London; Editing by Emelia Sithole-Matarise, Linda Pasquini and Bernadette Baum)
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