Novartis has raised its full-year 2026 core operating income outlook after delivering stronger sales and margin growth in the third quarter, as rising demand for key medicines and new product launches helped offset mounting pressure from generic competition.

 

The Swiss pharmaceutical major reported third-quarter net sales of $14.52 billion, up 4% in both reported US dollar terms and constant currencies. Core operating income climbed 11% in US dollar terms and 10% at constant currencies to $6.04 billion, while the core operating margin expanded to 41.6%, an increase of 2.3 percentage points.

 

However, reported operating income plunged 59% to $1.84 billion, while net income fell 70% to $1.20 billion. The decline was driven primarily by a $1.9 billion partial impairment of the del-desiran in-process research and development asset, alongside higher research and development expenditure and other expenses.

 

Novartis raised its full-year core operating income guidance to growth ranging from flat to low single-digit, from its previous expectation of a low single-digit decline. The company maintained its sales outlook for low single-digit growth in constant currencies.

 

Commenting on the results, Vas Narasimhan, CEO of Novartis, said: “Novartis delivered solid sales growth in Q3, as priority brands and launches more than offset generic erosion, demonstrating the replacement power of the business. Combined with productivity efforts, this drove strong bottom-line performance and allowed us to upgrade our full-year guidance. 

 

"At the same time, we continued to advance our pipeline, with positive Phase III results for remibrutinib in RMS, label expansions for Rhapsido and Pluvicto in the US, and the first submission for pelabresib in the EU. While the del-desiran readout in DM1 was not what we had hoped, we saw evidence of clinical activity in the data and are working through the development path for this medicine. Importantly, our programs in FSHD and DMD continue to progress well. With continued momentum across the business and pipeline, we remain well on track to deliver our mid- and long-term outlook.”

 

Novartis' growth engine remained its priority medicines, with strong performances from oncology, immunology, neuroscience and cardiovascular products helping counter generic erosion.

 

Breast cancer medicine Kisqali led the growth contribution among the company's highlighted priority brands, with third-quarter sales rising 37% at constant currencies to $1.82 billion. Sales of multiple sclerosis treatment Kesimpta increased 22% to $1.48 billion, while blood cancer drug Scemblix surged 67% to $593 million.

 

Cholesterol-lowering medicine Leqvio recorded 63% growth to $506 million, supported by broader uptake across markets, including China following its inclusion in the National Reimbursement Drug List. Cosentyx, used across several inflammatory conditions, grew 9% to $1.86 billion, driven in part by demand for its hidradenitis suppurativa and spondyloarthritis indications.

 

Radioligand therapy Pluvicto delivered 20% growth to $674 million, reflecting sustained demand in metastatic castration-resistant prostate cancer and expanded access. Its newly secured US and Chinese approvals in metastatic hormone-sensitive prostate cancer are expected to broaden its potential market.

 

Zolgensma Group sales increased 35% to $404 million, reflecting launch momentum from Itvisma, while Fabhalta grew 60% to $237 million on expansion in paroxysmal nocturnal haemoglobinuria and renal indications.

 

The top 20 brands generated $12.05 billion in the quarter, an increase of 7% at constant currencies. However, the performance was uneven. Entresto sales fell 38% to $1.17 billion amid generic competition, while Promacta/Revolade declined 61% to $142 million and Tasigna dropped 37% to $141 million.

 

Overall, volume contributed 14 percentage points to quarterly sales growth, offset in part by a nine-percentage-point drag from generic competition and a one-percentage-point negative impact from pricing.

 

The contrast between Novartis' core and reported earnings highlights the impact of the del-desiran impairment on its third-quarter financial performance.

 

Core net income rose 8% in US dollar terms to $4.66 billion, while core earnings per share increased 9% to $2.46. The improvement was driven mainly by higher core operating income and a lower weighted average number of shares outstanding, partly offset by increased interest expense.

 

In contrast, reported earnings per share fell 69% to $0.63. Free cash flow declined 18% to $5.11 billion, reflecting lower net cash flows from operating activities.

 

The nine-month performance was considerably weaker than the third-quarter momentum suggests. Net sales for the first nine months of 2026 rose 2% in US dollar terms to $42.04 billion but remained flat at constant currencies. Core operating income slipped 1% to $16.87 billion, or 2% at constant currencies.

 

Reported operating income fell 23% to $10.83 billion, while net income dropped 34% to $7.61 billion. Core earnings per share declined 1% to $6.85 in US dollar terms.

 

Free cash flow for the nine-month period fell 12% to $14.0 billion.

 

Novartis reported several regulatory and clinical milestones during the quarter, strengthening its prospects across oncology, immunology and neuroscience.

 

The US Food and Drug Administration approved Rhapsido, also known as remibrutinib, for adults with symptomatic dermographism inadequately controlled by H1 antihistamines. The approval expands the medicine's use beyond chronic spontaneous urticaria into chronic inducible urticaria.

 

Pluvicto received US and Chinese approvals in combination with an androgen receptor pathway inhibitor for patients with PSMA-positive metastatic hormone-sensitive prostate cancer, extending its reach across stages of metastatic prostate cancer.

 

Fabhalta received approval in Japan for IgA nephropathy, making it the first treatment approved for this indication in the country. The FDA also granted traditional approval for the same indication.

 

Meanwhile, Novartis secured a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use for Cosentyx in polymyalgia rheumatica. The company also completed its European regulatory submission for pelabresib in myelofibrosis and received FDA priority review for del-zota in Duchenne muscular dystrophy patients with variants amenable to exon 44 skipping.

 

A significant pipeline highlight was the positive Phase III REMODEL-1 and REMODEL-2 trial results for remibrutinib in relapsing multiple sclerosis. The oral treatment met its primary endpoint by significantly reducing annualised relapse rates versus teriflunomide and demonstrated benefits across key secondary endpoints, including MRI lesion reduction and delayed disability progression.

 

However, the quarter also brought setbacks.

 

Del-desiran failed to meet the primary endpoint in the Phase III HARBOR study in myotonic dystrophy type 1, triggering the $1.9 billion partial impairment charge. Novartis said secondary endpoints and exploratory analyses showed evidence of clinical activity and that it would evaluate the full dataset before determining the programme's next steps.

 

The company also reported that pelacarsen failed to meet the primary endpoint in the Phase III HORIZON trial, which evaluated whether lowering lipoprotein(a) reduced cardiovascular events in patients with elevated Lp(a) and established cardiovascular disease. Despite lowering Lp(a) levels, the treatment did not demonstrate the targeted reduction in cardiovascular events.

 

Separately, Novartis discontinued its Phase III study of remibrutinib in generalised myasthenia gravis following a futility analysis. The company said the decision had no safety implications and would not affect remibrutinib studies in other indications.

 

Novartis continued to invest in external innovation to reinforce its long-term research pipeline.

 

The company completed its acquisition of Myricx Bio, adding a new class of antibody-drug conjugates, including lead assets targeting B7-H3 and HER2, alongside a broader payload technology platform.

 

It also exercised its exclusive option to acquire full global rights to Sironax's Brain Delivery Module, a technology designed to improve the delivery of medicines across the blood-brain barrier.

 

Additional agreements included an exclusive global licence for an undisclosed preclinical radioligand therapy asset from BoomRay Pharmaceuticals and a strategic licensing and option agreement with Abogen Biosciences covering RNA-encoded therapeutics. The latter includes an exclusive worldwide licence to ABO2203, an mRNA-encoded CD19xCD3 T-cell engager being developed for autoimmune diseases.

 

Novartis' net debt increased to $37.4 billion at September 30, 2026, from $21.9 billion at the end of 2025.

 

The increase reflected acquisition-related and other investment outflows, the annual dividend payment and share repurchases. During the first nine months, the company generated $14.0 billion in free cash flow but recorded $16.7 billion in net cash outflows related to mergers and acquisitions, intangible assets and other acquisitions. It also paid $9.1 billion in dividends and recorded $4.8 billion in cash outflows from treasury share transactions.

 

Novartis repurchased 30.9 million shares for $4.7 billion on the SIX Swiss Exchange second trading line during the period, including purchases under its previously announced share buyback programme.

 

Despite the higher debt burden and uneven nine-month earnings, the company reiterated its commitment to investing in its pipeline, strengthening its technology platforms and delivering shareholder returns.

 

The revised profit outlook signals confidence that continued growth from priority brands, new launches and productivity measures can offset generic erosion and the financial impact of pipeline setbacks. The challenge for Novartis will be sustaining that momentum while restoring reported earnings growth and managing its expanding debt position.