Novartis' new drugs outweigh Entresto decline in Q3

Novartis' third-quarter results have exemplified the reason for its recent deal-making activity, as heart failure therapy Entresto finally succumbed to the entry of generics into the market.

The 1% contraction in Entresto (sacubitril/valsartan) sales comes after generics flooded into the US market in the summer, but Novartis' array of newer products deflected the impact and helped the company's overall revenues rise 7% to $13.9 billion.

Still, given that Entresto is as yet Novartis' biggest product, with sales of almost $1.9 billion in the quarter, and that the generic erosion will only accelerate, it is no surprise that the company has been making efforts to build its pipeline with moves such as yesterday's $12 billion offer for Avidity Biosciences and two late-stage drugs for neuromuscular disorders.

That follows a string of other deals this year involving Monte Rosa, Tourmaline Bio, Argo, Regulus, Anthos, and others, as it girds for the impact of not only Entresto's decline, but also other drags on its revenues.

That includes competition stalling the growth of its second-largest seller, immunology blockbuster Cosentyx (secukinumab), plus generic erosion to cancer drug Tasigna (nilotinib) and Promacta/Revolade (eltrombopag) for thrombocytopaenia, which also started in earnest in the third quarter and collectively saw sales fall by around $1.75 billion.

Shares in Novartis had fallen nearly 3.5% at the time of writing, as investors digested the third-quarter figures and Entresto reversal.

Novartis' chief executive, Vas Narasimhan, told CNBC this morning that the company still has "adequate firepower" for additional deals, with free cash flow of almost $20 billion a year.

On the plus side, there was strong growth for Kisqali (ribociclib), up 68% to $1.3 billion on the back of its approval for adjuvant use in early-stage breast cancer, as well as prostate cancer radiotherapy Pluvicto (177Lu vipivotide), Kesimpta (ofatumumab) for multiple sclerosis, and leukaemia drug Scemblix (asciminib), which all made high double-digit gains.

Narasimhan also highlighted the recent FDA approval of Rhapsido (remibrutinib) in chronic spontaneous urticaria (CSU) and phase 3 results for ianalumab in Sjogren's disease and primary immune thrombocytopenia (ITP), saying these are "two assets with pipeline-in-a-pill potential that could underpin our growth through 2030 and beyond."

Novartis has hiked its 2025 sales guidance in its last couple of financial results statements, but with Entresto now in decline maintained its latest prediction of high single-digit sales growth for the full year with operating income rising in the low-teens.

Narasimhan said he did not anticipate any impact from Trump's pharma tariffs this year and next, thanks to a major investment programme in new facilities in the US.