Novartis shares fall as Entresto sales weaken
Novartis' chief executive, Vas Narasimhan.
Novartis has started to show the effects of its patent cliff more strongly, with sales and profits falling in the first quarter of this year on generic competition.
Net sales fell 5%, or 1% at constant currencies, to $13.1 billion due to generic erosion of key products in the US, including heart failure blockbuster Entresto (sacubitril/valsartan), which plummeted 46% to $1.3 billion, even before the loss of patent protection in Europe due later this year. Earnings per share, meanwhile, fell 13% to $1.99.
Chief executive Vas Narasimhan said the generic hit was "as expected," and growth is expected to return in the second half of this year. Nevertheless, shares in the company weakened regardless, down almost 3% at the time of writing, as the revenue figure fell short of analyst expectations of around $13.4 billion.
There was a triple blow to Novartis in the quarter, with the loss of Entresto market exclusivity in the US accompanied by continued generic competition to cancer therapy Tasigna (nilotinib) and platelet booster Promacta/Revolade (eltrombopag), which shrank by 59% and 66%, respectively, to $155 million and $184 million.
The company is modelling a $4 billion hit to its revenues this year from patent losses, with a low-single-digit rise in net sales and a low-single-digit decline in operating profits.
There was encouraging news for Novartis among its growth products, however, notably a 55% rise in breast cancer treatment Kisqali (ribociclib) to $1.52 billion, a 70% rise in prostate cancer radiopharmaceutical therapy Pluvicto (177Lu vipivotide tetraxetan) to $642 million (although, it recently suffered a setback in Europe for that product), and Kesimpta (ofatumumab) for multiple sclerosis, which climbed 26% to $1.16 billion.
Narasimhan said that these priority brands had made a "strong start" to the year, adding that he was also happy with progress in the company's pipeline, including "compelling phase 3 results for remibrutinib in chronic inducible urticaria and phase 2 data in food allergy, reinforcing the medicine's pipeline-in-a-pill potential." Remibrutinib is already approved, as Rhapsido, for chronic spontaneous urticaria (CSU).
The CEO suggested that Novartis may be able to raise its medium- and long-term growth forecasts, depending on the outcomes of several key trials over the remainder of 2026, but warned that the impact of the Most-Favoured Nation (MFN) pricing policy implemented by the Trump administration in the US – currently focused only on Medicaid – will start to kick in over the next 18 months.
The company has been working to build its pipeline to offset the patent cliff, including the recently closed $12 billion acquisition of Avidity, which added three late-stage medicines for neuromuscular diseases.
Other recent deals highlighted in the financial update include a $3 billion agreement with Synnovation to acquire SNV4818, a PI3Kα inhibitor currently in phase 1/2 for breast cancer, and the $2 billion acquisition of food allergy therapy developer Excellergy.
