Novartis delivered sales growth in Q2 and further advanced the pipeline

Commenting on Q2 2026 results, Vas Narasimhan, CEO of Novartis, said: “Novartis delivered a solid second quarter, returning to sales growth driven by continued momentum from Kisqali, Kesimpta, Scemblix and Pluvicto. We are encouraged by the early trajectory of our recent launches, Rhapsido in CSU and Itvisma. We also made meaningful pipeline progress, highlighted by updated Kisqali overall survival data in early breast cancer and the FDA accelerated approval submission for del-zota in DMD. We are on track for multiple important readouts ahead in the second half, and remain on track to deliver our full-year guidance and mid-term outlook.”

Strategy

Our focus

Novartis is a “pure-play” innovative medicines company. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies – the US, China, Germany and Japan.

Our priorities

Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.

Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.

Strengthen foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.

Financials

Second quarter

Net sales were USD 14.4 billion (+3%, +1% cc), with volume growth contributing 18 percentage points, offset by 14 percentage points from generic competition. Pricing had a negative impact of 3 percentage points, and currency had a positive impact of 2 percentage points. Operating income was USD 4.8 billion (-2%, -3% cc), declining mainly due to lower gross profit, partly offset by lower SG&A expenses. Net income was USD 3.3 billion (-19%, -19% cc), impacted by higher income taxes and higher interest expense. EPS was USD 1.71 (-17%, -18% cc), benefiting from the lower weighted average number of shares outstanding. Core operating income was USD 5.9 billion (0%, 0% cc), in line with the prior-year quarter. Core operating income margin was 41.2% of net sales, decreasing 1.0 percentage point (0.7 percentage points in cc). Core net income was USD 4.6 billion (-3%, -4% cc), mainly due to higher interest expense. Core EPS was USD 2.41 (0%, -1% cc), benefiting from the lower weighted average number of shares outstanding. Free cash flow amounted to USD 5.6 billion (-12%), due to lower net cash flows from operating activities.

First half

Net sales were USD 27.5 billion (+1%, -2% cc), with volume growth contributing 15 percentage points, offset by 14 percentage points from generic competition. Pricing had a negative impact of 3 percentage points, and currency had a positive impact of 3 percentage points. Operating income was USD 9.0 billion (-6%, -7% cc), declining mainly due to lower gross profit, partly offset by lower legal related costs and lower SG&A expenses. Net income was USD 6.4 billion (-16%, -17% cc), mainly due to lower operating income, higher income taxes and higher interest expense. EPS was USD 3.37 (-14%, -15% cc), benefiting from the lower weighted average number of shares outstanding. Core operating income was USD 10.8 billion (-6%, -7% cc), declining mainly due to lower gross profit. Core operating income margin was 39.4% of net sales, decreasing 2.7 percentage points (2.3 percentage points in cc). Core net income was USD 8.4 billion (-9%, -10% cc), mainly due to lower core operating income and higher interest expense. Core EPS was USD 4.39 (-6%, -8% cc), benefiting from the lower weighted average number of shares outstanding. Free cash flow amounted to USD 8.9 billion (-9%), due to lower net cash flows from operating activities.

Q2 priority brands

Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q2 growth) including: Kisqali

(USD 1 695 million, +43% cc) sales grew strongly across all regions, with continued market share growth in the early breast cancer indication as well as leadership in metastatic breast cancer.

Kesimpta

(USD 1 424 million, +32% cc) sales grew across all regions, driven by increased demand and strong access.

Scemblix

(USD 562 million, +89% cc) sales grew across all regions, with continued strong momentum from the newly diagnosed patients-line indication in the US, Japan and Germany.

Pluvicto

(USD 651 million, +43% cc) sales showed continued strong demand in the pre-taxane metastatic castration-resistant prostate cancer (mCRPC) setting in the US, and access expansion ex-US.

Cosentyx

(USD 1 824 million, +10% cc) sales grew driven by US performance including growth in HS and IV. Ex-US, growth in Europe and most emerging markets was partly offset by a decline in China.

Leqvio

(USD 480 million, +59% cc) sales grew across all regions, with continued uptake in China following NRDL inclusion.

Fabhalta

(USD 225 million, +88% cc) sales grew, reflecting continued expansion in PNH and renal indications.

Zolgensma Group

(USD 365 million, +20% cc) sales grew driven by continued launch momentum from Itvisma in the US and UAE. Rhapsido (USD 64 million) continued to show strong early uptake in the US, supported by increasing coverage and a free drug program facilitating patient access. Ex-US sales were driven by early launch uptake in China.

Capital structure and net debt

Retaining a good balance between investment in the business, a strong capital structure, and attractive shareholder returns remains a priority.

During the first half of 2026, Novartis repurchased 18.2 million shares for USD 2.8 billion on the SIX Swiss Exchange second trading line. These repurchases included 13.8 million shares (USD 2.1 billion) under the up-to USD 10 billion share buyback announced in July 2025 (with up to USD 5.6 billion still to be executed). In addition, 4.4 million shares (USD 0.7 billion) were repurchased to mitigate the anticipated full-year dilution related to participation plans of associates, with the remainder of repurchases for this purpose to be executed in H2 2026. A further 2.0 million shares (USD 0.3 billion) were repurchased from employees. During the same period, USD 0.6 billion equity-based compensation plans expenses were recognized to equity and 12.7 million shares were delivered to employees related to equity-based compensation plans from prior years. As a result, the total number of shares outstanding decreased by 7.5 million compared to December 31, 2025. These treasury share transactions resulted in an equity decrease of USD 2.4 billion and cash outflows of USD 3.1 billion.

Net debt increased to USD 39.4 billion at June 30, 2026, compared to USD 21.9 billion at December 31, 2025. The increase was mainly due to the free cash flow of USD 8.9 billion being more than offset by the net cash outflow for M&A, intangible asset transactions and other acquisitions of USD 15.3 billion, the USD 9.1 billion annual dividend payment and cash outflows for treasury share transactions of USD 3.1 billion.

As of Q2 2026, the long-term credit rating for the company is Aa3 with Moody’s Ratings and AA- with S&P Global Ratings.