Novartis AG Reports Strong Earnings with Upgraded Guidance

Novartis AG ((NVS)) has held its Q1 earnings call. Read on for the main highlights of the call.

Novartis AG’s recent earnings call painted a largely positive picture, with the company reporting a robust start to the year. The sentiment was buoyed by significant sales growth and a series of product approvals, prompting an upgrade to the full-year guidance. Despite these successes, some concerns lingered regarding the rollout of Pluvicto and the impact of tariffs and European pricing, which tempered the overall optimism with a dose of caution.

Strong Financial Performance

Novartis showcased impressive financial results, with a 15% increase in sales and a 27% rise in core operating income. The core margin reached an impressive 42.1%, marking a 400 basis point increase. This strong financial performance has led the company to upgrade its full-year 2025 guidance, reflecting confidence in sustained growth.

Key Product Growth

The earnings call highlighted significant growth in key products. Kisqali saw a 56% increase in constant currency, demonstrating strong performance in both metastatic and early breast cancer treatments. Kesimpta also performed well, with a 43% growth, outpacing the B cell and MS market. Pluvicto, despite some rollout challenges, achieved a 21% increase, indicating promising developments in its launch preparations.

Innovation and Approvals

Novartis made notable strides in innovation, securing approvals for Pluvicto, Vanrafia, and Fabhalta. Additionally, the company reported a positive readout for OAV-101 in SMA patients older than 2 years and made a global submission for remibrutinib in CSU, underscoring its commitment to expanding its product pipeline.

Upgraded Full-Year Guidance

Driven by strong business momentum, Novartis raised its full-year guidance, projecting high single-digit sales growth and low double-digit core operating income growth. This optimistic outlook reflects the company’s confidence in its strategic direction and market position.

Challenges in Pluvicto Rollout

Despite Pluvicto’s growth, the rollout has faced challenges, with only about half of the centers using the product at the target rate. This indicates hurdles in expanding the number of sites and increasing the volume of patients treated, which the company is actively working to address.

Tariff and Tax Concerns

The earnings call also addressed concerns over tariffs and potential changes to tax rates due to geopolitical factors. Novartis is taking proactive steps to mitigate these risks by adjusting inventory levels and planning significant investments to safeguard its operations.

European Pricing Challenges

Novartis continues to face pricing challenges in Europe, where drug prices have declined, failing to reflect the innovation delivered by the company. This has resulted in 30% of medicines not being launched or delayed in the region, posing a significant challenge to the company’s European operations.

Forward-Looking Guidance

Looking ahead, Novartis provided robust financial guidance for 2025, emphasizing a strong start to the year with double-digit sales growth and significant margin expansion. The company expects sales to grow at high single digits and core operating income to increase at a low double-digit rate. Key brands like Kisqali and Kesimpta are anticipated to continue their impressive growth trajectories, supported by recent product approvals and ongoing innovation efforts.

In conclusion, Novartis AG’s earnings call reflected a generally positive sentiment, driven by strong financial performance and strategic product growth. While challenges such as the Pluvicto rollout and European pricing remain, the company’s upgraded guidance and commitment to innovation suggest a promising outlook for the future.