Novartis growth brands work, but two trial misses test its deal-making

Novartis is in a reset year. Second-quarter net sales were USD 14.4 billion, up 1% at constant currencies, as volume growth of 18 percentage points was offset by 14 points of generic competition and 3 points of price. Entresto sales fell 51% at constant currencies to USD 1.18 billion in the quarter. The company expects 2026 sales to grow at a low single-digit rate and core operating income to decline at a low single-digit rate.

The technology

Novartis is a large, diversified drug company with four therapy areas: cardiovascular-renal-metabolic, immunology, neuroscience and oncology. It runs two established technology platforms and three newer ones: gene and cell therapy, radioligand therapy and xRNA. The growth brands are already on the market. Kisqali sold USD 1.7 billion in the second quarter (up 43%), Kesimpta USD 1.4 billion (up 32%), Pluvicto USD 651 million (up 43%) and Scemblix USD 562 million (up 89%).

The pipeline adds bets in several modalities. Remibrutinib is an oral BTK inhibitor approved for two forms of chronic hives and positive in two phase III multiple sclerosis trials. Pluvicto won an FDA label in hormone-sensitive prostate cancer on July 31. The Avidity purchase brought antibody oligonucleotide conjugates for muscle diseases, and the Myricx deal adds a new ADC payload class.

The odds

Recent late-stage results have been mixed. Pelacarsen missed its cardiovascular outcomes endpoint on September 4, and del-desiran missed in myotonic dystrophy four days later. On the other side, remibrutinib beat teriflunomide on relapse rate in REMODEL-1 and REMODEL-2, and the FDA approved a new Pluvicto indication, a second US indication for Rhapsido and traditional approval for Fabhalta in IgA nephropathy.

Base rates support the filed assets. In the BIO/Informa/QLS 2011-2020 analysis, 57.8% of phase III programs reached an NDA or BLA and 90.6% of filed applications were approved. For rare diseases the filing-to-approval rate was 93.6%, which is the relevant figure for del-zota, now under FDA priority review. Remibrutinib in MS is past phase III, so the remaining risk is the filing and the label, including how regulators treat liver safety across the BTK class.

The money

Novartis is profitable and generates cash. First-half free cash flow was USD 8.9 billion. Deals have taken much of it: net debt rose to USD 39.4 billion at June 30 from USD 21.9 billion at the end of 2025, after USD 15.3 billion of net M&A and related outflows, a USD 9.1 billion dividend and USD 3.1 billion of share repurchases. The company kept credit ratings of Aa3 from Moody's and AA- from S&P, and had up to USD 5.6 billion left on its USD 10 billion buyback.

The risks

Generic erosion is the main near-term drag. Entresto, Promacta and Tasigna each fell by more than half in the second quarter, according to the results release. Second-quarter net income dropped 19% on higher taxes and interest.

Deal risk is rising. The Avidity deal cost about USD 12 billion, and its lead DM1 program has now failed its primary endpoint. Pelacarsen's miss removes a potential large cardiovascular product. Europe can also read data differently from the FDA: Novartis withdrew an EMA filing for Pluvicto in pre-chemotherapy disease after negative CHMP feedback.

Our read

Novartis is a company whose growth brands are working while patent losses keep the headline numbers flat. Kisqali, Kesimpta, Pluvicto, Scemblix and Leqvio are doing their jobs. The question for 2027 and beyond is whether the next group, led by remibrutinib in MS, ianalumab in Sjogren's disease and the Avidity assets, can add enough to restart growth.

The two September failures matter less for this year's numbers than for confidence in the company's deal-making, since both came from licensed or acquired programs. The REMODEL data at MSToronto2026 and third-quarter results on October 27 are the next hard data points.