Novartis Outlines Pure-Play Strategy Progress After Generics Business Spin-Off

Novartis AG NVS has outlined the progress made in delivering its pure-play strategy, focused on four core therapeutic areas (Cardiovascular-Renal-Metabolic, Immunology, Neuroscience, Oncology), two plus three technology platforms (Chemistry, Biotherapeutics, xRNA, Radioligand, Gene & Cell Therapy) in four priority geographies (US, China, Germany, Japan).

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Last month, Sandoz Group AG SDZNY SDZXF, a spin-off of Novartis, entered a new era as a standalone player in generic and biosimilar medicines.

"Novartis has now completed its transformation into a 'pure-play' innovative medicines company, delivering robust increases in core margin and free cash flow while also continuing strong operational performance," said Novartis CEO Vas Narasimhan.

Updating investors on its research and development, Novartis said its mid-term sales guidance is upgraded to 5% CAGR (2022-27) versus 4% expected earlier, with a core operating income margin of ~40%+ by 2027.

In Q3, Novartis reported sales of $11.78 billion, up 12% Y/Y in reported and constant currency, beating the consensus of $11.40 billion, mainly driven by a continued strong performance from Entresto, Kesimpta, Pluvicto, Kisqali and Scemblix.

The company said in an investor presentation that Kisqali, Pluvicto, Kesimpta Leqvio, Cosentyx, and Scemblix mainly drive the medium-term target.

Novartis says it is confident to grow mid-single digit longer-term based on the foundational strength of de-risked existing brands and pipeline assets.

"We believe investors will stay cautious on growth post 2027 pending pipeline delivery in the coming years," JP Morgan analysts stated in a Reuters report.

Price Action: NVS shares were down 0.62% to $97.13 at last check Tuesday.

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