Novartis Q4: Earnings Beat Estimates, CEO Dismisses Entresto Patent Expiration Worries

Novartis AG NVS shares are trading higher in the premarket session on Friday.

The Swiss pharma giant reported fourth-quarter adjusted earnings per share of $1.98, beating the street view of $1.81. Quarterly sales of $13.153 billion outpaced the analyst consensus estimate of $12.811 billion.

Quarterly net sales grew 16% at constant currency,  with volume contributing 15 percentage points to growth.

Heart failure drug Entresto sales grew 34% at constant currency, driven by strong demand and greater market share in the U.S. and Europe for heart failure treatment. It also saw increased use in China and Japan for hypertension management.

In an interview with CNBC, Novartis CEO Vas Narasimhan downplayed concerns about Entresto’s U.S. patent expiration, which could lead to increased competition from generic drugmakers. He stated that the company has strong replacement power.

Multiple sclerosis drug Kesimpta sales reached $950 million, up 49% at constant currency. Novartis said that sales grew across all regions, reflecting increased demand.

Cosentyx sales in the fourth quarter jumped 24% at constant currency. Sales grew in the U.S., Europe, and emerging growth markets driven by recent launches (including the HS indication and the IV formulation in the U.S.) and volume growth in core indications.

Also Read: AbbVie Vs. Novartis: Which Has The Technical Edge Before Q4 Earnings?

Core operating income was $4.9 billion, up 29% at constant currency, mainly driven by higher net sales. The core operating income margin was 36.9% of net sales, increasing by 3.7 percentage points at constant currency.

“We also achieved important innovation milestones, including new approvals and readouts for many of the assets that will fuel our growth over the mid- to long-term,” said Narasimhan in a press release. 

Net cash flows from operating activities for Novartis amounted to $4.2 billion in the quarter under review, while free cash flow amounted to $3.6 billion.

The company’s debt increased to $16.1 billion at December 31, 2024, compared to $10.2 billion net debt in the year-ago period.

Dividend: Novartis declared a dividend of CHF3.50 per share, an increase of 6.1%, proposed for 2024.

FY25 Outlook: “With the momentum we are seeing in the business, we expect to continue our strong sales growth with margin expansion in 2025 and we remain on track to deliver on our mid-term guidance,” Narasimhan added. 

For FY25, Novartis projects net sales to grow mid-to-high single digits, and core operating income to grow high single to low double digits.

“We assume Tasigna, Promacta and Entresto US generic entry mid-2025 for forecasting purposes,” Novartis said in the release.

This apart, the company is focused on executing its pipeline, which includes 15 submission-enabling readouts in the coming years and over 30 assets with the potential to drive long-term growth.

Price Action: NVS shares are trading higher by 1.86% to $106.70 premarket at last check Friday.

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