Novartis Shares Rise on Q2 Earnings Beat and Strong Drug Sales

Shares of Novartis AG (NOVN) rose on Tuesday after the Swiss pharmaceutical company announced second-quarter results that comfortably beat analyst estimates and reaffirmed its full-year financial outlook.

Core Profit Surpasses Expectations

Novartis reported a core operating income of approximately $5.94 billion, significantly exceeding the consensus analyst forecast of about $5.31 billion. Net sales for the quarter reached $14.41 billion, a 3% increase in U.S. dollar terms, according to its earnings release.

The top-line growth was powered by an 18 percentage point increase in volume from its drug portfolio. This successfully offset a 14 percentage point headwind from generic competition, which has particularly affected sales of its heart failure drug Entresto.

Strong Drug Sales and Pipeline Wins

The robust performance was driven by strong sales from Novartis's newer drugs, underscoring the success of its current portfolio.

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• Cancer treatment Kisqali saw sales surge by 43% at constant currencies to $1.70 billion.
• Leukemia drug Scemblix posted 89% sales growth during the period.

Investor confidence was further bolstered by recent pipeline developments. In the earnings call, CEO Vas Narasimhan highlighted a return to sales growth and meaningful progress, including updated survival data for Kisqali in early breast cancer. The U.S. Food and Drug Administration also granted full approval for Fabhalta, a treatment for the rare kidney disease IgA nephropathy, just days before the report.

Market Reaction and Outlook

In response to the news, Novartis shares climbed 2.2% to CHF 125.86 in trading. The rally helps the stock recover ground lost after a first-quarter earnings miss and moves it closer to its 52-week high of CHF 131. The company's decision to stand by its full-year guidance provided an additional layer of assurance for investors.