Although first-quarter revenue fell 1% year over year to $13.1 billion, or 5% at constant currencies, the results largely matched management's expectations as several blockbuster medicines lost patent protection in the United States.
Chief Executive Vas Narasimhan described the period as "the biggest loss of exclusivity in Novartis' history, emphasizing that the weakness reflected temporary patent expirations rather than deteriorating demand across the company's portfolio.
Core operating income declined 14% on a constant-currency basis, while core EPS fell 15% to $1.99. The decline reflected lower sales as well as continued investment in research and development. Despite this pressure, Novartis maintained healthy profitability with a 37.3% core operating margin, while free cash flow remained broadly stable at $3.3 billion. That suggests the company continues to generate substantial cash even during a challenging earnings period.
The brighter picture came from Novartis' growth portfolio, where nearly every strategic medicine continued to post double-digit expansion.
Kisqali remained the standout performer, with sales jumping 55% as adoption broadened in breast cancer. Pluvicto climbed 70%, reflecting growing demand for radioligand therapies, while Kesimpta increased 26% as multiple sclerosis patients continued switching to newer treatments.
Other recently launched medicines also maintained exceptional momentum. Scemblix surged 79%, and Leqvio advanced 69%. Several pipeline candidates also achieved important regulatory milestones, including positive late-stage data for Remibrutinib and priority review for Ianalumab.
The acquisition of Avidity Biosciences also strengthened Novartis' long-term growth pipeline by adding several late-stage neuromuscular disease candidates.
Overall, these performances suggest that the underlying business remains healthy despite temporary revenue headwinds from generic competition. Management therefore reaffirmed its full-year guidance, still expecting low-single-digit sales growth while forecasting a low-single-digit decline in core operating income during fiscal 2026.
The second-quarter report is unlikely to be judged solely on whether earnings beat analyst estimates. Instead, investors will be looking for confirmation that the company's growth engines continue to compensate for patent losses.
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