Novartis lifts full-year profit forecast, announces $10 billion share buyback

Swiss pharmaceutical giant Novartis has raised its full-year earnings forecast, citing robust revenue growth from key products, including its breast cancer drug Kisqali, during a strong second quarter.

The company also announced a substantial share buyback program, signaling confidence in its future growth trajectory, alongside news of its long-serving Chief Financial Officer's upcoming retirement.

Novartis announced on Thursday that it now anticipates its core operating income for the year to grow in the "low-teens," a slight but meaningful upgrade from its previous forecast of "low double-digits."

This more optimistic outlook comes after the company had, in April, already narrowed its earnings target range to rule out any growth below 10%.

The confidence stems from a solid second-quarter performance. The company's operating income, when adjusted for special items, rose by 20% to $5.9 billion, a figure that slightly surpassed analyst forecasts.

This was largely driven by impressive sales from some of its key drugs. The company’s breast cancer treatment, Kisqali, saw its quarterly revenue jump by a remarkable 64% to reach $1.2 billion. Sales of its multiple sclerosis drug, Kesimpta, also surged by 35% to $1.1 billion.

This strong performance has given the company the confidence to reward its shareholders.

"Our robust balance sheet and confidence in our mid- and long-term growth enable us to initiate an up-to $10 billion share buyback as part of our commitment to balanced capital allocation," stated Chief Executive Vas Narasimhan.

The Entresto enigma: navigating patent litigation

Sales of Novartis's blockbuster heart medication, Entresto, also continued to grow, rising 24% (22% at constant currency) to $2.36 billion. However, this key revenue stream faces a significant challenge from potential generic competition. Novartis is currently engaged in ongoing patent litigation in the United States concerning Entresto.

A US federal judge on Tuesday rejected Novartis's request for a preliminary injunction that would have stopped MSN Pharmaceuticals from selling a generic version of its top-selling product in 2024.

Despite this legal setback, Novartis's forecasts continue to assume that Entresto will begin to face competition from generic drugs in mid-2025, although the company acknowledges that the precise timing of this generic entry is subject to the outcomes of intellectual-property and regulatory litigation.

The decision to raise full-year guidance even with this looming challenge took some analysts by surprise. "We did not expect Novartis to raise its [full-year] guidance ahead of the generic entry to US Entresto which continues to be expected per mid-year," wrote Vontobel analyst Stefan Schneider in a note to customers.

For the second quarter, Novartis's group sales as a whole increased by 11% to $14.05 billion. The company cited Kisqali and Entresto, as well as its leukemia drug Scemblix, multiple-sclerosis treatment Kesimpta, and cholesterol drug Leqvio, as its key growth drivers for the quarter.

The company posted a quarterly net profit of $4.0 billion, a significant increase from the $3.25 billion recorded for the same period a year earlier. Core operating profit came in at $5.925 billion, up 21% at constant currency.

Analysts, according to consensus estimates provided by Visible Alpha, had forecasted sales at $14.17 billion and core operating profit at $5.75 billion.

A changing of the guard: longtime CFO to retire

In a separate announcement, Novartis revealed that its longtime Chief Financial Officer, Harry Kirsch, will retire in March 2026, after an impressive 22-year career at the company, including 12 years as its CFO.

He will be succeeded by Mukul Mehta, who currently serves as the company's head of business planning and analysis, digital finance, and tax.

Despite the raised earnings forecast, the company maintained its expectation for full-year sales growth to be in the high single-digit range at constant currency.