Entresto Patent Expiry to Weigh on Novartis as Profit Seen Falling in 2026
New Delhi: Novartis forecast its first annual drop in operating profit in a decade on Wednesday, even as it indicated that long term, the company could potentially offset the patent expiry of its established products, such as heart drug Entresto.
The Swiss drugmaker said 2026 operating profit, adjusted for one-offs, would slip by a low single-digit percentage, excluding currency swings. The last such decline was in 2016, which took the spin-off or sale of businesses into account.
Novartis is leaning on cancer drugs Kisqali and Scemblix and last year's $30 billion spent on deals, to offset patent expiries, spelling the loss of market exclusivity, on blockbuster drugs like Entresto for heart failure and allergy treatment Xolair.
The 2026 guidance on Wednesday included a projection for low single-digit gains in group sales, without mentioning numbers.
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Analysts at Jefferies said the lower part of the company's implied 2026 profit guidance range of $21.3-$22 billion, assuming a 1% foreign-exchange tailwind, could spur analysts to trim estimates, which had been at $21.8 billion on average. Novartis shares were down 1.8% at 0957 to a two-day low.
COMPANY OPTIMISTIC OF HITTING MID-TERM GOALS
CEO Vas Narasimhan, however, was optimistic of hitting mid-term targets, stressing longer-term growth prospects and projecting sales growth this year despite competition from generic drugmakers.
"In 2026, we expect to grow through the largest patent expiry in Novartis history, underscoring the strength of our business, and remain well on track to deliver our mid-term guidance," he said.
The CEO, at the helm for eight years, had a 24.9 million Swiss franc ($32.08 million) compensation package for 2025, up 30%, driven by a three-year share price performance of 64%, according to the annual report.
Mukul Mehta, set to become CFO in March, told Reuters that adjusted operating income "really starts to grow in the second half of the year, which bodes very well for 2026 second half and 2027 and beyond."
Novartis reported a 1% gain in fourth-quarter operating profit to $4.92 billion, in line with market expectations, on higher sales of breast cancer drug Kisqali, multiple sclerosis drug Kesimpta and psoriasis drug Cosentyx, among others.
