Swiss pharmaceutical giant Novartis posted better-than-expected sales for the fourth quarter, although it fell short of its own full-year guidance.
The company’s net sales for Q4 increased by 16% on a constant currency basis, reaching $13.2 billion, surpassing analysts’ estimates of $12.8 billion. In addition, Novartis’ adjusted core operating income for the quarter rose to $4.86 billion, exceeding the expected $4.23 billion.
For the full year, Novartis reported a 12% increase in net sales on a constant currency basis, totaling $50.32 billion, slightly missing the forecast of $50.47 billion. However, the company’s core operating income for 2024 grew by 22%, reaching $19.5 billion, surpassing the expected $17.02 billion. The growth was driven primarily by the strong performance of its heart failure drug Entresto and arthritis treatment Cosentyx.
Despite the strong fourth-quarter performance, Novartis had raised its earnings guidance for the year several times throughout 2024, anticipating net sales and core operating income growth in the “high teens.” However, it fell short of these expectations, indicating that the company’s growth trajectory for the full year was somewhat tempered.
CEO Vas Narasimhan commented on the results, highlighting the positive impact of the strategic changes implemented in 2023. These changes were aimed at positioning Novartis as a “pure-play innovative medicines company.” He expressed confidence in the company’s growth prospects, noting the momentum from its key products and its strong pipeline of new treatments, which are expected to support future growth through 2025 and beyond.
Looking ahead, Novartis provided guidance for 2025, forecasting net sales growth in the “mid- to high single digits” and core operating income growth in the “high single to low double digits.” Despite the potential impact of patent expiries for Entresto and other top-selling drugs, Narasimhan downplayed concerns, pointing to the company’s ability to bring new treatments to market as a means of offsetting the loss of exclusivity for its existing drugs.
In particular, Novartis expects its pipeline of more than 30 assets to continue driving long-term growth. Key developments include treatments for prostate cancer and chronic spontaneous urticaria, both of which are expected to produce significant results in the coming year. Novartis is also exploring growth opportunities through smaller acquisitions, aiming to expand its early- and mid-stage development pipeline.
While facing patent expirations for three of its top 20 drugs, including Entresto, Novartis remains confident in its ability to replace the revenue from these products with new therapies. The company has already submitted or plans to submit more than 15 regulatory approvals for key drugs in 2025.
In the fourth quarter, Novartis reported a 7% increase in net income, which rose to $2.8 billion from $2.64 billion during the same period in the previous year. The company’s shares saw a 3.16% rise following the announcement, reflecting investor optimism about its performance.
CNBC, Bloomberg, and the Wall Street Journal contributed to this report.
