Novartis

Sales came in at $13.1bn, down 5% at constant exchange rates (CER) and 1% reported, due to FX tailwinds. NB, all growth figures are in CER terms, unless stated otherwise.

Core Operating Income fell 14% to $4.9bn. The strong performance in Oncology and Neuroscience was offset by increasing generic competition for the heart failure drug Entresto (in CVRM) and a weak showing from Immunology.

For 2026, the management maintained its guidance, wherein sales are expected to increase by low single digit and COI to decline by low single digit percentage.

Overall, our model is under review, but we reaffirm our favourable stance on Novartis, backed by healthy growth across most key therapeutic areas, new drug approvals expected to carry the growth baton in the mid-term, a large and well-progressing pipeline, and a healthy balance sheet (2026e net debt-to-EBITDA of 1.9x).

Expert Opinion:
Novartis is undeniably one of the best-quality companies in the sector. Yet 2026 will be the worst year in terms of patent expiry notably in the US with a c USD4bn gap in sales. The company does have a pipeline to offset these and the fact that Q1 sales came in in line and FY guidance was confirmed is reassuring. Yet, the stock isn't especially cheap (see table below) especially in light of the lower EPS growth expected. We would stay away from Novartis at this stage despite its intrinsic quality and there are better options out there (Roche from a fundamental standpoint and Novo to play a shift in perception). 



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