How is Novartis's CEO Leading Past Its Biggest Patent Cliff?
Novartis closed 2025 with solid sales growth, expanding margins and a pipeline that continued to deliver, even as the company prepares for a significant hit from patent expiries.
Speaking in a video shared on LinkedIn, CEO Vas Narasimhan described the results as an "outstanding year for Novartis", pointing to both financial delivery and clinical progress.
"We really delivered operationally. We hit our financial goals. And I think we continue to advance our pipeline for patients," Vas said.
For full-year 2025, Novartis reports net sales of US$54.5bn, up 8% year-on-year at constant currencies, with core operating income rising 14% to US$21.9bn.
Core operating margin expanded by 210 basis points to 40.1%, a key milestone for the group's ongoing focus on efficiency and higher-value innovation.
Strong finish to a challenging year
Growth was driven by strong demand across priority brands. Breast cancer drug Kisqali delivered standout growth of 57%, while multiple sclerosis therapy Kesimpta rose 36%.
Radioligand therapy Pluvicto climbed 42%, leukaemia drug Scemblix surged 85% and psoriasis and immunology blockbuster Cosentyx grew 8% over the year.
Net income rose 19% at constant currencies to US$14bn, while core earnings per share increased 17% to US$8.98. Free cash flow reached US$17.6bn, up 8%, providing continued firepower for dividends, buybacks and dealmaking.
The fourth quarter was more mixed. Sales dipped by 1% at constant currencies to US$13.3bn, reflecting the impact of US generic competition and revenue deduction adjustments, particularly for Entresto and Promacta.
However, core operating income still edged up 1%, supported by lower selling expenses and government grant income.
Pipeline momentum and big bets
Vas highlighted pipeline progress in his LinkedIn post as a defining feature of the year. He said: "Some of the really incredible moments were seeing our positive readout for patients with Sjögren's disease.
"Incredibly important readout for patients with malaria, also children and infants with malaria, as well as continuing to advance our pipeline with important additions in areas like neuromuscular disease and immunology."
Key late-stage and regulatory advances in 2025 included FDA approval of gene therapy Itvisma for a broad spinal muscular atrophy population, an expanded European approval for Scemblix and regulatory submissions for Pluvicto in earlier-line prostate cancer and remibrutinib in chronic inducible urticaria, an inflammatory skin condition.
Novartis also continued to reshape its pipeline through external innovation. The company announced plans to acquire Avidity Biosciences in a deal expanded to close in the first half of 2026, adding late-stage neuromuscular assets and a novel RNA delivery platform.
Bracing the patent cliff
Despite the strong showing, Novartis struck a cautious tone of the year ahead.
For 2026, the company expects low single-digit sales growth but a low single-digit decline in core operating income, reflecting the loss of exclusivity for major products including heart failure drug Entresto.
Shares fell on the same day as the financial announcement, as investors digested the near-term earnings pressure.
The CEO remains confident in the longer-term trajectory, saying: "I think 2026 is going to be another strong year. Even in the face of our biggest patent expiry in history, we expect to continue to grow the company, continue to grow our business and advance incredibly important launches for patients with a whole range of diseases.
"I'm really excited for it."
The company reiterated its mid-term ambition of delivering 5-6% annual sales growth from 2027 to 2030, banking on its expanding oncology, immunology and cardiovascular pipelined to more than offset the patent losses over time.
