Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Novartis AG (NVS, Financial) reported a strong operational performance with a 10% increase in sales and a 20% rise in core operating income in constant currencies.
- The company achieved a core margin of 40.1%, reflecting a 340 basis point improvement from the previous year.
- Novartis AG (NVS) raised its full-year guidance for the third time, indicating strong underlying business momentum.
- Key growth drivers such as Entresto, Cosentyx, and Kisqali showed significant sales growth, with Entresto increasing by 26% and Cosentyx by 28%.
- The company continues to expand its pipeline with important innovation milestones, including FDA approvals and positive opinions for several drugs like Kisqali and Fabhalta.
Negative Points
- Novartis AG (NVS) faces potential headwinds from upcoming loss of exclusivity (LOE) for key drugs like Entresto and Promacta, expected in mid-2025.
- The company experienced a safety signal in its [XXB] program, leading to its termination, impacting its cardiovascular portfolio.
- Currency fluctuations had a negative impact on financial results, with a 1% negative effect on net sales and a 3% negative impact on core operating income.
- The competitive landscape in the immunology sector is intensifying, with new entrants potentially challenging Novartis AG (NVS)'s market position.
- There are ongoing legal challenges and uncertainties related to patent litigations, which could affect future revenue streams.
Q & A Highlights
Q: What is the impact of coverage gap reform on Novartis' business in 2025, particularly for Cosentyx and Entresto?
A: Vasant Narasimhan, CEO, explained that the coverage gap reform will have both positive and negative effects. On the positive side, there could be increased demand due to the 20% out-of-pocket cap. However, cost-sharing will increase, which is a headwind. Overall, the impact is expected to be neutral to slightly negative, and this is already factored into the long-term guidance.
Q: When can we expect new promotional efforts to impact Pluvicto patient growth in the US?
A: Vasant Narasimhan, CEO, stated that promotional efforts, including DTC campaigns and field force expansions, began in September. It typically takes about six months to see an impact. The significant growth is expected with the launch of PSMA4, which will triple the eligible patient population.
Q: What are the main tailwinds and headwinds for Novartis in 2025, considering expected generic launches?
A: Vasant Narasimhan, CEO, noted that new indications and launches, such as Cosentyx in HS and IV, Kisqali in early breast cancer, and Scemblix in first-line CML, are key tailwinds. The main headwinds are the expected loss of exclusivity for Entresto and Tasigna in mid-2025. Despite these, Novartis expects to continue strong growth.
Q: How does Novartis view the competitive dynamics in the HS market for Cosentyx, given upcoming competitors?
A: Vasant Narasimhan, CEO, expressed confidence in Cosentyx's position due to strong dermatologist support and comparable efficacy data in HS. He emphasized the importance of distinguishing between psoriasis and HS data, which supports Cosentyx's strong market position.
Q: What is Novartis' approach to capital allocation between M&A and share buybacks?
A: Harry Kirsch, CFO, explained that Novartis has the capacity to pursue both M&A and share buybacks. The company focuses on bolt-on acquisitions to strengthen its pipeline while maintaining a balanced approach to capital allocation, including ongoing share buybacks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
