Novartis beat market expectations for second-quarter core operating profit on Tuesday.
Lower-than-expected costs helped the Swiss drugmaker offset a sharp decline in sales of its top-selling heart failure drug Entresto.
The company reported quarterly group operating income of $5.94 billion, adjusted for special items.
That was above average analyst expectations of about $5.31 billion, according to estimates cited by Visible Alpha.
Novartis fasten driven by lower gross profit.
This was partly offset by lower costs during the quarter.
The results come as Novartis faces a major period of patent expiries.
The drugmaker is particularly exposed to the loss of exclusivity for Entresto, its leading heart failure treatment.
Entresto accounted for 14% of Novartis’ total net sales last year.
However, sales of the drug fell sharply during the second quarter.
The decline highlights the growing pressure from generic competition on one of the company’s most important products.
Entresto sales decline 50%
Entresto sales declined by 50% in the second quarter.
Generic competition in the United States, its largest market, weighed heavily on sales.
The drug generated $1.18 billion in sales during the quarter.
That was slightly below analysts’ expectations of $1.23 billion.
The decline was steeper than in the previous quarter.
Entresto sales had fallen 42% in the first quarter.
The drug is also set to lose patent exclusivity in Europe starting in November.
Novartis expects the decline in Entresto sales to be less severe during the second half of the year.
The company has previously said it expects sales to decline by $4 billion this year.
The expected reduction is linked to competition from generic drugs.
The pressure from patent expiries remains a key challenge for Novartis.
The company is now working to strengthen growth from newer medicines and its pipeline of experimental treatments.
Investors focus on experimental drug pipeline
Investors are increasingly looking beyond Novartis’ quarterly financial results.
Attention is shifting toward data from late-stage studies of three experimental drugs.
The drugs are pelacarsen, remibrutinib and del-desiran.
The results from these programmes are expected to play an important role in determining Novartis’ growth prospects beyond 2030.
That period is particularly important for the company.
Novartis maintains full-year guidance
Novartis said it remains on track to deliver its full-year guidance and mid-term outlook.
“We are on track for multiple important readouts ahead in the second half, and remain on track to deliver our full-year guidance and mid-term outlook,” chief executive Vas Narasimhan said in a statement.
The company expects low single-digit percentage growth in core operating income for the full year.
The outlook excludes the impact of currency swings.
The guidance comes as Novartis balances strong growth from newer medicines against falling sales of key established products.
The second-quarter results showed the impact of that transition.
Entresto sales declined sharply as generic competition increased.
At the same time, Kisqali, Scemblix and Cosentyx delivered growth that helped support the wider business.
Investors will now be watching the company’s pipeline closely.
The upcoming trial readouts could provide further indications of whether Novartis can maintain growth as more of its established medicines approach patent expiry.
For now, the company remains focused on delivering its full-year targets while managing the ongoing impact of generic competition and preparing for the next stage of its product cycle.
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