Novartis Reports Strong Q2 Sales and Margin Growth; Increases FY 2024 Guidance

In the second quarter of 2024, Novartis reported significant financial growth and progress in its key therapeutic areas. Net sales increased by 11% in constant currencies (cc) and 9% in USD, reaching USD 12.5 billion. This growth was largely driven by the strong performance of several key drugs, including Entresto, Kesimpta, Cosentyx, Kisqali, Leqvio, and Pluvicto. Entresto saw a 28% increase in sales, Kesimpta grew by 65%, Cosentyx by 22%, Kisqali by 50%, Leqvio by 134%, and Pluvicto by 44%.

Core operating income grew by 19% in cc and 17% in USD, resulting in a core operating income margin of 39.6%, an improvement of 2.7 percentage points in cc. Net income for the quarter also saw a substantial increase, rising by 49% in cc and 43% in USD, reaching USD 3.2 billion. Earnings per share (EPS) grew to USD 1.60, a 47% increase in cc and 52% in USD. Free cash flow was strong, amounting to USD 4.6 billion, a 40% increase driven by higher net cash from operating activities.

For the first half of 2024, Novartis reported net sales of USD 24.3 billion, an 11% increase in cc and 9% in USD. Core operating income for the first half was USD 9.5 billion, up 21% in cc and 16% in USD. The core operating income margin for the first half stood at 39%, up by 3.1 percentage points in cc. Net income for the first half was USD 5.9 billion, a 43% increase in cc and 34% in USD, with EPS rising to USD 2.91, a 47% increase in cc and 37% in USD. Free cash flow for the first half was USD 6.7 billion, an increase of 11% compared to the previous year.

Novartis also achieved several important milestones in its innovation pipeline during the second quarter. Fabhalta (iptacopan) received approval in the EU, Japan, and China for treating paroxysmal nocturnal hemoglobinuria (PNH). Lutathera was approved by the FDA for pediatric patients with gastroenteropancreatic neuroendocrine tumors (GEP-NETs), and Scemblix received Breakthrough Therapy designation from the FDA for first-line chronic myeloid leukemia (CML). Additionally, the FDA accepted the filing for atrasentan for treating IgA nephropathy (IgAN).

The company has raised its full-year 2024 guidance for core operating income, expecting mid- to high-teen growth from the previously projected low double-digit to mid-teen growth. Novartis also maintains its expectation for net sales to grow in the high single to low double-digit range.

CEO Vas Narasimhan highlighted the strong quarterly performance, attributing it to the momentum of key growth drivers and a robust pipeline. He emphasized the company's continued focus on innovation and strategic deals to expand its pipeline, particularly in radioligand therapy (RLT) and prostate cancer.

Novartis’ strategic transformation into a pure-play innovative medicines company is ongoing, with a clear focus on four core therapeutic areas: cardiovascular-renal-metabolic, immunology, neuroscience, and oncology. The company is also prioritizing three emerging technology platforms: gene and cell therapy, radioligand therapy, and xRNA, investing in R&D capabilities and manufacturing scale.

Geographically, Novartis is concentrating on growth in priority markets including the US, China, Germany, and Japan. Financially, the company remains disciplined in capital allocation, generating substantial cash flow and maintaining a strong capital structure.

Following the spin-off of Sandoz, Novartis' financial statements are now reported under continuing operations, reflecting its innovative medicines business and ongoing corporate activities.

In the second quarter, the top growth drivers were Entresto, Kesimpta, Cosentyx, Kisqali, Leqvio, and Pluvicto, each contributing significantly to the overall sales growth. Emerging markets, particularly China, also showed strong performance, with China’s sales growing by 27% in cc.

Overall, Novartis continues to demonstrate strong financial performance and significant progress in its strategic and operational goals, positioning itself for continued growth and innovation in the pharmaceutical industry.