Based on the Novartis Q4 2025 Media Release, here is the high-level summary of the financial and operational performance:
Full Year 2025 Financial Results
Novartis delivered strong performance in 2025, driven by double-digit growth in core products:
- Net Sales: reached 51,488 million USD, a 9% increase (10% in constant currencies).
- Core Operating Income: stood at 19,973 million USD, growing 11% compared to 2024.
- Dividend Proposal: The Board of Directors proposed a dividend of 3.70 CHF per share, an increase of 2.8%, marking 28 consecutive years of dividend growth.
Key Growth Drivers (Full Year Sales)
The following products contributed significantly to the revenue growth:
- Entresto: 7,271 million USD (+20%), continuing its dominance in the heart failure market.
- Cosentyx: 5,807 million USD (+17%), showing strong momentum in immunology.
- Kesimpta: 3,425 million USD (+39%), a leading driver in Multiple Sclerosis treatment.
- Kisqali: 3,073 million USD (+41%), following positive updates in the NATALEE trial context.
- Pluvicto: 1,313 million USD (+43%), highlighting the expansion of radioligand therapy.
Pipeline and Strategic Progress
Novartis has completed its transformation into a “pure-play” medicines company, focusing on four core therapeutic areas: Cardiovascular-Renal-Metabolic, Immunology, Neuroscience, and Oncology.
- R&D Milestones: The company reported positive data for Fabhalta and Scemblix, further strengthening its specialty portfolio.
- 2026 Outlook: Management expects net sales to grow in the mid-single digit range and core operating income to grow in the mid-to-high single digit range.
Below is the Income Statement and analysis based on the Novartis Q4 2025 financial report.
Income Statement FY 2025
| Item | 2025(USD million) | 2024(USD million) | YoY(%) | % of Total Rev |
| Net Sales | 54532 | 50317 | 8.4% | 100.0% |
| Core Operating Income | 21889 | 19494 | 12.3% | 40.1% |
| Core Net Income | 17411 | 15755 | 10.5% | 31.9% |
| Operating Income(IFRS) | 17644 | 14544 | 21.3% | 32.4% |
| Net Income(IFRS) | 13967 | 11939 | 17.0% | 25.6% |
Segment Revenue Analysis
| Segment | 2025(USD million) | 2024(USD million) | YoY(%) | % of Total Rev |
| Oncology | 16812 | 14357 | 17.1% | 30.8% |
| Immunology | 10274 | 9173 | 12.0% | 18.8% |
| Cardiovascular, Renal & Metabolic | 8946 | 8574 | 4.3% | 16.4% |
| Neuroscience | 5658 | 4455 | 27.0% | 10.4% |
| Established Medicines | 3187 | 3354 | -5.0% | 5.8% |
| Other Products & Contract Revenues | 9655 | 10404 | -7.2% | 17.7% |
Key Product Performance
| Product | Therapeutic Area | 2025(USD million) | YoY(%) | % of Total Rev |
| Entresto | Cardiovascular | 7271 | 20.0% | 13.3% |
| Cosentyx | Immunology | 5807 | 17.0% | 10.6% |
| Kesimpta | Neuroscience | 3425 | 39.0% | 6.3% |
| Kisqali | Oncology | 3073 | 41.0% | 5.6% |
| Pluvicto | Oncology | 1313 | 43.0% | 2.4% |
Executive Summary and Financial Analysis
1.Revenue Growth: Net sales grew by 8.4% (10% in constant currencies), primarily fueled by strong volume growth from “Key Growth Drivers.” The transition to a focused medicines company has successfully shifted the portfolio toward high-margin, innovative treatments.
2.Margin Expansion: The Core Operating Income margin improved to 40.1%, up from 38.7% in 2024. This was driven by a favorable product mix and continued productivity gains, even as R&D investment remained robust to support the late-stage pipeline.
3.Therapeutic Strengths: Neuroscience was the fastest-growing segment (+27%), led by the rapid adoption of Kesimpta. Oncology also showed exceptional momentum (+17.1%) due to the success of Kisqali in breast cancer and Pluvicto in radioligand therapy.
4.Shareholder Returns: Reflecting strong cash generation and confidence in the future, the Board proposed a 2.8% increase in the dividend to 3.70 CHF per share. The company maintains a strong balance sheet while continuing its share buyback program.
According to the latest Novartis earnings reports and investor presentations from early 2026, the company is entering a “catalyst-rich” period with over 15 submission-enabling Phase 3 readouts expected between 2026 and 2027.
Below is the organized Phase 3 pipeline with the most current estimated readout dates.
Phase 3 Clinical Trial Timeline (2026-2027)
| Therapeutic Area | Asset | Indication | Estimated Readout |
| Cardiovascular (CRM) | Pelacarsen | Lp(a) lowering (CV Outcomes) | H1 2026 (Originally 2025) |
| Abelacimab | Stroke prevention in AFib | 2026 (Event-driven) | |
| Leqvio | Secondary & Primary Prevention | 2027 | |
| Neuroscience | Remibrutinib | Relapsing Multiple Sclerosis (RMS) | H2 2026 |
| Votoplam | Huntington’s Disease | 2027+ (Ph3 started early ’26) | |
| Immunology | Ianalumab | Sjögren’s Disease / SLE | 2026 – 2027 |
| Zigakibart | IgA Nephropathy (IgAN) | 2026 – 2027 | |
| Remibrutinib | Chronic Inducible Urticaria (CIndU) | 2026 | |
| Oncology | Pluvicto | mHSPC (Pre-taxane) | 2026 (Regulatory update) |
| Scemblix | 1L Chronic Myeloid Leukemia (CML) | 2026 (Market expansion data) | |
| Pelabresib | Myelofibrosis | 2026 (Follow-up/Filing) |
Key Catalyst Deep Dive
1. Pelacarsen (The Big One)
- Status: The Lp(a)HORIZON trial is the first major outcome study for Lp(a) lowering.
- Timeline: Data was pushed to H1 2026 because cardiovascular events in the trial occurred more slowly than expected—ironically a sign of a well-managed patient group, but it delays the “unblinding.”
- Market Impact: This is considered a multi-billion dollar opportunity as no targeted therapy for high Lp(a) currently exists.
2. Remibrutinib (BTK Inhibitor)
- Status: Already approved for CSU (Chronic Spontaneous Urticaria) in late 2025.
- MS Timeline: The high-stakes readout for Multiple Sclerosis is expected in H2 2026. This will determine if Novartis can compete with Sanofi’s tolebrutinib in the neuro-inflammation space.
3. Ianalumab (Pipeline-in-a-drug)
- Status: Replicate Phase 3 trials for Sjögren’s were positive in late 2025.
- Timeline: Expect a steady stream of data across SLE (Lupus) and other autoimmune indications throughout 2026. Novartis views this as a potential $5B+ asset.
4. Vanrafia (Atrasentan) Update
- Latest: On February 13, 2026, Novartis released final ALIGN Phase 3 data. While it showed a significant benefit in slowing eGFR decline, the company is moving toward full FDA submission later this year.
Strategic Note: “The Patent Cliff”
Novartis is accelerating these readouts specifically to offset the generic entry of Entresto (its top seller), which is expected to face significant revenue erosion starting in 2025-2026. The success of Pelacarsen and Remibrutinib is critical for maintaining their 5% CAGR guidance through 2030.
In October 2025, Novartis announced its acquisition of Avidity Biosciences for approximately $12 billion ($72 per share in cash). This is one of Novartis’ largest deals in recent years, specifically designed to accelerate its “xRNA” strategy and bolster its neuroscience pipeline as key patents (like Entresto) approach expiration.
The transaction is expected to close in the first half of 2026.
The Core Technology: AOC Platform
Avidity’s value lies in its proprietary Antibody Oligonucleotide Conjugate (AOC) platform.
- The Breakthrough: RNA drugs traditionally struggle to reach tissues outside the liver. Avidity’s AOCs combine the precision of monoclonal antibodies (targeting TfR1 receptors) with the gene-silencing power of oligonucleotides to deliver therapy directly into skeletal and cardiac muscle.
- Strategic Fit: This allows Novartis to expand its RNA leadership beyond cardiovascular (Leqvio) into rare neuromuscular diseases.
Key Clinical Assets Acquired
Novartis gains three potential first-in-class, late-stage programs:
| Drug Candidate | Target Disease | Clinical Stage |
| del-desiran (AOC 1001) | Myotonic Dystrophy Type 1 (DM1) | Phase 3 (HARBOR trial) |
| del-brax (AOC 1020) | Facioscapulohumeral Muscular Dystrophy (FSHD) | Phase 2 (FORTITUDE trial) |
| del-zota (AOC 1044) | Duchenne Muscular Dystrophy (DMD Exon 44) | Phase 1/2 (EXPLORE44) |
The “SpinCo” Structure
To focus the acquisition on neuromuscular assets, the deal includes a specific corporate restructuring:
- Asset Separation: Prior to the merger, Avidity is spinning off its early-stage precision cardiology programs into a new, independent public company called SpinCo.
- Capitalization: SpinCo will be capitalized with $270 million and will retain existing RNA cardiology partnerships with Bristol Myers Squibb and Eli Lilly.
- Shareholder Impact: Avidity shareholders will receive one share of SpinCo for every ten shares of Avidity they own, in addition to the $72 cash per share from Novartis.
Financial & Strategic Impact
- Growth Guidance: Novartis expects this acquisition to raise its 2024-2029 sales CAGR from 5% to 6%.
- Launch Targets: The company anticipates multiple product launches from this pipeline before 2030, addressing a projected $15 billion global market for these rare diseases.
If you would like to track the progress of these specific clinical trials (like the HARBOR trial for DM1), I can provide more detailed milestone dates for 2026.
Novartis’ “Pipeline Pruning” is a strategic initiative to transform into a “Pure-play Innovative Medicines” company. According to the Q4 2025 and early 2026 updates, the company is aggressively optimizing its R&D portfolio to focus resources on high-value, first-in-class, or best-in-class projects.
1. Specific Pruning Actions (2025-2026)
In the latest updates, Novartis removed 6 early-stage (Phase 1) candidates from its pipeline. The majority of these removals were concentrated in the Oncology sector:
| Candidate | Therapeutic Area | Platform | Reason for Removal |
| AAA802 | Oncology | Radioligand (Ac-225) | Replaced by next-generation candidates |
| MGY825 | Oncology | Small Molecule | Portfolio prioritization (NSCLC focus) |
| KFA115 | Oncology | Biotherapeutic | Strategic deprioritization |
| HRO761 | Oncology | Small Molecule | Realignment in solid tumor strategy |
While 6 projects were removed, Novartis simultaneously added 2 new Phase 1 assets (such as AMO959 for DNA repair), illustrating that this is not a budget cut but a quality upgrade.
2. Strategic Rationale (The “Why”)
CEO Vas Narasimhan has emphasized that Novartis previously suffered from “project bloat,” where too many projects led to under-investment in individual key assets. The pruning serves several goals:
- Managing the “Patent Cliff”: With the blockbuster Entresto facing generic competition in 2025-2026, Novartis must ensure R&D dollars are spent on projects capable of launching before 2030.
- Protecting Core Margins: Having achieved a 40.1% core operating margin, the company must minimize “wastage” on early-stage projects with low commercial probability.
- Platform Concentration: Resources are being shifted to five core technology platforms: xRNA, Radioligand Therapy (RLT), Cell & Gene Therapy, Small Molecules, and Biologics.
3. Resource Realignment
The capital and focus saved from pruning are redirected toward:
- Late-stage Blockbusters: Funding the massive Phase 3 trials for Pelacarsen (Lp(a)), Remibrutinib, and Ianalumab.
- Strategic Acquisitions: Deals like the $12 billion acquisition of Avidity Biosciences are seen as swapping “uncertain early-stage R&D” for “certain late-stage assets” (e.g., Rare Neuromuscular diseases).
- Manufacturing Infrastructure: Investing in RLT production facilities in the US (Florida and Texas) to ensure supply chain dominance.
Executive Summary: Efficiency over Volume
Novartis’ pruning is not an act of financial distress; it is Portfolio Optimization. By eliminating early-stage projects with marginal differentiation, Novartis aims to build a more resilient model capable of maintaining 5-6% sales growth through 2030.
Based on the financial reports from 2021 to 2025, here is a detailed financial ratio analysis. This period captures the company’s significant transformation from a diversified giant into a focused “Pure-play Medicines” innovator following the spin-off of Sandoz.
Profitability Ratios
Novartis has shown a consistent upward trend in margins, reflecting the higher value of its innovative portfolio and improved operational efficiency.
| Ratio | 2025 | 2024 | 2023 | 2022 | 2021 |
| Gross Margin | 76.3% | 75.2% | 74.2% | 73.4% | 74.1% |
| Core Operating Margin | 40.1% | 38.7% | 36.0% | 33.0% | 32.1% |
| Net Profit Margin | 25.6% | 23.7% | 18.9% | 16.5% | 46.5%* |
| Return on Equity (ROE) | 34.1% | 26.3% | 16.2% | 9.5% | 36.9%* |
Note: 2021 Net Margin and ROE were exceptionally high due to a one-time gain of over $14 billion from the divestment of the Roche stake.
Solvency & Liquidity Ratios
While the company maintains a strong balance sheet, the debt-to-equity ratio has climbed recently to fund strategic acquisitions like Avidity Biosciences.
| Ratio | 2025 | 2024 | 2023 | 2022 | 2021 |
| Debt to Equity (D/E) | 72.0% | 63.6% | 57.0% | 47.0% | 46.0% |
| Net Debt to EBITDA | 1.1x | 1.0x | 0.8x | 0.7x | 0.2x |
| Current Ratio | 0.88 | 1.04 | 1.16 | 1.29 | 1.51 |
Efficiency & Market Valuation
The company’s ability to generate cash remains its primary strength, supporting its 28-year streak of dividend increases.
| Ratio | 2025 | 2024 | 2023 | 2022 | 2021 |
| Free Cash Flow (USD B) | 17.6 | 16.3 | 13.2 | 12.1 | 13.3 |
| P/E Ratio (TTM) | 21.4x | 16.6x | 28.6x | 9.2x | 20.1x |
| Dividend Yield | 3.1% | 3.3% | 3.5% | 3.8% | 3.6% |
Key Financial Insights
- Structural Margin Expansion: The Core Operating Margin reached the 40.1% target two years ahead of schedule (originally planned for 2027). This was achieved through the divestment of the lower-margin Sandoz business and the rapid growth of high-margin “Priority Brands” like Kisqali and Pluvicto.
- Strategic Leverage: The Debt-to-Equity ratio rose to 72% in 2025. This reflects a shift in capital allocation toward M&A to offset the upcoming patent cliff of Entresto. Despite the higher debt, an interest coverage ratio of 24.6x indicates that the company remains highly solvent.
- Liquidity Tightening: The Current Ratio dropped to 0.88 in 2025, suggesting a tighter short-term liquidity position as more cash was deployed into acquisitions and share buybacks ($10 billion program ongoing through 2027).
- Valuation Recovery: Market sentiment improved significantly in 2025, with the P/E ratio normalizing around 21x as investors priced in the success of the new pipeline assets (e.g., Remibrutinib and Ianalumab).
As of February 2026, Novartis (NVS) is trading at a valuation that reflects its successful transition into a high-margin, innovative medicines company. While its Trailing P/E (TTM) has risen due to recent stock price strength following the Phase III ALIGN study results, its Forward P/E suggests it remains reasonably priced relative to industry giants.
P/E Ratio Comparison (As of Feb 2026)
| Company | Ticker | Trailing P/E (TTM) | Forward P/E (FY1) | Valuation Context |
| Novartis | NVS | 22.1x | 15.6x | Premium valuation due to 40% core margin milestone. |
| Eli Lilly | LLY | 45.5x | 30.6x | Hyper-growth premium from GLP-1 (weight loss) dominance. |
| AstraZeneca | AZN | 31.8x | 21.0x | High premium for industry-leading oncology growth. |
| Johnson & Johnson | JNJ | 23.0x | 20.0x | Stabilized as a “Pure-play” MedTech & Pharma giant. |
| Roche | RHHBY | 21.9x | 17.4x | Trading in line with Novartis; similar portfolio transition. |
| Merck & Co. | MRK | 16.1x | 12.8x | Value-play; heavily reliant on Keytruda patent cycle. |
| Pfizer | PFE | 15.8x | 12.4x | Significant discount as it seeks post-COVID growth drivers. |
| Bristol Myers Squibb | BMY | 20.9x | 9.6x | Deep discount; market skeptical of its growth past 2026. |
Valuation Analysis & Peer Benchmarking
- Novartis vs. The Industry Average:The current S&P 500 Healthcare sector forward P/E is approximately 18.7x, while the general Pharmaceutical industry average sits at 19.5x. At a 15.6x Forward P/E, Novartis is trading at a slight discount to the broader healthcare sector, despite its superior 40% core operating margin. This suggests investors still see “room to run” as pipeline catalysts materialize.
- The “Premium” vs. “Value” Gap:
- Growth Premium: Companies like Eli Lilly and AstraZeneca command much higher multiples (30x–38x) because of explosive near-term revenue growth.
- Reasonable Value: Novartis and Roche represent the “Reasonable Growth at a Reasonable Price” (GARP) segment. Their 21x–22x trailing multiples are justified by their strong ROE (Novartis at ~32.6%) and steady dividend growth.
- Forward-Looking Upside:With a Forward P/E of 15.6x, Novartis is priced for mid-to-high single-digit earnings growth. If the 2026 pipeline readouts (specifically Pelacarsen) are successful, analysts anticipate a potential “re-rating,” where the stock’s multiple could expand closer to AstraZeneca’s ~20x forward levels.
Strategic Conclusion
Novartis is no longer the “undervalued” laggard it was in 2022 (when it traded at ~8x P/E). It is now viewed as a top-tier efficiency performer. Its current 22x TTM P/E is the highest in a decade, signaling that the market has finally priced in its operational turnaround.
Source: https://www.novartis.com/sites/novartis_com/files/q4-2025-media-release-en.pdf
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