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1. Company Snapshot

1.a. Company Description

Novartis AG researches, develops, manufactures, and markets healthcare products worldwide.The company operates through two segments, Innovative Medicines and Sandoz.The Innovative Medicines segment offers prescription medicines for patients and healthcare providers.


It also provides ophthalmology, neuroscience, immunology, hepatology, dermatology, respiratory, cardiovascular, renal, and metabolism medicine products.The Sandoz segment develops, manufactures, and markets finished dosage form medicines; active ingredients and finished dosage forms of small molecule pharmaceuticals to third parties; and retail generics and anti-infectives.It also provides active pharmaceutical ingredients and intermediates primarily antibiotics; protein- or other biotechnology-based products, including biosimilars; and biotechnology manufacturing services.


Novartis AG has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture, and commercialize inclisiran; and a clinical collaboration with Kura Oncology, Inc.to evaluate the combination of Tipifarnib and Alpelisib in patients with head and neck squamous cell carcinoma.The company was incorporated in 1996 and is headquartered in Basel, Switzerland.

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1.b. Last Insights on NOVN

Novartis AG's recent performance was driven by strong Q2 2025 earnings, with sales reaching $14.05 billion, up 12% year-over-year. The company's operating income outlook was raised, and a $10 billion share buyback was initiated. Additionally, Novartis announced positive updates on ianalumab and Leqvio, strengthening its outlook. Collaborations with Argo Biopharmaceutical and Arrowhead Pharmaceuticals for novel molecules and siRNA candidates also contributed to the positive momentum. These developments have enhanced Novartis' position in the pharmaceutical industry.

1.c. Company Highlights

2. Novartis' Q3 2025 Earnings: A Strong Performance

Novartis reported a solid financial performance in Q3 2025, with net sales growing 7% and core operating income up 7%. The core margin was 39.3%, and core EPS came in at $2.25, reflecting a 10% increase. Free cash flow totaled $6.2 billion. For the first 9 months, net sales grew 11%, core operating income 18%, and the core margin expanded 250 basis points to reach 41.2%. The company's financial performance was driven by its priority brands, including Kisqali, Kesimpta, Pluvicto, and Scemblix, which drove robust growth.

Publication Date: Oct -29

📋 Highlights
  • ...: ...
  • Strong Financial Performance:: Q3 sales up 7% with core operating income growth of 7%, core margin at 39.3%, and core EPS of $2.25 (10% increase).
  • Priority Brands Growth:: Kisqali (68%), Kesimpta (44%), Pluvicto (45%), and Scemblix (95%) drove robust sales, with Kisqali leading early breast cancer with 63% NBRx/TRx share.
  • Key Product Milestones:: FDA approval of Rhapsido for CSU, positive Phase III data for Ianalumab, and Pluvicto’s pre-taxane approval boosting U.S. growth by 53%.
  • Strategic Acquisitions & Buybacks:: Proposed Avidity acquisition raises 2024–2029 sales growth from 5% to 6%, with $10B new buyback program launched (replacing $15B program).
  • Long-Term Guidance Raised:: 2025 full-year net sales growth reaffirmed at high single digits, core operating income at low teens, and long-term revenue growth now driven by existing brands and Avidity.

Priority Brands Drive Growth

Kisqali grew 68%, Kesimpta grew 44%, Pluvicto grew 45%, and Scemblix grew 95%. Kisqali is the market leader in NBRx and TRx, with a 63% share in early breast cancer. Kesimpta had 45% growth in the U.S. and 43% growth outside the U.S. Pluvicto's growth was driven by the pre-taxane castrate-resistant prostate cancer approval. The company's renal portfolio is also gaining traction, with a 98% growth in IgAN versus market growth of 23%.

Innovation and Pipeline Updates

The company had several important approvals and positive Phase III results, including Rhapsido, Ianalumab, and Pluvicto. Rhapsido was approved by the FDA as the only oral targeted BTK inhibitor for CSU, with a clean safety profile and rapid onset of efficacy. Ianalumab had positive Phase III studies, with a statistically significant improvement in ESSDAI. As Vasant Narasimhan mentioned, "We've successfully tackled structural challenges with the PSMA and VISION launch, and now have over 700 prescribing clinics across the country."

Valuation and Outlook

With a P/E Ratio of 17.76 and an ROE of 32.56%, Novartis' valuation appears reasonable. The company's dividend yield is 3.54%, and its free cash flow yield is 7.49%. Novartis reaffirmed its full year guidance, expecting high single-digit growth in net sales and low teens growth in core operating income. The proposed acquisition of Avidity is expected to raise the company's '24 to '29 sales average growth rate from 5% to 6%. Analysts estimate next year's revenue growth at 2.5%.

Challenges and Opportunities

The company faces challenges, including rebate adjustments and generic competition. However, Novartis is confident in its ability to maintain stable margins in 2026 through productivity efforts and offsetting effects from high-margin products like Kisqali. The company's pipeline and innovation updates provide opportunities for future growth, including the potential for remibrutinib and label expansion for Pluvicto.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.90%)

6. Segments

Innovative Medicines

Expected Growth: 2.2%

The segment is expected to grow due to the strong performance of its key brands, including Entresto and Cosentyx, which have shown significant sales growth. Additionally, Novartis' robust pipeline of new medicines and increasing demand for its products in emerging markets will contribute to growth.

7. Detailed Products

Cosentyx

A prescription medicine used to treat moderate to severe plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and moderate to severe Crohn's disease.

Gilenya

A prescription medicine used to treat relapsing forms of multiple sclerosis (MS) in adults.

Tasigna

A prescription medicine used to treat certain types of leukemia, including Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML).

Kisqali

A prescription medicine used to treat certain types of breast cancer, including HR+/HER2- advanced or metastatic breast cancer.

Entresto

A prescription medicine used to reduce the risk of cardiovascular death and hospitalization in patients with chronic heart failure (NYHA Class II-IV) and reduced ejection fraction.

Xolair

A prescription medicine used to treat moderate to severe asthma in people 12 years and older whose asthma is not well-controlled with inhaled corticosteroids.

Lucentis

A prescription medicine used to treat wet age-related macular degeneration (AMD), diabetic macular edema (DME), and diabetic retinopathy (DR).

Alcon Contact Lenses

A range of contact lenses designed for comfort, convenience, and clear vision.

Sandoz Biosimilars

A range of biosimilar medicines used to treat various conditions, including cancer, autoimmune diseases, and inflammatory diseases.

8. Novartis AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Novartis AG faces moderate threat from substitutes due to the presence of alternative treatments and generics in the pharmaceutical industry.

Bargaining Power Of Customers

Novartis AG has a diverse customer base, including patients, healthcare providers, and payers, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Novartis AG relies on a network of suppliers for raw materials, manufacturing, and logistics, but has some bargaining power due to its large scale and diversified supply chain.

Threat Of New Entrants

The pharmaceutical industry has high barriers to entry, including significant R&D investments, regulatory hurdles, and patent protections, which limits the threat of new entrants for Novartis AG.

Intensity Of Rivalry

The pharmaceutical industry is highly competitive, with many established players, including Pfizer, Roche, and Merck, which increases the intensity of rivalry for Novartis AG.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 36.09%
Debt Cost 3.95%
Equity Weight 63.91%
Equity Cost 6.28%
WACC 5.44%
Leverage 56.46%

11. Quality Control: Novartis AG passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Novartis

A-Score: 6.3/10

Value: 3.5

Growth: 4.2

Quality: 7.8

Yield: 7.5

Momentum: 5.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
GSK

A-Score: 5.7/10

Value: 3.9

Growth: 2.2

Quality: 6.5

Yield: 6.9

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Sanofi

A-Score: 5.7/10

Value: 5.7

Growth: 4.0

Quality: 8.0

Yield: 7.5

Momentum: 1.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
AstraZeneca

A-Score: 5.5/10

Value: 2.0

Growth: 7.6

Quality: 6.9

Yield: 3.1

Momentum: 6.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Roche

A-Score: 5.3/10

Value: 2.0

Growth: 3.0

Quality: 6.4

Yield: 6.2

Momentum: 6.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Bayer

A-Score: 4.5/10

Value: 8.1

Growth: 2.1

Quality: 2.5

Yield: 3.8

Momentum: 6.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

107.08$

Current Price

107.08$

Potential

-0.00%

Expected Cash-Flows