Novartis Q4: Earnings Beat Estimates, CEO Dismisses Entresto Patent Expiration Worries

Novartis AG, the Swiss multinational pharmaceutical company, reported strong fourth-quarter earnings, surpassing analysts' expectations. The company's net sales grew by 16% in constant currency, driven by robust performance across various brands, including the heart failure drug Entresto. Despite concerns surrounding the Entresto patent expiration, Novartis' CEO, Vas Narasimhan, expressed confidence in the company's growth prospects.



Novartis' fourth-quarter adjusted earnings per share (EPS) of $1.98 exceeded the street view of $1.81. Quarterly sales of $13.153 billion outpaced the analyst consensus estimate of $12.811 billion. The company's core operating income (COI) grew by 29% in constant currency, with a COI margin of 36.9%, an increase of 3.7 percentage points compared to the previous year.



Entresto, a combination of sacubitril and valsartan, contributed significantly to Novartis' strong performance. The drug's sales grew by 34% in constant currency, driven by increased demand and market share in the U.S. and Europe for heart failure treatment. Entresto's sales also grew in China and Japan for hypertension management. Multiple sclerosis drug Kesimpta sales reached $950 million, up 49% in constant currency, while Cosentyx sales jumped 24% in constant currency.

Narasimhan downplayed concerns about Entresto's U.S. patent expiration, stating that the company has strong replacement power. He attributed the company's confidence in its growth prospects to the future growth potential of other key brands, such as Kisqali, Pluvicto, Leqvio, Scemblix, and iptacopan. Novartis also expects to have 15 submission-enabling readouts in the coming years and over 30 assets with the potential to drive long-term growth.



Novartis maintains its full-year 2023 group guidance, expecting group sales to grow mid-single digits and group core operating income to grow high-single digits in constant currency. The company also maintains its mid-term outlook of +4% sales growth (in cc) 2022-2027 CAGR, with a 40% Core OpInc margin for Novartis ex-Sandoz.

In conclusion, Novartis' strong fourth-quarter earnings, driven by Entresto's robust performance, demonstrate the company's resilience and growth prospects. Despite concerns surrounding the Entresto patent expiration, Novartis' CEO remains confident in the company's ability to maintain its growth trajectory through a strong pipeline and other key brands.