Novartis Plunges 3% Amid Tariff Fears and Pricing Pressures: What’s Next for NVS?

Summary
• Novartis (NVS) tumbles 2.97% to $114.23, its worst intraday performance since early 2024.
• Trump’s 39% tariff on Swiss exports and aggressive drug pricing demands weigh on sentiment.
• FDA approval for Leqvio’s first-line use fails to offset macroeconomic headwinds.
• Options volatility surges, with 20 contracts trading above 30% implied volatility.

Novartis faces a perfect storm of geopolitical and regulatory pressures as U.S. President Donald Trump’s punitive tariffs and most-favored-nation pricing demands reverberate across global markets. Despite a key FDA approval for Leqvio, the stock’s sharp decline reflects broader anxieties in the pharma sector. With intraday volatility tightening around $114.105–$115.44, investors are recalibrating risk amid a shifting trade and pricing landscape.

Trump’s Tariffs and Pricing Demands Spur Flight from Pharma Giants
Novartis’s 3% drop is directly tied to President Trump’s 39% tariff on Swiss exports and his push for most-favored-nation (MFN) pricing on U.S. drug sales. The tariffs, announced ahead of a 29 September deadline for price cuts, have triggered a sell-off in Swiss and global pharma stocks. Novartis, a key player in high-margin therapies, faces dual threats: reduced export margins from tariffs and potential revenue compression from MFN pricing. While the FDA’s approval of Leqvio for first-line use is a technical win, it fails to offset macroeconomic headwinds. Market participants are pricing in delayed earnings visibility and regulatory uncertainty, with Novartis’s 52-week low of $96.062 now within 15% of current levels.

Pharma Sector in Retreat as J&J Holds Steady
The broader pharma sector mirrors Novartis’s decline, with global indices down 2–3% amid Trump’s trade and pricing agenda. However, Johnson & Johnson (J&J) buckles the trend, trading 0.27% higher on strong Amvuttra sales and raised 2025 guidance. This divergence highlights J&J’s diversified portfolio and pricing resilience compared to Novartis’s reliance on high-margin specialty drugs. While Novartis’s dynamic P/E of 14.45 suggests undervaluation, sector-wide profit-taking and risk-off sentiment dominate, with investors favoring defensive plays over growth-oriented pharma names.

Options and ETF Plays for a Volatile Pharma Landscape
• 200-day average: $109.52 (below current price); RSI: 48.32 (neutral); MACD: -0.52 (bearish); Bollinger Bands: $112.07–$123.35 (tightening).
• Key levels: Support at $114.52 (accumulated volume), resistance at $117.97 (short-term MA).
• Short-term outlook: Range-bound trading expected until 29 September pricing deadline, with potential for 5–7% swings.

Top Options Contracts:
• NVS20250815P115 (Put, $115 strike, 2025-08-15):
- IV: 23.08% (moderate); Leverage: 56.37% (high); Delta: -0.54 (sensitive to price drops); Theta: -0.021 (low decay); Gamma: 0.0907 (responsive to volatility).
- Payoff: At 5% downside ($108.52), intrinsic value = $6.48. Ideal for capitalizing on near-term bearish moves with high leverage.
• NVS20250919P115 (Put, $115 strike, 2025-09-19):
- IV: 19.24% (low); Leverage: 34.68% (moderate); Delta: -0.507 (moderate sensitivity); Theta: -0.019 (low decay); Gamma: 0.0514 (modest responsiveness).
- Payoff: At 5% downside, intrinsic value = $6.48. Offers longer-term bearish exposure with lower volatility risk.

Trading Setup: Aggressive short-term bears should prioritize NVS20250815P115 for its high leverage and sensitivity to price drops. For a balanced approach, pair with NVS20250919P115 to hedge against volatility decay. Watch for a breakdown below $114.52 support, which could trigger a 7–10% correction ahead of the MFN deadline.

Backtest Novartis Stock Performance
After an intraday plunge of at least -3%, the performance of NVS has historically shown mixed results. While the 3-day win rate is 50.52%, indicating a slightly higher probability of a positive return in the short term, the overall performance over 10 and 30 days is more favorable, with win rates of 53.11% and 53.63%, respectively. This suggests that NVS tends to recover from such significant dips, but the returns are generally modest, with a maximum return of 2.41% observed even over 30 days.

Act Now: Position for Trump’s Tariff Deadline and Pricing Deadline
Novartis’s 3% drop signals a pivotal moment for investors navigating Trump’s trade and pricing agenda. With the stock hovering near key support at $114.52 and the sector leader Johnson & Johnson (J&J) up 0.27%, the path forward hinges on regulatory clarity and market sentiment. Aggressive short-term bears should target NVS20250815P115 for leveraged downside exposure, while long-term holders may wait for a rebound above $117.97. Watch for the 29 September pricing deadline and Trump’s next tariff moves—these will define Novartis’s near-term trajectory. Action now: Short NVS with puts or buy dips above $114.52 for a potential rebound.