Novartis sees sales boost from key cancer drugs

Novartis forecast currency-adjusted sales growth of 5–6% a year to 2030 and saw shares tick up about 1% (+16% YTD) after outlining a pipeline-boosting spending spree — roughly $30 billion in deals this year including a planned $12 billion Avidity acquisition that lifts 2024–29 growth guidance to 6% from 5% — and upgraded peak-sales for Kisqali to at least $10 billion (from $8 billion) and Scemblix to at least $4 billion (from $3 billion), which together generated $4.4 billion in the first nine months of 2025. Management said Kisqali could face U.S. price negotiations under the Inflation Reduction Act in 2027 but expects limited first-year impact, and Jefferies sees room to raise targets further while JPMorgan warns of patent cliff and pricing risks toward the decade’s end. Novartis is targeting a core operating margin of at least 40% by 2029 after a projected 1–2 percentage-point drag from Avidity (41.2% in the first nine months of 2025), but delivery on the 2030 roadmap depends on the success of recently approved and experimental assets such as Rhapsido and Avidity’s candidates amid recent Q3 margin weakness.

Analysis

Novartis guided to currency-adjusted sales growth of 5%–6% annually to 2030 and saw shares tick ~1% higher in early trade (up 16% YTD), while management flagged a roughly $30 billion deal cadence this year including a planned $12 billion Avidity acquisition that Novartis says lifts its 2024–2029 CAGR target to 6% from 5%. The company upgraded peak-sales assumptions for Kisqali to at least $10 billion (from $8 billion) and Scemblix to at least $4 billion (from $3 billion); those two drugs generated $4.4 billion in combined sales in the first nine months of 2025 and Jefferies sees scope to raise targets further. CEO Vas Narasimhan acknowledged potential U.S. price negotiations for Kisqali under the Inflation Reduction Act in 2027 but expects limited first-year impact, while JPMorgan warns of patent expiries (Entresto, Xolair) and late-decade pricing pressure that could temper growth beyond 2030. Operationally, Q3 results were roughly in line but showed weaker margins; Novartis is targeting a core operating margin of at least 40% by 2029 after a 1–2 percentage-point drag from Avidity (9M2025 margin 41.2%), and execution relies on commercializing recent approvals (Rhapsido) and Avidity’s pipeline candidates.

Key Decisions for Investors

• Consider a constructive overweight exposure to NVS to capture upgraded Kisqali and Scemblix long-term optionality, provided position size reflects integration and execution risk
• Use protective hedges or scale into the position ahead of Avidity closing (expected H1 2026) to mitigate the 1–2 ppt margin drag and integration uncertainty
• Monitor three near-term binary catalysts closely—Kisqali IRA selection in 2027, clinical/commercial readouts from Rhapsido and Avidity candidates, and formal patent-expiry timelines for Entresto/Xolair—and reprice risk if adverse developments occur
• Avoid adding materially to exposure based solely on guidance; require clear margin recovery or sustained sales traction from newly forecasted assets before increasing allocation