Novartis Raises Guidance Despite Drug-Trial Setbacks Hitting Profit — 2nd Update

By Adria Calatayud

Novartis raised its full-year earnings guidance, citing solid sales growth and cost savings, even as recent clinical-trial setbacks hit the Swiss drugmaker's bottom line in the third quarter.

The company has been grappling with declining revenue from aging medicines that used to rank among its top sellers, such as heart drug Entresto, as it works to roll out new products and to advance studies to seek approval for more.

"We are definitely off that patent cliff, which puts the company in a different place from a growth perspective," Novartis Chief Financial Officer Mukul Mehta said in an interview Tuesday.

Novartis now expects 2026 core operating profit--one of its preferred earnings metrics--to rise by a low-single-digit percentage, excluding the effect of currency changes. It had previously projected a decline for the metric.

The guidance upgrade was driven by a good sales performance in the third quarter and cost savings driven in large part by artificial intelligence, Mehta said. The company is using the technology to bring work that was previously outsourced in-house, cutting back on marketing and consulting costs, he added.

Despite recent pipeline setbacks, Novartis's current portfolio can hold the company until its next patent expirations, Mehta said. Psoriasis drug Cosentyx is due to go off patent in the U.S. in 2029, followed by breast-cancer medicine Kisqali and multiple-sclerosis treatment Kesimpta in the early 2030s.

Two medicines that the company hoped would boost its midterm outlook--pelacarsen for cholesterol and del-desiran for a rare neuromuscular disorder--missed their goals in late-stage trials, while a third, remibrutinib, hit the target in multiple sclerosis.

Novartis Chief Executive Officer Vas Narasimhan told reporters on Tuesday that the positive study results for remibrutinib, when added to existing skin indications for which it is already approved and more that could be unlocked by trials currently under way, mean it could become the largest medicine in the company's history.

Narasimhan said Novartis remained committed to its experimental drug del-desiran after a trial for myotonic dystrophy type 1 didn't deliver the results the company hoped for, and that it was working through the development path for the medicine.

Novartis acquired del-desiran as part of its $12 billion deal for Avidity Biosciences. The trial setback led the company to book a $1.9 billion write-down in its third-quarter results.

As a result, Novartis reported a drop in third-quarter net profit to $1.20 billion from $3.93 billion for the same period last year.

Excluding exceptional items, core operating profit climbed 10% at constant currency to $6.04 billion. The result beat analysts' expectations of $5.61 billion, according to consensus estimates provided by Visible Alpha.

Novartis's quarterly sales rose 4% to $14.52 billion.

Full-year sales are still expected to grow by a low-single-digit percentage, excluding currency effects, Novartis added.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

October 27, 2026 10:36 ET (14:36 GMT)