Novartis Expects Key Drugs, Recent Deals to Buoy Sales Into 2030s

 Novartis said higher expectations for key drugs and recent dealmaking that replenished its medicine pipeline should keep sales growing into the 2030s as the drugmaker plows ahead with a U.S. push.

The Swiss pharmaceutical company is confronting investor concerns about patent expirations for some of its topselling products, as it continues drug-pricing talks with the White House and moves forward with a $23 billion plan to bolster its U.S. footprint.

"We are very confident in the U.S. outlook," Novartis Chief Executive Vas Narasimhan said Thursday during a call with reporters.

The company is aiming to produce locally all key drugs it sells in the U.S. It picked North Carolina as the site of a new manufacturing hub, adding facilities to expand its existing presence as part of a previously announced pledge to invest billions of dollars in its U.S.-based infrastructure over the next five years.

Some of Novartis's peers, including Pfizer and Novo Nordisk, recently struck agreements with the Trump administration to lower the price of some of their drugs in exchange for a reprieve from potential new tariffs.

Novartis's talks with the U.S. government are progressing well and the company is confident it can manage the tariff situation, Narasimhan said. He indicated the company expects to absorb the outcome of those White House discussions in its guidance.

The drugmaker rolled forward its midterm sales target to the 2025-30 period, projecting its top-line will grow at an annual pace of 5% to 6% when excluding currency movements. Last month, following its $12 billion agreement to buy Avidity Biosciences, the company lifted its annual sales growth guidance for the 2024-29 period to 6% from 5%.

Drugs Novartis already has in hand, as well as upcoming launches with multibillion-dollar potential, will drive growth for years to come, Narasimhan said. The company now has eight in-market drugs with potential to generate peak sales of $3 billion to $10 billion a year, and expects to commercialize over the medium term eight more that could bring in multibillion-dollar sales each.

Novartis raised its peak sales guidance for two of its biggest drugs--Kisqali for breast cancer and Scemblix for leukemia. It now forecasts Kisqali sales to top $10 billion at their peak, up from $8 billion previously, while Scemblix's peak sales estimate was lifted to $4 billion from $3 billion.

Two of the planned launches Novartis sees as most promising--experimental drugs for neuromuscular diseases--come from its recent Avidity deal, the company's biggest acquisition in recent years. Novartis expects the deal to weigh on profitability in the coming years, but forecast a return to core operating profit margins above 40% by 2029. For the first nine months of the year, its margin was 41.2%.

The Avidity deal added to a series of smaller acquisitions and licensing agreements that allowed Novartis to fill its drug pipeline. The company said drugs it licensed or bought in the past two years position it well to drive top-line growth beyond 2030.

"Over the past two years, we have executed more than 30 strategic deals, bolstering our pipeline and strengthening the outlook of the business in the mid-2030s and beyond," Narasimhan said.

While Novartis's new sales target is ahead of current consensus expectations, investors will likely stay cautious on its prospects into the next decade given a large number of patent expirations in this period and the fact that its outlook depends on the pipeline playing out as hoped, analysts at J.P. Morgan wrote in a note to clients.

https://www.morningstar.com/news/dow-jones/202511203580/novartis-expects-key-drugs-recent-deals-to-buoy-sales-into-2030s-update