Novartis returns to growth as new drugs offset generics
- Novartis is a pure-play innovative medicines company after separating Sandoz.
- The company returned to growth in the second quarter of 2026.
- Kisqali crossed USD 1 billion in quarterly United States sales for the first time.
- Core margin reached 40.1% in 2025, two years ahead of the company goal.
- The bear case is policy risk, since Cosentyx, Kisqali, and Xolair face Medicare price negotiation for 2028.
Execution meets policy risk
The bull case is simple: Novartis is selling its key newer drugs very well. The company successfully offset early generic competition by returning to 1% constant currency growth in the second quarter of 2026. This was led by Kisqali, which crossed USD 1 billion in quarterly United States sales for the first time.
The company also has more shots on goal. Pluvicto is moving toward an expected third-quarter 2026 approval before taxane chemotherapy in prostate cancer, which opens a larger market. Avidity, if completed, brings assets with loss-of-exclusivity dates in the 2040s and no IRA impact, highlighted by a recent accelerated approval submission for del-zota.
The bear case is not about weak science right now. It is about price. Novartis agreed in December 2025 to launch future medicines with comparable prices across high-income countries. CMS also picked Cosentyx, Kisqali, and Xolair for Medicare price negotiation for 2028.
Finn lands near the middle because both sides are real. Novartis is executing, but investors are paying for a company whose best growth drivers now face more direct United States pricing pressure.
Patents, launches, and discipline
Novartis makes money by discovering, buying, testing, manufacturing, and selling patented drugs. The company focuses on high-need specialty areas instead of crowded mass markets where rebates can eat into price.
The current plan targets more than 5% sales CAGR to 2028. CAGR means average annual growth over a period. Management is trying to reach that by scaling drugs such as Kisqali, Kesimpta, Pluvicto, Scemblix, Leqvio, Fabhalta, Vanrafia, and Rhapsido.
The model breaks when patents, policy, or access fail. Generic copies have already hurt drugs such as Entresto, Tasigna, and Promacta. The Avidity deal may improve the long-term pipeline, but management expects 1 to 2 points of core margin dilution through 2029.
Novartis is also spending to reduce supply risk. Management said it is investing USD 23 billion with a goal of making 100% of key United States products end-to-end inside the country.
The drugs that matter
Cosentyx
Cosentyx is a major immunology drug with USD 6.7 billion of 2025 sales and 8% constant-currency growth. It is still important, but Medicare price negotiation for 2028 is a clear risk.
Kisqali
Kisqali is a breast cancer drug and one of Novartis's biggest growth engines. It recently crossed USD 1 billion in quarterly United States sales, helped by early breast cancer uptake.
Kesimpta
Kesimpta treats multiple sclerosis. It reached USD 4.4 billion of 2025 sales and grew 36% in constant currencies.
Pluvicto
Pluvicto is a radioligand therapy for prostate cancer, meaning it uses a targeted radioactive payload to attack cancer cells. The company anticipates a third-quarter 2026 approval in the hormone-sensitive setting.
Scemblix
Scemblix treats chronic myeloid leukemia. It is still smaller than the biggest brands, but the company expects it to reach front-line leadership in the United States in late 2026.
Entresto
Entresto remains important in heart failure, but it is now more of a managed decline story in the United States. The drug accepted a maximum fair price under the IRA for 2026, and generics entered the market in mid-2025.
Rhapsido, Fabhalta, and Vanrafia
These newer launches give Novartis more ways to grow beyond the older blockbusters. Rhapsido is an oral BTK inhibitor for chronic spontaneous urticaria, while Fabhalta and Vanrafia strengthen the kidney disease pipeline.
Where sales come from
The mix uses 2025 net sales from continuing operations in the Form 20-F. Novartis reports as one innovative medicines company, so these are geographic sales buckets rather than separate profit segments.
What could go wrong
United States drug price cuts
High impact · High oddsCosentyx, Kisqali, and Xolair were selected for Medicare price negotiation for 2028. Entresto already accepted a maximum fair price for 2026. If negotiated prices are harsh, growth drugs could be worth less than investors expect.
Global launch price cap
High impact · Medium oddsNovartis agreed with the United States administration to launch future medicines with comparable prices across high-income countries. That could limit the old playbook of charging much higher prices for new drugs. The tension is that management still targets more than 5% sales CAGR to 2028.
Generic erosion in 2026
Medium impact · High oddsThe company faced a tough first half in 2026 because United States generics for Entresto, Promacta, and Tasigna entered in mid-2025. While second-quarter growth resumed, older products continue to drag on the newer portfolio.
Avidity integration and margin drag
Medium impact · Medium oddsThe proposed Avidity acquisition adds long-duration pipeline assets, but it also brings execution risk. Management expects 1 to 2 points of core margin dilution for the next several years, which matters after hitting 40.1% in 2025.
Launch access misses
Medium impact · Medium oddsNovartis needs new launches to keep replacing older drugs. Rhapsido access wins, Pluvicto expansion into community settings, and renal launches such as Vanrafia and Fabhalta all matter. Slow reimbursement or weak doctor adoption would pressure the growth case.
In one breath
What does Novartis do?
Novartis develops and sells patented medicines. Its main focus areas are cardiovascular, renal and metabolic disease, immunology, neuroscience, and oncology.
Why is Novartis stock not scored higher?
The company is executing well, but the price risk is real. Key drugs face United States Medicare price negotiation, and a new agreement could limit future launch pricing.
What are the biggest Novartis growth drugs?
Kisqali, Kesimpta, Pluvicto, and Scemblix are the clearest current growth drivers. In the second quarter of 2026, Kisqali crossed USD 1 billion in United States sales alone.
What should investors watch in 2026?
The key test is whether growth keeps accelerating in the second half. Investors should also watch Rhapsido access, pelabresib filings, Pluvicto hormone-sensitive prostate cancer approval, and Medicare price updates.
