Novartis India Limited has formally reclassified Novartis AG (NAG) from the 'promoter' category to the 'public' category, effective July 29, 2026. This regulatory update follows the completion of a landmark transaction wherein ChrysCapital entities acquired control of the company through the purchase of 17,450,680 equity shares, representing 70.68% of the equity share capital. The reclassification marks the final step in the governance transition, ensuring NAG no longer exercises control over the affairs of Novartis India Limited.

The Board of Directors approved this change during its 245th meeting held on July 29, 2026. The decision was made in accordance with Regulation 31A(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Concurrently, the Board accepted the resignations of six outgoing directors and appointed six new directors to reflect the new ownership structure. WaveRise Investments Limited and ChrysCapital Fund X are now recognized as the controlling entities.

Regulatory Compliance and Undertakings

To facilitate the reclassification, Novartis AG provided a formal undertaking confirming its compliance with specific conditions under Regulation 31A(3) of the SEBI Listing Regulations. NAG confirmed that it and related persons do not hold more than 10% of the total voting rights in Novartis India Limited. Furthermore, NAG affirmed that it does not exercise control directly or indirectly, nor does it have special rights through shareholder agreements or informal arrangements.

NAG also confirmed it is not represented on the Board of Directors, does not act as key managerial personnel, and is not classified as a wilful defaulter by the Reserve Bank of India or a fugitive economic offender. The undertaking specifies that NAG will continue to comply with trading suspension and outstanding dues conditions indefinitely, while other compliance conditions must be met for at least three years from the date of reclassification.

Board Reconstitution Details

The change in control triggered a significant reshuffle of the Board. Six directors resigned, including Chairperson Christopher David Snook and Whole-Time Director Falin Ishwarlal Majmudar. They were replaced by six new appointees recommended by the Nomination and Remuneration Committee.

The new non-executive, non-independent directors include Ashok Bhatia, Kshitij Sheth, and Jagriti Gupta. The independent director slots were filled by Ramesh Ramadurai, Shashank Sinha, and Suchita Sharma. All new directors commenced their tenure on July 29, 2026, serving until the next Annual General Meeting.

What the Numbers Show

The acquisition involved a substantial transfer of voting power. By acquiring 70.68% of the shares, the ChrysCapital consortium secured a dominant stake, leaving NAG with a residual holding below the 10% threshold required for promoter classification. This structural shift ensures clear separation between the former promoter and the new controlling shareholders, aligning with SEBI’s transparency norms for takeover transactions.

Novartis reported net sales of $14.4 billion for the second quarter of 2026, an increase of 1% in constant currencies, driven by strong momentum from key growth brands including Kisqali, Kesimpta, Scemblix and Pluvicto. Core operating income remained flat at $5.9 billion, while net income declined 19% to $3.3 billion, impacted by higher income taxes and interest expenses. The company reaffirmed its full-year 2026 guidance, expecting net sales to grow by a low single-digit percentage and core operating income to decline by a low single-digit percentage.

Core earnings per share (EPS) was $2.41, beating the analyst consensus estimate of $2.13 by 13.15%. This represents a 0.41% decrease over earnings of $2.42 per share from the same period last year. Quarterly sales of $14.408 billion beat the analyst consensus estimate of $14.042 billion by 2.61%, a 2.52% increase over sales of $14.054 billion in the same period last year.

Financial Performance

Net sales for the quarter grew 3% in reported terms to $14.4 billion, with volume growth contributing 18 percentage points, offset by a 14 percentage point negative impact from generic competition. Pricing negatively impacted sales by 3 percentage points, while currency effects added 2 percentage points. Operating income decreased 3% in constant currencies to $4.8 billion, primarily due to lower gross profit, partly offset by lower SG&A expenses. Core operating income margin was 41.2%, a decrease of 70 basis points in constant currencies.

Net income for the quarter was $3.3 billion, down 19% in constant currencies and reported terms. Core net income decreased 4% in constant currencies to $4.6 billion. Free cash flow for the quarter was $5.6 billion, a decrease of 12% in reported terms, due to lower net cash flows from operating activities.

For the first half of 2026, net sales were $27.5 billion, down 2% in constant currencies. Core operating income for the period was $10.8 billion, a decrease of 7% in constant currencies. Net income for the first half was $6.4 billion, down 17% in constant currencies.

Brand Performance

Sales growth was driven by priority brands, with Kisqali increasing 43% in constant currencies to $1.7 billion and Kesimpta rising 32% to $1.4 billion. Scemblix grew 89% to $562 million, and Pluvicto increased 43% to $651 million. Cosentyx sales grew 10% in constant currencies to $1.8 billion, while Leqvio surged 59% to $480 million. Fabhalta sales increased 88% to $225 million.

Pipeline and Strategic Updates

Novartis advanced its pipeline with several key milestones in the second quarter. Rhapsido received approval from the European Commission and Japan’s MHLW for chronic spontaneous urticaria. Itvisma was approved by the European Commission as the only gene replacement therapy for a broad spinal muscular atrophy patient population. The FDA granted pediatric exclusivity to Kisqali, adding a six-month period of exclusivity to existing patents. A Biologics License Application was submitted to the FDA for accelerated approval of del-zota in Duchenne muscular dystrophy.

Capital Allocation and Outlook

During the first half of 2026, Novartis repurchased 18.2 million shares for $2.8 billion. Net debt increased to $39.4 billion at June 30, 2026, compared to $21.9 billion at December 31, 2025, driven by mergers and acquisitions, dividend payments and share repurchases. The company maintained its long-term credit ratings of Aa3 with Moody’s and AA- with S&P.

Novartis reaffirmed its full-year 2026 guidance, expecting net sales to grow by a low single-digit percentage and core operating income to decline by a low single-digit percentage in constant currencies. If mid-July exchange rates prevail, the foreign exchange impact for the year is expected to be positive 1 percentage point on both net sales and core operating income.