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.

Novartis today announced that the US Food and Drug Administration (FDA) has granted traditional approval for Fabhalta (iptacopan) to slow kidney function decline in adults with primary immunoglobulin A nephropathy (IgAN) at risk of disease progression. Fabhalta, a first-in-class complement inhibitor, slows estimated glomerular filtration rate (eGFR) decline by 48% versus placebo over two years. This approval converts an initial accelerated approval granted in August 2024 for the reduction of proteinuria in primary IgAN.

The approval was based on data from the Phase III APPLAUSE-IgAN study. Results demonstrated a statistically significant and clinically meaningful improvement in eGFR over two years. Fabhalta showed an annualized mean change from baseline in eGFR of -3.0 mL/min/1.73 m²/yr compared with -5.7 mL/min/1.73 m²/yr for placebo. Clinically meaningful improvements in protein in urine were observed as early as two weeks, with sustained reduction over the treatment period.

Safety profile and access

The APPLAUSE-IgAN study indicated that Fabhalta has a favorable safety profile, consistent with previously reported data. The most common adverse events in patients with IgAN were abdominal pain, dizziness, and nausea. Fabhalta may increase the risk of serious infections caused by encapsulated bacteria and is available only through a Risk Evaluation and Mitigation Strategy (REMS) program requiring appropriate vaccinations prior to treatment.

Novartis is committed to helping IgAN patients access Fabhalta through support programs, with nearly 100% of US patients paying $10 or less per month. The company’s growing IgAN portfolio includes Vanrafia (atrasentan) and the investigational compound zigakibart.

Mechanism of action

Fabhalta is an oral Factor B inhibitor designed to selectively target the alternative complement pathway. This pathway is a key driver of inflammation associated with IgAN. By inhibiting Factor B, the drug aims to reduce ongoing complement-mediated injury and slow disease progression. Fabhalta has received regulatory approvals in multiple complement-mediated diseases and is being evaluated across a range of rare kidney conditions.