Published by Global Banking and Finance Review
Posted on July 17, 2025
By Miranda Murray and Patricia Weiss
BERLIN (Reuters) -Swiss drugmaker Novartis nudged up its full-year earnings forecast on Thursday, citing strong second-quarter sales of key drugs such as Kisqali, and said potential new U.S. tariffs would not affect its 2025 guidance.
The company is facing the possibility of steep U.S. tariffs on drugs, though CEO Vas Narasimhan has said that Novartis can manage their effects.
"We have adequate inventory in the U.S. for this year, and we feel fully confident that for this year, any new tariffs would not impact our guidance," he told journalists after the results.
Novartis now expects full-year core operating income to increase by a low-teens percentage, compared with the low double-digits cited previously.
"Medium term, we're putting in place the various elements of a plan to ensure that we can mitigate any impact," said Narasimhan, most importantly a commitment to spend $23 billion to build and expand facilities in the United States.
"Given enough time, we should be able to get there and avoid significant impacts from tariffs," he added.
In the long term, Novartis wants to restructure its production for the U.S. market, with a push for key products to also be produced there, reversing a previous policy to expand capacity in Europe and other regions to serve the United States.
Shares fell as much as 2.8% before recovering slightly to trade down 0.7% at 1140 GMT.
Jefferies analysts attributed the share decline to weaker than expected sales due to a miss by psoriasis drug Cosentyx, while JP Morgan noted that finance chief Harry Kirsch's retirement announcement may have tempered investor enthusiasm.
Kirsch will retire in March 2026 and be replaced by Mukul Mehta, who currently heads the business planning and analysis, digital finance and tax division.
Novartis also announced a new share buyback programme worth up to $10 billion, set to run until the end of 2027.
Second-quarter operating income, adjusted for special items, was up 20%, at $5.9 billion, slightly above analyst forecasts, while sales climbed 12% to $14 billion.
The company's promising Kisqali drug saw revenue jump 64% to $1.2 billion, while sales of its blockbuster heart medication Entresto rose 24% to $2.36 billion - though analysts expect headwinds from the market entry of a cheaper generic drug from the second half.
The decline is likely to be modest at first but could accelerate significantly three to six months after the patent expires, according to the CFO.
Novartis suffered a legal setback this week in its attempt to block MSN Pharmaceuticals from launching a generic version of Entresto, after a U.S. court denied a request for a preliminary injunction.
(Reporting by Patricia Weiss and Miranda Murray. Editing by Rachna Uppal and Mark Potter)
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