AI-assisted research analysis by FutureKnowledge. Sources checked 27 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Novartis raised its 2026 core operating income outlook on 27 October after third-quarter core operating income rose 11% to $6.04 billion, well ahead of forecasts, even as reported net income fell 70% because of a $1.9 billion write-down on a failed drug trial. The Swiss drugmaker’s results show newer medicines now carrying the company through the loss of its best-selling heart drug, Entresto, to generic competition.
Novartis Q3 results: what the numbers show
According to the Novartis results release, net sales for the quarter ended 30 September rose 4% to $14.52 billion, also 4% at constant currencies. Core operating income, the company’s preferred profit measure, climbed 11% to $6.04 billion, and the core operating margin widened by 2.3 percentage points to 41.6%, as RTTNews reported. Core earnings per share rose to $2.46 from $2.25 a year earlier.
Against expectations, the picture was a profit beat rather than a sales beat. Newsquawk’s consensus comparison put sales in line with the expected $14.5 billion, while core operating income of $6.04 billion compared with an expected $5.51 billion and core EPS of $2.46 beat the $2.28 forecast.
Reported figures moved the other way. Operating income fell 59% to $1.84 billion and net income dropped 70% to $1.20 billion from $3.93 billion, mainly because of a $1.9 billion partial impairment on del-desiran, an experimental treatment that missed its main goal in the Phase III HARBOR study in myotonic dystrophy type 1, Investing.com reported. Free cash flow fell 18% to $5.11 billion, according to the full results summary published by BiopharmaWatch.
Key Q3 2026 figures
| Measure | Q3 2026 | Change |
|---|---|---|
| Net sales | $14.52bn | +4% (+4% cc) |
| Core operating income | $6.04bn | +11% (+10% cc) |
| Core operating margin | 41.6% | +2.3 points |
| Core EPS | $2.46 | +9% |
| Net income (reported) | $1.20bn | -70% |
| Free cash flow | $5.11bn | -18% |
| Entresto sales | $1.17bn | -38% |
The guidance change
Novartis now expects 2026 core operating income to be in line with 2025 or to grow by a low single-digit percentage at constant currencies. The previous guidance was for a low single-digit decline. The sales outlook, low single-digit growth, was left unchanged, and the company said currency movements at late-October rates would add about one percentage point to both sales and core operating income, per the results summary. Chief executive Vas Narasimhan credited productivity and bottom-line delivery for allowing “us to upgrade our full-year guidance”, TokenPost reported.
The upgrade answers a complaint from July. When Novartis beat second-quarter forecasts but kept its outlook, a Vontobel analyst said he was surprised the quarter did not trigger a guidance upgrade, according to Bloomberg’s report carried by swissinfo.ch.
Why it happened: new drugs versus the Entresto cliff
The quarter was a contest between fast-growing newer drugs and generic erosion of older ones. Breast cancer drug Kisqali sold $1.82 billion, up 37% at constant currencies; psoriasis treatment Cosentyx $1.86 billion, up 9%; multiple sclerosis drug Kesimpta $1.48 billion, up 22%; leukaemia drug Scemblix $593 million, up 67%; and cholesterol drug Leqvio $506 million, up 63%. Prostate cancer radioligand therapy Pluvicto sold $674 million, up 20%, according to the release figures.
Entresto went the other way. Third-quarter sales fell 38% to $1.17 billion, and nine-month sales were down 44% at $3.65 billion. Generics entered the US market after Novartis lost a bid in August 2025 to block MSN Pharmaceuticals from launching a copy, as Pharmaceutical Technology reported at the time. In February, Novartis said it expected generics to cut about $4 billion from its 2026 sales, Endpoints News reported. Entresto’s decline in the third quarter was smaller than the 50% fall in the second quarter that Bloomberg reported, which suggests the steepest part of the drop may be in the base, though Novartis did not say so.
Over nine months, the trade-off is visible: sales rose 2% in dollars but were flat at constant currencies, and core operating income was down 1%. The margin gains of the third quarter are what lifted the full-year profit outlook.
Pipeline mixed, balance sheet heavier
The research news was mixed. Remibrutinib met its main goal in Phase III studies in relapsing multiple sclerosis, and Pluvicto won US and Chinese approval in an earlier stage of prostate cancer. But del-desiran and pelacarsen, a heart-risk drug, missed primary endpoints in Phase III trials, and a remibrutinib study in myasthenia gravis was stopped for futility, the results summary shows.
Net debt rose to $37.4 billion at 30 September from $21.9 billion at end-2025. Bloomberg noted in July that Novartis had spent more than $15 billion on deals in a year, including the $12 billion Avidity Biosciences purchase, and is investing $23 billion in US manufacturing. Novartis bought back $4.7 billion of shares in nine months and has up to $4.9 billion left in its $10 billion programme.
What it means for India and the drug industry
Novartis’s results are a clear case of the “patent cliff” that big drugmakers face this decade, and the other side of that cliff is generic manufacturing, where Indian firms are major US suppliers. Entresto copies launched by MSN, part of Hyderabad-based MSN Laboratories, are one example. For large Western drugmakers, the pattern is to replace lost blockbuster revenue with acquisitions and newer specialist drugs, much as consumer and healthcare groups such as Abbott with its nutrition spin-off are reshaping portfolios. Swiss peer Nestlé’s Q3 sales show a different route, leaning on volume growth.
In general terms, companies most exposed to single ageing blockbusters face the sharpest revenue drops, while those with several newer growth drugs, or generic makers able to launch first copies, tend to be on the other side of the shift.
Scenarios to watch
These are conditional scenarios, not predictions.
| If… | Then possibly… |
|---|---|
| Kisqali, Kesimpta and Pluvicto keep double-digit growth | Core profit could keep rising even as Entresto shrinks further |
| Entresto erosion speeds up again or more generics hit other brands | Sales growth could stall at the low end of guidance |
| Further Phase III setbacks follow HARBOR and HORIZON | More impairments could weigh on reported profit and pipeline confidence |
| Net debt keeps rising with deals | Room for buybacks and new acquisitions may narrow |
What to watch next
- The full-year results, which will show whether core profit lands in the new range.
- 2027 guidance, the first full year with Entresto generics in the base.
- Uptake of Pluvicto in its new prostate cancer use and remibrutinib filings in multiple sclerosis.
- Progress on the remaining $4.9 billion of the buyback.
Bottom line
Novartis’s Q3 results show a company getting through the Entresto patent cliff faster on profit than on sales: core margin is at 41.6% and the full-year outlook is up, but sales growth remains modest, trial failures cost $1.9 billion, and debt has risen sharply after deals.
Method note: This analysis compared the Novartis Q3 2026 results release (with figures checked against a full reproduction on BiopharmaWatch) with reports from Investing.com, RTTNews, Newsquawk, TokenPost, Bloomberg via swissinfo.ch, Endpoints News and Pharmaceutical Technology. Where reported and core figures differ, both are given and labelled.