Swiss pharmaceutical powerhouse Novartis (NYSE:NVS) has raised its mid-term sales and operating income targets, signaling a bold move following the completion of its transformation into a ‘pure-play’ innovative medicines company after the spin-off of its Sandoz division.
The revised objective now aims for a 5% compound annual growth rate in sales from 2022 to 2027, up from the previous target of 4%. Anticipating a core operating income margin of approximately 40% by 2027, the company attributes this growth to the sustained momentum of key growth drivers.
Novartis outlined its pure-play strategy, concentrating on four core therapeutic areas (Cardiovascular-Renal-Metabolic, Immunology, Neuroscience, Oncology) and two plus three technology platforms (Chemistry, Biotherapeutics, xRNA, Radioligand, Gene and cell Therapy) in four priority geographies (United States, China, Germany, Japan).
Having earlier divested its eye care division, Alcon, and now with the separation of Sandoz, Novartis has streamlined its focus exclusively on its pharmaceutical business. Progress has been made in advancing its portfolio and pipeline, with resources strategically aligned for maximum focus and enhanced competencies. The current portfolio boasts 103 projects, with up to 15 key submissions for regulatory approval expected in the 2024-2027 timeframe.
Key growth drivers include blockbuster oncology drugs Kisqali and Pluvicto, along with the multiple sclerosis drug Kesimpta. Novartis plans to submit label expansions for various drugs, including Kisqali for breast cancer, Pluvicto for prostate cancer, and Scemblix for chronic myeloid leukemia by 2027.
Positive results from the NATALEE trial support Novartis’ endeavor to extend the benefits of Kisqali to patients with earlier stages of breast cancer. Notably, Pluvicto and Scemblix have witnessed robust launches and recorded solid sales, with Pluvicto experiencing strong demand in the United States as the FDA-approved radioligand therapy for progressive, PSMA-positive metastatic castration-resistant prostate cancer.
Novartis has planned multiple submissions by 2027, covering a range of therapeutic areas, including cardiovascular risk reduction, pediatric hyperlipidemia, and various indications for drugs like Cosentyx, remibrutinib, ianalumab, and more.
The company’s strategic moves also include divesting specific ophthalmology assets to Bausch + Lomb for $2.5 billion, focusing on the core pharmaceutical business. Novartis continues to return value to shareholders through buybacks and dividends, having repurchased $30 billion in shares through 2018-2023 and announcing a new $15 billion buyback plan in July 2023.
Despite the competitive landscape, the strong performance of key drugs, a robust pipeline, and a sharpened focus position Novartis to maintain momentum and deliver value to shareholders. Shares of Novartis have shown a 7% year-to-date increase compared with the industry’s 4.7% growth.
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