Novartis hikes profit guidance again after stellar Q2

Swiss pharma titan Novartis has raised its full-year profit guidance for the second time in three months after strong sales growth and margin expansion in its second quarter.

The company is now guiding to mid to high teens growth in core operating income in 2024, up from April's guidance of low double-digit to mid-teens growth. Prior to April, guidance had been for high single-digit growth.

"Our performance reflects continued strong momentum of our key growth drivers, both in the US and ex-US, which has allowed us to upgrade our FY2024 guidance," said chief executive Vas Narasimhan.

Net sales in the second quarter were up 11% on last year at constant currencies at $12.51bn, despite generic competition and pricing both having a 2 percentage-point negative impact on top line growth each.

Sales of the company's biggest-selling products, heart medication Entresto, psoriasis and arthritis treatment Cosentyx and multiple sclerosis drug Kesimpta, all came in ahead of what analysts were expecting.

Entresto sales rose 28% increase to $1.90bn, helped by increased penetration in the US and Europe, along with China; Cosentyx sales gained 22% to $1.53bn; while Kesimpta sales jumped 65% to $799m.

Headline operating income was up 47% on last year at $4.01bn, while adjusted or core operating income rose 19% to $4.95bn, smashing the $4.6bn expected by the market. The core operating income margin jumped 270 basis points to 39.6%.

Free cash flow surged 40% in US dollar terms to $4.6bn, helped by higher net cash flows from operating activities.

Despite the strong results, the stock was down 2.1% at CHF96.96 by 1030 in Zurich.