- Novartis expects sales to grow faster than anticipated over the next five years as several of its recently launched cancer and multiple sclerosis drugs gain traction and key experimental medicines reach market.
- In a presentation Tuesday, the Swiss pharmaceutical company told investors that it expects sales to grow at a 5% compound annual rate between 2022 and 2027, up from the 4% rate it had previously set. That’s still below the 7% growth Novartis reported over the prior five years, however.
- The upgrade comes as Novartis continues to overhaul its business organization and drug research. A spinout of generic drug unit Sandoz was recently completed, while executives have trimmed the number of pipeline projects from about 150 in February to 113 in late October.
Novartis used Tuesday’s presentation to showcase the dramatic changes in the company’s business in the past decade. Over that time, CEO Vas Narasimhan has narrowed Novartis’ focus to high-margin pharmaceutical therapies, shedding consumer, eye-care and generic drug units to create what he calls a “pure-play innovative medicine” company.
The transition has been helped by the commercial success of Novartis’ immune disease drug Cosentyx and cardiovascular treatment Entresto, sales of which are now annualizing at more than $11 billion combined. The company is counting on sales growth from newer medicines like Pluvicto and Kesimpta, meanwhile, to offset the impact of generic competition to Entresto later this decade.
Their growing market adoption is one reason for Novartis’ guidance upgrade Tuesday. The company also anticipates growing its core margin to 40%, an increase of five percentage points from last year’s figure and nearly two-fifths higher than in 2018.
At the same time, Novartis is also attempting to direct more of its resources to fewer pipeline projects. Since 2021, the company has trimmed its pipeline by one-third, while increasing its R&D spend behind the experimental medicines it does advance. Much of the cuts have come in oncology, where Novartis now lists about half as many experimental programs as it did in late 2021.
More of those programs are built around emerging technologies like antisense oligonucleotides, radioligands and cellular therapies. Pluvicto, for instance, is a radioligand therapy for cancer, while Novartis’ new cholesterol drug Leqvio is an antisense therapy.
The company expects these “advanced” drugs to account for a greater share of its sales by the end of the decade, and traditional chemical pills less. But they also come with higher technical risks and development can hit unexpected roadblocks as the technologies underpinning them become better understood. On Tuesday, for example, the Food and Drug Administration signaled it was looking more closely at the cancer risk of cellular therapies, including Novartis’ drug Kymriah.