Novartis (NVS) Stock Slips as Q1 Earnings Miss and CEO Flags Pricing Policy Risk

TLDR

• NVS stock fell nearly 2% in pre-market after Q1 earnings missed expectations
• Net sales came in at $13.11B, below the $13.40B analyst forecast, down 1% year-over-year
• Entresto sales dropped 42% to $1.31B after U.S. patent expiry and generic competition
• Core EPS fell to $1.99 from $2.28; core operating profit dropped 12% to $4.9B
• CEO Vas Narasimhan warned the U.S. “most favored nation” drug pricing policy could delay patient access to new medicines in Europe and Japan within 18 months

Novartis reported a rough start to 2026, with Q1 results missing on both sales and profit as generic competition hit harder than Wall Street expected.

Net sales came in at $13.11 billion, short of the $13.40 billion analysts had penciled in. Core operating profit fell 12% to $4.9 billion, also below the roughly $5.1 billion consensus from Visible Alpha.

The main culprit was Entresto, Novartis’s top-selling heart drug. Sales of the treatment dropped 42% to $1.31 billion after its U.S. patents expired and generics entered the market. Analysts had expected $1.37 billion.

Novartis AG, NVS

Entresto made up 14% of total net sales last year, making this one of the most painful patent cliffs in recent company history. CEO Vas Narasimhan has called it the largest patent expiry Novartis has faced in two decades.

It’s not just Entresto. Blood disorder drug Promacta and leukemia treatment Tasigna are also facing generic pressure, adding to the squeeze on top-line growth.

Core EPS fell to $1.99, down from $2.28 in the same period last year. Operating income dropped 9% and net income fell 13%, reflecting both the sales shortfall and higher research costs.

Novartis held its full-year guidance, pointing to a strong pipeline and ongoing drug launches. The company expects sales to decline by around $4 billion this year due to generic competition for Entresto, Promacta, and Tasigna.

CEO Flags MFN Policy Risk

Beyond the earnings, CEO Narasimhan used the quarter’s release to raise concerns about U.S. drug pricing policy, specifically the “most favored nation” rule.

The MFN policy ties U.S. drug prices to those paid in other wealthy countries. Narasimhan warned the consequences would spread globally, saying “the reality of MFN is going to set in in the next 18 months.”

He said Novartis is pushing Europe and Japan to rethink how they price and reward new drugs. Without changes, he warned that “novel medicines might see delayed entry” and patient access could suffer.

His comments echo those from peers. Roche and AstraZeneca have both flagged Europe’s pricing system as a growing risk to future drug access.

Street Still Cautiously Positive

Despite the miss, Wall Street hasn’t turned its back on the stock. Novartis holds a Moderate Buy consensus based on six analyst ratings.

The average price target sits at $169.86, implying roughly 17% upside from current levels.

Entresto now faces patent expiries in Europe starting in November, which will add further pressure to sales in the second half of the year.

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