Novartis (NVS) Stock Drops 2% After Q1 Revenue Miss and Entresto Sales Plunge 42%

Key Takeaways

• Shares of NVS declined approximately 2% during pre-market trading following a first quarter earnings disappointment
• Revenue totaled $13.11B, falling short of the $13.40B Wall Street projection, representing a 1% year-over-year decline
• Sales of Entresto plummeted 42% to $1.31B following U.S. patent loss and entry of generic alternatives
• Core earnings per share decreased to $1.99 from $2.28; core operating profit contracted 12% to $4.9B
• CEO Vas Narasimhan cautioned that the U.S. “most favored nation” pricing mechanism could restrict patient access to innovative therapies in Europe and Japan over the next 18 months

Novartis delivered a challenging opening quarter for 2026, with first quarter performance falling below expectations on both revenue and profitability metrics as generic erosion proved more severe than anticipated by analysts.

Revenue registered at $13.11 billion, missing the $13.40 billion Street estimate. Core operating profit contracted 12% to $4.9 billion, likewise trailing the approximately $5.1 billion consensus compiled by Visible Alpha.

The primary driver of underperformance was Entresto, the pharmaceutical giant’s leading cardiovascular medication. Revenue from the therapy collapsed 42% to $1.31 billion following the expiration of its U.S. patent protection and subsequent generic market entry. Wall Street had projected $1.37 billion.

Novartis AG, NVS

Entresto accounted for 14% of consolidated revenue in the prior year, representing one of the most significant patent expirations in the company’s recent history. CEO Vas Narasimhan has characterized it as the most substantial patent cliff Novartis has encountered in twenty years.

The challenges extend beyond Entresto. Generic competition is also impacting Promacta, used for blood disorders, and Tasigna, a leukemia medication, compounding headwinds to revenue expansion.

Core earnings per share declined to $1.99, compared with $2.28 in the year-ago period. Operating income contracted 9% while net income fell 13%, driven by both the revenue shortfall and increased research and development expenditures.

CFO Mukul Mehta informed reporters that the performance aligned with internal projections. He indicated the company anticipates “growth to return back to our P&L in the second half of this year.”

Novartis maintained its full-year outlook, citing a robust pipeline and continuing product launches. The organization anticipates approximately $4 billion in revenue erosion this year stemming from generic competition affecting Entresto, Promacta, and Tasigna.

CEO Raises Concerns Over MFN Pricing Framework

Beyond the quarterly results, CEO Narasimhan utilized the earnings release to voice apprehensions regarding U.S. pharmaceutical pricing policy, particularly the “most favored nation” mechanism.

The MFN framework links U.S. pharmaceutical prices to those paid in other developed nations. Narasimhan cautioned that the ramifications would extend internationally, stating “the reality of MFN is going to set in in the next 18 months.”

He indicated Novartis is encouraging Europe and Japan to reconsider their pricing and reimbursement frameworks for innovative medications. Absent reforms, he cautioned that “novel medicines might see delayed entry” and patient access could deteriorate.

Currently, the immediate impact on Novartis remains contained. MFN presently affects approximately 5% to 10% of Medicaid-associated revenue. However, Narasimhan views the policy as permanent. “I don’t see it disappearing in the U.S.,” he stated.

His remarks parallel those from competitors. Roche and AstraZeneca have similarly identified Europe’s reimbursement structure as an escalating threat to future therapeutic availability.

Analyst Community Maintains Cautious Optimism

Notwithstanding the earnings miss, the investment community has not abandoned confidence in the shares. Novartis maintains a Moderate Buy consensus rating derived from six analyst opinions.

The consensus price target stands at $169.86, suggesting approximately 17% appreciation potential from present trading levels.

Entresto will face patent expirations in Europe beginning in November, which will introduce additional revenue pressure during the latter half of the year.

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