Novartis raises profit outlook after third-quarter growth

Novartis returned to year-on-year growth with $14.5 billion in third-quarter revenue, a 4% rise from the same period last year. The increase also held when measured at constant exchange rates, indicating that currency movements did not account for the reported growth. The Basel-based drugmaker said the negative impact of generic medicines continued to ease, helping its business gather momentum after a weak start to the year.

Revenue declined in the first quarter as generic versions of key blockbuster medicines entered the market. Novartis was back on a growth trajectory in the second quarter, then extended that recovery in the third. On October 27, the company also lifted its full-year outlook for core operating profit. It now expects that measure to remain stable or edge higher, after previously forecasting a decline in the low single-digit percentage range. The revision puts improving sales and a better profit outlook at the centre of the group’s latest results.

Generic competition is losing some of its force as the year progresses. Novartis has said the erosion from generic medicines likely peaked, with the pressure expected to be significantly greater in the first half of 2026 than in the second. That pattern is reflected in the company’s return to quarterly revenue growth after the first-quarter decline.

Several important medicines faced patent expiries last year. Entresto, Promacta and Tasigna lost patent protection, exposing sales to competition from generic versions. Their impact remains part of the business backdrop, but Novartis’s latest quarterly revenue rose 4% year on year to $14.5 billion. The company had already returned to growth in the second quarter, and the third-quarter result extended that run. For the Swiss group, the easing drag from generics is central to the improved outlook: management now sees core operating profit holding steady or increasing slightly over the full year, rather than declining by a low single-digit percentage.

A $1.9 billion write-down tied to failed drug candidate Del-Desiran weighed heavily on reported earnings. Novartis recorded operating profit of $1.8 billion, a 59% decline from a year earlier, while consolidated profit fell to $1.2 billion from $3.9 billion. The company has also faced setbacks in late-stage research.

The adjusted figure watched closely by analysts told a different story. Core operating profit, which excludes various factors, rose to $6 billion and exceeded the AWP consensus of $5.6 billion. That gap helps explain why Novartis raised its full-year core profit outlook despite the steep fall in reported operating profit. The figures capture two pressures moving through the business at once: a substantial charge associated with a research failure and stronger underlying profitability. For investors assessing the quarter, the distinction between reported and core operating profit is key to understanding the revised guidance.

Novartis expects full-year core operating profit to be stable or slightly higher, an improvement on its earlier forecast for a low-single-digit percentage decline. Management maintained its expectation for revenue growth in the low single-digit percentage range at constant exchange rates.

The outlook rests on a year in which generic competition hit revenue hardest in the first half, then eased as the company returned to growth. Third-quarter sales rose 4%, while core operating profit reached $6 billion, above analyst expectations. At the same time, the Del-Desiran write-down and research setbacks show how individual development failures can affect reported results. Novartis, headquartered in Basel, is therefore closing the year with a stronger profit forecast alongside a substantial quarterly decline in reported earnings. Its next results will show how the company’s improving sales momentum and reduced generic drag translate into performance against the revised full-year targets.