Novartis raises profit guidance despite $1.9 billion trial write-down

Novartis raised its full year core operating income guidance on October 27 after third quarter sales rose 4 percent to $14.52 billion, even as a $1.9 billion impairment on the failed del-desiran program cut reported net income 70 percent to $1.20 billion.

Why it matters: The quarter tests whether Novartis's growth brands can outrun generic erosion and absorb pipeline failures from its $12 billion Avidity acquisition, and the guidance raise, with shares up 2.3 percent in early Zurich trade, says management believes they can.

Data as of Third quarter 2026 results released October 27, 2026 and furnished to the SEC on Form 6-K (accession 0001114448-26-000014). The EDGAR document itself returned an access error in this run; figures are from the Novartis release text as published the same morning and corroborated by Reuters and Dow Jones reports of October 27, 2026.

Novartis raised its full year 2026 outlook on October 27, saying core operating income is now expected to be in line with the prior year or grow by a low single digit percentage at constant currencies, up from a previously expected low single digit decline. Full year sales guidance was unchanged at low single digit growth. The upgrade rests on the third quarter: net sales rose 4 percent to $14.52 billion from $13.91 billion a year earlier, and core operating income rose 11 percent in dollar terms to $6.04 billion, lifting the core margin to 41.6 percent from 39.3 percent. Core earnings per share rose 9 percent to $2.46, ahead of the $5.61 billion core operating income consensus cited by Dow Jones.

The reported numbers tell the other half of the story. Operating income fell 59 percent and net income fell 70 percent to $1.20 billion, from $3.93 billion a year earlier, mainly because Novartis booked a $1.9 billion partial impairment on del-desiran, the neuromuscular candidate from its $12 billion acquisition of Avidity that missed in a late stage trial in September. Free cash flow fell 18 percent to $5.1 billion. Chief executive Vas Narasimhan said priority brands and launches more than offset generic erosion, demonstrating what he called the replacement power of the business, and told journalists the company does not need to change its acquisition strategy despite two consecutive trial setbacks in September.

The brand detail supports the claim for now. Kisqali sales rose 37 percent at constant currencies, Scemblix 67 percent, Leqvio 63 percent, Kesimpta 22 percent and Cosentyx 9 percent. The release also listed a dense set of pipeline milestones in the quarter, including positive Phase 3 REMODEL-1 and REMODEL-2 results for remibrutinib in relapsing multiple sclerosis, an FDA approval for Rhapsido in the most prevalent form of chronic inducible urticaria, and FDA and China approvals for Pluvicto in a prostate cancer setting.

Shares rose 2.3 percent in early trade, Reuters reported, a verdict that investors are pricing the margin story rather than the impairment. The open question is durability: the guidance raise is a margin raise, not a sales raise, and it lands while the Avidity assets that justified a $12 billion deal are being written down.

Novartis raises profit guidance despite $1.9 billion trial write-down

Sources