Source – Novartis
Novartis, a pharmaceutical company, has announced a new $15 billion stock repurchase plan after completing a previous one of the same size. This new plan coincides with the expected spinoff of Novartis’ generics unit, Sandoz. However, Novartis faces uncertainty with its heart drug, Entresto, as a combination patent for the drug was invalidated by a Delaware federal court.
Novartis CEO Vas Narasimhan stated that the stock repurchase plan is independent of the outcomes of the Entresto litigation. The company is in a strong cash position, having generated nearly $6 billion in free cash flow in the first half of 2023. The separation of Sandoz and the growth of Novartis’ remaining innovative medicines business are expected to increase cash flow.
“Novartis delivers another strong quarter of sales growth and robust margin expansion, supporting an upgrade to Group guidance for 2023. The performance was broad-based across core therapeutic areas and key geographies. Our growth drivers and rich pipeline continue to provide confidence in our mid-term growth outlook, highlighted by upcoming milestones for Kisqali, Pluvicto and iptacopan. Novartis robust balance sheet and expected future growth allow us to initiate an up-to USD 15 billion share buyback while maintaining the flexibility for continued strategic bolt-on acquisitions.”
– Vas Narasimhan MD, CEO of Novartis
The repurchase of shares will be completed within two and a half years, leaving room for Novartis to pursue other deals. Regarding the Entresto patent litigation, Novartis plans to appeal the unfavorable decision and is confident that no generic competitors will launch without first settling. The company has also submitted citizen petitions to the FDA to maintain high standards for any potential generics. Novartis anticipates no U.S. generic entry for Entresto until at least mid-2025.
Entresto remains Novartis’ top-selling drug, with $1.5 billion in sales in the second quarter, surpassing analyst expectations. The cancer medications Kisqali and Pluvicto are also expected to contribute to revenue growth. Kisqali showed positive results in a phase 3 trial as an adjuvant therapy for breast cancer, and further analysis is expected later this year. Novartis plans to pursue a broad indication for Kisqali in Europe and the U.S., with the U.S. submission delayed to provide additional overall survival analysis.
Pluvicto, a radioligand therapy, reached sales of $451 million in the first half of the year and is on track to become a blockbuster drug in 2023. Novartis encountered a shortage of Pluvicto but is resolving the issue with FDA-approved manufacturing sites. The company plans to open more treatment centers to accommodate patient demand.
Driven by strong sales of innovative medicines, Novartis reported $11.2 billion in sales in the second quarter, a 9% increase at unchanged exchange rates. Sandoz, the generics unit, also saw an 8% increase in sales to reach $2.4 billion.
Based on its performance, Novartis has revised its full-year revenue guidance, expecting high single-digit percentage growth for both its innovative medicines business and Sandoz, surpassing the previous mid-single-digit forecast.
