Novartis Reports Strong Q4 Earnings, Eyes Further Bolt-On Acquisitions in 2025

Novartis, one of the pharmaceutical industry's most active dealmakers in 2024, has reported impressive fourth-quarter earnings that surpassed analyst expectations. The Swiss pharmaceutical giant is now setting its sights on further bolt-on acquisitions to fuel long-term growth beyond 2030.

Q4 Financial Performance Exceeds Expectations

Novartis reported a 16% year-over-year increase in net sales at constant currencies, reaching $13.1 billion in the fourth quarter of 2024. This figure comfortably exceeded the consensus estimate of $12.82 billion. For the full year 2024, the company saw a 12% increase in net sales, totaling $50.32 billion.

Key drivers of this strong performance included:

• Entresto, Novartis' heart failure drug, which saw a 34% sales spike to nearly $2.2 billion
• Cosentyx, an anti-IgG1 antibody, bringing in almost $1.6 billion
• Kesimpta, a multiple sclerosis therapy, earning $950 million
• Kisqalimade, a breast cancer treatment, generating $902 million

Despite these impressive figures, analysts at BMO Capital Markets noted that some key products, such as the prostate cancer radiotherapy Pluvicto, showed softness, earning $351 million in the quarter.

Continued Focus on Bolt-On Acquisitions

CEO Vas Narasimhan emphasized the company's commitment to pursuing bolt-on acquisitions during a Friday morning media call. "We will continue our strategy to look for primarily bolt-on acquisitions that we think will bolster our growth in the 2030 and beyond period," Narasimhan stated.

This strategy follows a prolific year of dealmaking for Novartis, with 30 deals signed in 2024. Notable transactions included:

• A $1 billion upfront payment and up to $1.9 billion in milestone commitments to license PTC Therapeutics' Huntington's disease drug
• The acquisition of Kate Therapeutics, potentially reaching $1.1 billion in value
• A $2.2 billion molecular glue partnership with Monte Rosa
• A $2.9 billion expansion of its existing PeptiDream agreement
• A potential $1 billion agreement with Flagship's Generate:Biomedicines
• A contract exceeding $4 billion with Shanghai Argo

Challenges and Future Outlook

While Novartis celebrates its strong performance, the company faces challenges, particularly with its top-performing drug Entresto. The heart failure medication is under threat from generic competition, with at least four FDA-approved copycats. Novartis is actively defending Entresto's exclusivity, recently securing a temporary block on MSN Pharmaceuticals' generic version in the U.S. market.

CFO Harry Kirsch affirmed the company's commitment to defending Entresto's exclusivity in the coming year, highlighting the importance of this key asset to Novartis' portfolio.

As Novartis continues to pursue its aggressive growth strategy through bolt-on acquisitions and partnerships, the pharmaceutical industry will be watching closely to see how these moves shape the company's long-term performance and pipeline development.