Novartis achieves 22% rise in core operating income, driven by innovative medicines

Novartis has reported a stellar performance for the fourth quarter of 2024, showcasing impressive growth across its core business segments. The Swiss pharmaceutical giant achieved double-digit sales growth momentum, bolstered by strong demand for its innovative medicines and strategic focus on key therapeutic areas. This growth comes in the company’s first full year as a pure-play innovative medicines company following the spin-off of Sandoz, marking a transformative phase in its corporate journey.

With net sales rising by 16% in constant currencies (15% in USD) and core operating income increasing by 29% (27% in USD), Novartis has demonstrated the resilience and scalability of its business model. The company’s continued investment in research and development, combined with strategic market expansion, has played a pivotal role in driving these exceptional results.

What fueled Novartis’ financial growth in Q4 2024?

The strong performance in Q4 was underpinned by the robust growth of key products such as Entresto, Cosentyx, Kisqali, Kesimpta, and Leqvio. Entresto, a heart failure treatment, saw sales soar by 34% in constant currencies, while Kesimpta, used for multiple sclerosis, posted a 49% increase. Kisqali, primarily used in breast cancer treatment, experienced a remarkable 52% surge, highlighting the company’s dominance in oncology.

The growth of Leqvio was particularly noteworthy, with sales jumping by 83%, reflecting its growing acceptance in the cardiovascular segment. This diversified product performance illustrates Novartis’ ability to generate consistent revenue streams from multiple therapeutic areas, ensuring long-term sales growth momentum.

Commenting on the results, Novartis CEO Vas Narasimhan stated, “In our first full year as a pure-play innovative medicines company, Novartis delivered one of the strongest financial performances in our history. We expect to continue our strong sales growth momentum with margin expansion in 2025.” This confidence stems from the company’s solid pipeline of over 30 assets with the potential to drive differentiated growth in the coming years.

How did Novartis achieve record-breaking core operating income?

Novartis’ core operating income reached USD 4.9 billion in Q4 2024, reflecting a 29% growth in constant currencies. For the full year, core operating income stood at USD 19.5 billion, marking a 22% increase from the previous year. This growth was primarily driven by higher net sales and disciplined cost management, despite increased R&D investments.

The core operating income margin improved significantly, reaching 36.9% of net sales in Q4, up 3.7 percentage points compared to the previous year. This margin expansion was supported by operational efficiencies, strategic pricing adjustments, and a focus on high-value medicines.

Novartis’ strong financial discipline has also been reflected in its free cash flow, which grew by 70% in Q4 to USD 3.6 billion. For the full year, free cash flow stood at USD 16.3 billion, a 24% increase from 2023, driven by higher net cash flows from operating activities.

What role did innovation play in Novartis’ 2024 success?

Innovation remained at the heart of Novartis’ growth strategy in 2024. The company achieved several key milestones, including the FDA’s accelerated approval of Scemblix for newly diagnosed Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML-CP) and the European Commission’s approval of Kisqali for early breast cancer. Additionally, Novartis submitted Fabhalta (iptacopan) for the treatment of C3 glomerulopathy (C3G), with the FDA granting priority review.

The success of these products reflects Novartis’ commitment to advancing science and addressing unmet medical needs. The company’s R&D pipeline remains robust, with more than 15 submission-enabling readouts expected over the next few years. This strong pipeline will continue to fuel the company’s sales growth momentum and support its long-term strategic goals.

What is Novartis’ financial outlook for 2025?

Looking ahead, Novartis expects to maintain its growth trajectory in 2025. The company has provided guidance for mid- to high-single-digit growth in net sales and high-single to low-double-digit growth in core operating income. This optimistic outlook is based on the continued momentum of key products, new launches, and the company’s strategic focus on priority markets, including the US, China, Germany, and Japan.

Novartis also announced a proposed dividend increase of 6.1% to CHF 3.50 per share, reflecting the company’s strong financial performance and commitment to shareholder returns. The dividend proposal will be presented at the Annual General Meeting scheduled for March 7, 2025.

In terms of capital allocation, Novartis remains committed to creating sustainable value for shareholders. The company repurchased USD 8.3 billion worth of shares in 2024, with plans to continue share buybacks under the existing USD 15 billion program.

Expert insights on Novartis’ growth strategy

Industry analysts have praised Novartis’ strategic transformation into a pure-play innovative medicines company. The spin-off of Sandoz has allowed the company to sharpen its focus on high-growth therapeutic areas and streamline its operations. According to experts, Novartis’ diversified product portfolio and strong pipeline position it well to navigate market challenges and sustain long-term sales growth momentum.

Moreover, the company’s focus on operational excellence, digital transformation, and data-driven decision-making is expected to enhance its competitive edge. Novartis’ ability to balance growth investments with disciplined cost management has been a key factor in its financial success.