Novartis (NYSE: NVS) Q2 2026: key drugs surge while net debt jumps
Rhea-AI Filing Summary
Novartis reported Q2 2026 net sales of USD 14.4 billion, up 3% in USD (1% at constant currencies), while operating income fell 2% to USD 4.8 billion. Net income declined 19% to USD 3.3 billion and EPS decreased 17% to USD 1.71.
Core operating income was stable at USD 5.9 billion with a 41.2% margin, as strong volume growth from key brands including Kisqali, Kesimpta, Scemblix, Pluvicto and Leqvio offset generic erosion of Entresto, Promacta and Tasigna. Free cash flow was USD 5.6 billion, down 12%.
Net debt rose to USD 39.4 billion from USD 21.9 billion at year-end, mainly reflecting USD 15.3 billion of M&A and intangible investments including the USD 12.0 billion Avidity Biosciences acquisition, plus a USD 9.1 billion dividend and USD 3.1 billion of share repurchases. Several major approvals and filings advanced the pipeline, and 2026 guidance for low single‑digit net sales growth and a low single‑digit core operating income decline (both at constant currencies) was reaffirmed.
Positive
- Key growth brands accelerated sharply, with Kisqali at USD 1 695 million (+43% cc), Kesimpta USD 1 424 million (+32% cc), Scemblix USD 562 million (+89% cc), Pluvicto USD 651 million (+43% cc) and Leqvio USD 480 million (+59% cc), supporting overall sales growth.
- Pipeline and label expansion progressed through approvals for Rhapsido in chronic spontaneous urticaria in the EU and Japan, Itvisma for 5q SMA in the EU, and FDA traditional approval of Fabhalta for IgA nephropathy, plus multiple late‑stage data readouts and regulatory submissions.
Negative
- Profitability weakened: Q2 2026 net income fell 19% to USD 3 257 million and EPS declined 17% to USD 1.71 despite 3% net sales growth, driven by lower gross profit, higher income taxes and higher interest expense.
- Leverage increased significantly, with net debt rising to USD 39.4 billion from USD 21.9 billion at December 31, 2025, mainly due to USD 15.3 billion of M&A and intangible investments, a USD 9.1 billion dividend and USD 3.1 billion of share repurchases.
Filing Explained
By June 30, buybacks reduced shares outstanding, while acquisition financing left Novartis with USD 39.4 billion net debt and USD 7.7 billion liquidity.
This Form 6-K furnishes Novartis’s interim financial report and records completed first-half acquisitions and share repurchases, while the Myricx Bio acquisition remains an agreement expected to close in
For existing common holders, Novartis repurchased
The Excellergy acquisition closed on
That separates the completed Excellergy transaction’s disclosed cash consideration from additional milestone capacity and from the still-conditional Myricx transaction.
First-half financing included
At
The filing also states that IFRS 18 will take effect on
Key Figures
Q2 2026 Net Sales: USD 14 408 million
Q2 2026 Net Income: USD 3 257 million
Q2 2026 EPS: USD 1.71
+5 more
8 metrics
Q2 2026 Net Sales
USD 14 408 million
Quarter ended June 30, 2026; 3% growth vs Q2 2025
Q2 2026 Net Income
USD 3 257 million
Quarter ended June 30, 2026; 19% decline vs Q2 2025
Q2 2026 EPS
USD 1.71
Basic earnings per share for Q2 2026; down from USD 2.07 in Q2 2025
Q2 2026 Free Cash Flow
USD 5 561 million
Free cash flow in Q2 2026; 12% lower than Q2 2025
Net Debt
USD 39.4 billion
Net debt at June 30, 2026 vs USD 21.9 billion at December 31, 2025
Avidity Acquisition Price
USD 12.0 billion
Cash consideration to acquire Avidity Biosciences, Inc. at USD 72.00 per share
Core Operating Income Margin
41.2%
Core operating income as a percentage of net sales in Q2 2026
Shares Repurchased H1 2026
18.2 million shares for USD 2.8 billion
Share repurchases on the SIX Swiss Exchange second trading line in first half 2026
Key Terms
constant currencies, core operating income, free cash flow, in-process research and development, +2 more
6 terms
constant currencies financial
"Constant currencies (cc), core results and free cash flow are non-IFRS measures."
Constant currencies is a way companies report sales and profit changes as if exchange rates had not moved, isolating underlying business performance from currency swings. For investors it matters because it shows whether growth comes from actual demand or just favorable exchange-rate moves—think of it like comparing two stores’ receipts after converting prices to the same stable money to see who actually sold more, not who benefitted from changing rates.
core operating income financial
"Core operating income was USD 5.9 billion (0%, 0% cc), in line with the prior-year quarter."
Core operating income is the profit a company generates from its regular, day-to-day business activities after paying the normal costs of running those operations, excluding one‑time gains, losses, or unusual items. Investors care because it reveals the steady earnings power of the business—like measuring how well a store makes money from selling goods each month rather than from a one-off sale of property—and helps compare performance across periods and companies.
free cash flow financial
"Free cash flow amounted to USD 5.6 billion (-12%), due to lower net cash flows from operating activities."
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
in-process research and development financial
"These comprised identifiable intangible assets, including IPR&D, of USD 11.3 billion..."
Unfinished research and development work—such as drug candidates, prototypes, or process designs—that a company is actively developing but has not yet completed or commercialized. Investors care because it represents potential future products or technologies (like a half-built prototype) whose value is uncertain; it affects how acquisitions are priced, how future profits and costs are forecast, and can be written down if the project fails.
Bruton’s tyrosine kinase inhibitor medical
"It is the first approved Bruton’s tyrosine kinase inhibitor (BTKi) for CSU."
pediatric exclusivity regulatory
"FDA granted Kisqali pediatric exclusivity, adding a 6-month period of exclusivity..."
Pediatric exclusivity is a regulatory reward that gives a drug maker extra protected selling time—typically a six‑month extension—if the company conducts studies showing the medicine is safe and effective for children. For investors, it matters because that extra time is like a temporary shield that delays generic competition and can materially extend revenue from a product, affecting a drug’s cash flow, valuation and investment returns.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Novartis (NVS) perform financially in Q2 2026?
Novartis Q2 2026 net sales were USD 14 408 million, up 3% year on year, while net income fell 19% to USD 3 257 million. EPS declined 17% to USD 1.71, and free cash flow decreased 12% to USD 5 561 million as profits and cash generation softened.
Which products drove Novartis (NVS) Q2 2026 sales growth?
Growth was led by oncology and neuroscience brands: Kisqali (USD 1 695 million, +43% cc), Kesimpta (USD 1 424 million, +32% cc), Scemblix (+89% cc), Pluvicto (+43% cc), Cosentyx (+10% cc) and Leqvio (+59% cc), partly offsetting generic-driven declines.
Why did Novartis (NVS) earnings decline in Q2 2026?
Net income fell 19% to USD 3 257 million mainly because of lower gross profit, higher income taxes and increased interest expense. Operating income decreased 2% to USD 4 750 million, and the tax rate rose to 23.7% from 11.2% in the prior-year quarter.
How has Novartis (NVS) net debt changed in 2026?
Net debt increased to USD 39.4 billion at June 30, 2026 from USD 21.9 billion at December 31, 2025. The rise reflects USD 15.3 billion of M&A and intangible investments, including the Avidity deal, plus a USD 9.1 billion dividend and USD 3.1 billion of treasury share transactions.
What major acquisitions did Novartis (NVS) complete in H1 2026?
Novartis acquired Avidity Biosciences for about USD 12.0 billion, adding RNA therapeutics assets for neuromuscular diseases. It also completed acquisitions accounted as asset deals, including Pikavation Therapeutics (USD 1.8 billion) and Excellergy (USD 0.9 billion) in early-stage oncology and immunology.
What is Novartis (NVS) 2026 financial outlook?
For 2026, Novartis expects net sales to grow low single-digit and core operating income to decline low single-digit, both at constant currencies. If mid-July exchange rates persist, foreign exchange would add about 1 percentage point to net sales and core operating income growth.
What recent regulatory milestones did Novartis (NVS) report?
Recent milestones include EU and Japan approvals for Rhapsido in chronic spontaneous urticaria, EU approval of Itvisma for 5q SMA, US traditional approval of Fabhalta for IgA nephropathy, FDA pediatric exclusivity for Kisqali, and a BLA submission for del‑zota in Duchenne muscular dystrophy.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated July 21, 2026
(Commission File No. 1-15024)
(Name of Registrant)
Lichtstrasse 35
4056 Basel
Switzerland
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F: ☒ Form 40-F: ☐
Incorporation by Reference:
This Report on Form 6-K (only with respect to (i) information under “R&D update - key developments from the second quarter” in Exhibit 99.1 hereto, and (ii) Exhibit 99.2 hereto to this Report on Form 6-K) shall be deemed to be incorporated by reference into the registration statements on Form S-8 (File Nos. 333-171739, 333-198706, 333-250207, 333-258081 and 333-293197) and to be a part thereof from the date on which this report is filed to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibits:
99.1 Financial Report Q2 2026
99.2 Interim Financial Report
101 Interactive Data
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Novartis AG
Date: July 21, 2026
By:
/s/ PAUL PENEPENT
Name:
Paul Penepent
Title:
Head Financial Reporting and Accounting
 |
Novartis International AG CH-4002 Basel Switzerland
https://www.novartis.com https://x.com/novartisnews |
FINANCIAL RESULTS | FINANZERGEBNISSE
Novartis delivered sales growth in Q2 and further advanced the pipeline; Full-year guidance reaffirmed
Ad hoc announcement pursuant to Art. 53 LR
Second quarter
| · | Net sales grew +1% (cc1, +3% USD), with core operating income1 flat (cc and USD) |
| o | Sales growth driven by priority brands including Kisqali (+43% cc), Kesimpta (+32% cc), Scemblix (+89% cc), Pluvicto (+43% cc) and Leqvio (+59% cc) |
| o | Core operating income margin1 was 41.2%, -70 basis points (cc) |
| · | Q2 operating income declined -3% (cc, -2% USD); net income down -19% (cc and USD) |
| · | Q2 core EPS1 declined -1% (cc, 0% USD) to USD 2.41 |
| · | Q2 free cash flow1 was USD 5.6 billion (-12% USD) |
| · | H1 net sales down -2% (cc, +1% USD) with core operating income -7% (cc, -6% USD) |
| · | Q2 selected innovation milestones: |
| o | Rhapsido EC and JP approval in CSU, Phase III CIndU data presented at EAACI |
| o | Itvisma EC approval as the only gene replacement therapy for a broad SMA patient population |
| o | Kisqali 6-year eBC follow up data showed clinically meaningful overall survival; FDA granted pediatric exclusivity, adding a 6-month period of exclusivity to all existing patents listed in the Orange Book |
| o | Del-zota BLA submitted to the FDA for accelerated approval in DMD |
| o | Del-brax positive Phase I/II biomarker data in facioscapulohumeral muscular dystrophy (FSHD) |
| · | Full-year 2026 guidance2 reaffirmed |
| o | Net sales expected to grow low single-digit and core operating income expected to decline low single-digit |
Basel, July 21, 2026 – Commenting on Q2 2026 results, Vas Narasimhan, CEO of Novartis, said:
“Novartis delivered a solid second quarter, returning to sales growth driven by continued momentum from Kisqali, Kesimpta, Scemblix and Pluvicto. We are encouraged by the early trajectory of our recent launches, Rhapsido in CSU and Itvisma. We also made meaningful pipeline progress, highlighted by updated Kisqali overall survival data in early breast cancer and the FDA accelerated approval submission for del-zota in DMD. We are on track for multiple important readouts ahead in the second half, and remain on track to deliver our full-year guidance and mid-term outlook.”
| Key figures | |||||||||
| Q2 2026 | Q2 2025 | % change | H1 2026 | H1 2025 | % change | ||||
| USD m3 | USD m3 | USD | cc | USD m3 | USD m3 | USD | cc | ||
| Net sales | 14 408 | 14 054 | 3 | 1 | 27 521 | 27 287 | 1 | -2 | |
| Operating income | 4 750 | 4 864 | -2 | -3 | 8 985 | 9 527 | -6 | -7 | |
| Net income | 3 257 | 4 024 | -19 | -19 | 6 413 | 7 633 | -16 | -17 | |
| EPS (USD) | 1.71 | 2.07 | -17 | -18 | 3.37 | 3.91 | -14 | -15 | |
| Free cash flow | 5 561 | 6 333 | -12 | 8 891 | 9 724 | -9 | |||
| Core operating income | 5 940 | 5 925 | 0 | 0 | 10 837 | 11 500 | -6 | -7 | |
| Core net income | 4 578 | 4 710 | -3 | -4 | 8 372 | 9 192 | -9 | -10 | |
| Core EPS (USD) | 2.41 | 2.42 | 0 | -1 | 4.39 | 4.69 | -6 | -8 | |
1. Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 43 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2. Please see detailed guidance assumptions on page 7. 3. USD millions unless indicated otherwise.
Strategy
Our focus
Novartis is a “pure-play” innovative medicines company. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies – the US, China, Germany and Japan.
Our priorities
| 1. | Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas. |
| 2. | Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility. |
| 3. | Strengthen foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society. |
Financials
Second quarter
Net sales were USD 14.4 billion (+3%, +1% cc), with volume growth contributing 18 percentage points, offset by 14 percentage points from generic competition. Pricing had a negative impact of 3 percentage points, and currency had a positive impact of 2 percentage points.
Operating income was USD 4.8 billion (-2%, -3% cc), declining mainly due to lower gross profit, partly offset by lower SG&A expenses.
Net income was USD 3.3 billion (-19%, -19% cc), impacted by higher income taxes and higher interest expense. EPS was USD 1.71 (-17%, -18% cc), benefiting from the lower weighted average number of shares outstanding.
Core operating income was USD 5.9 billion (0%, 0% cc), in line with the prior-year quarter. Core operating income margin was 41.2% of net sales, decreasing 1.0 percentage point (0.7 percentage points in cc).
Core net income was USD 4.6 billion (-3%, -4% cc), mainly due to higher interest expense. Core EPS was USD 2.41 (0%, -1% cc), benefiting from the lower weighted average number of shares outstanding.
Free cash flow amounted to USD 5.6 billion (-12%), due to lower net cash flows from operating activities.
First half
Net sales were USD 27.5 billion (+1%, -2% cc), with volume growth contributing 15 percentage points, offset by 14 percentage points from generic competition. Pricing had a negative impact of 3 percentage points, and currency had a positive impact of 3 percentage points.
Operating income was USD 9.0 billion (-6%, -7% cc), declining mainly due to lower gross profit, partly offset by lower legal related costs and lower SG&A expenses.
| 2 |
Net income was USD 6.4 billion (-16%, -17% cc), mainly due to lower operating income, higher income taxes and higher interest expense. EPS was USD 3.37 (-14%, -15% cc), benefiting from the lower weighted average number of shares outstanding.
Core operating income was USD 10.8 billion (-6%, -7% cc), declining mainly due to lower gross profit. Core operating income margin was 39.4% of net sales, decreasing 2.7 percentage points (2.3 percentage points in cc).
Core net income was USD 8.4 billion (-9%, -10% cc), mainly due to lower core operating income and higher interest expense. Core EPS was USD 4.39 (-6%, -8% cc), benefiting from the lower weighted average number of shares outstanding.
Free cash flow amounted to USD 8.9 billion (-9%), due to lower net cash flows from operating activities.
Q2 priority brands
Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q2 growth) including:
| Kisqali | (USD 1 695 million, +43% cc) sales grew strongly across all regions, with continued market share growth in the early breast cancer indication as well as leadership in metastatic breast cancer. |
| Kesimpta | (USD 1 424 million, +32% cc) sales grew across all regions, driven by increased demand and strong access. |
| Scemblix | (USD 562 million, +89% cc) sales grew across all regions, with continued strong momentum from the newly diagnosed patients-line indication in the US, Japan and Germany. |
| Pluvicto | (USD 651 million, +43% cc) sales showed continued strong demand in the pre-taxane metastatic castration-resistant prostate cancer (mCRPC) setting in the US, and access expansion ex-US. |
| Cosentyx | (USD 1 824 million, +10% cc) sales grew driven by US performance including growth in HS and IV. Ex-US, growth in Europe and most emerging markets was partly offset by a decline in China. |
| Leqvio | (USD 480 million, +59% cc) sales grew across all regions, with continued uptake in China following NRDL inclusion. |
| Fabhalta | (USD 225 million, +88% cc) sales grew, reflecting continued expansion in PNH and renal indications. |
| Zolgensma Group | (USD 365 million, +20% cc) sales grew driven by continued launch momentum from Itvisma in the US and UAE. |
| Rhapsido | (USD 64 million) continued to show strong early uptake in the US, supported by increasing coverage and a free drug program facilitating patient access. Ex-US sales were driven by early launch uptake in China. |
Net sales of the top 20 brands in the second quarter and first half
| Q2 2026 | % change | H1 2026 | % change | |||
| USD m | USD | cc | USD m | USD | cc | |
| Cosentyx | 1 824 | 12 | 10 | 3 390 | 7 | 5 |
| Kisqali | 1 695 | 44 | 43 | 3 211 | 51 | 48 |
| 3 |
| Kesimpta | 1 424 | 32 | 32 | 2 588 | 31 | 29 |
| Entresto | 1 181 | -50 | -51 | 2 486 | -46 | -48 |
| Pluvicto | 651 | 43 | 43 | 1 293 | 57 | 55 |
| Jakavi | 576 | 10 | 8 | 1 133 | 12 | 6 |
| Tafinlar + Mekinist | 581 | 1 | 0 | 1 074 | -5 | -7 |
| Ilaris | 550 | 15 | 15 | 1 025 | 14 | 13 |
| Scemblix | 562 | 89 | 89 | 995 | 86 | 85 |
| Leqvio | 480 | 61 | 59 | 932 | 68 | 64 |
| Xolair | 342 | -23 | -25 | 730 | -19 | -22 |
| Zolgensma Group | 365 | 23 | 20 | 667 | 7 | 3 |
| Sandostatin Group | 302 | 0 | -1 | 589 | -5 | -7 |
| Lutathera | 225 | 9 | 8 | 436 | 9 | 8 |
| Exforge Group | 191 | 0 | -3 | 394 | 6 | 2 |
| Fabhalta | 225 | 88 | 88 | 394 | 96 | 94 |
| Promacta/Revolade | 179 | -64 | -65 | 363 | -65 | -66 |
| Diovan Group | 160 | 4 | 2 | 310 | 2 | -2 |
| Tasigna | 142 | -57 | -58 | 297 | -58 | -59 |
| Lucentis | 126 | -27 | -30 | 230 | -36 | -40 |
| Top 20 brands total | 11 781 | 2 | 1 | 22 537 | 1 | -2 |
R&D update – key developments from the second quarter
New approvals
|
Rhapsido (remibrutinib) |
EC and Japan’s MHLW approved Rhapsido as an oral treatment for adult patients with chronic spontaneous urticaria (CSU) with inadequate response to H1-antihistamine treatment. It is the first approved Bruton’s tyrosine kinase inhibitor (BTKi) for CSU. |
|
Itvisma (onasemnogene abeparvovec) |
EC approved Itvisma for the treatment of children two years and older, teens and adults living with 5q spinal muscular atrophy (SMA) with a bi-allelic mutation in the survival motor neuron 1 (SMN1) gene. It is the first and only gene replacement therapy available for this broad population. |
|
Fabhalta (iptacopan) |
In July, FDA granted traditional approval of Fabhalta as the first and only complement inhibitor to significantly slow kidney function decline in adults with primary immunoglobulin A nephropathy (IgAN) at risk of disease progression. |
Regulatory updates
|
Kisqali (ribociclib) |
FDA granted Kisqali pediatric exclusivity, adding a 6-month period of exclusivity to all existing patents listed in the Orange Book. |
|
KPE179 (del-zota) |
A Biologics License Application (BLA) was submitted to the FDA for accelerated approval of del-zota in people living with Duchenne muscular dystrophy (DMD) who have a genetic variant that may be amenable to exon 44 skipping (DMD44). Del-zota previously received FDA Breakthrough Therapy designation. |
| 4 |
|
Vanrafia (atrasentan) |
Regulatory submissions for traditional approval of Vanrafia in adults with IgAN were completed in the US and EU. |
|
Coartem (artemether and lumefantrine) |
The World Health Organization prequalified Coartem Baby, the first antimalarial developed specifically for newborns and young infants between 2-5 kg, a key step towards enabling widespread access through public sector procurement. |
Results from ongoing trials and other highlights
|
Rhapsido (remibrutinib) |
In the Phase III RemIND study, Rhapsido met its primary endpoint across the three most common chronic inducible urticaria (CIndU) subtypes, with higher rates of complete responses at Week 12, and responses seen as early as Week 2 in two subtypes. Twice as many patients achieved symptom control compared with placebo. The safety profile was favorable with no liver safety concerns. Data supports its potential as a first targeted therapy for CIndU. Data were presented at EAACI.
The Phase IIIb REMIXED extension study in CSU demonstrated that patients continuing remibrutinib treatment had a 72% lower risk of relapse and maintained higher rates of disease control compared with those switched to placebo for up to 18 months. The safety profile remained favorable. Data were presented at EAACI. The extension study will continue with follow-up for 3 years. |
|
Pluvicto (lutetium Lu177 vipivotide tetraxetan) |
Subgroup analyses from the Phase III PSMAddition study of Pluvicto plus standard of care (SoC) (ARPI + ADT) in patients with PSMA+ metastatic hormone-sensitive prostate cancer (mHSPC)1 demonstrated consistent improvement in radiographic progression-free survival (rPFS) versus SoC alone, regardless of disease volume or presentation (de novo or recurrent). The benefit was comparable with the previously reported primary endpoint showing a 28% reduction in the risk of progression or death, with a consistent safety profile. Data were presented at ASCO.
Further PSMAddition data showed Pluvicto plus SoC achieved a higher frequency and depth of PSA response versus SoC alone in PSMA+ mHSPC, with a 58% reduction in the risk of PSA progression. Data were presented at AUA. |
|
Cosentyx (secukinumab) |
In the Phase III REPLENISH study, Cosentyx demonstrated statistically significant sustained remission versus placebo at Week 52 in patients with polymyalgia rheumatica (PMR), doubling remission rates, while also reducing cumulative glucocorticoid exposure, with a safety profile consistent with Cosentyx. Data were published at the New England Journal of Medicine and presented at EULAR. Data have been submitted for health authority review in the US, EU and Japan. |
| VAY736 (ianalumab) | In the Phase III NEPTUNUS-1 and -2 studies in adult patients with Sjögren’s Disease, ianalumab demonstrated consistent improvement across most ESSDAI domains, including key lymphadenopathy, PNS, muscular and pulmonary domains. In the NEPTUNUS extension study, deepening control of disease activity was observed, with continued reductions in ESSDAI at Week 108 and a favorable safety profile. Data were presented at EULAR. Data have been submitted for health authority review in the US, EU and Japan. |
|
Vanrafia (atrasentan) |
Final 30-month results from the Phase III ALIGN study showed Vanrafia achieved a clinically meaningful slowing of kidney function decline in adults with IgAN together with sustained proteinuria reductions. The benefits were consistent across kidney function measures and in patient groups receiving SGLT2 inhibitors. The safety profile was consistent with prior studies. Results were published in The Lancet and presented at ERA. |
| DWH213 (del-brax) |
The biomarker cohort of the FORTITUDE Phase I/II study of del-brax in patients with facioscapulohumeral muscular dystrophy (FSHD) met its primary and key secondary |
| 5 |
|
|
endpoints, with reductions in KHDC1L (cDUX) and creatine kinase biomarker levels, indicating both strong target engagement and reduction in muscle damage. The safety profile was consistent with previous findings. |
|
Scemblix (asciminib) |
Week 144 data from the pivotal Phase III ASC4FIRST study of Scemblix in adults with newly diagnosed Ph+ CML-CP demonstrated superior major molecular response (MMR) compared with all SoC tyrosine kinase inhibitors (TKIs), including a 15.2% higher MMR rate versus 2G TKIs. Scemblix showed fewer grade ≥3 AEs and less than half the discontinuation rate due to AEs. Data were presented at ASCO. |
|
Kisqali (ribociclib) |
The NATALEE six-year follow up study showed clinically meaningful overall survival (OS) in the broadest at risk early breast cancer (eBC) population. Data will be presented at an upcoming medical congress.
In the largest CDK4/6i biomarker analysis in HR+/HER2- eBC, NATALEE showed Kisqali plus non-steroidal aromatase inhibitor (NSAI) demonstrated consistent invasive disease-free survival (iDFS) benefit versus NSAI alone across all PAM50 intrinsic subtypes, with greater benefit trends in patients with higher genomic risk or proliferation signature scores, including high-risk node-negative (N0) disease. Data were presented at ASCO. |
|
HTT227 (Votoplam) |
In the 24-month interim analysis of the Phase II PIVOT-HD long-term extension study, votoplam 10 mg dose demonstrated sustained mHTT lowering in early stage Huntington's disease (HD) patients with a favorable safety profile. The Phase III INVEST-HD study is actively enrolling. |
|
FUB523 (zigakibart) |
Long-term data from the Phase I/II study of zigakibart showed durable reductions in disease-relevant biomarkers, including Gd-IgA1 and IgA through Week 124, alongside clinically meaningful reductions in proteinuria and stabilization of eGFR, with no new safety signals. Data were presented at ERA.
Zigakibart is currently being evaluated in the Phase III BEYOND study in adults with IgAN, with readout anticipated in H1 2027. |
|
YTB323 (rap-cel) |
Preliminary data from the Phase II AUTOGRAPH studies of rap-cel showed early, clinically meaningful improvements in patients with severe, refractory idiopathic inflammatory myopathies (IIM) and diffuse cutaneous systemic sclerosis (dcSSc), alongside rapid and deep B-cell depletion, with a manageable safety profile. |
|
225Ac-PSMA-617
|
Phase I data from the AcTION study of the actinium-based RLT Ac225-PSMA-617 showed antitumor activity, with PSA declines and radiographic responses in patients with PSMA+ metastatic castration-resistant prostate cancer2. The safety profile was manageable. Data were presented at ASCO. |
| Selected transactions |
In July, Novartis entered into an agreement to acquire Myricx Bio, a biotechnology company developing a new class of antibody-drug conjugates (ADCs). The acquisition strengthens the Novartis oncology pipeline with two lead ADC assets targeting B7-H3 and HER2 and a broader payload platform with potential impact across multiple solid tumor settings. The transaction is expected to close in H2 2026, subject to customary closing conditions.
Novartis successfully completed the acquisition of Pikavation Therapeutics, Inc and SNV4818, strengthening its early-stage breast cancer pipeline.
Novartis successfully completed the acquisition of Excellergy including Exl-111, building on deep Novartis expertise in IgE biology and allergic disease. |
1 Also known as prostate-specific membrane antigen (PSMA)-positive metastatic androgen pathway modulation-naive/sensitive (mAPMN/S) prostate cancer.
2 Also known as prostate-specific membrane antigen (PSMA)-positive metastatic androgen pathway modulation-resistant (mAPMR) prostate cancer.
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Capital structure and net debt
Retaining a good balance between investment in the business, a strong capital structure, and attractive shareholder returns remains a priority.
During the first half of 2026, Novartis repurchased 18.2 million shares for USD 2.8 billion on the SIX Swiss Exchange second trading line. These repurchases included 13.8 million shares (USD 2.1 billion) under the up-to USD 10 billion share buyback announced in July 2025 (with up to USD 5.6 billion still to be executed). In addition, 4.4 million shares (USD 0.7 billion) were repurchased to mitigate the anticipated full-year dilution related to participation plans of associates, with the remainder of repurchases for this purpose to be executed in H2 2026. A further 2.0 million shares (USD 0.3 billion) were repurchased from employees. During the same period, USD 0.6 billion equity-based compensation plans expenses were recognized to equity and 12.7 million shares were delivered to employees related to equity-based compensation plans from prior years. As a result, the total number of shares outstanding decreased by 7.5 million compared to December 31, 2025. These treasury share transactions resulted in an equity decrease of USD 2.4 billion and cash outflows of USD 3.1 billion.
Net debt increased to USD 39.4 billion at June 30, 2026, compared to USD 21.9 billion at December 31, 2025. The increase was mainly due to the free cash flow of USD 8.9 billion being more than offset by the net cash outflow for M&A, intangible asset transactions and other acquisitions of USD 15.3 billion, the USD 9.1 billion annual dividend payment and cash outflows for treasury share transactions of USD 3.1 billion.
As of Q2 2026, the long-term credit rating for the company is Aa3 with Moody’s Ratings and AA- with S&P Global Ratings.
2026 outlook
|
Barring unforeseen events; growth vs. prior year in cc | |
| Net sales | Expected to grow low single-digit |
| Core operating income | Expected to decline low single-digit |
Foreign exchange impact
If mid-July exchange
rates prevail for the remainder of 2026, the foreign exchange impact for the year would be positive 1 percentage point on net sales and
positive 1 percentage point on core operating income. The estimated impact of exchange rates on our results is provided monthly on our
website.
| 7 |
Key figures1
| Q2 2026 | Q2 2025 | % change | H1 2026 | H1 2025 | % change | ||||
| USD m2 | USD m2 | USD | cc | USD m2 | USD m2 | USD | cc | ||
| Net sales | 14 408 | 14 054 | 3 | 1 | 27 521 | 27 287 | 1 | -2 | |
| Operating income | 4 750 | 4 864 | -2 | -3 | 8 985 | 9 527 | -6 | -7 | |
| As a % of sales | 33.0 | 34.6 | 32.6 | 34.9 | |||||
| Net income | 3 257 | 4 024 | -19 | -19 | 6 413 | 7 633 | -16 | -17 | |
| EPS (USD) | 1.71 | 2.07 | -17 | -18 | 3.37 | 3.91 | -14 | -15 | |
| Net cash flows from operating activities | 5 882 | 6 664 | -12 | 9 558 | 10 309 | -7 | |||
| Non-IFRS measures | |||||||||
| Free cash flow | 5 561 | 6 333 | -12 | 8 891 | 9 724 | -9 | |||
| Core operating income | 5 940 | 5 925 | 0 | 0 | 10 837 | 11 500 | -6 | -7 | |
| As a % of sales | 41.2 | 42.2 | 39.4 | 42.1 | |||||
| Core net income | 4 578 | 4 710 | -3 | -4 | 8 372 | 9 192 | -9 | -10 | |
| Core EPS (USD) | 2.41 | 2.42 | 0 | -1 | 4.39 | 4.69 | -6 | -8 | |
1. Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 43 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2. USD millions unless indicated otherwise.
Detailed financial results accompanying this press release are included in the Condensed Interim Financial Report at the link below:
https://ml-eu.globenewswire.com/resource/download/4e53f554-1093-41f4-95a8-a8ea8022015a
Disclaimer
This communication contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that can generally be identified by words such as “expected,” “anticipated,” “planned,” “can,” “will,” “continue,” “ongoing,” “growth,” “launch,” “expanded,” “deliver,” “accelerate,” “guidance,” “outlook,” “priority,” “potential,” “momentum,” “on track,” “look forward,” “pipeline,” or similar expressions, or by express or implied discussions regarding: potential new products, potential new indications for existing products, potential product launches or potential future revenues from any such products; or results of ongoing clinical trials; potential future, pending or announced transactions; potential future sales or earnings; strategy, plans, expectations or intentions, including discussions regarding our continued investment into new R&D capabilities and manufacturing; our capital structure. You should not place undue reliance on these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that the investigational or approved products described in this communication will be submitted or approved for sale or for any additional indications or labeling in any market, or at any particular time. Nor can there be any guarantee that such products will be commercially successful in the future. Neither can there be any guarantee that the expected benefits or synergies from the transactions described in this communication will be achieved in the expected timeframe, or at all. In particular, our expectations could be affected by, among other things, uncertainties concerning: global healthcare cost containment, including ongoing government, payer and general public pricing and reimbursement pressures and requirements for increased pricing transparency; the success of key products, commercial priorities and strategy; the research and development of new products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products; our ability to realize the strategic benefits, operational efficiencies or opportunities expected from our external business opportunities; the development or adoption of new technologies, including artificial intelligence, and new business models; the implementation of our new IT projects and systems; potential significant breaches of information security or disruptions of our information technology systems; actual or potential legal proceedings, including regulatory actions or delays or government regulation related to the products and pipeline products described in this communication; safety, quality, data integrity, or manufacturing issues; our performance on and ability to comply with environmental, social and governance measures and requirements; major macroeconomic
| 8 |
and geo- and socio-political developments, including the impact of any potential tariffs on our products or the impact of war in certain parts of the world; future global exchange rates; future demand for our products; and other risks and factors referred to in Novartis AG’s most recently filed Form 20-F and in subsequent reports filed with, or furnished to, the US Securities and Exchange Commission. Novartis is providing the information in this communication as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.
All product names appearing in italics are trademarks owned by or licensed to Novartis.
About Novartis
Novartis is an innovative medicines company. Every day, we work to reimagine medicine to improve and extend people’s lives so that patients, healthcare professionals and societies are empowered in the face of serious disease. Our medicines reach more than 300 million people worldwide.
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with us on LinkedIn, Facebook, X/Twitter and Instagram.
Novartis will conduct a conference call with investors to discuss this news release today at 14:00 Central European time and 8:00 Eastern Time. A simultaneous webcast of the call for investors and other interested parties may be accessed by visiting the Novartis website. A replay will be available after the live webcast by visiting https://www.novartis.com/investors/event-calendar.
Detailed financial results accompanying this press release are included in the Condensed Interim Financial Report at the link below. Additional information is provided on our business and pipeline of selected compounds in late-stage development. A copy of today's earnings call presentation can be found at https://www.novartis.com/investors/event-calendar.
Important dates
| October 27, 2026 | Third quarter & nine months 2026 results |
| November 18-19, 2026 | Meet Novartis Management 2026 (London, UK) |
| February 3, 2027 | Fourth quarter & full year 2026 results |
# # #
|
Novartis Media Relations E-mail: media.relations@novartis.com
|
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Novartis Investor Relations Central investor relations line: +41 61 324 7944 E-mail: investor.relations@novartis.com
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| 9 |
Novartis Second Quarter and Half Year 2026 Condensed Interim Financial Report – Supplementary Data
INDEX Page
OPERATING PERFORMANCE REVIEW 3
CASH FLOW AND BALANCE SHEET 11
INNOVATION REVIEW 15
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements 17
Consolidated statements of comprehensive income 19
Consolidated balance sheets 20
Consolidated statements of changes in equity 21
Consolidated statements of cash flows 23
Notes to condensed interim consolidated financial statements 25
SUPPLEMENTARY INFORMATION 43
CORE RESULTS - Reconciliation from IFRS® Accounting Standards results to non-IFRS measure core results 45
NON-IFRS MEASURE FREE CASH FLOW 48
ADDITIONAL INFORMATION
Net debt 50
Share information 50
Effects of currency fluctuations 51
DISCLAIMER 52
2
Operating performance review
Key figures
Second quarter and half year
(USD millions unless indicated otherwise) | Q2 2026 USD m | Q2 2025 USD m | % change USD | % change cc1 | H1 2026 USD m | H1 2025 USD m | % change USD | % change cc1 | |||||||||
Net sales to third parties | 14 408 | 14 054 | 3 | 1 | 27 521 | 27 287 | 1 | -2 | |||||||||
Other revenues | 543 | 782 | -31 | -31 | 954 | 1 169 | -18 | -19 | |||||||||
Cost of goods sold | -3 710 | -3 322 | -12 | -10 | -7 169 | -6 549 | -9 | -6 | |||||||||
Gross profit | 11 241 | 11 514 | -2 | -3 | 21 306 | 21 907 | -3 | -5 | |||||||||
Selling, general and administration | -3 241 | -3 442 | 6 | 7 | -6 381 | -6 500 | 2 | 4 | |||||||||
Research and development | -2 847 | -2 727 | -4 | -3 | -5 587 | -5 093 | -10 | -6 | |||||||||
Other income | 410 | 548 | -25 | -25 | 888 | 774 | 15 | 10 | |||||||||
Other expense | -813 | -1 029 | 21 | 22 | -1 241 | -1 561 | 20 | 23 | |||||||||
Operating income | 4 750 | 4 864 | -2 | -3 | 8 985 | 9 527 | -6 | -7 | |||||||||
% of net sales | 33.0 | 34.6 | 32.6 | 34.9 | |||||||||||||
Loss from associated companies | -2 | -3 | 33 | 48 | -5 | -6 | 17 | 26 | |||||||||
Interest expense | -462 | -289 | -60 | -64 | -805 | -559 | -44 | -46 | |||||||||
Other financial income and expense | -17 | -41 | nm | nm | -67 | -24 | nm | nm | |||||||||
Income before taxes | 4 269 | 4 531 | -6 | -6 | 8 108 | 8 938 | -9 | -10 | |||||||||
Income taxes | -1 012 | -507 | -100 | -98 | -1 695 | -1 305 | -30 | -29 | |||||||||
Net income | 3 257 | 4 024 | -19 | -19 | 6 413 | 7 633 | -16 | -17 | |||||||||
Basic earnings per share (USD) | 1.71 | 2.07 | -17 | -18 | 3.37 | 3.91 | -14 | -15 | |||||||||
Net cash flows from operating activities | 5 882 | 6 664 | -12 | 9 558 | 10 309 | -7 | |||||||||||
Non-IFRS measures 1 | |||||||||||||||||
Free cash flow | 5 561 | 6 333 | -12 | 8 891 | 9 724 | -9 | |||||||||||
Core operating income | 5 940 | 5 925 | 0 | 0 | 10 837 | 11 500 | -6 | -7 | |||||||||
% of net sales | 41.2 | 42.2 | 39.4 | 42.1 | |||||||||||||
Core net income | 4 578 | 4 710 | -3 | -4 | 8 372 | 9 192 | -9 | -10 | |||||||||
Core basic earnings per share (USD) | 2.41 | 2.42 | 0 | -1 | 4.39 | 4.69 | -6 | -8 | |||||||||
1 Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 43. Unless otherwise noted, all growth rates in this release refer to same period in prior-year. | |||||||||||||||||
nm = not meaningful | |||||||||||||||||
3
Strategy
Our focus
Novartis is a “pure-play” innovative medicines company. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies – the US, China, Germany and Japan.
Our priorities
1. Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
2. Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
3. Strengthen foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.
Financials
Second quarter
Net sales
Net sales were USD 14.4 billion (+3%, +1% cc), with volume growth contributing 18 percentage points, offset by 14 percentage points from generic competition. Pricing had a negative impact of 3 percentage points, and currency had a positive impact of 2 percentage points. By region, sales in the US were USD 6.0 billion (-5%) and sales in the rest of the world were USD 8.5 billion (+8%, +6% cc).
Sales growth was driven by continued strong performance from Kisqali (USD 1.7 billion, +44%, +43% cc), Kesimpta (USD 1.4 billion, +32%, +32% cc), Scemblix (USD 562 million, +89%, +89% cc), Pluvicto (USD 651 million, +43%, +43% cc) and Leqvio (USD 480 million, +61%, +59% cc), offset by generic competition, mainly Entresto (USD 1.2 billion, -50%, -51% cc).
In the US (USD 6.0 billion, -5%), strong growth from Kisqali, Kesimpta, Scemblix, Cosentyx and Pluvicto was more than offset by generic competition, mainly Entresto and Promacta. In Europe (USD 4.4 billion, +6%, +4% cc), sales grew driven by Kisqali, Kesimpta and Leqvio, partly offset by generic competition, mainly Promacta. Sales in emerging growth markets were USD 3.9 billion (+10%, +6% cc), including USD 1.2 billion of sales from China (+12%, +6% cc).
Operating income
Gross profit was USD 11.2 billion (-2%, -3% cc), mainly due to a prior-year royalty settlement income and unfavorable product mix.
SG&A expenses were USD 3.2 billion (+6%, +7% cc)1, driven by productivity.
R&D expenses were USD 2.8 billion (-4%, -3% cc), mainly due to investments in recently acquired assets.
Other income was USD 0.4 billion (-25%, -25% cc), decreasing mainly due to lower government grant income.
Other expense was USD 0.8 billion (+21%, +22% cc), decreasing mainly due to lower legal related costs.
1 For ease of understanding, Novartis uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared with the prior year is shown as a positive growth.
4
Operating income was USD 4.8 billion (-2%, -3% cc), declining mainly due to lower gross profit, partly offset by lower SG&A expenses. Operating income margin was 33.0% of net sales, decreasing 1.6 percentage points (1.3 percentage points in cc).
Core adjustments were USD 1.2 billion, mainly due to amortization, compared with USD 1.1 billion in the prior-year quarter. Core adjustments increased mainly due to higher restructuring and higher impairments, partly offset by lower legal related costs.
Core gross profit was USD 12.0 billion (0%, -1% cc), as higher revenues were offset by unfavorable product mix.
Core SG&A expenses were USD 3.2 billion (+6%, +7% cc), driven by productivity.
Core R&D expenses were USD 2.7 billion (-4%, -2% cc), due to investments in recently acquired assets.
Core other income was USD 0.1 billion (-48%, -48% cc), decreasing mainly due to lower government grant income. Core other expense was USD 0.2 billion (-27%, -30% cc).
Core operating income was USD 5.9 billion (0%, 0% cc), in line with the prior-year quarter. Core operating income margin was 41.2% of net sales, decreasing 1.0 percentage point (0.7 percentage points in cc).
Interest expense and other financial income and expense
Interest expense amounted to USD 462 million compared with USD 289 million in the prior-year quarter, mainly due to the increase in financial debt.
Other financial income and expense amounted to an expense of USD 17 million, broadly in line with the prior-year quarter.
Core interest expense amounted to USD 462 million compared with USD 289 million in the prior-year quarter, mainly due to the increase in financial debt.
Core other financial income and expense amounted to an income of USD 19 million, broadly in line with the prior-year quarter.
Income taxes
The tax rate in the second quarter was 23.7% compared to 11.2% in the prior-year period. The current-year tax rate was negatively impacted by the tax effects of an intercompany transaction and by changes in uncertain tax positions. The prior-year tax rate was favorably impacted by changes in uncertain tax positions and other items. Both the current- and prior-year tax rates were impacted by the adjustments to the estimated full-year tax rate, which was lower than previously estimated. Excluding these impacts, the tax rate would have been 17.3% in the current year and 15.5% in the prior-year period. The increase compared with the prior year was mainly the result of a change in profit mix.
The core tax rate (core taxes as a percentage of core income before tax) was 16.7% compared to 16.2% in the prior year. The increase from the prior year was mainly the result of a change in profit mix.
Net income, EPS, cash flows from operating activities and free cash flow
Net income was USD 3.3 billion (-19%, -19% cc), impacted by higher income taxes and higher interest expense. EPS was USD 1.71 (-17%, -18% cc), benefiting from the lower weighted average number of shares outstanding.
Core net income was USD 4.6 billion (-3%, -4% cc), mainly due to higher interest expense. Core EPS was USD 2.41 (0%, -1% cc), benefiting from the lower weighted average number of shares outstanding.
Net cash flows from operating activities amounted to USD 5.9 billion (-12%) mainly due to lower net income, adjusted for non-cash items and other adjustments, and by unfavorable net changes in other financial receipts.
Free cash flow amounted to USD 5.6 billion (-12%), due to lower net cash flows from operating activities.
5
First half
Net sales
Net sales were USD 27.5 billion (+1%, -2% cc), with volume growth contributing 15 percentage points, offset by 14 percentage points from generic competition. Pricing had a negative impact of 3 percentage points, and currency had a positive impact of 3 percentage points. By region, sales in the US were USD 10.9 billion (-9%) and sales in the rest of the world were USD 16.6 billion (+8%, +4% cc).
Sales were broadly stable, as strong growth from Kisqali (USD 3.2 billion, +51%, +48% cc), Kesimpta (USD 2.6 billion, +31%, +29% cc), Pluvicto (USD 1.3 billion, +57%, +55% cc), Scemblix (USD 995 million, +86%, +85% cc) and Leqvio (USD 932 million, +68%, +64% cc) was offset by generic competition, mainly Entresto (USD 2.5 billion, -46%, -48% cc), Promacta (USD 363 million, -65%, -66% cc) and Tasigna (USD 297 million, -58%, -59% cc).
In the US (USD 10.9 billion, -9%), strong growth from Kisqali, Kesimpta, Pluvicto, Scemblix and Leqvio was more than offset by generic competition, mainly Entresto and Promacta. In Europe (USD 8.6 billion, +7%, +1% cc), sales grew driven by Kisqali, Kesimpta and Leqvio partly offset by generic competition, mainly Promacta and Xolair. Sales in emerging growth markets were USD 7.7 billion (+9%, +4% cc), including USD 2.5 billion of sales from China (+13%, +7% cc).
Operating income
Gross profit was USD 21.3 billion (-3%, -5% cc), mainly due to lower net sales and unfavorable product mix.
SG&A expenses were USD 6.4 billion (+2%, +4% cc), driven by productivity.
R&D expenses were USD 5.6 billion (-10%, -6% cc), mainly due to investments in recently acquired assets.
Other income was USD 0.9 billion (+15%, +10% cc), driven by higher asset divestment gains partly offset by lower government grant income.
Other expense was USD 1.2 billion (+20%, +23% cc), decreasing mainly due to lower legal related costs.
Operating income was USD 9.0 billion (-6%, -7% cc), declining mainly due to lower gross profit, partly offset by lower legal related costs and lower SG&A expenses. Operating income margin was 32.6% of net sales, decreasing 2.3 percentage points (1.8 percentage points in cc).
Core adjustments were USD 1.9 billion, mainly due to amortization, compared with USD 2.0 billion in the prior year.
Core gross profit was USD 22.7 billion (-1%, -3% cc), declining due to lower net sales and unfavorable product mix.
Core SG&A expenses were USD 6.4 billion (+2%, +5% cc), driven by productivity.
Core R&D expenses were USD 5.4 billion (-10%, -7% cc), mainly due to investments in recently acquired assets.
Core other income was USD 0.2 billion (-22%, -31% cc), mainly due to lower government grant income. Core other expense was USD 0.4 billion (+5%, +11% cc).
Core operating income was USD 10.8 billion (-6%, -7% cc), declining mainly due to lower gross profit. Core operating income margin was 39.4% of net sales, decreasing 2.7 percentage points (2.3 percentage points in cc).
Interest expense and other financial income and expense
Interest expense amounted to USD 805 million compared with USD 559 million in the prior year, mainly due to the increase in financial debt.
Other financial income and expense amounted to an expense of USD 67 million, broadly in line with the prior year.
Core interest expense amounted to USD 805 million compared with USD 559 million in the prior year, mainly due to the increase in financial debt.
6
Core other financial income and expense amounted to an income of USD 23 million, broadly in line with the prior year.
Income taxes
The tax rate in the first half was 20.9% compared to 14.6% in the prior year. The current-year tax rate was negatively impacted by the tax effects of an intercompany transaction and by changes in uncertain tax positions. The prior-year tax rate was favorably impacted by changes in uncertain tax positions. This was partly offset by the effect of remeasuring deferred tax balances following a tax rate change in Switzerland, prior-year items and other items. Excluding these impacts, the tax rate would have been 17.3% in the current year and 15.5% in the prior-year period. The increase compared with the prior year was mainly the result of a change in profit mix.
The core tax rate (core taxes as a percentage of core income before tax) was 16.7% compared to 16.2% in the prior year. The increase from the prior year was mainly the result of a change in profit mix.
Net income, EPS, cash flows from operating activities and free cash flow
Net income was USD 6.4 billion (-16%, -17% cc), mainly due to lower operating income, higher income taxes and higher interest expense. EPS was USD 3.37 (-14%, -15% cc), benefiting from the lower weighted average number of shares outstanding.
Core net income was USD 8.4 billion (-9%, -10% cc), mainly due to lower core operating income and higher interest expense. Core EPS was USD 4.39 (-6%, -8% cc), benefiting from the lower weighted average number of shares outstanding.
Net cash flows from operating activities amounted to USD 9.6 billion (-7%), mainly due to lower net income, adjusted for non-cash items and other adjustments, and unfavorable net changes in other financial receipts, partly offset by favorable changes in working capital.
Free cash flow amounted to USD 8.9 billion (-9%), due to lower net cash flows from operating activities.
7
Product commentary (relating to Q2 performance)
Cardiovascular, RENAL and METABOLIC
Q2 2026 | Q2 2025 | % change | % change | H1 2026 | H1 2025 | % change | % change | ||||||||||
USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||||||||||
Cardiovascular, renal and metabolic | |||||||||||||||||
Entresto | 1 181 | 2 357 | -50 | -51 | 2 486 | 4 618 | -46 | -48 | |||||||||
Leqvio | 480 | 298 | 61 | 59 | 932 | 555 | 68 | 64 | |||||||||
Vanrafia | 27 | nm | nm | 43 | nm | nm | |||||||||||
Total cardiovascular, renal and metabolic | 1 688 | 2 655 | -36 | -37 | 3 461 | 5 173 | -33 | -35 | |||||||||
nm = not meaningful | |||||||||||||||||
Entresto (USD 1 181 million, –50%, –51% cc) sales declined due to generic competition in the US. Entresto continued to grow ex-US, where the product is approved for heart failure globally as well as hypertension in China and Japan.
Leqvio (USD 480 million, +61%, +59% cc) sales grew mainly driven by the US, Europe and continued uptake in China following inclusion in the National Reimbursement Drug List (NRDL) in January. Leqvio is registered in 109 countries worldwide and commercially available in 89 countries. Novartis obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals. Novartis is in US ANDA litigation with a generic manufacturer.
Vanrafia (USD 27 million) sales reflect continued launch execution following 2025 approvals in the US and China, as the first and only selective endothelin A (ETA) receptor antagonist for proteinuria reduction in primary IgA nephropathy (IgAN).
Immunology
Q2 2026 | Q2 2025 | % change | % change | H1 2026 | H1 2025 | % change | % change | ||||||||||
USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||||||||||
Immunology | |||||||||||||||||
Cosentyx | 1 824 | 1 629 | 12 | 10 | 3 390 | 3 163 | 7 | 5 | |||||||||
Ilaris | 550 | 477 | 15 | 15 | 1 025 | 896 | 14 | 13 | |||||||||
Xolair 1 | 342 | 443 | -23 | -25 | 730 | 899 | -19 | -22 | |||||||||
Rhapsido | 64 | nm | nm | 101 | nm | nm | |||||||||||
Total immunology | 2 780 | 2 549 | 9 | 8 | 5 246 | 4 958 | 6 | 3 | |||||||||
1 Net sales to third parties reflect Xolair sales for all indications. | |||||||||||||||||
nm = not meaningful | |||||||||||||||||
Cosentyx (USD 1 824 million, +12%, +10% cc) sales grew driven by US performance including growth in HS and IV. Ex-US, sales grew in Europe and most emerging markets, partly offset by a decline in China.
Ilaris (USD 550 million, +15%, +15% cc) sales grew across all regions, with continued momentum in the Periodic Fever Syndromes and Still’s disease indications.
Xolair (USD 342 million, –23%, –25% cc) sales declined mainly due to continued biosimilar pressure. Novartis co-promotes Xolair with Genentech in the US and shares a portion of revenue as operating income but does not record any US sales.
Rhapsido (USD 64 million) continued to show strong early uptake in the US, supported by increasing payer coverage and a free drug program facilitating patient access. Ex-US, sales were driven by early launch uptake in China, with recent launches in Germany, Austria and the UAE following Q2 approvals in CSU.
8
Neuroscience
Q2 2026 | Q2 2025 | % change | % change | H1 2026 | H1 2025 | % change | % change | ||||||||||
USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||||||||||
Neuroscience | |||||||||||||||||
Kesimpta | 1 424 | 1 077 | 32 | 32 | 2 588 | 1 976 | 31 | 29 | |||||||||
Zolgensma Group | 365 | 297 | 23 | 20 | 667 | 624 | 7 | 3 | |||||||||
Aimovig | 88 | 83 | 6 | 3 | 183 | 159 | 15 | 8 | |||||||||
Total neuroscience | 1 877 | 1 457 | 29 | 28 | 3 438 | 2 759 | 25 | 22 | |||||||||
Kesimpta (USD 1 424 million, +32%, +32% cc) sales grew across all regions, driven by increased demand and strong access, as a high efficacy B-cell therapy with at-home self-administration for a broad population of RMS patients. Kesimpta is now approved in 94 countries with more than 216,000 patients treated since launch.
Zolgensma Group (USD 365 million, +23%, +20% cc) sales grew driven by continued launch momentum from Itvisma in the US and UAE. Itvisma is now also approved in Japan, Qatar and the EU. Zolgensma sales were stable, with over 5,500 patients treated globally since launch.
Aimovig (USD 88 million, +6%, +3% cc) sales grew driven by increased demand for migraine prevention. Novartis commercializes Aimovig ex-US and ex-Japan, while Amgen retains all rights in the US and Japan.
ONCOLOGY
Q2 2026 | Q2 2025 | % change | % change | H1 2026 | H1 2025 | % change | % change | ||||||||||
USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||||||||||
Oncology | |||||||||||||||||
Kisqali | 1 695 | 1 177 | 44 | 43 | 3 211 | 2 133 | 51 | 48 | |||||||||
Pluvicto | 651 | 454 | 43 | 43 | 1 293 | 825 | 57 | 55 | |||||||||
Jakavi | 576 | 524 | 10 | 8 | 1 133 | 1 016 | 12 | 6 | |||||||||
Tafinlar + Mekinist 1 | 581 | 573 | 1 | 0 | 1 074 | 1 125 | -5 | -7 | |||||||||
Scemblix | 562 | 298 | 89 | 89 | 995 | 536 | 86 | 85 | |||||||||
Lutathera | 225 | 207 | 9 | 8 | 436 | 400 | 9 | 8 | |||||||||
Fabhalta 2 | 225 | 120 | 88 | 88 | 394 | 201 | 96 | 94 | |||||||||
Total oncology | 4 515 | 3 353 | 35 | 34 | 8 536 | 6 236 | 37 | 34 | |||||||||
1 Majority of sales for Mekinist and Tafinlar are combination, but both can be used as monotherapy. | |||||||||||||||||
2 Net sales to third parties reflect Fabhalta sales for all indications. | |||||||||||||||||
Kisqali (USD 1 695 million, +44%, +43% cc) sales grew strongly across all regions, with continued market share growth in the early breast cancer indication as well as leadership in metastatic breast cancer. Kisqali performance reflects its consistent overall survival benefit across all Phase III mBC trials, its NCCN Category 1 preferred status, its ESMO-MCBS highest-rated CDK4/6i in mBC and highest possible rating in eBC, and its ESMO guidelines preferred status in 1L mBC.
Pluvicto (USD 651 million, +43%, +43% cc) sales showed continued strong demand driven by the pre-taxane metastatic castration-resistant prostate cancer (mCRPC) setting in the US, while ex-US access continued to expand, with the post-taxane mCRPC setting now approved in 52 countries and the pre-taxane setting approved in 14 countries.
Jakavi (USD 576 million, +10%, +8% cc) sales grew across indications. Incyte retains all rights to ruxolitinib (Jakafi®) in the US.
Tafinlar + Mekinist (USD 581 million, +1%, 0% cc) sales were broadly stable, as a decline in the US due to competitive pressure was offset by ex-US sales growth. Novartis is in US ANDA litigation with a generic manufacturer.
Scemblix (USD 562 million, +89%, +89% cc) sales grew across all regions, with continued momentum in the newly diagnosed patients-line indication, where 66 markets have secured approval.
Lutathera (USD 225 million, +9%, +8% cc) sales grew driven by demand in the US and Europe, including continued 2L leadership and solidified share in the 1L setting in the US. Novartis is in patent litigation with manufacturers having FDA applications referencing Lutathera. In June 2026, the U.S. District Court for the District of Delaware issued a negative decision regarding the validity of Novartis patents covering Lutathera, which expire in 2039 (with pediatric exclusivity). Novartis has appealed the decision. No manufacturers have final approval in the US. Any commercial launch of a product referencing Lutathera prior to the final outcome of the appeal may be at risk of later litigation.
9
Fabhalta (USD 225 million, +88%, +88% cc) sales grew, reflecting continued expansion in PNH and renal indications.
Established BRANDS
Q2 2026 | Q2 2025 | % change | % change | H1 2026 | H1 2025 | % change | % change | ||||||||||
USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||||||||||
Established brands | |||||||||||||||||
Sandostatin Group | 302 | 303 | 0 | -1 | 589 | 620 | -5 | -7 | |||||||||
Exforge Group | 191 | 191 | 0 | -3 | 394 | 370 | 6 | 2 | |||||||||
Promacta/Revolade | 179 | 502 | -64 | -65 | 363 | 1 048 | -65 | -66 | |||||||||
Diovan Group | 160 | 154 | 4 | 2 | 310 | 304 | 2 | -2 | |||||||||
Tasigna | 142 | 327 | -57 | -58 | 297 | 704 | -58 | -59 | |||||||||
Lucentis | 126 | 173 | -27 | -30 | 230 | 362 | -36 | -40 | |||||||||
Myfortic | 105 | 102 | 3 | 0 | 216 | 201 | 7 | 4 | |||||||||
Piqray/Vijoice | 123 | 111 | 11 | 10 | 204 | 211 | -3 | -4 | |||||||||
Kymriah | 88 | 99 | -11 | -10 | 169 | 199 | -15 | -16 | |||||||||
Contract manufacturing | 472 | 276 | 71 | 68 | 824 | 619 | 33 | 27 | |||||||||
Other | 1 660 | 1 802 | -8 | -9 | 3 244 | 3 523 | -8 | -11 | |||||||||
Total established brands | 3 548 | 4 040 | -12 | -14 | 6 840 | 8 161 | -16 | -19 | |||||||||
Sandostatin Group (USD 302 million, 0%, -1% cc) sales were broadly stable.
Exforge Group (USD 191 million, 0%, -3% cc) sales were broadly stable.
Promacta/Revolade (USD 179 million, –64%, –65% cc) sales continued to decline globally due to generic competition.
Diovan Group (USD 160 million, +4%, +2% cc) sales grew driven by emerging markets.
Tasigna (USD 142 million, –57%, –58% cc) sales continued to decline globally due to generic competition.
Lucentis (USD 126 million, –27%, –30% cc) sales declined mainly due to increased competition. Novartis only commercializes Lucentis in markets ex-US.
Myfortic (USD 105 million, +3%, 0% cc) sales grew in China.
Piqray/Vijoice (USD 123 million, +11%, +10% cc) sales grew driven by consistent increase in demand for Vijoice in the US. Vijoice received positive EMA CHMP opinion in May.
Kymriah (USD 88 million, –11%, –10% cc) sales declined across most markets due to continued competitive pressure.
10
Cash Flow and Balance Sheet
Cash flow
Second quarter
Net cash flows from operating activities amounted to USD 5.9 billion, compared with USD 6.7 billion in the prior-year quarter. This decrease was mainly due to lower net income, adjusted for non-cash items and other adjustments, and by unfavorable changes in other financial receipts.
Net cash outflows used in investing activities amounted to USD 3.1 billion, compared with USD 2.2 billion in the prior-year quarter.
In the current-year quarter, net cash outflows used in investing activities were mainly driven by USD 2.7 billion for acquisitions applying the optional concentration test (net of cash acquired of USD 5 million), including Excellergy, Inc. (USD 0.9 billion) and Pikavation Therapeutics, Inc. (USD 1.8 billion). In addition, cash outflows for purchases of intangible assets amounted to USD 0.4 billion and for property, plant and equipment to USD 0.3 billion.
In the prior-year quarter, net cash outflows used in investing activities were mainly driven by USD 1.5 billion for acquisitions applying the optional concentration test, net of USD 0.1 billion of cash acquired (Anthos Therapeutics, Inc. for USD 0.8 billion and Regulus Therapeutics Inc. for USD 0.7 billion). Cash outflows for purchases of property, plant and equipment amounted to USD 0.3 billion, and for intangible assets to USD 0.2 billion.
Net cash outflows used in financing activities amounted to USD 2.0 billion, compared with USD 5.2 billion in the prior-year quarter.
In the current-year quarter, net cash outflows used in financing activities were mainly driven by the USD 2.9 billion payment of Swiss withholding tax (in April 2026 when it was due) on the annual dividend payment made in the first quarter 2026, and by USD 1.2 billion for net treasury share transactions. These cash outflows were partly offset by cash inflows of USD 2.0 billion from the issuance of euro denominated bonds (notional amount EUR 1.7 billion) and by net cash inflows of USD 0.2 billion resulting from changes in current financial debts.
In the prior-year quarter, net cash outflows used in financing activities were mainly driven by USD 2.7 billion for net treasury share transactions, the USD 2.5 billion payment of Swiss withholding tax (in April 2025 when it was due) on the annual dividend payment made in the first quarter 2025, and USD 0.6 billion for the repayment at maturity of a Swiss franc denominated bond (notional amount CHF 0.5 billion). These cash outflows were partly offset by the net increase in current financial debts of USD 0.9 billion.
Free cash flow amounted to USD 5.6 billion (-12%), due to lower net cash flows from operating activities.
First half
Net cash flows from operating activities amounted to USD 9.6 billion, compared with USD 10.3 billion in the prior-year period. This decrease was mainly due to lower net income, adjusted for non-cash items and other adjustments, and unfavorable changes in other financial receipts, partly offset by favorable changes in working capital.
Net cash outflows used in investing activities amounted to USD 14.8 billion, compared with USD 1.9 billion in the prior-year period.
In the current-year period, net cash outflows for investing activities were mainly driven by USD 11.7 billion cash outflows for acquisition of businesses, mainly the acquisition of Avidity Biosciences, Inc. (cash purchase price of USD 12.0 billion, partly offset by cash acquired of USD 371 million), as well as USD 2.7 billion for acquisitions applying the optional concentration test (net of cash acquired of USD 5 million), including Excellergy, Inc. (USD 0.9 billion) and Pikavation Therapeutics, Inc. (USD 1.8 billion). In addition, cash outflows for purchases of intangible assets amounted to USD 0.9 billion and for property, plant and equipment to USD 0.7 billion. These cash outflows were partly offset by net proceeds of USD 0.8 billion from time deposits and the sale of marketable securities, mainly marketable security funds acquired through the Avidity Biosciences, Inc. acquisition.
11
In the prior-year period, net cash outflows used in investing activities were mainly driven by USD 1.5 billion for purchases of intangible assets and by USD 1.5 billion for acquisitions applying the optional concentration test, net of USD 0.1 billion of cash acquired (Anthos Therapeutics, Inc. for USD 0.8 billion and Regulus Therapeutics Inc. for USD 0.7 billion). Cash outflows for purchases of property, plant and equipment amounted to USD 0.6 billion. These cash outflows were partly offset by the net proceeds of USD 1.8 billion from marketable securities and time deposits, mainly due to the maturity of time deposits.
Net cash inflows from financing activities amounted to USD 1.6 billion, compared with USD 13.8 billion net cash outflows in the prior-year period.
In the current-year period, net cash inflows from financing activities were mainly driven by cash inflows from the issuance of bonds totaling USD 12.9 billion, including USD 10.9 billion from US dollar denominated bonds (notional amount USD 11.0 billion) and USD 2.0 billion from euro denominated bonds (notional amount EUR 1.7 billion). The proceeds from the US dollar denominated bonds were used to repay a bridge loan of USD 11.0 billion entered into in February 2026 to fund the Avidity Biosciences, Inc. acquisition. In addition, changes in current financial debts resulted in net cash inflows of USD 1.0 billion. These inflows were partly offset by the annual dividend payment of USD 9.1 billion and net payments for treasury share transactions of USD 3.1 billion.
In the prior-year period, net cash outflows used in financing activities were mainly driven by USD 7.8 billion for the annual dividend payment and USD 5.4 billion in net payments for treasury share transactions. Cash outflows also included USD 1.6 billion for the repayment of two bonds at maturity, comprising a US dollar denominated bond with a notional amount of USD 1.0 billion and a Swiss franc denominated bond with a notional amount of CHF 0.5 billion, equivalent to USD 0.6 billion. These cash outflows were partly offset by the net increase in current financial debts of USD 1.4 billion.
Free cash flow amounted to USD 8.9 billion (-9%), due to lower net cash flows from operating activities.
12
Balance sheet
Assets
Total non-current assets of USD 94.7 billion increased by USD 14.2 billion compared with December 31, 2025.
Intangible assets other than goodwill increased by USD 12.7 billion, mainly due to the Avidity Biosciences, Inc., Pikavation Therapeutics, Inc. and Excellergy, Inc. acquisitions, as well as other additions, partly offset by amortization and impairments, and currency translation adjustments.
Goodwill increased by USD 1.2 billion, mainly due to the acquisition of Avidity Biosciences, Inc., partly offset by currency translation adjustments.
Other non-current assets increased by USD 0.7 billion, mainly due to an increase in prepaid post-employment benefit plans. This was driven by an increase in the fair value of plan assets, partly offset by a decrease in the discount rate applied in calculating actuarial defined benefit obligations.
Property, plant and equipment, right-of-use assets, deferred tax assets, investments in associated companies, and financial assets were broadly in line with December 31, 2025.
Total current assets of USD 27.4 billion decreased by USD 3.1 billion compared with December 31, 2025.
Cash and cash equivalents decreased by USD 3.8 billion compared with December 31, 2025 as net cash inflows from operating activities of USD 9.6 billion, net proceeds from financial debts of USD 13.8 billion and net proceeds of USD 0.8 billion from time deposits and the sale of marketable security funds, were more than offset by cash outflows related to the acquisitions of Avidity Biosciences, Inc., Pikavation Therapeutics, Inc. and Excellergy, Inc. totaling USD 14.4 billion, the annual net dividend payment of USD 9.1 billion, net purchases of treasury shares of USD 3.1 billion, as well as other net cash outflows from investing and financing activities and currency effects of USD 1.4 billion.
Trade receivables increased by USD 0.7 billion mainly due to the increase in net sales.
Inventories, other current assets, marketable securities, time deposits and derivative financial instruments, and income tax receivables were broadly in line with December 31, 2025.
Liabilities
Total non-current liabilities of USD 48.3 billion increased by USD 11.2 billion compared with December 31, 2025.
Non-current financial debts increased by USD 9.6 billion compared with December 31, 2025, mainly due to the issuance of US dollar denominated bonds with a notional amount of USD 11.0 billion and euro denominated bonds with a notional amount of EUR 1.7 billion, partly offset by the reclassification from non-current to current financial debts of bonds maturing in 2027, comprising two US dollar denominated bonds with notional amounts of USD 1.3 billion and USD 1.0 billion, and a Swiss franc denominated bond with a notional amount of CHF 0.7 billion, and by currency translation adjustments.
Deferred tax liabilities increased by USD 1.9 billion mainly due to the acquisition of Avidity Biosciences, Inc.
Provisions and other non-current liabilities, and non-current lease liabilities were broadly in line with December 31, 2025.
Total current liabilities of USD 31.7 billion increased by USD 4.5 billion compared with December 31, 2025.
Current financial debts and derivative financial instruments increased by USD 4.0 billion compared with December 31, 2025, mainly due to the reclassification from non-current to current financial debts of bonds maturing in 2027, comprising two US dollar denominated bonds with notional amounts of USD 1.3 billion and USD 1.0 billion, and a Swiss franc denominated bond with a notional amount of CHF 0.7 billion, and the issuance of commercial paper notes.
Provisions and other current liabilities and current income tax liabilities increased by USD 0.3 billion whereas trade payables and current lease liabilities were broadly in line with December 31, 2025.
13
Equity
The Company’s equity decreased by USD 4.6 billion to USD 41.9 billion compared with December 31, 2025. Net income of USD 6.4 billion, a favorable impact from equity-based compensation of USD 0.6 billion, and actuarial gains on defined benefit plans of USD 0.6 billion were more than offset by the annual gross dividend to Novartis AG shareholders of USD 9.1 billion, the net purchase of treasury shares of USD 3.1 billion and the impact from currency translation differences of USD 0.5 billion.
Net debt and debt/equity ratio
The Company’s liquidity amounted to USD 7.7 billion as at June 30, 2026, compared with USD 11.6 billion as at December 31, 2025. Total non-current and current financial debts, including derivatives, amounted to USD 47.1 billion as at June 30, 2026, compared with USD 33.5 billion as at December 31, 2025.
The debt/equity ratio increased to 1.12:1 as at June 30, 2026, compared with 0.72:1 as at December 31, 2025.
The net debt increased to USD 39.4 billion as at June 30, 2026, compared with USD 21.9 billion as at December 31, 2025.
14
Innovation Review
Novartis continues to focus its R&D portfolio prioritizing high value medicines with transformative potential for patients. We now focus on ~100 projects in clinical development.
Selected innovative medicines approvals in Q2
Product | Active ingredient/ Descriptor | Indication | Region | |||||
Cosentyx | secukinumab | Ankylosing spondylitis, juvenile | US | |||||
Fabhalta | iptacopan | IgA nephropathy | US | |||||
Itvisma (OAV101) | intrathecal onasemnogene abeparvovec | Spinal muscular atrophy (IT formulation) | EU | |||||
Rhapsido | remibrutinib | Chronic spontaneous urticaria | EU, JP | |||||
Selected innovative medicines projects awaiting regulatory decisions
Completed submissions | |||||||||||
Product | Indication | US | EU | Japan | News update | ||||||
Cosentyx | Polymyalgia rheumatica | Q1 2026 | Q1 2026 | Q1 2026 | – PhIII data publication in NEJM – Data presentation at EULAR | ||||||
Hidradenitis suppurativa, pediatrics aged 12+ | Approved | Q1 2026 | |||||||||
Fabhalta | IgA nephropathy | Approved | Q1 2026 | – US traditional approval – PhIII data presented at ERA | |||||||
KPE179 (del-zota) | Duchenne muscular dystrophy | Q2 2026 | – US submission for accelerated approval | ||||||||
Leqvio | Hypercholesterolaemia, pediatrics | Approved | Q3 2025 | ||||||||
Pluvicto | Metastatic hormone-sensitive prostate cancer¹ | Q4 2025 | Q4 2025 | – PSMAddition data presented at AUAA and ASCO | |||||||
Rhapsido (remibrutinib) | Chronic inducible urticaria | Q4 2025 | – PhIII RemIND data presented at EAACI | ||||||||
VAY736 (ianalumab) | Sjögren’s disease | Q1 2026 | Q1 2026 | Q1 2026 | – PhIII NEPTUNUS-1 and -2 data presented at EULAR | ||||||
Vijoice | PIK3CA-related overgrowth spectrum (PROS) | Approved | Q2 2025 | – CHMP positive opinion | |||||||
1 Also known as prostate-specific membrane antigen (PSMA)-positive metastatic androgen pathway modulation-naive/sensitive (mAPMN/S) prostate cancer. | |||||||||||
Selected innovative medicines pipeline projects
Compound/ product | Potential indication/ Disease area | First planned submissions | Current Phase | News update | |||||
225Ac-PSMA-617 | post Lu metastatic castration-resistant prostate cancer | 2028 | 3 | – PhI data presented at ASCO | |||||
Metastatic castration-resistant prostate cancer¹ 1L | ≥2029 | 3 | – PhI data presented at ASCO | ||||||
Aimovig | Migraine, pediatrics | 2028 | 3 | ||||||
DAK539 (pelabresib) | Myelofibrosis | 2026 | 3 | – PhIII MANIFEST-3 study achieved FPFV – PhII MANIFEST-2 data presented at EHA | |||||
DII235 | CVRR-Lp(a) | ≥2029 | 2 | ||||||
DWH213 (del-brax) | Facioscapulohumeral muscular dystrophy | 2028 | 3 | – PhI/II biomarker cohort met primary and secondary endpoints | |||||
EWF980 (del-desiran) | Myotonic dystrophy type 1 | 2027 | 3 | ||||||
FUB523 (zigakibart) | IgA nephropathy | 2027 | 3 | – 124-week PhI/II data presented at ERA | |||||
GHZ339 | Atopic dermatitis | ≥2029 | 2 | ||||||
1 Also known as prostate-specific membrane antigen (PSMA)-positive metastatic androgen pathway modulation-resistant (mAPMR) prostate cancer. | |||||||||
15
Compound/ product | Potential indication/ Disease area | First planned submissions | Current Phase | News update | |||||
GIA632 | Atopic dermatitis | ≥2029 | 2 | ||||||
Vitiligo | ≥2029 | 2 | |||||||
JSB462 | Prostate cancer | ≥2029 | 2 | ||||||
KAE609 | Malaria, uncomplicated | ≥2029 | 2 | ||||||
(cipargamin) | Malaria, severe | ≥2029 | 2 | ||||||
KLU156 (ganaplacide + lumefantrine) | Malaria, uncomplicated | 2026 | 3 | – CH submission | |||||
Kesimpta | Multiple sclerosis new dosing regimen | 2027 | 3 | ||||||
KPE179 (del-zota) | Duchenne muscular dystrophy | 2026 | 2 | – US submission for accelerated approval | |||||
Leqvio | Secondary prevention of cardiovascular events in patients with elevated LDL-C | 2027 | 3 | ||||||
Primary prevention CVRR | ≥2029 | 3 | |||||||
LNP023 | Myasthenia gravis | 2027 | 3 | ||||||
(iptacopan) | IC-MPGN | ≥2029 | 3 | ||||||
Atypical haemolytic uraemic syndrome | ≥2029 | 3 | |||||||
LOU064 (remibrutinib) | Chronic spontaneous urticaria, pediatrics | 2027 | 3 | ||||||
Food allergy | ≥2029 | 2 | |||||||
Hidradenitis suppurativa | 2027 | 3 | |||||||
Multiple sclerosis, relapsing | 2027 | 3 | |||||||
Multiple sclerosis, secondary progressive | ≥2029 | 3 | |||||||
Myasthenia gravis | 2028 | 3 | |||||||
LTP001 | Pulmonary arterial hypertension | ≥2029 | 2 | ||||||
Lutathera | Gastroenteropancreatic neuroendocrine tumor | 2028 | 3 | ||||||
LXE408 | Visceral leishmaniasis | ≥2029 | 2 | ||||||
MAA868 (abelacimab) | Atrial fibrillation | 2028 | 3 | ||||||
NIO752 | Progressive supranuclear palsy | ≥2029 | 3 | – PhIII achieved FPFV | |||||
PAC001 (pacibekitug) | Atherosclerotic cardiovascular disease | ≥2029 | 2 | ||||||
Pluvicto | Oligometastatic prostate cancer | ≥2029 | 3 | ||||||
QCZ484 | Hypertension | ≥2029 | 2 | ||||||
TQJ230 (pelacarsen) | Secondary prevention of cardiovascular events in patients with elevated levels of lipoprotein(a) | 2026 | 3 | ||||||
VAY736 (ianalumab) | Lupus nephritis | 2028 | 3 | ||||||
Systemic lupus erythematosus | 2027 | 3 | – Accelerated submission to 2027 from 2028 – PhII data presented at EULAR | ||||||
Systemic sclerosis | 2028 | 2 | |||||||
1L immune thrombocytopenia | 2027 | 3 | |||||||
2L immune thrombocytopenia | 2027 | 3 | |||||||
Warm autoimmune hemolytic anemia | 2027 | 3 | – PhIII VAYHIA study did not meet primary endpoint | ||||||
VHB937 (lifonebart) | Alzheimer's disease | ≥2029 | 2 | ||||||
Amyotrophic lateral sclerosis | ≥2029 | 2 | – FDA fast track designation granted | ||||||
Vijoice | Lymphatic malformations | ≥2029 | 3 | ||||||
HTT227 (votoplam) | Huntington's disease | ≥2029 | 3 | ||||||
YTB323 | Active refractory lupus nephritis | 2028 | 2 | – PhI/II data presented at EULAR and EHA | |||||
Active refractory systemic lupus erythematosus | 2028 | 2 | – PhI/II data presented at EULAR and EHA | ||||||
1L high-risk large B-cell lymphoma | ≥2029 | 2 | |||||||
Systemic sclerosis | ≥2029 | 2 | – PhII data presented at EULAR | ||||||
Myositis | ≥2029 | 2 | – PhII data presented at EULAR – RMAT designation granted by FDA | ||||||
ANCA associated vasculitis | ≥2029 | 2 | |||||||
16
Condensed Interim Consolidated Financial Statements
Consolidated income statements
Second quarter (unaudited)
(USD millions unless indicated otherwise) | Note | Q2 2026 | Q2 2025 | ||||
Net sales to third parties | 9 | ||||||
Other revenues | 9 | ||||||
Cost of goods sold | - | - | |||||
Gross profit | |||||||
Selling, general and administration | - | - | |||||
Research and development | - | - | |||||
Other income | |||||||
Other expense | - | - | |||||
Operating income | |||||||
Loss from associated companies | - | - | |||||
Interest expense | - | - | |||||
Other financial income and expense | - | - | |||||
Income before taxes | |||||||
Income taxes | - | - | |||||
Net income | |||||||
Attributable to: | |||||||
Shareholders of Novartis AG | |||||||
Non-controlling interests | - | - | |||||
Weighted average number of shares outstanding – Basic (million) | |||||||
Basic earnings per share (USD) 1 | |||||||
Weighted average number of shares outstanding – Diluted (million) | |||||||
Diluted earnings per share (USD) 1 | |||||||
1 Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG. | |||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||
17
Consolidated income statements
First half (unaudited)
(USD millions unless indicated otherwise) | Note | H1 2026 | H1 2025 | ||||
Net sales to third parties | 9 | ||||||
Other revenues | 9 | ||||||
Cost of goods sold | - | - | |||||
Gross profit | |||||||
Selling, general and administration | - | - | |||||
Research and development | - | - | |||||
Other income | |||||||
Other expense | - | - | |||||
Operating income | |||||||
Loss from associated companies | - | - | |||||
Interest expense | - | - | |||||
Other financial income and expense | - | - | |||||
Income before taxes | |||||||
Income taxes | - | - | |||||
Net income | |||||||
Attributable to: | |||||||
Shareholders of Novartis AG | |||||||
Non-controlling interests | - | - | |||||
Weighted average number of shares outstanding – Basic (million) | |||||||
Basic earnings per share (USD) 1 | |||||||
Weighted average number of shares outstanding – Diluted (million) | |||||||
Diluted earnings per share (USD) 1 | |||||||
1 Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG. | |||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||
18
Consolidated statements of comprehensive income
Second quarter (unaudited)
(USD millions) | Q2 2026 | Q2 2025 | |||
Net income | |||||
Other comprehensive income | |||||
Items that are or may be recycled into the consolidated income statement | |||||
Cash flow hedge, net of taxes | |||||
Net investment hedge, net of taxes | - | ||||
Currency translation effects, net of taxes | - | ||||
Total of items that are or may be recycled | - | ||||
Items that will never be recycled into the consolidated income statement | |||||
Actuarial gains from defined benefit plans, net of taxes | |||||
Fair value adjustments on equity securities, net of taxes | |||||
Total of items that will never be recycled | |||||
Total other comprehensive income | |||||
Total comprehensive income | |||||
Total comprehensive income for the period attributable to: | |||||
Shareholders of Novartis AG | |||||
Non-controlling interests | - | - | |||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||
First half (unaudited)
(USD millions) | H1 2026 | H1 2025 | |||
Net income | |||||
Other comprehensive income | |||||
Items that are or may be recycled into the consolidated income statement | |||||
Cash flow hedge, net of taxes | |||||
Net investment hedge, net of taxes | - | ||||
Currency translation effects, net of taxes | - | ||||
Total of items that are or may be recycled | - | ||||
Items that will never be recycled into the consolidated income statement | |||||
Actuarial gains from defined benefit plans, net of taxes | |||||
Fair value adjustments on equity securities, net of taxes | - | ||||
Total of items that will never be recycled | |||||
Total other comprehensive income | |||||
Total comprehensive income | |||||
Total comprehensive income for the period attributable to: | |||||
Shareholders of Novartis AG | |||||
Non-controlling interests | - | - | |||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||
19
Consolidated balance sheets
(USD millions) | Jun 30, 2026 (unaudited) | Dec 31, 2025 (audited) | |||
Assets | |||||
Non-current assets | |||||
Property, plant and equipment | |||||
Right-of-use assets | |||||
Goodwill | |||||
Intangible assets other than goodwill | |||||
Investments in associated companies | |||||
Deferred tax assets | |||||
Financial assets | |||||
Other non-current assets | |||||
Total non-current assets | |||||
Current assets | |||||
Inventories | |||||
Trade receivables | |||||
Income tax receivables | |||||
Marketable securities, time deposits and derivative financial instruments | |||||
Cash and cash equivalents | |||||
Other current assets | |||||
Total current assets | |||||
Total assets | |||||
Equity and liabilities | |||||
Equity | |||||
Share capital | |||||
Treasury shares | - | - | |||
Reserves | |||||
Equity attributable to Novartis AG shareholders | |||||
Non-controlling interests | |||||
Total equity | |||||
Liabilities | |||||
Non-current liabilities | |||||
Financial debts | |||||
Lease liabilities | |||||
Deferred tax liabilities | |||||
Provisions and other non-current liabilities | |||||
Total non-current liabilities | |||||
Current liabilities | |||||
Trade payables | |||||
Financial debts and derivative financial instruments | |||||
Lease liabilities | |||||
Current income tax liabilities | |||||
Provisions and other current liabilities | |||||
Total current liabilities | |||||
Total liabilities | |||||
Total equity and liabilities | |||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||
20
Consolidated statements of changes in equity
Second quarter (unaudited)
Reserves | |||||||||||||||||
(USD millions) | Note | Share capital | Treasury shares | Retained earnings | Total value adjustments | Equity attributable to Novartis AG shareholders | Non- controlling interests | Total equity | |||||||||
Total equity at April 1, 2026 | - | ||||||||||||||||
Net income | - | ||||||||||||||||
Other comprehensive income | - | ||||||||||||||||
Total comprehensive income | - | ||||||||||||||||
Purchase of treasury shares | - | - | - | - | |||||||||||||
Equity-based compensation plans | |||||||||||||||||
Taxes on treasury share transactions | - | - | - | ||||||||||||||
Value adjustments related to financial assets sold and divestments | - | ||||||||||||||||
Other movements | 4.3 | ||||||||||||||||
Total of other equity movements | - | - | - | - | |||||||||||||
Total equity at June 30, 2026 | - | ||||||||||||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||||||||||||
Reserves | |||||||||||||||||
(USD millions) | Note | Share capital | Treasury shares | Retained earnings | Total value adjustments | Equity attributable to Novartis AG shareholders | Non- controlling interests | Total equity | |||||||||
Total equity at April 1, 2025 | - | - | |||||||||||||||
Net income | - | ||||||||||||||||
Other comprehensive income | |||||||||||||||||
Total comprehensive income | - | ||||||||||||||||
Purchase of treasury shares | - | - | - | - | |||||||||||||
Equity-based compensation plans | |||||||||||||||||
Taxes on treasury share transactions | - | - | - | ||||||||||||||
Changes in non-controlling interests | |||||||||||||||||
Value adjustments related to financial assets sold and divestments | - | ||||||||||||||||
Other movements | 4.3 | ||||||||||||||||
Total of other equity movements | - | - | - | - | - | ||||||||||||
Total equity at June 30, 2025 | - | - | |||||||||||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||||||||||||
21
Consolidated statements of changes in equity
First half (unaudited)
Reserves | |||||||||||||||||
(USD millions) | Note | Share capital | Treasury shares | Retained earnings | Total value adjustments | Equity attributable to Novartis AG shareholders | Non- controlling interests | Total equity | |||||||||
Total equity at January 1, 2026 | - | ||||||||||||||||
Net income | - | ||||||||||||||||
Other comprehensive income | - | ||||||||||||||||
Total comprehensive income | - | ||||||||||||||||
Dividends | 4.1 | - | - | - | |||||||||||||
Purchase of treasury shares | - | - | - | - | |||||||||||||
Reduction of share capital | - | ||||||||||||||||
Equity-based compensation plans | |||||||||||||||||
Taxes on treasury share transactions | - | - | - | ||||||||||||||
Value adjustments related to financial assets sold and divestments | - | ||||||||||||||||
Other movements | 4.3 | - | |||||||||||||||
Total of other equity movements | - | - | - | - | |||||||||||||
Total equity at June 30, 2026 | - | ||||||||||||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||||||||||||
Reserves | |||||||||||||||||
(USD millions) | Note | Share capital | Treasury shares | Retained earnings | Total value adjustments | Equity attributable to Novartis AG shareholders | Non- controlling interests | Total equity | |||||||||
Total equity at January 1, 2025 | - | - | |||||||||||||||
Net income | - | ||||||||||||||||
Other comprehensive income | |||||||||||||||||
Total comprehensive income | - | ||||||||||||||||
Dividends | 4.1 | - | - | - | |||||||||||||
Purchase of treasury shares | - | - | - | - | |||||||||||||
Reduction of share capital | - | - | |||||||||||||||
Equity-based compensation plans | |||||||||||||||||
Taxes on treasury share transactions | - | - | - | ||||||||||||||
Changes in non-controlling interests | |||||||||||||||||
Value adjustments related to financial assets sold and divestments | - | ||||||||||||||||
Other movements | 4.3 | ||||||||||||||||
Total of other equity movements | - | - | - | - | - | ||||||||||||
Total equity at June 30, 2025 | - | - | |||||||||||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||||||||||||
22
Consolidated statements of cash flows
Second quarter (unaudited)
(USD millions) | Note | Q2 2026 | Q2 2025 | ||||
Net income | |||||||
Adjustments to reconcile net income to net cash flows from operating activities | |||||||
Reversal of non-cash items and other adjustments | 6.1 | ||||||
Dividends received from associated companies and others | |||||||
Interest received | |||||||
Interest paid | - | - | |||||
Change in other financial receipts | |||||||
Change in other financial payments | - | ||||||
Income taxes paid | - | - | |||||
Net cash flows from operating activities before working capital and provision changes | |||||||
Payments out of provisions and other net cash movements in non-current liabilities | - | - | |||||
Changes in working capital and other operating cash flow items | 6.2 | ||||||
Net cash flows from operating activities | |||||||
Purchases of property, plant and equipment | - | - | |||||
Proceeds from sale of property, plant and equipment | |||||||
Purchases of intangible assets | - | - | |||||
Purchases of financial assets | - | - | |||||
Proceeds from sale of financial assets | |||||||
Acquisitions of businesses | 6.3 | - | - | ||||
Acquisitions applying the optional concentration test | 6.4 | - | - | ||||
Divestments of businesses, net | 6.5 | - | |||||
Investments in time deposits and marketable securities | - | - | |||||
Proceeds from time deposits and from sale of marketable securities | |||||||
Other investing cash flows, net | - | ||||||
Net cash flows used in investing activities | - | - | |||||
Dividends paid to shareholders of Novartis AG | 4.1 | - | - | ||||
Purchases of treasury shares | - | - | |||||
Proceeds from exercised options and other treasury share transactions, net | |||||||
Proceeds from non-current financial debts | |||||||
Repayments of the current portion of non-current financial debts | - | - | |||||
Change in current financial debts | |||||||
Payments of lease liabilities | - | - | |||||
Other financing cash flows, net | - | - | |||||
Net cash flows used in financing activities | - | - | |||||
Net change in cash and cash equivalents before effect of exchange rate changes | - | ||||||
Effect of exchange rate changes on cash and cash equivalents | - | ||||||
Net change in cash and cash equivalents | - | ||||||
Cash and cash equivalents at April 1 | |||||||
Cash and cash equivalents at June 30 | |||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||
23
Consolidated statements of cash flows
First half (unaudited)
(USD millions) | Note | H1 2026 | H1 2025 | ||||
Net income | |||||||
Adjustments to reconcile net income to net cash flows from operating activities | |||||||
Reversal of non-cash items and other adjustments | 6.1 | ||||||
Dividends received from associated companies and others | |||||||
Interest received | |||||||
Interest paid | - | - | |||||
Other financial receipts | |||||||
Other financial payments | - | - | |||||
Income taxes paid | - | - | |||||
Net cash flows from operating activities before working capital and provision changes | |||||||
Payments out of provisions and other net cash movements in non-current liabilities | - | - | |||||
Changes in working capital and other operating cash flow items | 6.2 | - | - | ||||
Net cash flows from operating activities | |||||||
Purchases of property, plant and equipment | - | - | |||||
Proceeds from sale of property, plant and equipment | |||||||
Purchases of intangible assets | - | - | |||||
Purchases of financial assets | - | - | |||||
Proceeds from sale of financial assets | |||||||
Acquisitions of businesses | 6.3 | - | - | ||||
Acquisitions applying the optional concentration test | 6.4 | - | - | ||||
Divestments of businesses, net | 6.5 | - | |||||
Investments in time deposits and marketable securities | - | - | |||||
Proceeds from time deposits and from sale of marketable securities | |||||||
Other investing cash flows, net | - | ||||||
Net cash flows used in investing activities | - | - | |||||
Dividends paid to shareholders of Novartis AG | 4.1 | - | - | ||||
Purchases of treasury shares | - | - | |||||
Proceeds from exercised options and other treasury share transactions, net | |||||||
Proceeds from non-current financial debts | 10 | ||||||
Repayments of the current portion of non-current financial debts | - | - | |||||
Change in current financial debts | 10 | ||||||
Payments of lease liabilities | - | - | |||||
Other financing cash flows, net | - | ||||||
Net cash flows from/(used in) financing activities | - | ||||||
Net change in cash and cash equivalents before effect of exchange rate changes | - | - | |||||
Effect of exchange rate changes on cash and cash equivalents | - | ||||||
Net change in cash and cash equivalents | - | - | |||||
Cash and cash equivalents at January 1 | |||||||
Cash and cash equivalents at June 30 | |||||||
The accompanying Notes form an integral part of the condensed interim consolidated financial statements | |||||||
24
Notes to the Condensed Interim Consolidated Financial Statements for the three month and six month period ended June 30, 2026 (unaudited)
1. Basis of preparation
The consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRS®) Accounting Standards as issued by the International Accounting Standards Board. They are prepared in accordance with the historical cost convention, except for items that are required to be accounted for at fair value.
These Condensed Interim Consolidated Financial Statements for the three month and six month period ended June 30, 2026, were prepared in accordance with International Accounting Standards (IAS®) Standards 34 Interim Financial Reporting and accounting policies set out in the 2025 Annual Report published on February 4, 2026.
2. Accounting policies
The Company’s accounting policies are set out in Note 1 to the Consolidated Financial Statements in the 2025 Annual Report and conform with IFRS Accounting Standards as issued by the International Accounting Standards Board.
The preparation of financial statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the period, which affect the reported amounts of revenues, expenses, assets, liabilities, and contingent amounts.
Estimates are based on historical experience and other assumptions that are considered reasonable under the given circumstances and are regularly monitored. Actual outcomes and results could differ from those estimates and assumptions. Revisions to estimates are recognized in the period in which the estimate is revised.
As disclosed in the 2025 Annual Report, goodwill, and the intangible assets not yet available for use (in-process research and development (IPR&D)) are evaluated for impairment annually, or when facts and circumstances warrant. The intangible assets available for use (currently marketed products and other intangible assets) are evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. The amount of goodwill and intangible assets other than goodwill on the Company’s consolidated balance sheet has risen significantly in recent years, primarily from acquisitions. Impairment testing may lead to potentially significant impairment charges in the future that could have a materially adverse impact on the Company’s results of operations and financial condition.
The Company’s activities are not subject to significant seasonal fluctuations.
Status of adoption of significant new or amended IFRS standards or interpretations
No new IFRS Accounting Standards were adopted by the Company in 2026. There were no new IFRS Accounting Standards amendments or interpretations that became effective in 2026 and 2025, that had a material impact on the Company’s consolidated financial statements.
In 2024, the International Accounting Standards Board issued the following new IFRS Accounting Standard, which is not yet effective:
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 Presentation and Disclosure in Financial Statements was issued by the International Accounting Standards Board in April 2024. IFRS 18 will become effective on January 1, 2027, and is required to be applied retrospectively to comparative periods presented, with early adoption permitted. Upon adoption, IFRS 18 replaces International Accounting Standards (IAS®) Standards 1 – Presentation of Financial Statements.
IFRS 18 sets out new requirements focused on improving financial reporting by:
• requiring additional defined structure to the statement of profit or loss (i.e. consolidated statement of income), to reduce diversity in the reporting, by requiring five categories (operating, investing, financing, income taxes and discontinued operations) and defined subtotals and totals (operating income, income before financing, income taxes and net income),
25
• requiring disclosures in the notes to the financial statements about management-defined performance measures (i.e. certain non-IFRS measures), and
• adding new principles for aggregation and disaggregation of information in the primary financial statements and notes.
IFRS 18 will not affect the recognition or measurement of items in the financial statements, but it might change what an entity reports as its “operating profit or loss”, due to the classification of certain income and expense items between the five categories of the consolidated income statement. It might also change what an entity reports as operating activities, investing activities and financing activities within the statement of cash flows, due to the change in classification of certain cash flow items between these three categories of the cash flows statement.
The Company’s preliminary assessment of IFRS 18 impacts indicates that certain income and expense amounts are expected to be reclassified within the consolidated income statement. For example, portions of foreign currency results and monetary losses from hyperinflation accounting will move from non-operating to operating income and expense. These expected presentation changes will not affect reported net income. The consolidated statement of cash flows presentation will change. It will start with operating income instead of net income, and certain cash flows are expected to be reclassified among the operating, investing, and financing activities categories. For example, dividends received and interest received are expected to be reclassified from operating activities to investing activities, while interest paid is expected to be reclassified from operating activities to financing activities. These presentation changes will not affect the net change in cash and cash equivalents reported for the period.
Novartis is currently finalizing its assessment of the impact of adopting IFRS 18, which will be effective January 1, 2027.
Based on the Company’s assessment, there were no other IFRS Accounting Standards, amendments or interpretations not yet effective in 2026 that would have been expected to have a material impact on the Company’s consolidated financial statements.
3. Significant acquisitions of businesses
The following are the significant acquisitions of businesses where the Company applied the business combination acquisition method of accounting.
Significant transaction in 2026
Acquisition of Avidity Biosciences, Inc.
On October 25, 2025, Novartis entered into an agreement and plan of merger to acquire Avidity Biosciences, Inc. (“Avidity”), a US-based, publicly traded biotechnology company specializing in RNA therapeutics, with a focus on rare neuromuscular genetic disorders such as myotonic dystrophy type 1 (DM1), facioscapulohumeral muscular dystrophy (FSHD), and Duchenne muscular dystrophy (DMD).
Pursuant to the merger agreement, on February 27, 2026, following the satisfaction of the closing conditions, Novartis, through an indirect wholly owned subsidiary, acquired all outstanding shares of Avidity’s common stock for USD 72.00 per share in cash. The total consideration amounted to approximately USD 12.0 billion in cash on a fully diluted basis. The acquiring subsidiary merged with and into Avidity, resulting in Avidity becoming an indirect wholly owned subsidiary of Novartis. Avidity shares admitted to trading on NASDAQ were subsequently delisted. The acquisition was financed through a combination of available cash and third-party debt financing.
The fair value of the total purchase consideration was approximately USD 12.0 billion. The preliminary purchase price allocation resulted in net identifiable assets of approximately USD 10.6 billion. These comprised identifiable intangible assets, including IPR&D, of USD 11.3 billion (of which approximately USD 7.5 billion is attributable to the DM1 IPR&D intangible asset), marketable security funds of USD 0.7 billion (which were settled to cash on February 27, 2026 by Novartis), cash of USD 0.4 billion, other net assets of USD 0.1 billion, and net deferred tax liabilities of USD 1.9 billion. Goodwill arising from the acquisition amounted to approximately USD 1.4 billion.
The purchase price allocation is preliminary as the detailed valuation of certain acquired assets and liabilities, including identifiable intangible assets and deferred tax balances, has not yet been completed. The finalization of the purchase price allocation may result in changes to the amounts recognized for net identifiable assets and goodwill in subsequent reporting periods.
The results of operations from the date of acquisition were not material.
Significant transaction in 2025
In 2025, there were no acquisitions of businesses where the Company applied the business combination acquisition method of accounting.
26
Fair value of assets and liabilities acquired through business combinations
The following table presents the fair value of the assets and liabilities acquired through business combinations and the total purchase consideration for the first half of 2026. In 2025, there were no business combinations.
(USD billions) | Jun 30, 2026 | ||
In-process research and development | |||
Deferred tax assets | |||
Other non-current assets | |||
Marketable securities | |||
Cash | |||
Other current assets | |||
Deferred tax liabilities | - | ||
Other non-current liabilities | - | ||
Current liabilities | - | ||
Net identifiable assets acquired | |||
Goodwill | |||
Total purchase consideration for business combinations | |||
The business combination in the first half of 2026 was Avidity. The goodwill arising out of the Avidity business combination is not tax deductible. It is primarily attributable to the deferred tax effects arising from the recognition of identifiable intangible assets for which no corresponding tax basis exists, expected synergies and the value of the acquired assembled workforce.
The following are the significant acquisitions where Novartis elected to apply the optional concentration test, resulting in the transaction being accounted for as assets separately acquired rather than as a business combination within the meaning of IFRS Accounting Standards.
Significant transaction in 2026
Acquisition of Excellergy, Inc.
On March 26, 2026, Novartis entered into an agreement and plan of merger to acquire all outstanding shares of Excellergy, Inc. (“Excellergy”), a US-based, private clinical-stage biotechnology company focused on the development of next-generation anti-IgE therapies for IgE-driven diseases. The transaction closed on June 24, 2026.
The purchase price consisted of cash consideration of USD 0.9 billion and potential additional milestones of up to USD 1.1 billion, which Excellergy shareholders are eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.
The cash purchase price was allocated to an IPR&D intangible asset of USD 0.9 billion, and other net assets including cash of USD 5 million. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.
Acquisition of Pikavation Therapeutics, Inc.
On March 18, 2026, Novartis entered into a stock purchase agreement to acquire Pikavation Therapeutics, Inc., (“Pikavation”), a wholly owned subsidiary of Synnovation Therapeutics, LLC (“Synnovation”), that holds a pan-mutant selective PI3Ka inhibitor IP, including SNV4818 phase 1 program. The transaction closed on May 28, 2026.
The purchase price consisted of cash consideration of USD 1.8 billion and potential additional milestones of up to USD 1.2 billion, which Synnovation is eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.
The cash purchase price was allocated to an IPR&D intangible asset of USD 1.8 billion, and other net assets. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.
Significant transaction in 2025
Acquisition of Tourmaline Bio, Inc.
On September 8, 2025, Novartis entered into an agreement and plan of merger to acquire Tourmaline Bio, Inc. (“Tourmaline”), a US-based, publicly traded clinical-stage biopharmaceutical company focused on developing a treatment option for atherosclerotic cardiovascular disease.
Pursuant to the merger agreement, on September 29, 2025, Novartis, through an indirect, wholly owned subsidiary, commenced a tender offer (the “Offer”) to acquire all of the outstanding shares of common stock of Tourmaline in exchange for USD 48.00 in cash per share. The tender offer expired at one minute past 11:59 p.m., New York City time on October 27, 2025 with a payment on October 28, 2025 in the amount of USD 1.4 billion for the tendered outstanding shares to the Tourmaline shareholders. On October 28, 2025, the acquiring subsidiary merged with and into Tourmaline, resulting in Tourmaline becoming an indirect wholly owned subsidiary of Novartis. Tourmaline shares admitted to trading on NASDAQ were subsequently delisted.
The cash purchase price consisted of cash consideration of USD 1.4 billion. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.
The cash purchase price was allocated to an IPR&D intangible asset of USD 1.2 billion, and other net assets including cash and cash equivalents of USD 0.2 billion.
27
Option agreement to acquire a private clinical-stage biotech company
On September 16, 2025, Novartis entered into an agreement granting it an option to acquire all outstanding shares of a private clinical-stage biotech company (the “Biotech company”). The option is subject to pre-defined terms and is exercisable at Novartis sole discretion. Management concluded that the terms of the option agreement conferred substantive control over the Biotech company, in accordance with the principles of IFRS Accounting Standards. Consequently, the Biotech company was consolidated into Novartis consolidated financial statements effective from September 2025.
If Novartis decides to exercise the option to acquire, it would make a payment to the Biotech company’s shareholders, with potential additional payments, which they are eligible to receive upon achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets at the consolidation date was concentrated in an identifiable IPR&D intangible asset.
The purchase price as at the option agreement date was USD 0.4 billion. The amount was allocated to the net assets at the consolidation date, including USD 0.4 billion IPR&D intangible assets and USD 18 million in cash and cash equivalents. A non-controlling interest of USD 0.4 billion was recognized in equity. Subsequent milestone-related payments will be recognized as additions to the intangible asset when the specified milestones are achieved.
Acquisition of Regulus Therapeutics Inc.
On April 29, 2025, Novartis entered into an agreement and plan of merger to acquire Regulus Therapeutics Inc. (“Regulus”), a US-based, publicly traded clinical-stage biopharmaceutical company focused on developing microRNA therapeutics. Regulus lead development phase asset, farabursen, is a potential first-in-class, next-generation oligonucleotide targeting miR-17 for the treatment of autosomal dominant polycystic kidney disease (ADPKD).
Pursuant to the merger agreement, on May 27, 2025, Novartis, through an indirect, wholly owned subsidiary, commenced a tender offer (the “Offer”) to acquire all of the outstanding shares of common stock of Regulus in exchange for (i) USD 7.00 in cash per Share, plus (ii) one contingent value right (each, a “CVR”) per Share, representing the right to receive one contingent payment of USD 7.00 in cash, upon the achievement of a specified regulatory milestone. The tender offer expired at one minute past 11:59 p.m., New York City time on June 24, 2025 with a payment of USD 0.7 billion for the outstanding shares to the Regulus shareholders for their tendered shares and the issuance of 1 CVR per share. Additionally, the liability related to the Regulus employee share plans amounted to USD 0.1 billion and was paid on July 11, 2025, with the issuance of 1 CVR per share. On June 25, 2025, the acquiring subsidiary merged with and into Regulus, resulting in Regulus becoming an indirect wholly owned subsidiary of Novartis. Regulus shares admitted to trading on NASDAQ were subsequently delisted.
The purchase price consisted of cash consideration of USD 0.8 billion and CVRs of up to USD 0.9 billion, which Regulus shareholders are eligible to receive upon the achievement of a specified regulatory milestone. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.
The cash purchase price was allocated to an IPR&D intangible asset of USD 0.8 billion, and other net assets including cash and cash equivalents of USD 23 million. Subsequent payments for the potential CVRs upon achievement of the specified regulatory milestone will be recognized as additions to the intangible asset if the specified regulatory milestone is achieved.
Acquisition of Anthos Therapeutics, Inc.
On February 10, 2025, Novartis entered into an agreement and plan of merger to acquire all of the outstanding shares of common stock of Anthos Therapeutics, Inc. (“Anthos”), a US-based, privately held clinical stage biopharmaceutical company with abelacimab, a late-stage medicine in development for the prevention of stroke and systematic embolism in patients with atrial fibrillation. The transaction closed on April 3, 2025.
The purchase price consisted of cash consideration of USD 0.9 billion and potential additional milestones of up to USD 2.1 billion, which Anthos shareholders are eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.
The cash purchase price was allocated to an IPR&D intangible asset of USD 0.9 billion, and other net assets including cash and cash equivalents of USD 47 million. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.
28
Identifiable net assets acquired through acquisitions applying the optional concentration test
The following table presents the identifiable net assets acquired through acquisitions applying the optional concentration test:
(USD billions) | Jun 30, 2026 | Dec 31, 2025 | |||
In-process research and development | |||||
Deferred tax assets 1 | |||||
Cash and cash equivalents 2 | |||||
Other current and non-current assets | |||||
Current and non-current liabilities | - | ||||
Identifiable net assets acquired through acquisitions applying the optional concentration test | |||||
1 Deferred tax assets are attributable to tax loss and tax credit carryforwards. | |||||
2 H1 2026 includes cash of USD | |||||
For significant pending transactions, see Note 10. Other interim disclosures — Commitments — Other commitments.
29
4. Summary of equity attributable to Novartis AG shareholders
Number of outstanding shares (in millions) | Equity attributable to Novartis AG shareholders | ||||||||||
Note | 2026 | 2025 | H1 2026 USD millions | H1 2025 USD millions | |||||||
Balance at beginning of year | |||||||||||
Shares acquired to be canceled | - | - | - | - | |||||||
Other share purchases | - | - | - | - | |||||||
Equity-based compensation plans | |||||||||||
Taxes on treasury share transactions | - | - | |||||||||
Dividends | 4.1 | - | - | ||||||||
Net income of the period attributable to shareholders of Novartis AG | |||||||||||
Other comprehensive income attributable to shareholders of Novartis AG | |||||||||||
Changes in non-controlling interests | |||||||||||
Other movements | 4.3 | ||||||||||
Balance at June 30 | |||||||||||
4.1. The annual gross dividend to shareholders of Novartis AG amounted to USD 9.1 billion (2025: USD 7.8 billion). The net dividend payment to Novartis AG shareholders paid in March 2026 amounted to USD 6.2 billion (2025: USD 5.3 billion paid in March 2025). The USD 2.9 billion Swiss withholding tax on the gross dividend was paid at its due date in April 2026 (2025: USD 2.5 billion paid at its due date in April 2025).
4.2. In July 2023, Novartis entered into an irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares on the second trading line under its up-to USD 15.0 billion share buyback. In June 2024, Novartis amended the arrangement to include the repurchase of an additional 8.7 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 8.7 million shares concluded in October 2024. In June 2025, Novartis amended the arrangement to include the repurchase of an additional 10.7 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 10.7 million shares concluded in August 2025.
The repurchases under the USD 15.0 billion share buyback that commenced in July 2023 concluded in July 2025.
In July 2025, Novartis amended and restated its arrangement to repurchase Novartis shares on the second trading line under its new up-to USD 10.0 billion share buyback.
In March 2026, Novartis replaced its July 2025 arrangement with a new irrevocable, non-discretionary arrangement with a bank to continue repurchasing Novartis shares on the second trading line under its up-to USD 10.0 billion share buyback. In May 2026, Novartis amended the arrangement to include the repurchase of an additional 12.1 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees.
Novartis is able to cancel this arrangement at any time but may be subject to a 90 day waiting period. As of June 30, 2026, and December 31, 2025, these waiting period conditions were not applicable and as a result, there was no requirement to record a liability under this arrangement as of June 30, 2026, and December 31, 2025.
4.3. Other movements include mainly the impact of the application of IAS Standards 29 “Financial Reporting in Hyperinflationary Economies,” for subsidiaries in hyperinflationary economies.
30
5. Financial instruments
The following table illustrates the three hierarchical levels for valuing financial instruments at fair value as of June 30, 2026, and December 31, 2025. For additional information on the hierarchies and other matters, please refer to the Consolidated Financial Statements in the 2025 Annual Report, published on February 4, 2026.
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
(USD millions) | Jun 30, 2026 | Dec 31, 2025 | Jun 30, 2026 | Dec 31, 2025 | Jun 30, 2026 | Dec 31, 2025 | Jun 30, 2026 | Dec 31, 2025 | |||||||||
Financial assets | |||||||||||||||||
Cash and cash equivalents - debt securities | |||||||||||||||||
Derivative financial instruments | |||||||||||||||||
Current contingent consideration receivables | |||||||||||||||||
Current debt and equity securities | |||||||||||||||||
Total current financial assets at fair value | |||||||||||||||||
Non-current debt and equity securities | |||||||||||||||||
Fund investments | |||||||||||||||||
Non-current contingent consideration receivables | |||||||||||||||||
Associated companies at fair value through profit or loss | |||||||||||||||||
Total non-current financial assets at fair value | |||||||||||||||||
Financial liabilities | |||||||||||||||||
Current contingent consideration liabilities | - | - | - | - | |||||||||||||
Derivative financial instruments | - | - | - | - | |||||||||||||
Total current financial liabilities at fair value | - | - | - | - | - | - | |||||||||||
Non-current contingent consideration liabilities | - | - | - | - | |||||||||||||
In the first half of 2026, there was one transfer of equity securities from Level 3 to Level 1 for USD 8 million due to Initial Public Offering of the invested company.
The carrying amount of non-current debt and equity securities, fund investments and non-current contingent consideration receivables totaling USD 2.0 billion at June 30, 2026 (USD 1.8 billion at December 31, 2025) is included in the line “Financial assets” of the consolidated balance sheets. The carrying amount of current contingent consideration liabilities of USD 0.1 billion at June 30, 2026 (USD 0.2 billion at December 31, 2025) is included in the line “Provisions and other current liabilities” of the consolidated balance sheets. The carrying amount of non-current contingent consideration liabilities of USD 0.4 billion at June 30, 2026 (USD 0.5 billion at December 31, 2025) is included in the line “Provisions and other non-current liabilities” of the consolidated balance sheets.
The fair value of straight bonds and floating rate bonds amounted to USD 39.2 billion at June 30, 2026 (USD 26.6 billion at December 31, 2025) compared with the carrying amount of USD 40.5 billion at June 30, 2026 (USD 27.9 billion at December 31, 2025). For all other financial assets and liabilities, the carrying amount is a reasonable approximation of the fair value.
The Company’s exposure to financial risks has not changed significantly during the period and there have been no major changes to the risk management department or in any risk management policies.
31
6. Details to the consolidated statements of cash flows
6.1. Non-cash items and other adjustments
The following tables show the reversal of non-cash items and other adjustments in the consolidated statements of cash flows.
(USD millions) | Q2 2026 | Q2 2025 | |||
Depreciation, amortization and impairments on: | |||||
Property, plant and equipment | |||||
Right-of-use assets | |||||
Intangible assets | |||||
Financial assets 1 | - | ||||
Change in provisions and other non-current liabilities | |||||
Gains on disposal on property, plant and equipment; intangible assets; other non-current assets; and other adjustments on financial assets and other non-current assets, net | - | - | |||
Equity-settled compensation plans | |||||
Loss from associated companies | |||||
Income taxes | |||||
Net financial expense | |||||
Other | - | - | |||
Total | |||||
1 Includes fair value changes | |||||
(USD millions) | H1 2026 | H1 2025 | |||
Depreciation, amortization and impairments on: | |||||
Property, plant and equipment | |||||
Right-of-use assets | |||||
Intangible assets | |||||
Financial assets 1 | - | ||||
Change in provisions and other non-current liabilities | |||||
Gains on disposal on property, plant and equipment; intangible assets; other non-current assets; and other adjustments on financial assets and other non-current assets, net | - | - | |||
Equity-settled compensation plans | |||||
Loss from associated companies | |||||
Income taxes | |||||
Net financial expense | |||||
Other | - | - | |||
Total | |||||
1 Includes fair value changes | |||||
6.2. Cash flows from changes in working capital and other operating cash flow items included in the net cash flows from operating activities
(USD millions) | Q2 2026 | Q2 2025 | H1 2026 | H1 2025 | |||||
(Increase)/decrease in inventories | - | - | |||||||
Increase in trade receivables | - | - | - | - | |||||
Decrease in trade payables | - | - | - | - | |||||
Change in other current and non-current assets | - | ||||||||
Change in provisions and other current liabilities | |||||||||
Total | - | - | |||||||
32
6.3. Cash flows related to acquisitions of businesses
The following table is a summary of the cash flow impact of acquisitions of businesses:
(USD millions) | Note | Q2 2026 | Q2 2025 | H1 2026 | H1 2025 | ||||||
Total purchase consideration for business combinations | 3 | - | |||||||||
Acquired cash | |||||||||||
Contingent consideration payables, net | - | - | - | - | |||||||
Acquisitions of businesses | - | - | - | - | |||||||
Note 3 provides disclosure of the fair value of assets and liabilities acquired through business combinations. All considerations paid for acquisitions were in cash.
6.4. Cash flows used for acquisitions by applying the optional concentration test
In the current-year period, the total cash consideration paid for acquisitions where the Company elected to apply the optional concentration test to determine that the transaction is not a business combination within the meaning of IFRS Accounting Standards, and to account for the acquisition as assets separately acquired amounted to USD 2.7 billion, net of cash acquired of USD 5 million (Q2 2026: USD 2.7 billion, net of cash acquired of USD 5 million; Q2 2025 and H1 2025: USD 1.5 billion, net of cash and cash equivalents acquired of USD 70 million).
Note 3 provides disclosure of the identifiable net assets acquired through acquisitions where the Company elected to apply the optional concentration test. All consideration paid for acquisitions were in cash.
6.5. Cash flows related to divestments of businesses
Cash flows related to divestments of businesses were not material. All considerations received or paid related to divestments were in cash.
33
7. Legal proceedings update
A number of Novartis companies are, and will likely continue to be, subject to various legal proceedings, including litigations, arbitrations and governmental investigations, that arise from time to time. Legal proceedings are inherently unpredictable. As a result, the Company may become subject to substantial liabilities that may not be covered by insurance and may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow. Note 20 to the Consolidated Financial Statements in our 2025 Annual Report and 2025 Form 20-F contains a summary as of the date of these reports of significant legal proceedings to which Novartis or its subsidiaries were a party. The following is a summary as of July 20, 2026, of significant developments in those proceedings, as well as any new significant proceedings commenced since the date of the 2025 Annual Report and 2025 Form 20-F.
Investigations and related litigations
Southern District of New York (S.D.N.Y.) Gilenya marketing practices investigation and litigation
In 2013, Novartis Pharmaceuticals Corporation (NPC) received a civil investigative demand from the United States Attorney’s Office for the S.D.N.Y. requesting the production of documents and information relating to marketing practices for Gilenya, including the remuneration of healthcare providers in connection therewith. In 2017, the S.D.N.Y. and New York State declined to intervene in claims raised by an individual relator in a qui tam complaint. In 2022, NPC’s motion to dismiss this complaint was granted. In December 2024, the appeals court affirmed in part but remanded in part, sending the case back to the district court for further proceedings. In March 2026, the district court denied Novartis motion to dismiss and the case proceeded to discovery. The claims are being vigorously contested.
Inflation Reduction Act (IRA) litigation
In 2023, following the U.S. government’s selection of Entresto for the first round of the IRA’s “Medicare Drug Price Negotiation Program,” NPC filed a complaint in the U.S. District Court (USDC) for the District of New Jersey on the grounds that those drug price-setting provisions are unconstitutional under the First, Fifth and Eighth Amendments to the U.S. Constitution. In October 2024, the court granted the government’s motion for summary judgment. NPC appealed to the Third Circuit and in September 2025, the Third Circuit affirmed. In May 2026, the U.S. Supreme Court declined to hear NPC’s petition, concluding this litigation.
Greece investigation
The Greek authorities are investigating legacy allegations of potentially inappropriate economic benefits to healthcare providers (HCPs), government officials and others in Greece. These authorities include the Greek Coordinating Body for Inspection and Control, and the Greek Body of Prosecution of Financial Crime (SDOE), from which the Company received a summons in 2018 and 2020. Novartis has cooperated in these investigations. In 2021, SDOE imposed on Novartis Hellas a fine equivalent to approximately USD 1.2 million; Novartis Hellas appealed the fine and, in September 2023, the Court overturned the decision and fine. The Greek State appealed. In June 2026, the Court of Appeal upheld the decision annulling the fine. In 2022, the Greek State served a civil lawsuit on Novartis Hellas, seeking approximately USD 225 million for moral damages allegedly arising from the conduct that was the subject of the Company’s 2020 settlement with the US Department of Justice regarding allegations of inappropriate economic benefits in Greece that was disclosed in the 2020 Annual Report and the 2020 Form 20-F. In May 2025, the court issued its decision rejecting the claims of the Greek State, which the Greek State appealed in October 2025. In June 2025, the National Social Security Fund of Greece filed a civil lawsuit against Novartis seeking approximately EUR 229 million for moral damages arising from the same facts. The claims will be vigorously contested.
In addition to the matters described above, there have been other non-material developments in the other legal matters described in Note 20 to the Consolidated Financial Statements contained in our 2025 Annual Report and 2025 Form 20-F.
Novartis believes that its total provisions for investigations, product liability, arbitration and other legal matters are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities, there can be no assurance that additional liabilities and costs will not be incurred beyond the amounts provided.
34
8. Operating segment
Novartis operates as a single global operating segment innovative medicines company that is engaged in the research, development, manufacturing, distribution, marketing and sale of a broad range of innovative pharmaceuticals medicines, with a focus on the core therapeutic areas: cardiovascular, renal and metabolic; immunology; neuroscience; oncology; and established brands. The Company’s research, development, manufacturing and supply of products and functional activities are managed globally on a vertically integrated basis. Commercial efforts that coordinate marketing, sales and distribution of these products are organized by geographic region, therapeutic area and established brands.
The Executive Committee of Novartis (ECN), chaired by the CEO, is the governance body responsible for allocating resources and assessing the business performance of the operating segment of the Company on a global basis and is the chief operating decision-maker (CODM) for the Company.
The determination of a single operating segment is consistent with the financial information regularly reviewed by the CODM for purposes of assessing performance and allocating resources.
See Note 9 for revenues and geographic information disclosures.
9. Revenues and geographic information
Net sales to third parties
Net sales to third parties by region1
Second quarter
Q2 2026 USD m | Q2 2025 USD m | % change USD | % change cc2 | Q2 2026 % of total | Q2 2025 % of total | ||||||||
US | - | - | |||||||||||
Europe | |||||||||||||
Asia/Africa/Australasia | |||||||||||||
Canada and Latin America | |||||||||||||
Total | |||||||||||||
Of which in established markets | |||||||||||||
Of which in emerging growth markets | |||||||||||||
1 Net sales to third parties by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | |||||||||||||
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43. | |||||||||||||
First half
H1 2026 USD m | H1 2025 USD m | % change USD | % change cc2 | H1 2026 % of total | H1 2025 % of total | ||||||||
US | - | - | |||||||||||
Europe | |||||||||||||
Asia/Africa/Australasia | |||||||||||||
Canada and Latin America | |||||||||||||
Total | - | ||||||||||||
Of which in established markets | - | - | |||||||||||
Of which in emerging growth markets | |||||||||||||
1 Net sales to third parties by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | |||||||||||||
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43. | |||||||||||||
35
Net sales to third parties by core therapeutic area and established brands
Second quarter
Q2 2026 | Q2 2025 | % change | % change | ||||||
USD m | USD m | USD | cc1 | ||||||
Cardiovascular, renal and metabolic | |||||||||
Entresto | - | - | |||||||
Leqvio | |||||||||
Vanrafia | nm | nm | |||||||
Total cardiovascular, renal and metabolic | - | - | |||||||
Immunology | |||||||||
Cosentyx | |||||||||
Ilaris | |||||||||
Xolair 2 | - | - | |||||||
Rhapsido | nm | nm | |||||||
Total immunology | |||||||||
Neuroscience | |||||||||
Kesimpta | |||||||||
Zolgensma Group | |||||||||
Aimovig | |||||||||
Total neuroscience | |||||||||
Oncology | |||||||||
Kisqali | |||||||||
Pluvicto | |||||||||
Jakavi | |||||||||
Tafinlar + Mekinist | |||||||||
Scemblix | |||||||||
Lutathera | |||||||||
Fabhalta 3 | |||||||||
Total oncology 4 | |||||||||
Established brands | |||||||||
Sandostatin Group | - | ||||||||
Exforge Group | - | ||||||||
Promacta/Revolade 4 | - | - | |||||||
Diovan Group | |||||||||
Tasigna 4 | - | - | |||||||
Lucentis | - | - | |||||||
Myfortic 4 | |||||||||
Piqray/Vijoice 4 | |||||||||
Kymriah | - | - | |||||||
Contract manufacturing | |||||||||
Other 4 | - | - | |||||||
Total established brands 4 | - | - | |||||||
Total net sales to third parties | |||||||||
1 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43. | |||||||||
2 Net sales to third parties reflect Xolair sales for all indications. | |||||||||
3 Net sales to third parties reflect Fabhalta sales for all indications. | |||||||||
4 Reclassified to conform with 2026 presentation of brands by therapeutic area and established brands. | |||||||||
nm = not meaningful | |||||||||
36
Net sales to third parties by core therapeutic area and established brands
First half
H1 2026 | H1 2025 | % change | % change | ||||||
USD m | USD m | USD | cc1 | ||||||
Cardiovascular, renal and metabolic | |||||||||
Entresto | - | - | |||||||
Leqvio | |||||||||
Vanrafia | nm | nm | |||||||
Total cardiovascular, renal and metabolic | - | - | |||||||
Immunology | |||||||||
Cosentyx | |||||||||
Ilaris | |||||||||
Xolair 2 | - | - | |||||||
Rhapsido | nm | nm | |||||||
Total immunology | |||||||||
Neuroscience | |||||||||
Kesimpta | |||||||||
Zolgensma Group | |||||||||
Aimovig | |||||||||
Total neuroscience | |||||||||
Oncology | |||||||||
Kisqali | |||||||||
Pluvicto | |||||||||
Jakavi | |||||||||
Tafinlar + Mekinist | - | - | |||||||
Scemblix | |||||||||
Lutathera | |||||||||
Fabhalta 3 | |||||||||
Total oncology 4 | |||||||||
Established brands | |||||||||
Sandostatin Group | - | - | |||||||
Exforge Group | |||||||||
Promacta/Revolade 4 | - | - | |||||||
Diovan Group | - | ||||||||
Tasigna 4 | - | - | |||||||
Lucentis | - | - | |||||||
Myfortic 4 | |||||||||
Piqray/Vijoice 4 | - | - | |||||||
Kymriah | - | - | |||||||
Contract manufacturing | |||||||||
Other 4 | - | - | |||||||
Total established brands 4 | - | - | |||||||
Total net sales to third parties | - | ||||||||
1 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43. | |||||||||
2 Net sales to third parties reflect Xolair sales for all indications. | |||||||||
3 Net sales to third parties reflect Fabhalta sales for all indications. | |||||||||
4 Reclassified to conform with 2026 presentation of brands by therapeutic area and established brands. | |||||||||
nm = not meaningful | |||||||||
37
Net sales to third parties1 of the top 20 brands in 2026
Second quarter
US | Rest of world | Total | ||||||||||||||||||||
Brands | Brand classification by therapeutic area or established brands | Key indications | USD m | % change USD/cc2 | USD m | % change USD | % change cc2 | USD m | % change USD | % change cc2 | ||||||||||||
Cosentyx | Immunology | Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) | ||||||||||||||||||||
Kisqali | Oncology | HR+/HER2- metastatic breast cancer and early breast cancer | ||||||||||||||||||||
Kesimpta | Neuroscience | Relapsing forms of multiple sclerosis (MS) | ||||||||||||||||||||
Entresto | Cardiovascular, renal and metabolic | Chronic heart failure, hypertension | - | nm | - | - | ||||||||||||||||
Pluvicto | Oncology | PSMA-positive mCRPC patients post-ARPI, pre- and post-Taxane | ||||||||||||||||||||
Jakavi | Oncology | Myelofibrosis (MF), polycythemia vera (PV), graft-versus-host disease (GvHD) | ||||||||||||||||||||
Tafinlar + Mekinist | Oncology | BRAF V600+ metastatic and adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication, pediatric low grade glioma (pLGG) | - | |||||||||||||||||||
Ilaris | Immunology | Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout) | ||||||||||||||||||||
Scemblix | Oncology | Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in chronic phase (CP); Ph+ CML in CP with the T315I mutation | ||||||||||||||||||||
Leqvio | Cardiovascular, renal and metabolic | Atherosclerotic cardiovascular disease (ASCVD) | ||||||||||||||||||||
Xolair 3 | Immunology | Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps, food allergy (FA) | - | - | - | - | ||||||||||||||||
Zolgensma Group | Neuroscience | Spinal muscular atrophy (SMA) | ||||||||||||||||||||
Sandostatin Group | Established brands | Carcinoid tumors, acromegaly | - | - | ||||||||||||||||||
Lutathera | Oncology | GEP-NETs gastroenteropancreatic neuroendocrine tumors | ||||||||||||||||||||
Exforge Group | Established brands | Hypertension | - | - | ||||||||||||||||||
Fabhalta 4 | Oncology | Paroxysmal Nocturnal Hemoglobinuria (PNH), IgA Nephropathy (IgAN), Adult C3 Glomerulopathy (C3G) | ||||||||||||||||||||
Promacta/Revolade | Established brands | Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) | - | - | - | - | - | |||||||||||||||
Diovan Group | Established brands | Hypertension | - | |||||||||||||||||||
Tasigna | Established brands | Chronic myeloid leukemia (CML) | - | - | - | - | - | |||||||||||||||
Lucentis | Established brands | Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) | - | - | - | - | ||||||||||||||||
Top 20 brands total | - | |||||||||||||||||||||
Rest of portfolio | ||||||||||||||||||||||
Net sales to third parties | - | |||||||||||||||||||||
1 Net sales to third parties by location of customer | ||||||||||||||||||||||
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43. | ||||||||||||||||||||||
3 Net sales to third parties reflect Xolair sales for all indications. | ||||||||||||||||||||||
4 Net sales to third parties reflect Fabhalta sales for all indications. | ||||||||||||||||||||||
5 Mainly due to change in revenue deductions | ||||||||||||||||||||||
nm = not meaningful | ||||||||||||||||||||||
38
Net sales to third parties1 of the top 20 brands in 2026
First half
US | Rest of world | Total | ||||||||||||||||||||
Brands | Brand classification by therapeutic area or established brands | Key indications | USD m | % change USD/cc2 | USD m | % change USD | % change cc2 | USD m | % change USD | % change cc2 | ||||||||||||
Cosentyx | Immunology | Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) | ||||||||||||||||||||
Kisqali | Oncology | HR+/HER2- metastatic breast cancer and early breast cancer | ||||||||||||||||||||
Kesimpta | Neuroscience | Relapsing forms of multiple sclerosis (MS) | ||||||||||||||||||||
Entresto | Cardiovascular, renal and metabolic | Chronic heart failure, hypertension | - | - | - | |||||||||||||||||
Pluvicto | Oncology | PSMA-positive mCRPC patients post-ARPI, pre- and post-Taxane | ||||||||||||||||||||
Jakavi | Oncology | Myelofibrosis (MF), polycythemia vera (PV), graft-versus-host disease (GvHD) | ||||||||||||||||||||
Tafinlar + Mekinist | Oncology | BRAF V600+ metastatic and adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication, pediatric low grade glioma (pLGG) | - | - | - | |||||||||||||||||
Ilaris | Immunology | Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout) | ||||||||||||||||||||
Scemblix | Oncology | Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in chronic phase (CP); Ph+ CML in CP with the T315I mutation | ||||||||||||||||||||
Leqvio | Cardiovascular, renal and metabolic | Atherosclerotic cardiovascular disease (ASCVD) | ||||||||||||||||||||
Xolair 3 | Immunology | Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps, food allergy (FA) | - | - | - | - | ||||||||||||||||
Zolgensma Group | Neuroscience | Spinal muscular atrophy (SMA) | - | |||||||||||||||||||
Sandostatin Group | Established brands | Carcinoid tumors, acromegaly | - | - | - | |||||||||||||||||
Lutathera | Oncology | GEP-NETs gastroenteropancreatic neuroendocrine tumors | ||||||||||||||||||||
Exforge Group | Established brands | Hypertension | - | |||||||||||||||||||
Fabhalta 4 | Oncology | Paroxysmal Nocturnal Hemoglobinuria (PNH), IgA Nephropathy (IgAN), Adult C3 Glomerulopathy (C3G) | ||||||||||||||||||||
Promacta/Revolade | Established brands | Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) | - | - | - | - | - | |||||||||||||||
Diovan Group | Established brands | Hypertension | - | - | ||||||||||||||||||
Tasigna | Established brands | Chronic myeloid leukemia (CML) | - | - | - | - | - | |||||||||||||||
Lucentis | Established brands | Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) | - | - | - | - | ||||||||||||||||
Top 20 brands total | - | - | ||||||||||||||||||||
Rest of portfolio | - | - | ||||||||||||||||||||
Net sales to third parties | - | - | ||||||||||||||||||||
1 Net sales to third parties by location of customer | ||||||||||||||||||||||
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43. | ||||||||||||||||||||||
3 Net sales to third parties reflect Xolair sales for all indications. | ||||||||||||||||||||||
4 Net sales to third parties reflect Fabhalta sales for all indications. | ||||||||||||||||||||||
39
Other revenues
(USD millions) | Q2 2026 | Q2 2025 | H1 2026 | H1 2025 | |||||
Profit sharing income | |||||||||
Royalty income 1 | |||||||||
Milestone income | |||||||||
Other 2 | |||||||||
Total other revenues | |||||||||
1 In the second quarter and first half of 2025, royalty income includes a royalty settlement of USD | |||||||||
2 Other includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales to third parties. | |||||||||
10. Other interim disclosures
Property, plant and equipment, right-of-use assets and intangible assets
The following table shows additional disclosures related to property, plant and equipment, right-of-use assets and intangible assets:
(USD millions) | Q2 2026 | Q2 2025 | H1 2026 | H1 2025 | |||||
Property, plant and equipment impairment charges | - | - | - | ||||||
Property, plant and equipment depreciation charge | - | - | - | - | |||||
Right-of-use assets impairment charges | - | - | |||||||
Right-of-use assets depreciation charge | - | - | - | - | |||||
Intangible assets impairment charges | - | - | - | - | |||||
Intangible assets amortization charge | - | - | - | - | |||||
In the first half of 2026 and 2025, there were no
The following table shows the additions to property, plant and equipment, right-of-use assets and intangible assets other than goodwill, excluding the impacts of the first half of 2026 business combinations and acquisitions applying the optional concentration test, which are disclosed in Note 3:
(USD millions) | Q2 2026 | Q2 2025 | H1 2026 | H1 2025 | |||||
Additions to property, plant and equipment | |||||||||
Additions to right-of-use assets | |||||||||
Additions to intangible assets other than goodwill | |||||||||
Financial debts
The acquisition of Avidity Biosciences, Inc., completed on February 27, 2026, was initially financed through a USD 11.0 billion bridge loan with an interest rate based on compounded Secured Overnight Financing Rate (SOFR). The bridge loan was fully repaid on March 18, 2026, using the proceeds from the straight and floating rate bonds issued in the first quarter of 2026.
40
The following table provides a breakdown of straight and floating rate bonds issued in the first half of 2026:
Coupon | Currency | Notional amount (millions) | Issuance year | Maturity year | Issuer | Issue price | USD millions | ||||||||
Total straight and floating rate bonds issued in the first half of 2026 | |||||||||||||||
Total straight and floating rate bonds, June 30, 2026 | |||||||||||||||
Total straight and floating rate bonds, December 31, 2025 | |||||||||||||||
Net investment hedge designation
In addition to the existing hedges as of December 31, 2025, the Company has further designated the newly issued Euro-denominated straight bonds maturing 2032 (EUR 600 million), 2035 (EUR 600 million) and 2041 (EUR 500 million) as hedges of the translation risk arising on certain of these net investments in foreign operations with a Euro functional currency. As of June 30, 2026, long-term financial debt with a carrying amount of EUR 5.0 billion (USD 5.7 billion, December 31, 2025: USD 3.9 billion), have been designated as hedge instruments. The hedges remained effective since inception, and no
Commitments
Research and development commitments
The Company has entered into long-term research and development agreements related to intangible assets with various third parties. The Company has also entered into acquisition agreements related to intangible assets with third parties that were accounted for as assets separately acquired by electing to apply the optional concentration test. These agreements may provide for potential milestone payments by Novartis, which are dependent on successful achievement of specified clinical development, regulatory approval, or sales milestones, or other conditions specified in the agreements.
As of June 30, 2026, the amount and estimated timing of the Company’s commitments to make payments under those agreements, which are shown without risk adjustment and on an undiscounted basis, were as follows:
(USD millions) | Jun 30, 2026 | ||
2026 | |||
2027 | |||
2028 | |||
2029 | |||
2030 | |||
2031 | |||
Thereafter | |||
Total | |||
Other commitments
The Company has entered into various purchase commitments for services and materials as well as for equipment in the ordinary course of business. These commitments are generally entered into at current market prices and reflect normal business operations.
The Company routinely acquires interests in intellectual property focused on key disease areas and indications that the Company expects to be growth drivers in the future.
Pending acquisition commitment to acquire Myricx Bio – On July 5, 2026, Novartis entered into a stock purchase agreement to acquire Myricx Bio, a privately held UK-based biotechnology company developing a new class of antibody-drug conjugates (ADCs), using N-myristoyltransferase inhibitor (NMTi) payloads. Under the terms of the agreement Novartis will make a payment of USD 1.1 billion at closing and up to USD 0.4 billion in additional payments contingent upon the achievement of specified milestones. The transaction is expected to close in the second half of 2026, subject to satisfaction or waiver of customary closing conditions, including regulatory approval.
41
11. Events subsequent to the June 30, 2026, consolidated balance sheet date
Significant transaction entered into in July 2026
On July 5, 2026, the Company entered into a commitment related to a purchase agreement to acquire a company. See Note 10 for further information.
42
Supplementary information (unaudited)
Non-IFRS measures as defined by Novartis
Novartis uses certain non-IFRS Accounting Standards metrics when measuring performance, especially when measuring current-year results against prior periods, including core results, constant currencies and free cash flow. These are referred to by Novartis as non-IFRS measures.
Despite the use of these measures by management in setting goals and measuring the Company’s performance, these are non-IFRS measures that have no standardized meaning prescribed by IFRS Accounting Standards. As a result, such measures have limits in their usefulness to investors.
Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS Accounting Standards measures) may not be comparable to the calculation of similar measures of other companies. These non-IFRS measures are presented solely to permit investors to more fully understand how the Company’s management assesses underlying performance. These non-IFRS measures are not, and should not be viewed as, a substitute for IFRS Accounting Standards measures and should be viewed in conjunction with the consolidated financial statements presented in accordance with IFRS Accounting Standards.
As an internal measure of Company performance, these non-IFRS measures have limitations, and the Company’s performance management process is not solely restricted to these metrics.
Core results
The Company’s core results – including core operating income, core net income and core earnings per share – exclude fully the amortization and net impairment charges of intangible assets, excluding software, net gains and losses on fund investments and equity securities valued at fair value through profit and loss, impact of IAS Standards 29 “Financial Reporting in Hyperinflationary Economies” to other financial income and expense, and certain acquisition- and divestment-related items. The following items that exceed a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses; divestment gains and losses; restructuring charges/releases and related items; legal-related items; impairments of property, plant and equipment, software, and financial assets, and income and expense items that management deems exceptional and that are or are expected to accumulate within the year to be over a USD 25 million threshold.
Novartis believes that investor understanding of the Company’s performance is enhanced by disclosing core measures of performance since, core measures exclude items that can vary significantly from year to year, they enable better comparison of business performance across years. For this same reason, Novartis uses these core measures in addition to IFRS Accounting Standards measures and other measures as important factors in assessing the Company’s performance.
The following are examples of how these core measures are used:
• In addition to monthly reports containing financial information prepared under IFRS Accounting Standards, senior management receives a monthly analysis incorporating these non-IFRS core measures.
• Annual budgets are prepared for both IFRS Accounting Standards and non-IFRS core measures.
As an internal measure of Company performance, the core results measures have limitations, and the Company’s performance management process is not solely restricted to these metrics. A limitation of the core results measures is that they provide a view of the Company’s operations without including all events during a period, such as the effects of an acquisition, divestment, or amortization/impairments of intangible assets, impairments to property, plant and equipment and restructurings and related items.
Change in constant currency
Changes in the relative values of non-US currencies to the US dollar can affect the Company’s financial results. To provide additional context that may assist investors in understanding period-on-period movements, including changes in volume, price and generic competition impacts on net sales, we disclose year-over-year percentage changes in net sales and selected key figures, including operating income and net income, both as reported in USD and in constant currencies. Constant currency percentage changes are presented only as supplemental explanatory information to give context for the estimated currency effect on reported year-over-year percentage changes and should be considered together with the corresponding USD-reported percentage changes.
Constant currency percentage changes exclude the estimated impact of exchange rate movements arising from (i) translating results from functional currencies into USD, the Company’s reporting currency, and (ii) major transactions of consolidated entities performed in currencies other than their functional currency.
Constant currency percentage changes are calculated by translating current-year results into USD using prior-year average exchange rates (excluding adjustments required under IAS Standards 29 “Financial Reporting in Hyperinflationary Economies” for
43
subsidiaries operating in hyperinflationary economies), and adjusting for the estimated impact of exchange rate movements on major transactions of consolidated entities performed in currencies other than their functional currency. The translated current-year amounts are then compared with the prior-year results in USD to derive the constant currency percentage changes.
Free cash flow
Novartis defines free cash flow as net cash flows from operating activities less purchases of property, plant and equipment. Management believes that this definition provides a performance measure that focuses on core operating activities, and also excludes items that can vary significantly from year to year, thereby enabling better comparison of business performance across years.
Free cash flow is a non-IFRS measure, which means it should not be interpreted as a measure determined under IFRS Accounting Standards. Free cash flow is not intended to be a substitute measure for net cash flows from operating activities as determined under IFRS Accounting Standards. Free cash flow is presented as additional information because management believes it is a useful supplemental indicator of the Company’s ability to operate without reliance on additional borrowing or use of existing cash. Free cash flow is a measure of the net cash generated that is available for investment in strategic opportunities, returning to shareholders and for debt repayment.
Additional information
Growth rate calculation
For ease of understanding, Novartis uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared with the prior year is shown as a positive growth.
Net debt
Novartis calculates net debt as current financial debts and derivative financial instruments plus non-current financial debts less cash and cash equivalents and marketable securities, time deposits and derivative financial instruments.
Net debt is presented as additional information because it sets forth how management monitors net debt or liquidity and management believes it is a useful supplemental indicator of the Company’s ability to pay dividends, to meet financial commitments, and to invest in new strategic opportunities, including strengthening its balance sheet.
See page 50 for additional disclosures related to net debt.
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Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
The following table provides an overview of the reconciliation from IFRS Accounting Standards results to non-IFRS measure core results:
(USD millions unless indicated otherwise) | Q2 2026 | Q2 2025 | H1 2026 | H1 2025 | |||||
IFRS Accounting Standards operating income | 4 750 | 4 864 | 8 985 | 9 527 | |||||
Amortization of intangible assets | 778 | 770 | 1 553 | 1 559 | |||||
Impairments | |||||||||
Intangible assets | 199 | 92 | 199 | 93 | |||||
Property, plant and equipment related to the company-wide rationalization of manufacturing sites | 1 | 1 | |||||||
Other property, plant and equipment | 34 | ||||||||
Total impairment charges | 199 | 93 | 233 | 94 | |||||
Acquisition or divestment of businesses and related items | |||||||||
- Income | -51 | -106 | -180 | -217 | |||||
- Expense | 85 | 143 | 208 | 246 | |||||
Total acquisition or divestment of businesses and related items, net | 34 | 37 | 28 | 29 | |||||
Other items | |||||||||
Divestment gains | -50 | -125 | -50 | ||||||
Financial assets - fair value adjustments | 6 | -3 | -13 | 38 | |||||
Restructuring and related items | |||||||||
- Income | -24 | -44 | -38 | -60 | |||||
- Expense | 472 | 147 | 586 | 292 | |||||
Legal-related items | |||||||||
- Income | -280 | -280 | |||||||
- Expense | 46 | 443 | 46 | 443 | |||||
Additional income | -321 | -109 | -470 | -170 | |||||
Additional expense | 57 | 52 | 78 | ||||||
Total other items | 179 | 161 | 38 | 291 | |||||
Total adjustments | 1 190 | 1 061 | 1 852 | 1 973 | |||||
Core operating income | 5 940 | 5 925 | 10 837 | 11 500 | |||||
as % of net sales | 41.2% | 42.2% | 39.4% | 42.1% | |||||
Loss from associated companies | -2 | -3 | -5 | -6 | |||||
Interest expense | -462 | -289 | -805 | -559 | |||||
Other financial income and expense | -17 | -41 | -67 | -24 | |||||
Core adjustments to other financial income and expense | 36 | 28 | 90 | 57 | |||||
Income taxes, adjusted for core adjustment items (core income taxes) | -917 | -910 | -1 678 | -1 776 | |||||
Core net income | 4 578 | 4 710 | 8 372 | 9 192 | |||||
Core net income attributable to shareholders of Novartis AG | 4 585 | 4 709 | 8 379 | 9 188 | |||||
Core net income attributable to non-controlling interests | -7 | 1 | -7 | 4 | |||||
Core basic EPS (USD) 1 | 2.41 | 2.42 | 4.39 | 4.69 | |||||
1 Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | |||||||||
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Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
Second quarter
(USD millions unless indicated otherwise) | Q2 2026 IFRS Accounting Standards results | Amortization of intangible assets1 | Impairments2 | Acquisition or divestment of businesses and related items3 | Other items4 | Q2 2026 Core results | Q2 2025 Core results | ||||||||
Gross profit | 11 241 | 692 | 32 | 11 965 | 11 915 | ||||||||||
Operating income | 4 750 | 778 | 199 | 34 | 179 | 5 940 | 5 925 | ||||||||
Income before taxes | 4 269 | 778 | 199 | 34 | 215 | 5 495 | 5 620 | ||||||||
Income taxes 5 | -1 012 | -155 | -35 | -17 | 302 | -917 | -910 | ||||||||
Net income | 3 257 | 4 578 | 4 710 | ||||||||||||
Attributable to: | |||||||||||||||
Shareholders of Novartis AG | 3 264 | 4 585 | 4 709 | ||||||||||||
Non-controlling interests | -7 | -7 | 1 | ||||||||||||
Basic EPS (USD) 6 | 1.71 | 2.41 | 2.42 | ||||||||||||
The following are adjustments to arrive at core gross profit | |||||||||||||||
Cost of goods sold | -3 710 | 692 | 32 | -2 986 | -2 612 | ||||||||||
The following are adjustments to arrive at core operating income | |||||||||||||||
Selling, general and administration | -3 241 | 5 | 5 | -3 231 | -3 441 | ||||||||||
Research and development | -2 847 | 86 | 199 | 9 | -100 | -2 653 | -2 553 | ||||||||
Other income | 410 | -51 | -258 | 101 | 194 | ||||||||||
Other expense | -813 | 71 | 500 | -242 | -190 | ||||||||||
The following are adjustments to arrive at core income before taxes | |||||||||||||||
Other financial income and expense | -17 | 36 | 19 | -13 | |||||||||||
1 Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | |||||||||||||||
2 Impairments: research and development includes net impairment charges related to intangible assets | |||||||||||||||
3 Acquisition or divestment of businesses and related items, including integration-related charges: selling, general and administration, research and development, other income and other expense include integration-related charges and income; other income and other expense also include transitional services fee income and expenses related to the Sandoz distribution as well as adjustments to provisions; other income also includes settlement income related to a prior-year divestment | |||||||||||||||
4 Other items: costs of goods sold, selling, general and administration, research and development, other income and other expense include net restructuring charges and related items; research and development include contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes an asset divestment gain, fair value adjustments on contingent consideration receivables, a gain related to pension plan amendments and other items; other expense includes legal-related items; other financial income and expense includes the impact of IAS Standards 29 “Financial Reporting in Hyperinflationary Economies” for subsidiaries operating in hyperinflationary economies | |||||||||||||||
5 Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 1.2 billion to arrive at the core results before tax amounts to a tax benefit of USD 95 million and the average tax rate on the total adjustments was -7.7% since the estimated full year core tax charge of 16.7% has been applied to the pre-tax income of the period. | |||||||||||||||
6 Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | |||||||||||||||
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Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
First half
(USD millions unless indicated otherwise) | H1 2026 IFRS Accounting Standards results | Amortization of intangible assets1 | Impairments2 | Acquisition or divestment of businesses and related items3 | Other items4 | H1 2026 Core results | H1 2025 Core results | ||||||||
Gross profit | 21 306 | 1 386 | 53 | 22 745 | 22 997 | ||||||||||
Operating income | 8 985 | 1 553 | 233 | 28 | 38 | 10 837 | 11 500 | ||||||||
Income before taxes | 8 108 | 1 553 | 233 | 28 | 128 | 10 050 | 10 968 | ||||||||
Income taxes 5 | -1 695 | -308 | -41 | -18 | 384 | -1 678 | -1 776 | ||||||||
Net income | 6 413 | 8 372 | 9 192 | ||||||||||||
Attributable to: | |||||||||||||||
Shareholders of Novartis AG | 6 420 | 8 379 | 9 188 | ||||||||||||
Non-controlling interests | -7 | - 7 | 4 | ||||||||||||
Basic EPS (USD) 6 | 3.37 | 4.39 | 4.69 | ||||||||||||
The following are adjustments to arrive at core gross profit | |||||||||||||||
Cost of goods sold | -7 169 | 1 386 | 53 | -5 730 | -5 115 | ||||||||||
The following are adjustments to arrive at core operating income | |||||||||||||||
Selling, general and administration | -6 381 | 6 | 7 | -6 368 | -6 498 | ||||||||||
Research and development | -5 587 | 167 | 199 | 14 | -150 | -5 357 | -4 855 | ||||||||
Other income | 888 | -180 | -494 | 214 | 273 | ||||||||||
Other expense | -1 241 | 34 | 188 | 622 | -397 | -417 | |||||||||
The following are adjustments to arrive at core income before taxes | |||||||||||||||
Other financial income and expense | -67 | 90 | 23 | 33 | |||||||||||
1 Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | |||||||||||||||
2 Impairments: research and development includes net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | |||||||||||||||
3 Acquisition or divestment of businesses and related items, including integration-related charges: selling, general and administration, research and development, other income and other expense include integration-related charges and income; other income and other expense also include transitional services fee income and expenses related to the Sandoz distribution as well as adjustments to provisions; other income also includes settlement income related to a prior-year divestment | |||||||||||||||
4 Other items: costs of goods sold, selling, general and administration, research and development, other income and other expense include net restructuring charges and related items; costs of goods sold and research and development include contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes asset divestment gains, fair value adjustments on contingent consideration receivables, a gain related to pension plan amendments and other items; other expense includes legal-related items; other financial income and expense includes the impact of IAS Standards 29 “Financial Reporting in Hyperinflationary Economies” for subsidiaries operating in hyperinflationary economies | |||||||||||||||
5 Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 1.9 billion to arrive at the core results before tax amounts to a tax benefit of USD 17 million and the average tax rate on the total adjustments was -0.9% since the estimated full year core tax charge of 16.7% has been applied to the pre-tax income of the period. | |||||||||||||||
6 Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | |||||||||||||||
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Non-IFRS measure free cash flow
The following tables provide a reconciliation of the three major categories of the IFRS Accounting Standards consolidated statements of cash flows to the non-IFRS measure free cash flow:
Second quarter
Q2 2026 | Q2 2025 | ||||||||||||
(USD millions) | IFRS Accounting Standards cash flow | Adjustments | Free cash flow | IFRS Accounting Standards cash flow | Adjustments | Free cash flow | |||||||
Net cash flows from operating activities | 5 882 | 5 882 | 6 664 | 6 664 | |||||||||
Net cash flows used in investing activities 1 | -3 105 | 2 784 | -321 | -2 243 | 1 912 | -331 | |||||||
Net cash flows used in financing activities 2 | -2 020 | 2 020 | 0 | -5 213 | 5 213 | 0 | |||||||
Non-IFRS measure free cash flow | 5 561 | 6 333 | |||||||||||
1 With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | |||||||||||||
2 Net cash flows used in financing activities are excluded from the free cash flow. | |||||||||||||
First half
H1 2026 | H1 2025 | ||||||||||||
(USD millions) | IFRS Accounting Standards cash flow | Adjustments | Free cash flow | IFRS Accounting Standards cash flow | Adjustments | Free cash flow | |||||||
Net cash flows from operating activities | 9 558 | 9 558 | 10 309 | 10 309 | |||||||||
Net cash flows used in investing activities 1 | -14 841 | 14 174 | -667 | -1 913 | 1 328 | -585 | |||||||
Net cash flows from/(used in) financing activities 2 | 1 559 | -1 559 | 0 | -13 761 | 13 761 | 0 | |||||||
Non-IFRS measure free cash flow | 8 891 | 9 724 | |||||||||||
1 With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | |||||||||||||
2 Net cash flows from/(used in) financing activities are excluded from the free cash flow. | |||||||||||||
The following tables summarize the non-IFRS measure free cash flow:
Second quarter
(USD millions) | Q2 2026 | Q2 2025 | |||
Operating income | 4 750 | 4 864 | |||
Reversal of non-cash items and other adjustments | |||||
Depreciation, amortization and impairments | 1 406 | 1 252 | |||
Change in provisions and other non-current liabilities | 466 | 665 | |||
Other | 12 | 197 | |||
Operating income adjusted for non-cash items | 6 634 | 6 978 | |||
Dividends received from associated companies and others | 1 | 1 | |||
Interest received and change in other financial receipts | 44 | 437 | |||
Interest paid and change in other financial payments | -380 | -240 | |||
Income taxes paid | -398 | -675 | |||
Payments out of provisions and other net cash movements in non-current liabilities | -251 | -279 | |||
Change in inventories and trade receivables less trade payables | -410 | -354 | |||
Change in other operating cash flow items | 642 | 796 | |||
Net cash flows from operating activities | 5 882 | 6 664 | |||
Purchases of property, plant and equipment | -321 | -331 | |||
Non-IFRS measure free cash flow | 5 561 | 6 333 | |||
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First half
(USD millions) | H1 2026 | H1 2025 | |||
Operating income | 8 985 | 9 527 | |||
Reversal of non-cash items and other adjustments | |||||
Depreciation, amortization and impairments | 2 614 | 2 447 | |||
Change in provisions and other non-current liabilities | 536 | 847 | |||
Other | 146 | 478 | |||
Operating income adjusted for non-cash items | 12 281 | 13 299 | |||
Dividends received from associated companies and others | 1 | 1 | |||
Interest received and other financial receipts | 127 | 559 | |||
Interest paid and other financial payments | -593 | -493 | |||
Income taxes paid | -1 185 | -1 215 | |||
Payments out of provisions and other net cash movements in non-current liabilities | -518 | -516 | |||
Change in inventories and trade receivables less trade payables | -1 062 | -1 514 | |||
Change in other operating cash flow items | 507 | 188 | |||
Net cash flows from operating activities | 9 558 | 10 309 | |||
Purchases of property, plant and equipment | -667 | -585 | |||
Non-IFRS measure free cash flow | 8 891 | 9 724 | |||
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Additional information
Net debt
Condensed consolidated changes in net debt
Second quarter
(USD millions) | Q2 2026 | Q2 2025 | |||
Net change in cash and cash equivalents | 739 | -410 | |||
Change in marketable securities, time deposits, financial debts and derivatives financial instruments | -2 039 | -1 103 | |||
Change in net debt | -1 300 | -1 513 | |||
Net debt at April 1 | -38 087 | -22 271 | |||
Net debt at June 30 | -39 387 | -23 784 | |||
First half
(USD millions) | H1 2026 | H1 2025 | |||
Net change in cash and cash equivalents | -3 819 | -4 803 | |||
Change in marketable securities, time deposits, financial debts and derivatives financial instruments | -13 621 | -2 840 | |||
Change in net debt | -17 440 | -7 643 | |||
Net debt at January 1 | -21 947 | -16 141 | |||
Net debt at June 30 | -39 387 | -23 784 | |||
Components of net debt
(USD millions) | Jun 30, 2026 | Dec 31, 2025 | Jun 30, 2025 | ||||
Non-current financial debts | -37 489 | -27 935 | -22 470 | ||||
Current financial debts and derivative financial instruments | -9 588 | -5 602 | -8 314 | ||||
Total financial debts | -47 077 | -33 537 | -30 784 | ||||
Less liquidity | |||||||
Cash and cash equivalents | 7 616 | 11 435 | 6 656 | ||||
Marketable securities, time deposits and derivative financial instruments | 74 | 155 | 344 | ||||
Total liquidity | 7 690 | 11 590 | 7 000 | ||||
Net debt at end of period | -39 387 | -21 947 | -23 784 | ||||
Share information
Jun 30, 2026 | Jun 30, 2025 | ||||
Number of shares outstanding | 1 900 714 840 | 1 935 853 188 | |||
Registered share price (CHF) | 126.58 | 96.17 | |||
ADR price (USD) | 156.72 | 121.01 | |||
Market capitalization (USD billions) 1 | 297.4 | 233.5 | |||
Market capitalization (CHF billions) 1 | 240.6 | 186.2 | |||
1 Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares). Market capitalization in USD is based on the market capitalization in CHF converted at the quarter end CHF/USD exchange rate. | |||||
50
Effects of currency fluctuations
Principal currency translation rates
(USD per unit) | Average rates Q2 2026 | Average rates Q2 2025 | Average rates H1 2026 | Average rates H1 2025 | Period-end rates Jun 30, 2026 | Period-end rates Jun 30, 2025 | |||||||
1 CHF | 1.266 | 1.209 | 1.271 | 1.161 | 1.236 | 1.254 | |||||||
1 CNY | 0.147 | 0.138 | 0.146 | 0.138 | 0.147 | 0.140 | |||||||
1 EUR | 1.163 | 1.133 | 1.167 | 1.093 | 1.140 | 1.174 | |||||||
1 GBP | 1.343 | 1.335 | 1.345 | 1.297 | 1.324 | 1.373 | |||||||
100 JPY | 0.628 | 0.692 | 0.633 | 0.674 | 0.616 | 0.695 | |||||||
100 RUB | 1.345 | 1.235 | 1.309 | 1.154 | 1.289 | 1.272 | |||||||
Currency impact on key figures
The following table provides a summary of the currency impact on key Company figures due to their conversion into US dollars, the Company’s reporting currency, of the financial data from entities reporting in non-US dollars.
Second quarter
Change in USD % Q2 2026 | Change in constant currencies % Q2 2026 | Percentage point currency impact Q2 2026 | |||||
Net sales to third parties | 3 | 1 | 2 | ||||
Operating income | -2 | -3 | 1 | ||||
Net income | -19 | -19 | 0 | ||||
Basic earnings per share (USD) | -17 | -18 | 1 | ||||
Core operating income | 0 | 0 | 0 | ||||
Core net income | -3 | -4 | 1 | ||||
Core basic earnings per share (USD) | 0 | -1 | 1 | ||||
First half
Change in USD % H1 2026 | Change in constant currencies % H1 2026 | Percentage point currency impact H1 2026 | |||||
Net sales to third parties | 1 | -2 | 3 | ||||
Operating income | -6 | -7 | 1 | ||||
Net income | -16 | -17 | 1 | ||||
Basic earnings per share (USD) | -14 | -15 | 1 | ||||
Core operating income | -6 | -7 | 1 | ||||
Core net income | -9 | -10 | 1 | ||||
Core basic earnings per share (USD) | -6 | -8 | 2 | ||||
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Disclaimer
This communication contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that can generally be identified by words such as “expected,” “anticipated,” “planned,” “can,” “will,” “continue,” “ongoing,” “growth,” “launch,” “expanded,” “deliver,” “accelerate,” “guidance,” “outlook,” “priority,” “potential,” “momentum,” “on track,” “look forward,” “pipeline,” or similar expressions, or by express or implied discussions regarding: potential new products, potential new indications for existing products, potential product launches or potential future revenues from any such products; or results of ongoing clinical trials; potential future, pending or announced transactions; potential future sales or earnings; strategy, plans, expectations or intentions, including discussions regarding our continued investment into new R&D capabilities and manufacturing; our capital structure. You should not place undue reliance on these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that the investigational or approved products described in this communication will be submitted or approved for sale or for any additional indications or labeling in any market, or at any particular time. Nor can there be any guarantee that such products will be commercially successful in the future. Neither can there be any guarantee that the expected benefits or synergies from the transactions described in this communication will be achieved in the expected timeframe, or at all. In particular, our expectations could be affected by, among other things, uncertainties concerning: global healthcare cost containment, including ongoing government, payer and general public pricing and reimbursement pressures and requirements for increased pricing transparency; the success of key products, commercial priorities and strategy; the research and development of new products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products; our ability to realize the strategic benefits, operational efficiencies or opportunities expected from our external business opportunities; the development or adoption of new technologies, including artificial intelligence, and new business models; the implementation of our new IT projects and systems; potential significant breaches of information security or disruptions of our information technology systems; actual or potential legal proceedings, including regulatory actions or delays or government regulation related to the products and pipeline products described in this communication; safety, quality, data integrity, or manufacturing issues; our performance on and ability to comply with environmental, social and governance measures and requirements; major macroeconomic and geo- and socio-political developments, including the impact of any potential tariffs on our products or the impact of war in certain parts of the world; future global exchange rates; future demand for our products; and other risks and factors referred to in Novartis AG’s most recently filed Form 20-F and in subsequent reports filed with, or furnished to, the US Securities and Exchange Commission. Novartis is providing the information in this communication as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.
All product names appearing in italics are trademarks owned by or licensed to Novartis.
About Novartis
Novartis is an innovative medicines company. Every day, we work to reimagine medicine to improve and extend people’s lives so that patients, healthcare professionals and societies are empowered in the face of serious disease. Our medicines reach more than 300 million people worldwide.
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with us on LinkedIn, Facebook, X and Instagram.
Novartis will conduct a conference call with investors to discuss this news release today at 14:00 Central European time and 8:00 Eastern Time. A simultaneous webcast of the call for investors and other interested parties may be accessed by visiting the Novartis website. A replay will be available after the live webcast by visiting https://www.novartis.com/investors/event-calendar.
Important dates
October 27, 2026
Third quarter & nine months 2026 results
November 18-19, 2026
Meet Novartis Management 2026 (London, UK)
February 3, 2027
Fourth quarter & full year 2026 results
52
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