NVS: FY25 Deep Dive
FY25 net sales $54.81B (+8% reported / +9% cc) — Kisqali $4.8B (+57%), Kesimpta $4.4B (+36%), Pluvicto reached $2B globally (+42% Q4). Core OpInc +14%; core margin 40.1% (2 years ahead of plan). Net income $14.06B; Diluted EPS $7.19. Free cash flow record ~$18B. ADR program terminated; ordinary shares trade on NYSE from Dec 8 — different from typical ADR structure.
Key Takeaways
Novartis closed fiscal 2025 (calendar year ended December 31, 2025) at $54.81 billion of net sales, up 8% reported / +9% constant currency — driven primarily by 6 priority brands compounding above 30% growth: Kisqali ($4.8B, +57%), Kesimpta ($4.4B, +36%), Pluvicto ($2B+, +42% Q4), Leqvio (+57% FY), Scemblix (+87% Q4), and continued growth at Cosentyx ($6.7B). The structural read: Novartis hit 40.1% core operating margin in FY25 — a level management originally targeted for FY27, achieved 2 years ahead of plan. Net income reached $14.06 billion; diluted EPS $7.19; core OpInc +14% YoY. Free cash flow reached record ~$18 billion (vs $13.8B FY24, +28%). Capital allocation: $7.86B dividends, $9.26B buybacks (+11%) — total $17.1B return. Total debt $37.0B. Strategic moves: Avidity acquisition announced (raising 2024-2029 sales average growth rate from 5% to 6%); Itvisma (gene therapy, $3B+ peak potential) FDA-approved; Rhapsido (BTK inhibitor for CSU) launched US; Pelabresib Phase 3 path forward to registration. Sell-side coverage in Feb-April 2026: 2 covered analyst events (Morgan Stanley raised $143 → $170 on March 26, OW maintained — Street-high captured). Consensus PT $170, range $170-$170 (sparse coverage in this window).
Main business structure
Novartis reports a single integrated pharmaceutical operating segment. Revenue framed by therapeutic area and "priority brands" hierarchy:
| Priority Brand | FY25 ($B) | YoY |
|---|---|---|
| Cosentyx (psoriasis IL-17) | 6.7 | +8% |
| Kisqali (CDK4/6 breast cancer) | 4.8 | +57% |
| Kesimpta (MS) | 4.4 | +36% |
| Pluvicto (radioligand prostate) | 2.0+ | +42% Q4 |
| Leqvio (PCSK9 cholesterol) | ~1.0 | +57% |
| Scemblix (CML) | (rapid growth) | +87% Q4 |
| Entresto + Promacta + others | rest | varies |
Kisqali: CDK4/6 inhibitor in HR+/HER2- breast cancer. The standout FY25 grower at +57% to $4.8B. US early breast cancer NBRx >60%; Germany >80% NBRx in early breast cancer. The Mature MONALEESA + NATALEE indications continue to drive share gains.
Kesimpta: subcutaneous monoclonal antibody for relapsing forms of MS. +36% to $4.4B. US 27% Q4 growth; 50% of NBRx in first line. Leading in 9 of 10 major ex-US markets.
Pluvicto (radioligand therapy for metastatic prostate cancer): $2B+ globally end-FY25; +42% constant currency Q4; US sales +75%. PSMA share 16%. Japan + China approvals secured FY25 — important regulatory expansion. Pre-taxane (earlier-line) launch driving acceleration.
Leqvio: siRNA for elevated LDL cholesterol. Reached blockbuster ($1B+) status in FY25; +57% full-year growth. Multi-year compound expected.
Scemblix: ABL1 BCR-ABL1 inhibitor for CML. +87% Q4 growth. NBRx leadership in US + Japan; first-line setting trending ahead of plan.
Cosentyx: still the largest single product at $6.7B. +8% full year. On track to $8B peak per management.
Pipeline + Strategic Moves
- Itvisma (gene therapy, post-Avidity related): US approved FY25; potential $3B+ peak. Ex-US approvals in UAE, Europe + Japan submissions.
- Rhapsido (BTK inhibitor for CSU): US launch with strong demand
- Avidity Biosciences acquisition: announced Q3 FY25; raises 2024-2029 sales CAGR from 5% to 6%
- Pelabresib: Phase 3 MANIFEST program — path forward for registration
- Renal portfolio: Fabhalta + Vanrafia (IgAN); IgAN portfolio +98% YoY
- 2026 outlook: 20 Phase 3 readouts expected (>$10B peak revenue potential)
ADR Structure Change (Q4 FY25)
In late FY25, Novartis terminated its ADR program. Ordinary shares began trading directly on NYSE from December 8, 2025 — a structural shift from the legacy ADR-mediated structure to direct US listing. This affects index inclusion, settlement mechanics, and dividend tax treatment for US holders.
Geographic mix. US ~37%, Europe ~30%, Emerging Markets ~25%, Japan ~5%, Other ~3%.
Customer concentration. Specialty distributors per industry standard.
Scale anchors. ~78,000 employees globally. Basel HQ. R&D spend ~$11-12B annually (~22% of revenue).
Key core metrics (3-year trend)
1. Net sales and the priority-brand acceleration
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Net sales ($B) | 46.66 | 51.72 | 54.81 |
| YoY | — | +11% | +8% reported / +9% cc |
| Core OpMargin | ~36% | ~38% | 40.1% |
The 40.1% core operating margin at FY25 close is the structural read — Novartis reached its FY27 target 2 years early.
2. Earnings
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Operating income ($B) | 9.77 | 14.54 | 17.07 |
| Net income ($B) | 14.85 | 11.94 | 14.06 |
| Diluted EPS | $7.10 | $5.87 | $7.19 |
3. Free cash flow + capital allocation
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| OCF ($B) | 14.46 | 17.62 | 19.24 |
| Capex ($B) | 2.75 | 3.81 | 1.56 |
| FCF ($B) | 11.71 | 13.81 | 17.69 |
| Dividends ($B) | 7.26 | 7.62 | 7.86 |
| Buybacks ($B) | 8.72 | 8.33 | 9.26 |
| Total return ($B) | 15.97 | 15.96 | 17.12 |
FCF stepped up 28% to ~$18B in FY25 — the cash flow foundation supports continued buyback + dividend growth.
Market evaluation
Sell-side coverage (Feb-April 2026 covered events). Sparse — only Morgan Stanley action captured in window.
Recent analyst activity:
- Morgan Stanley: $143 → $170 on March 26 — Overweight maintained, +$27
Buy-side positioning. NVS is a core European pharma holding, paired with Roche, Sanofi, AZN. US listing change (post-Dec 8) likely to drive index re-inclusion + ETF flows. Trades at discount to LLY on GLP-1-less profile but premium to legacy pharma on priority brand growth.
FY25 corporate structure: priority-brand compounding + early margin target hit
FY25 confirmed Novartis as one of the cleanest priority-brand compounders in big pharma. Six brands compounding +30%+ (Kisqali, Kesimpta, Pluvicto, Leqvio, Scemblix, plus others) drove the $54.8B revenue + 40.1% core margin print, hitting management's FY27 margin target 2 years early. The Avidity acquisition raises mid-cycle sales CAGR from 5% to 6%; Itvisma (gene therapy) + Rhapsido (BTK) + Pelabresib pipeline supports FY26-FY28 growth visibility. The ADR structure termination + direct NYSE listing (Dec 8) is a meaningful technical change for US investor accessibility. Management guidance: 20 Phase 3 readouts expected in 2026 with potential to drive >$10B peak revenue. The Q1 FY26 earnings print this week is the proximate event for measuring continued priority-brand growth + margin trajectory + Avidity integration commentary.