Stock Watch: Why Novartis’s Q3 Misses Matter
A Study In Margin Compression In Generic And Innovative Drugs
Novartis’s use of the phrase “incident population” should have sent shock waves through companies developing gene and cellular therapies. Instead, like the stock price reaction to its lower revenues, the response was demure.
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In this week's podcast version of Five Must-Know Things: Pfizer’s COVID transition; Lilly ramps up Mounjaro on strong demand; Pfizer’s R&D head reflects on pandemic experience; parsing Novartis’s Q3; and China’s progress with mRNA vaccines.
A mixed sales bag for the Swiss major in Q3 saw a strong start for Pluvicto dampened by a reverse for Zolgensma, weak growth for Cosentyx and continued sluggishness for Leqvio. Positive data for potential blockbuster iptacopan were another bright spot, as Novartis prioritizes the delivery of high value medicines, and concentrates on the US market.
Generic pharmaceutical margins are notoriously thin while pricing is limited by intense competition. What happens to margins when raw material and energy pressures rise?