Novartis (NVS) Grew Sales Again as Entresto Fell 50%, Can Remibrutinib Carry It?

Earlier this month, Novartis (NYSE:NVS) won a second US approval for Rhapsido, the drug also known as remibrutinib, this time for symptomatic dermographism, a form of chronic hives. In a late-stage trial, twice as many adults on the drug reached complete hive resolution by week 12 as those on placebo.

But skin approvals are not what shareholders are watching. Later this week, Novartis will present new multiple sclerosis data on the same drug, and it reports third-quarter results next week. Six weeks ago, a failed late-stage trial of another drug, del-desiran, hit the shares hard, according to Reuters. It was the second of Novartis’s three key pipeline readouts this year to miss. The third, remibrutinib in multiple sclerosis, was positive.

That raises the question of how much Novartis now leans on remibrutinib. The company sells branded prescription medicines, and its next stretch of growth depends on newer drugs replacing Entresto, which is losing sales to generics. The base business looks healthier than the drop six weeks ago implied, but the price leans on remibrutinib to deliver more than it has yet proved. Novartis is one of the 10 No-Brainer Stocks to Buy Now.

Newer Drugs Are Covering for Entresto

Second-quarter net sales rose 1% at constant currencies, a turn from a 5% drop in the first quarter. Entresto sales fell about half from a year earlier, yet newer priority brands kept growing at constant currencies: Kisqali rose 43% and Scemblix 89%. In the first quarter, Novartis said US generic erosion more than offset its growth drivers. In the second, the growth drivers came out ahead.

Those gains were enough to keep core operating income flat, with a core margin of 41.2%. Over the past 12 months, Novartis kept about 74 cents of every sales dollar after making its drugs.

Management reaffirmed full-year guidance for low single-digit sales growth and a low single-digit drop in core operating income. Investors who want more healthcare exposure can see our ranking of 10 Best Healthcare Stocks to Buy According to Hedge Funds.

Two Pipeline Misses Raised the Stakes

Del-desiran came from Novartis’s $12 billion purchase of Avidity, so its failure hit the pipeline and the buying strategy together, Reuters reported. The same report said investors had counted on it, the heart drug pelacarsen and remibrutinib to drive growth, and that the miss added pressure on CEO Vas Narasimhan.

That worry is fair, and it caps how positive a view the numbers support. But sales are already growing again on the strength of other brands, and Novartis held its goal of 5% to 6% annual sales growth from 2025 through 2030, Reuters said.

Rhapsido is already approved for chronic spontaneous urticaria and now symptomatic dermographism. Its REMODEL trials compare it with teriflunomide in relapsing multiple sclerosis, and Novartis has planned an investor call on the data. If you’re interested in biotech investing, we recently compiled a report on 10 Best Biotech Stocks to Invest In According to Billionaires.

What the Price Is Betting On

Novartis trades at about 17.4 times estimated 2026 earnings. That is about 11% below the sector median but about 20% above its own five-year average.

Consensus estimates call for earnings per share to dip 1.65% this year, so the multiple isn’t backed by growth right now. It also rests on adjusted earnings, and net income fell 19% from a year earlier in the second quarter. For a shareholder, that means paying more than the stock’s own history for a company whose profit is expected to slip. In return, the pipeline has already missed twice. For investors looking for cheaper stocks, our list of 10 Best Undervalued Stocks to Buy in October is worth a look.

Can remibrutinib carry the company? Not by itself, and it doesn’t have to yet. The newer brands are growing fast enough to turn total sales positive. What remains open is whether remibrutinib can return earnings to growth, and next week’s report will show whether those brands keep outrunning Entresto’s decline.

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This article is originally published at Insider Monkey.