Novartis raises medium-term sales target at Investor Day
Published: Tuesday, Nov 28th 2023, 08:10
Updated At: Tuesday, Nov 28th 2023, 08:13
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Novartis sets itself a higher medium-term growth target for sales at its Investor Day. With the spin-off of the generics division Sandoz, the transformation into a pure-play company for innovative medicines is now complete.
For the coming years up to 2027, the pharmaceutical company is specifically aiming for annual sales growth of +5%. Previously, the growth target was 4 percent. Novartis wants to continue to achieve a core operating profit margin of over 40 percent, as detailed in a press release issued on Tuesday.
Even beyond this period, Novartis is confident of achieving growth in the mid-single-digit percentage range in the longer term. This optimism is based on "the fundamental strength of the existing low-risk brands and the products currently in development", the statement continues.
The focus of recent years, together with financial discipline, has led to robust growth in sales, core operating profit and free cash flow.
Focused pipeline
However, the company has not only made financial progress in recent years by concentrating on its core competencies. The focus on the pharmaceutical business has also strengthened the research and development pipeline and improved productivity.
Improving research activities also includes consistently pushing ahead with those projects that appear to be the most promising. According to the press release, the portfolio now comprises 103 projects, including 46 novel drugs, for which up to 15 major approval applications are expected in the period 2024-2027. These potential candidates, in turn, each target important unmet needs and have significant sales potential.
In comparison: two years ago, the portfolio still comprised 155 projects. Despite the thinned-out pipeline, expenditure on research and development has risen in this period from 6 billion in 2021 to 6.4 billion in 2023 to date.
Focus on four therapy areas
As already communicated on previous occasions, the focus remains on the therapeutic areas of cancer, cardiovascular, renal and metabolic diseases (CRM) as well as immunology and neurology.
Of the drugs already approved, more than six are expected to generate multi-billion sales, as Novartis announced in the presentation. For the already approved heart drug Entresto and the psoriasis drug Cosentyx alone, the pharmaceutical company expects peak sales of up to USD 7 billion each. However, even more recent approvals such as Pluvicto and Leqvio are also expected to bring several billion dollars into the Novartis coffers.
Added to this are the planned applications for approval. Here too, the pharmaceutical group has identified numerous candidates with blockbuster potential, i.e. likely to generate sales of at least one billion euros.
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