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(AWP Alliance News) - Novartis AG on Tuesday lifted its annual profit guidance despite a fall in third-quarter profit, partly due to a near USD2 billion hit from a disappointing drug trial result.
The pharmaceutical company said net income in the third quarter of 2026 plunged 70% to USD1.20 billion from USD3.93 billion a year prior. At constant currency, the fall was 71%.
Net sales, however, were 4.4% higher a USD14.52 billion from USD13.91 billion. Constant currency sales growth was 4%, the Basel, Switzerland-based firm said.
Higher research and development expenses kept a lid on profit, including a USD 1.9 billion partial impairment charge related to the del-desiran asset. In September, Novartis had said the drug missed the primary endpoint in a myotonic dystrophy study. Myotonic dystrophy is a genetic disorder that causes muscle weakness.
"While the del-desiran readout in DM1 was not what we had hoped, we saw evidence of clinical activity in the data and are working through the development path for this medicine," Chief Executive Officer Vas Narasimhan said.
"Novartis delivered solid sales growth in Q3, as priority brands and launches more than offset generic erosion, demonstrating the replacement power of the business. Combined with productivity efforts, this drove strong bottom-line performance and allowed us to upgrade our full-year guidance."
Novartis now sees low single-digit core operating income growth for the full year. Its prior view was for a low-single-digit percentage decline. Core operating income in 2025 rose 12% to USD21.89 billion.
In the third quarter, core operating income was 11% higher on-year at USD6.04 billion. The core profit measure excludes one-off items, so the UD1.9 billion del-desiran impairment is not included.
Novartis shares were 2.1% higher at CHF130.10 each in Zurich on Tuesday morning.
By Eric Cunha, Alliance News news editor
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