Novartis CEO Flags Risks From Trump's MFN Drug Policy As Q1 Earnings Miss Estimates

On Tuesday, Novartis (NYSE:NVS) CEO Vas Narasimhan said the Trump administration's "most favored nation" (MFN) drug pricing policy could create a tough trade-off for drugmakers and patients.

According to a CNBC report, Narasimhan described it as a "very difficult situation," and added, "The reality of MFN is going to set in the next 18 months." He also said, "The longer-term implications are significant."

How MFN Policy Could Squeeze Patients

The MFN framework ties U.S. prices to those in other high-income countries, after President Donald Trump made lowering prescription costs a central priority.

Narasimhan said Novartis is pressing governments in Europe and Japan to update how they pay for new medicines, arguing faster changes are needed to keep launches on track. Without shifts in those systems, he said, some new treatments could arrive later in those regions, limiting patient access.

Generic Headwinds Weigh On Q1 Results

Novartis on Tuesday reported a first-quarter 2026 sales decline as U.S. copycat competition outweighed gains from several fast-growing medicines. Revenue fell 1% to $13.1 billion, missing the Benzinga estimate of $13.50 billion, while earnings per share (EPS) slid 13% to $1.99, slightly below expectations.

Several medicines posted sharp growth, led by Kisqali, which rose 55% in constant currencies to $1.52 billion. Pluvicto increased 70% to $642 million, while Kesimpta grew 26% to $1.16 billion. Scemblix climbed 79% to $433 million, and Leqvio advanced 69% to $452 million. Fabhalta more than doubled, rising 103% to $169 million.

Management reaffirmed its full-year 2026 targets, calling for low single-digit net sales growth and a low single-digit decline in core operating income. Narasimhan said, "Novartis delivered a strong start to 2026 across our priority brands and launches, while U.S. generic erosion weighed on results in Q1 as expected."

Strategic Acquisitions Bolster Oncology And Immunology Pipeline

Last month, Novartis agreed to acquire a next-generation PI3Kα inhibitor program from Synnovation Therapeutics, aiming to strengthen its breast cancer pipeline with a more targeted and potentially better-tolerated treatment approach. Under the agreement, Novartis will pay $2 billion upfront and up to $1 billion in milestone payments.

The drugmaker also agreed to acquire Excellergy Inc., a private biotech company developing next-generation anti-IgE therapies for IgE-driven diseases. Novartis will pay up to $2 billion in upfront and milestone payments to acquire Excellergy.

The Synnovation deal is expected to close in the first half of 2026, while the Excellergy transaction is anticipated to be completed in the second half of the year.

Benzinga Edge Stock Rankings indicate that NVS has a Momentum score in the 60th percentile with a strong price trend in the long term.

Price Action: Novartis shares are trading 2.3% lower in premarket at the time of writing.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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