Novartis NOVN.SW
What does Novartis do?
Novartis is a pharmaceutical company based in Basel that focuses on the research, development, manufacturing and marketing of patent-protected medicines. The company has transformed itself from a broadly diversified healthcare group into a focused provider of innovative drugs. Its main therapeutic areas include cardiovascular disease, immunology, oncology and neuroscience.
Novartis generates revenue mainly from prescription drugs supplied to wholesalers, hospitals, pharmacies and government healthcare systems. Well-known products include Entresto for heart failure, Cosentyx for inflammatory skin conditions and rheumatic diseases, Kisqali in breast cancer treatment, and Jakavi for bone marrow disorders. Competitively, Novartis is among the large global pharmaceutical companies. Its position rests on a broad research pipeline, patents, international approval and distribution structures, and heavy investment in research and development. At the same time, the company competes with other groups for new active ingredients and market share.
Score profile
Rank vs. Drug Manufacturers - General (15 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Novartis ranks above average in the group Drug Manufacturers - General (6.2/10). On growth, the company ranks below average in the group Drug Manufacturers - General (2.5/10). On valuation (higher = cheaper), the stock ranks in the middle in the group Drug Manufacturers - General (4.7/10). On financial strength, Novartis ranks below average in the group Drug Manufacturers - General (3.4/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 16.4x | 16.4x | better than 50 % |
| Trailing P/E | 32.3x | 32.3x | better than 50 % |
| PEG ratio | 3.9x | 3.3x | better than 32 % |
| EV/EBITDA | 12.1x | 13.4x | better than 57 % |
| Price/sales | 4.4x | 4.4x | better than 50 % |
| Price/book | 8.3x | 6.8x | better than 39 % |
| Revenue growth | 4.7% | 5.6% | better than 40 % |
| Earnings growth | -68.8% | -5.3% | better than 11 % |
| Gross margin | 75.2% | 74.2% | better than 70 % |
| Operating margin | 34.3% | 34.3% | better than 50 % |
| Net margin | 17.5% | 15.7% | better than 63 % |
| Return on equity | 24.3% | 20.0% | better than 63 % |
| Debt/equity | 128.6% | 119.9% | better than 37 % |
| Current ratio | 0.9x | 1.4x | better than 17 % |
| Free cash flow yield | 4.4% | 4.4% | better than 50 % |
| Dividend yield | 2.8% | 2.2% | – |
| Payout ratio | 87.1% | 60.8% | – |
| Beta | 0.45 | 0.37 | – |
Valuation: what is Novartis worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Novartis a model range of 116.88 CHF to 188.20 CHF per share.
22 analysts, average rating “Hold”, average price target 126.92 CHF (−5.6%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Revenue and earnings depend on the strength and patent life of the high-selling core drugs.
- New approvals and successful launches from the research pipeline support long-term growth.
- Demand for therapies in oncology, immunology and cardiovascular disease is supported by demographic trends.
Risks
- Patent expiries allow generics and biosimilars, which can put significant pressure on sales of established products.
- Clinical trials or approval processes can fail, causing high development investments to be lost.
- Price regulation and reimbursement decisions by governments and payers limit pricing power and margins.
What to look for with Novartis
The operating margin, viewed together with the R&D ratio, is informative because it shows how profitable the drugs are and how heavily the company invests in future products.