Novartis Under Pressure from Generic Competition

about 2 months ago

Khloe Mele

"And to Novartis shares down over 3% in Switzerland after their third quarter results. We're reporting the slowest profit growth in almost two years for this quarter because some of its top sellers are facing growing generic competition in the US, its biggest market. That is going to be a major challenge for Novartis going forward, and we're already starting to see this feed through into earnings. As a result, Novartis is trying to find new treatments to mitigate that threat both by developing its own drugs and through a $12 billion acquisition of Avidity Biosciences, the biggest deal in over a decade for the company. This will provide some relief in the long term, but until then, earnings will reflect the pressure from generic competition and the CEO is expecting the full impact to hit in the fourth quarter. We haven't even seen the worst yet."

The analysis on Novartis points to significant near-term challenges as its key products face generic competition in the US, leading to a notable drop in share price and slow profit growth. Although a major acquisition aimed at diversifying its pipeline is underway, the company is expected to suffer further earnings pressure into the fourth quarter.

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