Novartis Raises Earnings Expectations Again! Stock Price Soars by 1.7%, but Restructuring and Layoffs Spark Controversy

Novartis, the Swiss pharmaceutical giant, announced on Tuesday that it had raised its 2024 earnings forecast for the third time. This adjustment was mainly due to the strong performance of its prescription drug line, particularly the continued growth in market demand for its drug Cosentyx, which is used to treat psoriasis and arthritis. For the full year, Novartis said it expects core operating income, which is adjusted for one-time items, to rise more than 15%, up from its previous forecast.

Novartis also reported results for the third quarter that exceeded market expectations. The positive news was largely driven by revenue growth from anti-inflammatory drug Cosentyx, among other factors. To further improve its competitiveness and focus on new drug development, Novartis has implemented a series of restructuring measures, including layoffs and the divestment of Sandoz, its generics business.

In a media conference call, Novartis CEO Vas Narasimhan said the cost-cutting effects of the organizational changes that began in 2022 are continuing to be felt. "The changes we have made are aimed at building the company into a pure-play company focused on key therapeutic areas and key geographies, and this strategy has paid off significantly," he stressed.

Shares in Novartis were up 1.7% in premarket trading before the market opened at 0800 GMT. Core operating income rose 17 percent on a quarterly adjusted basis to $5.15 billion, beating the average analyst estimate of $4.8 billion.