Novartis AG shares advanced 0.57% to close at CHF 119.96 in Zurich trading on Friday, after touching a 52-week high of CHF 120.64 during the session. The move comes as the pharmaceutical giant embarks on a significant U.S. research expansion.
Major Research Investment
The company has commenced construction on a 466,000-square-foot biomedical research facility in San Diego, scheduled to open in 2029 with approximately 1,000 employees. President of Biomedical Research Fiona Marshall stated the center aims to strengthen scientific leadership and is part of a broader $23 billion U.S. investment initiative incorporating AI-powered discovery tools.
Financial Outlook and Challenges
Novartis anticipates a low single-digit decline in adjusted operating profit for 2026, attributing this to patent expirations for key drugs including Entresto and Xolair. Incoming CFO Mukul Mehta noted that adjusted operating income should begin growing in the second half of the year. The company recently reported 2025 net sales growth of 8% with a core operating margin of 40.1%.
CEO Vas Narasimhan expressed confidence in the company's ability to "grow through the largest patent expiry" expected in 2026. Guidance projects low single-digit sales growth alongside a comparable low single-digit drop in core operating income.
Upcoming Shareholder Events
Investor attention now shifts to the annual general meeting scheduled for March 6 in Basel, where shareholders will vote on a proposed dividend of CHF 3.70 per share. If approved, the payout would commence March 12, with shares going ex-dividend on March 10. The board has also proposed canceling 77.6 million repurchased shares as part of a 2025 capital reduction.
As trading resumes Monday, market participants will monitor whether Friday's momentum persists and how analysts interpret the 2026 guidance. The company faces the dual challenge of advancing its newer drug portfolio while navigating what it describes as its most significant patent cliff.
