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Shares of Novarda's lower in US trading today, despite the Swiss drug maker raising its guidance and announcing a ten billion dollars stock buyback. Instead, investors are keing in on disappointing sales for a key drug and news that it's longtime CFO is retiring. All of this against a backdrop in which President Trump has signaled possible new tariffs on
the pharma sector. Joining us now to discuss what's ahead is vos Narasimmon, he is CEO of nevardis joining us from their global research headquarters in Cambridge, Massachusetts.
Boss, thanks for joining us.
I want to start with the big picture, of which is tariffs, of course, because you've pledged to invest twenty three billion dollars in US production over five years to make key drugs for the American market in order to mitigate the impacts of potential tariffs. Do you have any indication that this commitment, this level of commitment would be enough to get an exemption from tariffs in the introim until your new facilities are up and running.
It great to be here, Scarlett, So we don't know.
We don't know what exactly is going to be required for the exemptions that have been talked about, but I would say that we are in a very good position right now and that we have inventory on hand in the US so that tariffs will not impact twenty twenty five.
We continue to build inventories as well for well now into twenty twenty six, and then we're working as fast as we can to get those facilities up and running so that more and more of our key medicines are produced in the US, with a goal that within four years, all of our key medicines are produced in the US for the US.
You're hoping that go ahead?
I'm sorry, I was going to say, we're hopefully the administration will be pragmatic in how they think about this, right.
Right, And to that end, have you had specific conversations with the administration on this point.
We've had conversations with the trade representative trying to understand the contours of what they're thinking about, but of course we don't know until I think the final policy is written and released.
Yeah, fair enough.
In a similar way, do you worry that these investments won't make as much economic sense if there's a new administration in a couple of years, who decides to roll back remove any of the tariffs.
The way we think about this investment is we didn't do it because of the tariffs.
It just makes strategic sense.
I mean, soon we expect the US to account for fifty percent of our global sales, certainly by the end of the decade, so it makes sense to have production capacity in the US for the US market, Europe for Europe, and then of course we also build up capacity in China and Japan to service the Asian markets. I think that's a sensible strategic approach given all of the uncertainties that we've seen over the recent years.
I want to talk about your siasis drug cocentics. It saw slower than expected growth in the US for some new indications, and then you also.
Have the backdrop of a broader.
Slowdown in China for innovative medicines. What is your confidence that either of these factors will improve materially in the next few months.
Look, I think in China, I do expect there to be improvement over the second half of the year and going into next year, as we go off of a lower base that maybe than we had originally expect is I think growth will come back, and I think more broadly, we expect Consentics to consistently deliver mid single digit growth. What's interesting about a lot the focus on Consentics today is we have not moved off our eight billion dollar
plus peak sales guidance in twenty twenty nine. And Consentics has had many competitors over the years, and we've been able to manage each one. Usually when those competitors come in, there is a market reaction like we had today, and then we work through it and then we build confidence back.
I think much more importantly when you look at our guide five percent of plus and with all of the launches performing well, I think the long run investors will see through this and then continue I think to look favorably on our performance.
Which of those markets in the US or China do you have more conviction in when it comes to this particular drug.
With respect to Consentics, I mean both are critically critically are important.
I think very different dynamics.
You know, in China we have a very high growth environment, and so obviously when you have a little bit less growth, it.
Has an impact.
In the US, this is a very significt in medicine already, you know, approaching three billion dollars plus in sales and so there. Of course, it's much more of managing competition, new new indications, new formulations to continue the growth. But look, I think overall, as I said, eight billion dollar plus, we're sticking with it and we feel confident we'll get there.
Yeah, that's a pretty good sign.
Well.
One reason of Artists did raise its full your earnings guidance is because of the growth of your breast cancer medicine, Chris Colli, and the UK has said that it will now recommend the drug for more patients. I guess I wonder are you surprised by the uptake of this medicine in recent months for patients with early breast cancer.
It succeeded our expectations, scarl I have to say, I mean, when we look at it, we knew the medicine could be significant, but we're now market leader in new to brand RX in the US, both in metastatic and early
breast cancer. We've seen remarkable uptake with the early launch in Germany, so the demand is really there and I think what's most promising for long run is that we're seeing patients with no zero or so called lymph node zero lymph node one, so a little bit earlier stage of the disease, also using the medicine, and that's an indication. It's two thirds of women with this form of early breast cancer and we're the only one with this indication. So I give us a lot of energy and excitement.
We've guided to eight billion dollars plus, but certainly if things continue in this way, the medicine could be significantly bigger.
Okay, so that's that's where you I want to go next. At what point do you start to really reassess what the peak sales potential for this drug could be?
You know, we look at it every year and so before our capital markets.
Day in the fall, we evaluate and so certainly we'll do that right now. I mean, given the momentum we're seeing, we'll have to look at would we raise our CAISCOALI guidance given given the performance that we're seeing. So it's very exciting and we have that with a few medicine semblics. Are other cancer drug performing extremely well, plu Victo, our
pro say cancer medicine performing extremely well. So I think we'll be able to show investors that we have the growth drivers to growth through the end of a decade and into the twenty thirties.
You also, as I mentioned, plan to buy back up to ten billion dollars of your own shares in the coming years. What does to say about your appetite for M and A and in licensing of medicines. Is there a lack of sufficiently priced, attractive targets right now out there?
We're in the great position that we can do both. We can buy back our shares and do M and A. When you look at where our cash flow is heading, we'll soon be approaching twenty billion dollars of free cash flow. That enables us to play a strong and growing dividend, that enables us to buy back our shares and then also to invest fully in M and A and media
l So we're not pulling back. We actually led the industry and the number of deals completed over the last eighteen months, and so we'll continue to look and if there's a good asset that fits with our therapeutic areas, fits with our technology priorities, we'll certainly go after it.
Now, you mentioned M and A and how you are looking for things.
You've talked about maybe bolt on deals, which specific areas make the most sense for you.
Right now, we stick with our priorities.
Have war main therapeutic areas oncology, immunology, cardiovascular, neuroscience. We have three main technology eras selling gene therapies, RNA therapeutics, and radio ligan therapies.
That's where we look. We've learned that focus is.
What's driven the outstanding performance we've seen over the last three plus years, and we want to say ultra focus key therapeutic areas, key technology platforms, and that's where we primarily look.
I mentioned Boss that you are in Cambridge. That's where Novartis's global research headquarters are based. But it's also your old stomping grounds because you've got your MD and your MPH from Harvard. I believe you're also a current fellow, so you've got a lot of links to the city and.
To the school itself.
We know that the school is under attack from the Trump administration. There's losses flying both ways. How do you think about the brain drain, the discouragement to the Harvard community by what's going on within the political climate right now.
Look, I'm not close to the details, but certainly. I think speaking for research based universities, it is a challenging time and we see now with China emerging as a major player in biopharmaceuticals and biotech, particularly in the Shanghai area, that the US has to maintain competitiveness, and that means having world leading universities, a strong NIH and continuing to fund the breakthrough science that's led to the Cambridge biotech ecosystem,
which you see behind me where there's over five hundred biotechs, a leading biopharmaceutical ecosystem. To see the Harvard University research labs and hospitals with other universities as well have similar footprints. And we need to maintain that competitive edge in the US and that's going to be I think, really something that comes to the fore in the coming years as China continues to invest in biotech.
Yeah, it's something that we keep hearing from leaders among companies and the role that the US needs to play to kind of fend off that competition.
Boss, thank you so much for joining us today.
Vos Narrisimon is CEO of Novardest joining us from Cambridge, Massachusetts,