| Valuation method | Value, CHF | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 60.50 | -47 |
| Intrinsic value (DCF) | 79.34 | -31 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 88.10 | -23 |
Novartis AG (NOVN.SW) is a global pharmaceutical powerhouse headquartered in Basel, Switzerland, specializing in innovative medicines and generic pharmaceuticals under its Sandoz division. Operating in over 140 countries, Novartis focuses on therapeutic areas including oncology, immunology, neuroscience, and cardiovascular diseases. The company's diversified portfolio includes blockbuster drugs like Cosentyx (psoriasis) and Entresto (heart failure), alongside a robust pipeline of biosimilars and generics. With a market capitalization exceeding CHF 176 billion, Novartis is a leader in the Drug Manufacturers - General sector, leveraging its R&D capabilities and strategic collaborations (e.g., with Alnylam Pharmaceuticals) to maintain competitive edge. Its recent spin-off of Sandoz in 2023 sharpened its focus on high-margin innovative drugs while retaining a stake in the generics market. Novartis's commitment to digital health and operational efficiency positions it well in the evolving healthcare landscape.
Novartis presents a compelling investment case with its strong revenue base (CHF 51.7 billion in FY 2023), high profitability (net income of CHF 11.9 billion), and consistent dividend yield (CHF 3.5 per share). Its low beta (0.53) suggests defensive characteristics, appealing to risk-averse investors. However, risks include patent cliffs for key drugs (e.g., Gilenya) and pricing pressures in generics. The Sandoz spin-off may reduce diversification benefits but improves capital allocation. With CHF 11.5 billion in cash and a manageable debt-to-equity ratio, Novartis has ample liquidity for M&A and R&D. Investors should monitor pipeline progress (e.g., Kisqali in breast cancer) and biosimilar competition.
Novartis competes in the global pharmaceutical market through a dual strategy: high-margin innovative drugs (70% of revenue) and cost-effective generics (Sandoz). Its competitive advantage lies in its R&D scale (CHF 9.3 billion annual spend), deep therapeutic expertise (e.g., radioligand therapy leadership with Pluvicto), and global commercial infrastructure. Unlike pure-play innovators (e.g., Vertex), Novartis benefits from diversified revenue streams, including biosimilars (Hyrimoz) and established generics. However, it faces intense competition in oncology (Roche’s dominance) and immunology (AbbVie’s Humira). The Sandoz division competes on price with Teva and Viatris, but Novartis’s vertical integration (API manufacturing) provides cost advantages. Its Swiss base offers tax efficiencies but exposes it to currency risks. Strategic partnerships (e.g., with Molecular Partners for COVID-19 therapies) enhance its agility in drug development.