Novartis celebrates strong profits, while the CEO enjoys record pay triggering discussion

Novartis significantly increased its profit in the 2025 financial year but is facing waning momentum towards the end of the year. As the Basel-based pharmaceutical group reported, net profit amounted to USD 17.4 billion. This represents an increase of 11 per cent compared with the previous year and is mainly attributable to higher operating earnings.

Revenue rose by 8 per cent in 2025 to USD 54.5 billion or Swiss francs (also +8 per cent at constant exchange rates). Novartis thus achieved the net growth in the high single-digit percentage range projected by management. Core operating income amounted to USD 21.9 billion, with a core margin of around 40 per cent. Earnings per share came to USD 7.21.

Growth slows, outlook more subdued

In the fourth quarter of 2025, growth lost momentum noticeably. Revenue increased by just 1 per cent year on year to USD 13.3 billion; at constant exchange rates this even resulted in a decline of 1 per cent. Novartis therefore largely stagnated after posting double-digit growth in the first two quarters. The main drag came from revenue erosion caused by copycat products.

Operating profit rose by 2 per cent in the final quarter to USD 3.6 billion. Net quarterly profit, however, fell to USD 2.4 billion from USD 2.8 billion a year earlier. The company cited higher income taxes as the main reason. Core operating profit adjusted for various factors increased by 1 per cent to USD 4.9 billion, in line with market expectations.

Shareholders are set to participate in the positive performance of the 2025 financial year through a higher dividend. Novartis plans to raise the payout from CHF 3.50 to CHF 3.70 per share. For the current 2026 financial year, management is taking a cautious stance. At constant exchange rates, revenue growth in the low single-digit percentage range is expected. For core operating profit, Novartis is even anticipating a decline in the low single-digit percentage range.

CEO remuneration rises sharply

In line with the strong annual results, the remuneration of CEO Vas Narasimhan also increased significantly. His total pay rose to USD 24.9 million in 2025, up from USD 19.2 million the previous year. The increase is primarily due to the long-term bonus, which is linked to the group’s revenue and profit growth and alone amounted to USD 17.3 million. Narasimhan therefore once again ranks among the highest-paid chief executives in Europe. This, together with the high margin and the clearly visible high share of profit from revenue before and after tax, does not sit particularly well with the ongoing debates about price reductions triggered by Trump through the MFN negotiations. At the same time, European pharmaceutical CEOs have written letters to their national governments and are delivering numerous speeches arguing that European healthcare systems will now have to reckon with higher drug costs and, in a sense of patriotic duty, should step in to fill the gap created by US discounts.