Novartis AG (NVS): Business Model Canvas [Dec-2025 Updated]

You're looking at the blueprint of a newly streamlined pharma giant, and honestly, it's a fascinating pivot. Since spinning off Sandoz, Novartis AG has gone all-in as a pure-play innovative medicines company, betting big on complex assets like Radioligand and Cell & Gene Therapies. To give you a sense of the scale, they posted $27.3 billion in net sales in the first half of 2025 while pouring $10.879 billion into R&D in the trailing twelve months ending September 2025 to fuel that pipeline. If you want to see exactly how they structure their value creation-from their specialized manufacturing to their key customer relationships with Oncologists and Payers-dive into the full Business Model Canvas below; it maps out their path to that high single-digit growth target for FY 2025.

Novartis AG (NVS) - Canvas Business Model: Key Partnerships

You're looking at how Novartis AG structures its external relationships to fuel its pipeline and market reach as of late 2025. This network of partners is crucial, especially with the company focusing heavily on bolt-on acquisitions to bolster growth beyond 2029.

Strategic Bolt-On Acquisitions

Novartis AG has been actively using its capital to acquire late-stage assets, a strategy that helps offset patent cliff risks and strengthens core therapeutic areas. For instance, the acquisition of Tourmaline Bio in September 2025 was a significant move to bolster the cardiovascular pipeline with the asset pacibekitug. This was not an isolated event; Novartis pledged over $17 billion in licensing and acquisition deals since January 2025. The company's M&A activity in 2025 included several major transactions, showing a clear preference for acquiring innovation.

Here's a look at some of the recent, high-value acquisitions that define this partnership strategy:

The Tourmaline Bio deal, valued at approximately $1.4 billion, offered $48 per share in cash. This move reflects a broader trend where Novartis is prioritizing precision over scale in its deal-making.

Academic and Biotech Collaborations for xRNA, Cell & Gene Therapy Platforms

Beyond outright purchases, Novartis maintains deep collaborations to access cutting-edge science, particularly in novel modalities like xRNA and Cell & Gene Therapy. The commitment to RNA-based therapies is substantial; Novartis allocated an additional $5.2 billion to its RNAi (a form of xRNA) partnership with Argo Biopharma in September 2025. This expanded the initial collaboration, which began in January 2024 with two RNAi agreements valued up to $4.165 billion. Overall, Novartis has made multiple investments totaling nearly $6 billion in xRNA therapeutics over the past two years ending in late 2025. The company explicitly seeks to partner with academic institutions to bridge the translational gap, listing Gene Therapies & xRNA as a key technology platform of interest.

Key areas for these platform collaborations include:

• Targeting RNA to silence disease-causing genes.
• Advancing the production of high-quality biologics.
• Optimization of cell & gene therapies at scale.

Patient Advocacy Groups for Community Outreach

Novartis AG partners with patient advocacy groups to ensure community outreach and to better understand patient needs, which informs development and access strategies. The company engages with organizations such as ZERO Prostate Cancer to support community efforts in specific disease areas.

Technology Partners like Microsoft for AI Integration in R&D and Operations

A foundational partnership for Novartis's digital transformation is the five-year alliance with Microsoft, established in 2019. This strategic alliance focuses on two core objectives: AI Empowerment, aiming to bring AI to the desktop of every Novartis associate, and AI Exploration for hard computational challenges. The collaboration involves joint research activities across global centers in Switzerland, Ireland, and the UK. Initial projects included personalizing treatments for macular degeneration and increasing the efficiency of cell and gene therapy manufacturing, starting with treatments like Kymriah.

Global Distributors and Wholesalers for Broad Market Access

To ensure its portfolio of innovative medicines reaches patients globally, Novartis relies on an extensive network of global distributors and wholesalers. This external logistics infrastructure is vital for the commercialization of its products across the more than 70 countries where some of its key therapies, like Leqvio, have been released.

Finance: draft 13-week cash view by Friday.

Novartis AG (NVS) - Canvas Business Model: Key Activities

Research and Development (R&D) of New Molecular Entities (NMEs).

Novartis AG continues to prioritize investment in R&D to fuel its pipeline, though the ratio to sales has been managed following portfolio shifts. For the twelve months ending September 30, 2025, Novartis AG research and development expenses were $10.879B. This follows the 2024 fiscal year spending of $10.02 billion, which represented 19.9% of net sales, a decrease from the 25.0% ratio seen in 2023. The company also made significant external investments to bolster its pipeline, pledging over $17 billion in licensing and acquisition deals through October 2025, including a $1.4 billion buyout of Tourmaline Bio.

Specialized manufacturing for Radioligand and Gene Therapies.

A core activity involves scaling up complex manufacturing for advanced modalities like Radioligand Therapy (RLT) and Gene Therapies. Novartis announced a planned $23 billion investment over five years in US-based infrastructure to support this, with a total planned US investment approaching $50 billion over the next five years. This includes building 2 new RLT manufacturing facilities in Florida and Texas, and expanding 3 existing RLT facilities in Indianapolis, Millburn, and Carlsbad. Specifically, a new 10,000-square-foot RLT manufacturing facility opened in Carlsbad, California, becoming the company's third US RLT site. This expansion aims to produce 100% of key medicines end-to-end in the US.

Global clinical trials and regulatory approval processes (e.g., FDA, EMA).

Execution on the pipeline resulted in several key regulatory achievements in 2025. Novartis secured notable FDA approvals and expanded indications, which are critical for realizing revenue from R&D investments. The company also optimized its global footprint for clinical trials to accelerate recruitment times.

• FDA accelerated approval for Vanrafia (atrasentan) in April 2025 for IgA nephropathy (IgAN).
• Pluvicto received an expanded indication in March 2025 for PSMA-positive metastatic castration-resistant prostate cancer (mCRPC).
• Fabhalta (iptacopan) achieved approval for C3 glomerulopathy (C3G).
• Rhapsido received FDA approval as the only oral, targeted BTK inhibitor for CSU in Q3 2025.
• Positive Phase III data reported for Pluvicto in hormone-sensitive prostate cancer and for Ianalumab in Sjogren's disease in Q3 2025.

Commercial launch excellence for new blockbuster drugs.

The performance of recently launched and priority brands is a key driver of Novartis AG's financial results in 2025. The company reaffirmed its full-year 2025 guidance expecting net sales to grow in the high single-digit percentage range (cc).

For the second quarter (Q2) of 2025, net sales grew +11% (cc), and core operating income grew +21% (cc). The first half (H1) of 2025 saw net sales up +13% (cc) and core operating income up +24% (cc). Investments behind these priority brands and launches partially offset margin expansion.

In the third quarter (Q3) of 2025, net sales growth was +7% (cc), with continued strong execution from key assets like Kisqali at +68% cc and Scemblix at +95% cc.

Data science and digital transformation across the value chain.

Novartis AG is strategically investing in advanced technology platforms, including data science and Artificial Intelligence (AI), to enhance R&D success probability and accelerate timelines. The company's DATA42 program shows intent to unify large-scale scientific, clinical, and operational datasets onto a digital platform. This data-driven approach is motivated by the high cost and time associated with drug development, which traditionally costs over $2B and takes more than 10 years for only about 1 in 10 clinical molecules to reach the market. To bolster this, Novartis entered a partnership with BioAge Labs, potentially worth up to $550 million, to access one of the world's largest human longevity datasets for drug discovery in age-related diseases.

Novartis AG (NVS) - Canvas Business Model: Key Resources

You're looking at the core assets Novartis AG holds to drive its innovative medicines strategy. These aren't just ideas; they are tangible, multi-billion dollar foundations.

Intellectual Property (IP) protecting key assets like Entresto and Kisqali

The value here is tied directly to patent life and market performance. For instance, the breast cancer treatment Kisqali saw revenue jump 64% to $1.2 billion in the first half of 2025. Entresto sales rose 24% to $2.36 billion in the same period, though a U.S. court recently denied Novartis' request for a preliminary injunction against a generic competitor. Kisqali is now projected by Novartis to achieve peak sales of up to $10 billion.

The company is managing patent expirations by focusing on pipeline depth:

• Peak sales projection for Cosentyx: over $8 billion.
• Peak sales projection for Kisqali: up to $10 billion.
• Number of submission-enabling data readouts expected from core assets in the next two years: over 15.

Advanced technology platforms: RLT, Cell & Gene Therapy, and xRNA

Novartis AG operates on a toolkit of five R&D approaches, with three being advanced modalities. The company is scaling up investments across these platforms to support its pipeline growth. The xRNA platform underpins drugs like Leqvio, which has a peak sales expectation of up to $3 billion. The Radioligand Therapy (RLT) platform supports commercial products like Pluvicto, which recorded sales of $345 million in Q2 2024. The company is building new RLT manufacturing facilities in Florida and Texas as part of its U.S. expansion.

The core technology platforms are:

• Established: Chemistry and Biotherapeutics.
• Advanced: xRNA, Radioligand Therapy (RLT), and Gene and Cell Therapy.
• Number of strategic deals signed in the last two years to enhance these platforms: over 30.

Global manufacturing network, including $23 billion US investment commitment

Novartis AG announced a $23 billion investment over five years to expand its U.S. infrastructure across 10 facilities, including seven brand new sites. This outlay is intended to allow the company to produce 100% of its key medicines for U.S. patients domestically. This capital expenditure is substantial; the total investment in U.S. operations is expected to reach up to $50 billion over the five-year period.

This manufacturing and R&D build-out includes specific site commitments:

Blockbuster drug portfolio generating multi-billion dollar sales

The company's focus on a streamlined portfolio is expected to yield significant revenue. Novartis projects that eight of its flagship medicines could each deliver peak sales between $3 billion and $10 billion. The overall company performance reflects this strength; Q1 2025 net sales grew +15% cc (or +12% USD) to $13.2 billion. By Q2 2025, sales climbed 12% to $14 billion, with Q2 adjusted operating income at $5.9 billion.

Key portfolio financial metrics as of early/mid-2025:

• Q1 2025 Core EPS: $2.28.
• Q1 2025 Free Cash Flow: $3.4 billion.
• Projected annual sales growth (2024-2029): 5% to 6%.
• Target core margin by 2027: 40%+.

Highly specialized R&D talent and medical science liaison teams

The specialized talent base supports the complex pipeline. Novartis development professionals in India alone number approximately 2,800, representing nearly 11 per cent of the global workforce. This investment in expertise is reflected in R&D focus: the company increased its full-time equivalent (FTE) per project by 49% when comparing Q1-Q3 2021 to Q1-Q3 2024.

The pipeline depth requires this specialized human capital:

• Number of NME candidates in clinical Phases I-III: over 30.
• Therapeutic areas of focus: Cardiovascular-Renal-Metabolic, Immunology, Neuroscience, and Oncology.
• The company is bringing its small interfering RNA (siRNA) production muscle to the U.S. for the first time with the new investment.

Novartis AG (NVS) - Canvas Business Model: Value Propositions

Novartis AG offers value through a focused portfolio of innovative medicines, centered on delivering transformative treatments across specific, high-need therapeutic areas.

The company's strategic focus is anchored in four core therapeutic areas, which drive the development and commercialization of its most promising assets.

For high unmet needs, Novartis delivers first-in-class therapies, particularly within its radioligand therapy (RLT) platform for Oncology and new approvals in rare diseases.

• Pluvicto, the PSMA-targeted RLT, achieved Q2 2025 sales of $454 million, showing 22% growth over Q1 2025.
• The FDA approval for Pluvicto in the pre-taxane setting in March 2025 expanded its eligible patient population, with peak sales projected above $5 billion.
• Fabhalta (iptacopan) achieved key regulatory milestones in Q1 2025, receiving FDA, EC, and China NMPA approvals for C3G.
• Scemblix, another Oncology asset, showed sales growth of +79% cc in Q2 2025, with peak sales guidance raised to over $4 billion.

The value proposition extends to offering extended and improved lives for patients managing chronic and rare diseases, evidenced by the rapid adoption of newer assets.

The growth of the CRM portfolio, despite patent expirations for Entresto (which lost market exclusivity mid-2025), is supported by assets like Leqvio, which posted +61% cc sales growth in Q2 2025.

Economic value is demonstrated to payers through robust operational performance and high-margin delivery, reflecting the clinical efficacy of the portfolio.

For the first half of 2025, Novartis reported net sales of $27.3 billion, with a core operating income margin of 42.1%. The company's full-year 2025 guidance includes a core margin target of 40%+.

Supply chain reliability is a critical value component for complex, short-shelf-life therapies like RLT, where timely delivery is essential due to the short radioactive half-life of the isotopes.

Novartis is actively fortifying this supply chain through significant capital investment and physical expansion.

• Novartis announced a planned $23 billion investment in US infrastructure up to 2030.
• In November 2025, the company opened its third US-based RLT manufacturing facility in Carlsbad, California.
• The combined sales of Pluvicto and Lutathera reached $2 billion between them over the first nine months of 2025.
• The company plans to establish two more RLT manufacturing sites in Texas and Florida, alongside expanding existing facilities.

This vertical integration, from isotope sourcing to dosing, is designed to ensure the consistent delivery of these time-sensitive medicines.

Novartis AG (NVS) - Canvas Business Model: Customer Relationships

You're looking at how Novartis AG connects with the people who prescribe, dispense, and ultimately use their innovative medicines as of late 2025. It's definitely a shift from the old days of just sales reps knocking on doors.

Dedicated personal selling and scientific exchange with Healthcare Professionals (HCPs)

The traditional sales force interaction is clearly evolving. In 2025, the average physician gets over 1.4 pharmaceutical touchpoints per working hour, but honestly, only about half of those reps remain fully accessible to them. This pressure means every interaction has to count, blending personal scientific exchange with digital efficiency. Novartis is focusing its commercial execution on key growth drivers like Kisqali, Cosentyx, and Leqvio, which requires precise targeting of the right HCPs. 76 percent of pharma marketers are prioritizing clinician social engagement, showing where the scientific conversation is moving.

The digital front line gives us a real-time pulse on this relationship. Between January and June 2025, an average of nearly 300 healthcare professionals (HCPs) were talking about Novartis online each month, with a peak of over 700+ posts in May and June following FDA approvals. Still, the sentiment is often neutral, leaning more toward curiosity or caution than enthusiasm, so capturing attention isn't the same as building deep trust.

Hybrid engagement model leveraging AI-driven insights for tailored content

Novartis is actively integrating data science and technology across its operations to enhance engagement with HCPs and patients. This hybrid approach uses AI-driven insights to tailor content, moving away from one-size-fits-all materials. For instance, HCPs are increasingly drawn to personalized, on-demand updates, like tools that summarize trial data or visualize mechanisms of action in 3D formats, which helps reduce their cognitive load. This focus on data-driven personalization is a core part of their strategy to accelerate growth.

Here's a quick look at the digital interaction landscape:

The challenge, as seen in September 2025 FDA reprimands regarding digital materials for Entresto, is ensuring that this tailored digital content maintains compliance and sufficient evidence for any superiority claims made.

Patient support programs to navigate access, reimbursement, and adherence

For high-value, innovative medicines, patient access and adherence are critical relationship components. Novartis has a comprehensive program called Novartis Patient Support designed to help patients start, stay, and save on treatment. For their new SMA therapy, Itvisma, eligible individuals may pay as little as $0 out-of-pocket, despite a wholesale acquisition cost of $2.59 million. This is part of a broader strategy to implement a global access strategy for all new medicines launched.

The Novartis Patient Assistance Foundation (NPAF), an independent non-profit, provides certain Novartis medications free of cost to eligible patients who are uninsured or have government insurance and meet income guidelines. For 2025 policy changes, the income guideline for Medicare/Medicaid/Uninsured patients was set at less than or equal to $81,760 for a household size of two. The global Patient Support Programs (PSP) market itself is estimated at USD 22.70 Bn in 2025, showing the industry-wide focus on this area.

• Medication Adherence Support is projected to hold the largest PSP service share at 22.6 percent in 2025.
• Oncology is the dominant therapeutic area for PSPs, holding a 32.1 percent share in 2025.
• Novartis specifically runs the "Support for Me" programme for heart failure patients.

Co-creation with health systems to integrate innovative therapies into care pathways

As a pure-play innovative medicines company, Novartis's relationship with health systems focuses on integrating these advanced therapies into established care pathways. This is supported by a strategic focus on launch excellence and ensuring market access in priority geographies like the US, China, Germany, and Japan. The company is also making substantial domestic investments, announcing a planned investment of $23 billion over five years (starting April 2025) to bolster US manufacturing, which directly impacts supply chain reliability for health systems.

The company's success in driving adoption for key brands reflects this integration effort:

• Leqvio, a cholesterol-lowering therapy, saw an 83 percent sales increase in Q4 2024, supported by its July 2025 FDA approval for first-line monotherapy use.
• Kisqali, a breast cancer treatment, saw a significant 52 percent year-over-year increase in Q4 2024, reaching sales of $902 million.

Direct-to-consumer (DTC) advertising for disease awareness and brand building

Direct-to-consumer advertising remains a significant, though scrutinized, part of the relationship-building effort in the US, one of only two countries allowing prescription drug DTC advertising. The global DTC pharma ad market is expected to be approximately $10 billion in 2025. Novartis was a major driver of the surge in TV ad spending, which rose 30 percent in Q1 2025 compared to the same period last year.

Specifically for its products:

• In January 2025, Novartis's Pluvicto ad spending took the top spot with more than $47 million spent on just one commercial.
• In Q3 2025, US spending on prescription drug TV ads hit $1.25 billion.

However, this channel faces regulatory headwinds; in September 2025, the FDA reprimanded Novartis for digital materials promoting Entresto, stating the digital banners made superiority claims over ACE inhibitors without sufficient evidence. This signals that the relationship with consumers must be balanced with strict regulatory adherence.

Novartis AG (NVS) - Canvas Business Model: Channels

You're looking at how Novartis AG gets its innovative medicines from the lab bench to the patient's bedside in late 2025. It's a complex, multi-pronged approach, especially given their focus on high-value, specialized treatments.

The foundation of reaching specialists and hospital systems globally rests on their direct sales force. While I don't have the exact headcount for late 2025, this force is strategically deployed across their 4 priority geographies: the US, China, Germany, and Japan. Remember, Novartis medicines reach nearly 300 million people worldwide, so the scale of this direct engagement is massive.

For their Radioligand Therapies (RLT), the channel is intensely specialized due to the short half-life of the isotopes. Novartis is building out a dedicated, resilient supply chain, now boasting 3 RLT manufacturing facilities in the US (including the new Carlsbad site). Internationally, they operate facilities in Ivrea, Italy, and Zaragoza, Spain, with construction underway in China and plans for Japan. This infrastructure is designed to maintain an on-time delivery rate of >99.9% to patients across the western US, Alaska, and Hawaii for these critical treatments. This specialized logistics network supports the centers treating patients with products like Pluvicto and Lutathera.

Distribution for the broader portfolio, including their 8 in-market assets projected for over USD 3 billion in peak sales each, relies heavily on established partners. Novartis uses a large network of specialty pharmacies and authorized distributors, such as the example you mentioned, AmerisourceBergen, to manage the complex dispensing and reimbursement requirements for specialty drugs.

To support these specialized channels, Novartis heavily employs digital outreach. They use digital platforms to push HCP education and scientific content, which is vital for driving adoption of new indications, like the expanded use for Pluvicto approved in March 2025.

Finally, for certain therapies, Novartis incorporates Direct-to-Patient (DTP) services. This channel is crucial where at-home administration or specific patient support services are required to ensure adherence and successful treatment completion, especially for newer modalities like gene and cell therapies.

Here's a quick look at the scale and focus points for these channels:

The focus within these channels is clearly shifting toward high-value, complex medicines:

• Focusing direct sales efforts on specialists in Cardiovascular-Renal-Metabolic, Immunology, Neuroscience, and Oncology.
• Prioritizing launch excellence for New Molecular Entities (NMEs) across the 4 core therapeutic areas.
• Building out manufacturing capacity to support the RLT platform, one of 3 emerging technology platforms.
• Ensuring supply chain integrity for time-sensitive products like RLTs, where proximity to treatment centers is critical.

If onboarding for a new specialty pharmacy partner takes longer than 14 days, churn risk rises due to treatment delays, so you'll want Finance to track that cycle time by end of Q1 2026.

Novartis AG (NVS) - Canvas Business Model: Customer Segments

You're looking at the core groups Novartis AG targets with its innovative medicines portfolio as of late 2025. This isn't just about the final patient; it's heavily focused on the gatekeepers and prescribers.

Healthcare Professionals (HCPs): This segment is segmented by specialty to align with Novartis AG's four core therapeutic areas: Cardiovascular-Renal-Metabolic, Immunology, Neuroscience, and Oncology.

• Oncologists: Driven by high-growth assets like Kisqali, which saw sales growth of +64% in Q2 2025.
• Cardiologists: Key prescribers for Entresto, which generated USD 2.4 billion in sales in Q2 2025.
• Neurologists: Targeted with assets like OAV101 IT, which had US and EU submissions in Q2 2025.
• Immunologists: Served by products such as Cosentyx, with Q2 2025 sales of USD 3.2 billion.

Patients with severe, chronic, or rare diseases in core therapeutic areas: The focus is on high disease burden populations where Novartis AG has significant in-market and pipeline assets.

Here's a look at the scale of the target patient populations in key geographies for the Cardiovascular-Renal-Metabolic area, based on 2025 epidemiology data:

The treated population for specific indications is a direct measure of patient segment engagement. For instance, the treated population for Chronic Heart Failure with Reduced Ejection Fraction in the US was 8,744 thousand patients in 2025.

Global Payers and Government Health Authorities (e.g., CMS in the US): These entities control access and reimbursement, making them critical decision-makers. Their decisions are influenced by the net price and the impact of generic competition.

• Generic competition negatively impacted Q3 2025 net sales by 7 percentage points, driven by drugs like Promacta and Tasigna in the US.
• Pricing had a negative impact of 2 percentage points in Q3 2025, largely due to revenue deduction adjustments mainly in the US.
• The US region accounted for USD 6.0 billion in net sales in Q3 2025, showing +12% growth.

Integrated Delivery Networks (IDNs) and major hospital systems: These systems are key purchasers, especially for high-volume or hospital-administered therapies. The overall growth in volume is a proxy for their uptake.

For the nine months ending September 30, 2025, volume contributed 11 percentage points to the 11% growth in net sales. The company's focus on priority geographies like China, which saw over 25% constant currency growth in sales for the first 9 months of 2024, indicates strategic engagement with large, integrated systems in those markets.

Regulators (FDA, EMA, PMDA) in priority geographies: Regulatory bodies in the US, China, Germany, and Japan are crucial for market entry and continued access.

• FDA granted accelerated approval for Vanrafia for IgA nephropathy in Q2 2025.
• US and EU submissions were made for OAV101 IT in Q2 2025.

The TTM revenue ending September 30, 2025, was $56.372B.

Finance: review Q4 2025 guidance assumptions against Q3 2025 generic erosion rates by Friday.

Novartis AG (NVS) - Canvas Business Model: Cost Structure

You're looking at the major drains on Novartis AG's operating cash flow, the costs that underpin their ability to bring complex medicines to market. Honestly, for a company this size, the numbers are staggering, but they reflect the high-stakes nature of biopharma innovation.

High R&D expenditure is the most significant recurring investment. This is the cost of the pipeline, the engine for future revenue. For the twelve months ending September 30, 2025, Novartis AG's research and development expenses reached $10.879 billion. To put that in perspective, for the first quarter of 2025 alone, R&D expenses were reported at $2.366 billion.

Manufacturing and production costs are inherently high due to the complexity of the products. Novartis AG is heavily invested in specialized areas like radioligand therapy (RLT), which requires unique supply chains and sterile production environments. This is not simple pill pressing; it's high-tech chemistry and biology. This cost category is being aggressively managed through vertical integration, as seen in their massive capital outlay.

Selling, General, and Administrative (SG&A) expenses cover everything from sales force operations to corporate overhead. For the first quarter of 2025, Novartis AG reported SG&A expenses of $3.058 billion. Looking at the trailing twelve months ending September 30, 2025, the total SG&A was $13.309B, representing a year-over-year increase.

Capital expenditures are currently dominated by capacity expansion, especially for high-growth areas like RLT. Novartis AG announced a planned $23 billion investment over five years in U.S.-based manufacturing and research infrastructure, which includes building new facilities dedicated to RLT production in Florida and Texas, and expanding existing sites. This is a massive commitment to future production capability.

Finally, there are the costs associated with protecting that intellectual property. Patent defense and litigation are a constant, though variable, cost. While specific, recent total litigation spend for Novartis AG isn't always broken out, industry analysis suggests that settling patent disputes can cost pharmaceutical companies anywhere from $5 million to $50 million per case. We saw recent activity in 2025, such as a patent term extension challenge in Australia and post-grant opposition proceedings in India.

Here's a quick look at some of the key cost metrics we have for the recent periods:

The cost structure is clearly weighted toward future innovation, with R&D being the primary driver, supplemented by significant, strategic capital investment in manufacturing technology to support high-value products like RLTs. You can see the breakdown of the Q1 2025 operating expenses below:

• Cost of goods sold: $3,227 million for Q1 2025.
• Research and development: $2,366 million for Q1 2025.
• Selling, general and administration: $3,058 million for Q1 2025.
• Gross profit for Q1 2025 was $10,393 million.

The ratio of R&D to net sales for Q1 2025 was 17.9% (calculated from $2,366M R&D / $13,233M Net Sales).

Finance: draft 13-week cash view by Friday.

Novartis AG (NVS) - Canvas Business Model: Revenue Streams

You're looking at how Novartis AG, as of late 2025, converts its innovative medicines into hard currency. It's all about product sales, but those licensing deals and milestones provide important, albeit lumpy, support. Honestly, the focus is clearly on driving volume and maintaining pricing power for the big brands.

The core of the revenue engine is the innovative medicines segment, which is essentially the entire company now. For the first half of 2025 (H1 2025), Novartis posted net sales of USD 27.3 billion. This represented a year-on-year increase of 13% in constant currency (cc) for H1 2025. The company's full-year 2025 revenue guidance remains set for a high single-digit percentage increase.

Key growth drivers are absolutely carrying the momentum. You see this in the sales figures reported for the first half and the second quarter. For instance, Entresto, despite facing generic entry assumptions in mid-2025, still grew 22% cc in Q2 2025, contributing USD 4.6 billion in sales for H1 2025. Kisqali is showing massive acceleration, growing 60% in H1 2025, with Q2 sales hitting about $1.18 billion. Here's a quick look at how those top performers stacked up:

Beyond the product sales, Novartis captures revenue through other streams. Royalty income is definitely present, though it can fluctuate. In the first quarter of 2025, Royalty income was reported at USD 8 million, but the second quarter included a specific royalty settlement of USD 0.3 billion. This shows you that out-licensed products can provide meaningful, if irregular, cash boosts.

Milestone payments from collaboration and partnership agreements provide another layer. For the first quarter of 2025, the company booked Milestone income of USD 54 million. These payments are tied to hitting specific clinical or regulatory targets on partnered assets, which is a direct reflection of successful R&D execution outside their four walls.

To summarize the non-sales revenue components for the first half, you had:

• Royalty income, including a $0.3 billion settlement in Q2 2025.
• Milestone income of $54 million in Q1 2025.
• Other revenue components, such as manufacturing or services, which totaled USD 387 million in Q1 2025.

Finance: draft 13-week cash view by Friday.