Skip to Content

Novartis AG ADR NVS Stock Quote

| Rating as of

Morningstar‘s Stock Analysis NVS

Valuation
Currency in USD
Is it the right time to buy or sell?
Is it the right time to buy or sell?

1-Star Price

INVESTOR

5-Star Price

INVESTOR

Economic Moat

INVESTOR

Capital Allocation

INVESTOR

Diving Into the Drug Pricing Hit From the Inflation Reduction Act, We’ve Reduced Our FVEs by 2%

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

After taking a closer look at what we consider the three key elements of the Inflation Reduction Act that will affect the biopharma industry over the next decade, we're reducing our fair value estimates for 17 of the biggest biopharma names in Morningstar's coverage by an average of 2%. We think the step-down in U.S. branded drug sales from capping Medicare price increases to inflation (fully rolled out in 2023), redesigning Medicare Part D (beginning in 2025), and Medicare negotiation (beginning in 2026 for small molecules) will result in a 3% reduction in total sales for these firms by 2031, with firm-level reductions depending on the firm's reliance on the U.S. market, proportion of the portfolio targeting seniors, history of price increases, and relative size of its small molecule and biologics portfolios (as biologics are immune from Medicare negotiation for 13 years instead of nine). Our estimates factor in some ability for the industry to either benefit from certain changes (like potential increased prescription fill rates in Part D with lower out-of-pocket costs) or compensate for headwinds (like responding to inflation caps on price increases with higher launch prices). Overall, we think the effect of the Inflation Reduction Act is manageable for the industry, and we see the competitive advantages and economic moats of these firms remaining intact. 

Unlock Our Full Analysis With Morningstar Investor

Key Statistics NVS

Company Profile NVS

Business Description

Novartis develops and manufactures healthcare products through two segments: Innovative Medicines and Sandoz. It generates the vast majority of its revenue from Innovative Medicines segment consisting global business franchises in oncology, ophthalmology, neuroscience, immunology, respiratory, cardio-metabolic, and established medicines. The company sells its products globally, with the United States representing close to one third of total revenue.

Contact
Lichtstrasse 35
Basel, 4056, Switzerland
T +41 613241111
Industry Drug Manufacturers - General
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Employees 104,323

Related News NVS