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Novartis Kicks Off $2.5B Share Buyback Program On Strong Pipeline Growth

Novartis Kicks Off $2.5B Share Buyback Program On Strong Pipeline Growth

On Tuesday, Swiss biopharma company Novartis AG (NYSE: NVSannounced a $2.5 billion share buyback program. The management also exhibited a heightened confidence level in its sales projections based on the current pipeline of products under development.

What Happened: The buyback decision was spurred by a strong liquidity position along with the top ratings for its capital structure from companies like S&P (AA-) and Moody’s (A1).

CEO Vas Narasimhan said that management has “confidence in future growth and success of our pipeline.” The share repurchase program will kick-off immediately and could continue till the first half of the next year.

Novartis expects margins to widen due to cost reduction measures across the Technical Operations and Business Services units. These efforts could save close to $2 billion by the end of 2020. The management anticipates an additional cost savings of $2 billion from productivity programs in the Technical Operations unit.

Why Does It Matter: Novartis management has high hopes from five of its assets in experimental medicines for cancer treatment, which could progress to the mid and late stages of trials next year. Six assets from the Pharmaceuticals unit are expected to reach key milestones between 2021 and 2022.

Based on products under development, Novartis holds the second spot in the biopharma sector. The management anticipates substantial revenue growth in the future driven by these experimental treatments.

Price Action: NVS shares are higher by 0.92% at $88.11 in the pre-market session on the last check Tuesday.

Image Courtesy: Wikimedia


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