CNBC's Karen Gilchrist weighs in on Novartis' second-quarter earnings and efforts to diversify its drug portfolio beyond its blockbuster Entresto heart failure treatment.

Basel

Novartis has raised its operating income outlook after reporting robust second-quarter results, with net sales up 11% and operating income rising by 21%. The company also announced a $10 billion share buyback, citing confidence in its mid- and long-term growth prospects. 

While Novartis has traditionally relied on its heart failure drug Entresto and arthritis treatment Cosentix, it is now emphasizing growth in other areas, including drugs for breast cancer, multiple sclerosis, and cholesterol. The company is preparing for the impact of generic competition following a US patent expiry for Entresto and is monitoring potential sector-specific tariffs from the US, though no official company comment has been made on the matter yet.

Novartis raises outlook on strong second-quarter sales

Another decent quarter for this Swiss pharma, so raising its guidance back in the first quarter and now again raising the outlook for its operating income as well, maintaining it for its net sales and that after some solid performance as suggested we saw that the net sales rose 11% and operating income up 21% and we've also been able to get some positive sort of colour from the company as well announcing a 10 billion dollar share buyback as well as it cites confidence in the mid and long term growth outlook and this all as the company looks to showcase the diversity in its portfolio. Traditionally this company has been quite dependent on its blockbuster heart failure drug Entresto and also Cosentix which is for arthritis but now showcasing the performance of a lot of other drugs in its portfolio as well so we've got Cascale for breast cancer, we've also got a multiple sclerosis treatment as well as one for cholesterol so certainly showing the breadth of the portfolio and there had been a lot of concern from investors about a US patent expiry for Entresto and that the company says is likely to see generics come online from the middle of this year so that is likely to serve a bit of a blow to the company but as said it is showcasing these other avenues of growth as well. Looking at the share price the stock is up about seven percent year to date and we know one of the big potential headwinds on the horizon is tariffs from the Trump administration he's telegraphed that we could be looking at some serious tariffs on the pharma sector 200 percent he's like. Any comment from the company thus far? Not thus far so nothing in the statement thus far I will be joining the the investigal later today and of course we have Vaz the CEO speaking to CNBC later today so we'll be expecting to get a little bit more color on tariffs but quite honestly so far it's just been multiple scenario planning for a lot of these farmers when I've been speaking to them it's it's planning for all possible scenarios. President Trump has now said that we will get clarity by the end of the month for a very long time he's been saying that these sector specific tariffs will be coming in two weeks or very soon. He did indicate they could be as high as 200 percent but he has also said that there will be a grace period so a much longer grace period than for other sectors. 12 months to 18 months although from many analysts I've spoken to that's still not long enough it takes years for these very complex supply chains to be relocated. Well I guess for the pharma sector one thing going forward is that margins are so high that to to a high point they can absorb potential tariffs a tariff hit. Karen thank you for breaking down the detail for us.

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