Buffett Brain · Research note
Score updated 20 Oct 2026 · analysis from 2 Jun 2026
NVS· Healthcare
Novartis
Novartis is a fortress drug maker with a 75 percent gross margin whose patents quietly bleed value while the stock asks 21 times earnings.
Buffett fit
Partial fit
Owner
74
Durability
46
Management
63
Price
51
Score updated 20 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
An owner looks past the headline and asks what he is really getting. Here he gets a 6.1 percent owner-earnings yield and that exceeds net income by 26 percent, which is real money he can spend.
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Durability is the weak link, and the score of 46 says so plainly. Earnings per share have fallen 9.3 percent a year over the measured period, and at one point peak-to-trough earnings dropped 70 percent.
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looks competent without being heroic. Returns on capital of 14.9 percent in the trailing year and 17.1 percent over five years clear the bar, and the steady of 3.6 percent of shares a year is the right instinct while the price is fair.
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There is no at this price, and that is the heart of the matter.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1 of 75.1 percent reflects genuine on patent-protected drugs
- 2 of 29.9 percent turns nearly a third of every sales dollar into operating profit
- 3 runs at 1.26 times net income, confirming earnings are backed by real cash
- 4Five-year return on capital of 17.1 percent shows the business has earned good returns over a full cycle
Concerns
7- 1Valuation is rich: a 21.4 times and a 4.7 percent earnings yield leave no cushion for a business with falling earnings
- 2Earnings per share have declined 9.3 percent a year, the opposite of
- 3Peak-to-trough earnings fell 70 percent at one point, a sign of how brittle the profit stream can be
- 4The durability score of 46 flags patent cliffs as the central risk to the franchise
Price history
$154+91.2%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Novartis discovers, patents, and sells prescription medicines, and the of patent-protected drugs shows up in a 75.1 percent and a 29.9 percent . Those are the economics of a business that turns chemistry into cash, with running at 1.26 times reported net income. The trouble is that each patent is a clock counting down, so the revenue base must be replaced before it expires.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 20, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Healthcare
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