Novartis Secures UK Patent Victory for Entresto, But Global LOE Pressures Persist

What happened

Novartis successfully defended its UK patent for blockbuster heart drug Entresto against a challenge by Accord Healthcare, a unit of Intas Pharmaceuticals, which sought to launch a generic rival. The London High Court's rejection of the invalidity claim removes a near-term threat to Entresto's exclusivity in the UK, one of the company's key markets. However, this legal win only addresses the UK jurisdiction, while the brand already faces significant generic competition in the US, where generics hold an estimated 35% prescription share as of late 2025. The Deep Value master report had already factored in global loss of exclusivity for Entresto, expecting the company's priority brands like Kisqali, Kesimpta, and Pluvicto to offset erosion. While the ruling is modestly positive, it does not alter the fundamental investment thesis that Novartis is fully valued at current prices, with the report maintaining a potential sell stance and an attractive entry below $125.

Implication

For investors, the Entresto patent victory in the UK is a small victory in the battle against generic erosion, potentially delaying revenue decline in that specific market. However, the broad loss of exclusivity in the US and other regions remains the primary headwind, and the company's guidance already assumes continued generic pressure. The base case scenario from the master report, which assigns a 45% probability and a $145 implied value, is not materially changed by this news. With the stock trading around $144, near the upper end of the report's trim range of $155, the risk-return profile remains skewed to the downside, with an attractive entry at $125 suggesting a potential 13% decline. Therefore, current holders should consider trimming positions into any strength, while new investors should wait for a more favorable valuation or a clear catalyst that improves the growth outlook.

Thesis delta

The UK court ruling slightly reduces near-term generic risk for Entresto in one jurisdiction, but it does not change the core thesis that Novartis faces significant LOE headwinds globally. The master report's potential sell rating remains intact, as the stock is still trading above the report's attractive entry level and near the trim threshold. The thesis is unchanged; only the timing of UK generics is delayed, which may provide a marginal boost to near-term earnings but not enough to justify a higher valuation.