Munger Mode rating: 4 out of 5 — Buy. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
Charlie and I have spent considerable time studying the pharmaceutical industry over the decades. We have generally steered clear of it — the business of drug discovery is inherently unpredictable, patent cliffs create recurring revenue destruction, and regulatory risk looms over every molecule. Yet within this difficult industry, a handful of companies have built something approaching a durable franchise. Novartis, as it exists today after its transformation into a pure innovative medicines company, is one of the better businesses in global pharma. It is not a Coca-Cola or a See's Candies — no pharmaceutical company is — but within its universe, it possesses meaningful competitive advantages, is run by capable management, generates prodigious free cash flow, and trades at a reasonable price relative to its earnings power. We rate it four stars.
Recent filings analysed: 20-F (2026-02-04).
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