Novartis AG : Novartis Banks On New Drugs To Offset Generics Pressure
07/19/2012| 03:48am US/Eastern
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-- Second-quarter net profit up marginally, beats expectations
-- Newly-launched products contribute 29% to quarterly net revenue
-- Continued strong sales in China also boosts performance
(Rewrites throughout to add details, quotes, background. Updates with share price.)
By Marta Falconi
ZURICH--Novartis AG (NVS) said Thursday that growth in newly launched drugs more than offset weaker sales of its best-selling product Diovan, which was hurt by increased generic competition, highlighting how the Swiss drug maker is banking on pipeline innovation for its future.
The Basel-based company said it is on track to deliver 2012 full-year outlook after net profit for the three months to the end of June edged up to $2.71 billion from $2.70 billion in the same period a year earlier, beating analysts' expectations of $2.52 billion.
Novartis said recently launched products contributed 29% to net sales, compared to 25% last year, rejuvenating its healthcare portfolio, even if net sales were down 4% at $14.3 billion and sales at the flagship pharmaceuticals division also decreased 1% to $8.3 billion. Sales were hurt also by the strengthening of the U.S. dollar against most major currencies, which slashed 5 percentage points, and also by the suspension of production at a manufacturing site in Lincoln, Nebraska, from where shipments are expected to resume not before the fourth quarter this year.
"Investment in R&D is paying off," Chief Executive Joe Jimenez told reporters in a conference call. "A high level of productivity in R&D is our future, that's key for Novartis's growth track record."
Jimenez said breast cancer drug Afinitor and multiple sclerosis pill Gilenya are on track to become blockbusters, generating sales of at least $1 billion.
Sales of eye drug Lucentis, diabetes treatment Galvus and chronic myeloid leukemia drug Tasigna also rose in the second quarter, and are helping Novartis offset the sales decline of blockbuster heart medicine Diovan which went off patent in Europe last year. Diovan, which generated sales for $5.7 billion in 2011, will also lose patent exclusivity in the U.S. in September this year. Sales of the drug were down 16% to $1.27 billion in the second quarter, Novartis said.
Emerging markets were also touted as a growing segment. In China, where Novartis recently received approval for its Onbrez Breezhaler lung treatment, net sales were up 23% in constant currencies in the quarter.
At 0730 GMT Novartis shares were trading 0.6% higher at 55.40 Swiss francs.
Write to Marta Falconi at marta.falconi@dowjones.com
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