ELIANE ENGELER
Associated Press Writer
GENEVA (AP) — Novartis AG posted Thursday a 1 percent increase in third-quarter net profit on strong sales of pharmaceuticals, such as its new Afinitor drug against kidney cancer, and raised its full-year outlook after the approval of its swine flu vaccines.
The profit of $2.1 billion was up from $2 billion in the same period of 2008.
Earnings were largely offset by one-off charges, including the reduction of the value of a research and development project related to eye care company Alcon. Increased financing costs and a higher tax rate also prevented a better result, Novartis said.
Net sales were $11.1 billion, up 3 percent from $10.7 billion in the year-earlier quarter. Without the effect of the weaker dollar, net sales rose 7 percent in local currencies, the company said.
Novartis raised its 2009 outlook for net sales, saying they will grow at a high-single-digit rate in local currencies, even excluding anticipated sales of swine flu vaccines in the fourth quarter.
The approval in the U.S. and Europe for Novartis' swine flu vaccine will help boost performance, with 90 to 120 million doses expected to be produced by the end of the year. That is expected to increase fourth quarter net sales by $400 million to $700 million.
Chief Executive Daniel Vasella said Novartis is on track to book record full-year results.
"I am pleased with our strong underlying performance, led by the momentum of our Pharmaceuticals business," Vasella said.
"Our investments in R&D show excellent results, with many key approvals in 2009, most notably the anticancer therapy Afinitor and the biotechnology medicine Ilaris," he said in a statement.
Shares in Novartis were up 0.1 percent at 52.50 Swiss francs ($52.00) on the Zurich exchange.
Michael Nawrath, an analyst with Zuercher Kantonalbank said net profit was slightly below his expectations, but the pharmaceutical division showed "wonderful results."
Net sales in the pharmaceuticals division rose 8 percent to $7.2 billion, up from $6.7 billion in the year-earlier quarter. The growth was driven by sales of the new Afinitor drug against kidney cancer in the U.S. and other drugs, including the high blood pressure treatments Exforge and Tekturna, which is known as Rasilez outside of the U.S.
Geneva broker Helvea said it was "a pleasing set of results" with new drugs leading a strong growth trend in the pharmaceuticals division.
It noted that recently approved Lucentis, for patients with wet age-related macular degeneration, a form of blindness, and Tasigna, to treat certain forms of Philadelphia chromosome-positive chronic myeloid leukemia, compensated weakening performance of the hypertension drug Diovan in the U.S. as patients chose cheap generics.
Novartis said it expected pharmaceuticals net sales in local currencies to grow at a double-digit rate in 2009.