Novartis announced Wednesday that net income in the fourth quarter plunged 47 percent to $1.2 billion as the company recorded previously-disclosed charges mainly related to a revision in the sales potential of Rasilez/Tekturna. Overall sales in the three-month period rose 4 percent to $14.8 billion, slightly below analysts' estimates of $14.9 billion, as revenue from pharmaceutical products increased by the same amount to $8.3 billion.
For the full year, sales climbed 16 percent to $58.6 billion, with revenue from prescription drugs reaching $32.5 billion, up 7 percent on 2010. Net income for 2011 was $9.2 billion, which included charges of $1.9 billion, representing a decline of 7 percent. CEO Joseph Jimenez remarked that the company "achieved solid sales growth and strong operating leverage in the fourth quarter and for the year as a whole." However, he acknowledged that Novartis "experienced some disappointments in the fourth quarter, with Tekturna/Rasilez and with the need to improve our quality standards at some manufacturing sites."
For 2012, Novartis said it expects sales "to be in line with 2011" despite the Diovan patent expiry and the predicted decline in sales of Tekturna/Rasilez. However, the company said that its core operating income margin on a constant currency basis is expected "to be slightly below" the 2011 figure of 27.2 percent of net sales. Bank Sarasin analyst David Kaegi said the fourth-quarter sales and 2012 guidance were slightly better than expected. "It now only sees core operating profit 'slightly' below last year's level, and that is good news," he commented.