Swiss drug maker Novartis AG reported a 6 percent drop in first-quarter net profits Tuesday as the cost of purchasing its remaining stake in eye care company Alcon depressed earnings.
Net profits attributable to shareholders were $2.77 billion in the first quarter, down from $2.93 billion in the January-March period last year when profits were boosted by high sales of swine flu vaccine.
Most analysts had expected lower net profits of about $2.6 billion for the first quarter of 2011, and shares in Novartis rose 2.5 percent to 49.85 Swiss francs ($55.62) in morning trading on the Zurich exchange.
"We're off to a good start," CEO Joseph Jimenez told reporters in a conference call.
The Basel-based company, which reports its results in U.S. dollars, benefited from the weakness of the dollar against other major currencies during the quarter.
Sales rose 16 percent to $14.03 billion, but only 14 percent in constant currencies.
Alcon contributed $1.9 billion toward net sales. Novartis completed the final stage of the $51 billion deal during the first quarter and expects to save some $300 million a year by eliminating overlaps between Alcon and its own eye care division.
Jimenez expressed confidence that its pipeline of new drugs will compensate for the expected loss of sales due to patent expiry for other medicines, such as best-selling hypertension drug Diovan, which contributed $1.41 billion to first-quarter sales but faces generic challengers in Europe in the fall.
Novartis received approval to sell its oral multiple sclerosis medication Gilenya in the European Union, Switzerland and Australia during the quarter. The U.S. Food and Drug Administration approved Gilenya to reduce relapses in patients with MS last September.
"We're getting significant revenue from Gilenya already," said Jimenez.
The U.S. FDA approved the marketing of meningitis vaccine Menveo for children aged 2 to 10, and the EU approved Lucentis for treating diabetic macular edema — a leading cause of blindness. Lucentis is already Novartis' third best seller, generating revenues of $444 million in the first quarter.
Anticancer treatment Glivec — marketed under the name Gleevec in the United States — contributed $1.08 billion in sales during the period.
Overall pharmaceutical sales rose 7 percent to $7.77 billion. Vaccines and diagnostics, meanwhile, plummeted by almost three quarters to $371 million due to the predicted loss of swine flu vaccine sales.
The company's generics division Sandoz generated revenues of $2.32 billion during the quarter, up 16 percent, while sales of consumer health products rose 11 percent $1.64 billion.
Novartis expects double-digit sales growth for the full year.