Novartis reported Tuesday that second-quarter net income increased 12
percent compared with the prior-year period to $2.7 billion, boosted by
sales of recently launched products and revenue from its new Alcon
division. Sales in the three months ended June 30, reached $14.9
billion, up 27 percent on the same quarter last year, and beating
analysts estimates of $14.7 billion, with revenue from newly-launched
products growing 46 percent to $3.8 billion.
Commenting on the figures, CEO Joseph Jimenez said that the
drugmaker’s “diversified healthcare portfolio, focused on high growth
segments, is enabling us to generate superior results.” Jimenez noted
that Novartis “further demonstrated the success of our R&D strategy
with four major approvals and two filings in the second quarter,”
including clearance by European regulators of hypertension drug Rasilamlo and expanded authorisation of Lucentis for treating macular oedema.
In the second quarter, pharmaceutical sales grew 10 percent to $8.3
billion. Novartis said that three-monthly revenue from Diovan dropped 3
percent to $1.5 billion as generic versions of the drug eroded sales in
Spain, Canada and Brazil. Revenue from Gleevec/Glivec rose 12 percent to
$1.2 billion, while sales of the next-generation drug Tasigna surged 91
percent to $170 million. Revenue from Lucentis, which is marketed in
the US by Roche, climbed 44 percent to $541 million.
For other products, sales of cancer drugs Zometa and Femara declined
1 percent and 29 percent, respectively, to $376 million and $241
million. The drugmaker noted that revenue from Zometa was affected by
“new competition,” while sales of Femara mainly suffered due to generic
versions of the product in the US. The company said that Gilenya, which
was launched in the US last October and in parts of Europe following approval
in March, is “continuing its strong growth trajectory.” The oral drug
had second quarter sales of $79 million, while in the US and EU, 13 000
patients are taking the medicine. “Gilenya is turning out to be one of
the most successful new product launches,” Jimenez remarked.
Novartis also reported that quarterly sales from its Sandoz unit
jumped 25 percent versus the year-ago period to $2.5 billion, lifted by
higher sales in the US, which increased 48 percent in constant
currencies to $849 million. Growth in the division was also boosted by
sales of biosimilars, with revenue from these products, which include a
generic version of Sanofi’s Lovenox, up 31 percent. Meanwhile, revenue
from the company’s vaccines and diagnostics unit slipped 47 percent to
$299 million from a year earlier, when influenza A (H1N1) vaccines
contributed $200 million.
The drugmaker noted that following the completion of its takeover of Alcon
in early April, the eye-care unit contributed $2.6 billion in sales in
the second quarter. According to Jimenez, the drugmaker has found more
than the targeted $300 million in cost savings from the merger. The CEO
added that Novartis is continuing to look for smaller acquisitions,
although he noted that “our priority is to pay down debt, so we’re going
to be very disciplined.”
Novartis also reiterated its growth forecast for the year, and said
it expects overall sales to increase “around the double-digit mark.” For
pharmaceutical sales, the company predicts that growth will be “in low-
to mid-single digits,” repeating that volume growth should more than
offset the impact of generic competition for the full year. Jimenez
however cautioned that cost cuts and efficiency improvements were
necessary as European austerity measures would affect drug pricing
“Overall it’s a good, solid set of numbers,” commented Nomura
International analyst Amit Roy, adding that “Gilenya is nicely on
track.”