Novartis Profit Helped by GlaxoSmithKline Joint Venture -- Update
October 25 2016 - 3:53AM
Dow Jones News
By Denise Roland
Novartis AG said net income increased in the third quarter
thanks to proceeds from its consumer health care joint venture with
GlaxoSmithKline PLC, helping to offset declining revenue and heavy
investment in its new heart-failure medicine and its ailing
eye-care unit.
The Swiss pharmaceutical giant said the joint venture, formed as
part of a $20 billion transaction with Glaxo that closed last year,
generated income of $91 million in the third quarter, compared with
a $3 million loss in the prior-year period. Novartis owns 36.5% of
that business.
That helped offset falling profit elsewhere. Novartis is
spending heavily to boost sales of its new heart-failure medicine
Entresto and is in the midst of overhauling its eye-care unit,
Alcon, which has struggled recently amid increased competition in
the lens implant and contact lens markets.
Basel, Switzerland-based Novartis said net income from
continuing operations increased 7% to $1.9 billion in the three
months to September 30. Core net income, a measure that strips out
certain items such as proceeds from the consumer health care joint
venture, dipped 4% to $2.9 billion.
Joe Jimenez, chief executive, said he expected those investments
to bear fruit soon.
He said sales of Entresto should benefit from the deployment of
a much larger sales force, aimed at primary-care doctors, from
early next year. Entresto got off to a slow start because of
reluctance of doctors to switch stable patients to a new drug but
has received a boost recently from the endorsement of cardiology
groups in the U.S. and Europe. Novartis is leaning heavily on
Entresto, as well as its new psoriasis drug, Cosentyx, to replace
the revenue lost from older medicines that now face competition
from cheaper copycats.
The Novartis boss said that Alcon would show "improved growth
momentum" by the fourth quarter but that the unit wouldn't recover
as quickly as hoped. When he announced the turnaround plan in
January, Mr. Jimenez forecast Alcon would return to growth by the
end of the year. Now, he expects the unit to report flat or
slightly falling sales for the full year, mainly because of
slower-than-expected improvement in the surgical business.
At the same time, Novartis is battling falling sales after
generic versions of its top-selling cancer medicine Gleevec
launched earlier this year. Sales of Gleevec slid 30% in the third
quarter to $834 million. That was partly offset by growth of
medicines launched in the last five years, whose sales increased
20% to $4.3 billion in the third quarter. In total, Novartis
revenue declined 1% to $12.1 billion.
Novartis backed its guidance for 2016, saying it expected
full-year sales to be in line with those of 2015, while core
operating income would be flat or decline by a low-single-digit
percentage from the previous year.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
October 25, 2016 03:38 ET (07:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Novartis (NYSE:NVS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Novartis (NYSE:NVS)
Historical Stock Chart
From Sep 2023 to Sep 2024