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 04:25 ET (08:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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