Novartis AG raised its full-year guidance Wednesday as it reported strong growth of its newer drugs, bolstering its chief executive’s efforts to focus the pharmaceutical giant on higher-value medicines.
The Basel, Switzerland-based company said it now expects core operating income to grow by a high single-digit percentage, up from earlier guidance of a mid-to-high single digit rise. It said it continued to expect sales to increase by a mid-single-digit percentage.
The brighter outlook came as Novartis reported a 9% rise in first-quarter core operating income — a figure closely watched by analysts that strips out one-time items — to $3.25 billion. Revenue rose 2% to $11.1 billion, although net profit fell 5% to $1.87 billion, largely because of the strength of the U.S. dollar. The figures exclude Alcon, the eye-care unit that Novartis spun off earlier this month.
The company attributed the rise in underlying earnings to strong sales of some of its newer drugs, including Cosentyx for various dermatological and rheumatological diseases and Entresto for heart disease. Chief Executive Vas Narasimhan said U.S. prescriptions for Cosentyx had overtaken AbbVie Inc.’s blockbuster Humira in two conditions where they compete: psoriasis and ankylosing spondylitis.
Citi analyst Andrew Baum said the results were encouraging because they focused investors on the potential of the slimmed-down company. “Having Alcon out of the way removes a distraction for investors and a distraction for management,” he said.
Shares in the company rose 2.5% in early trading.
Dr. Narasimhan has been focusing Novartis on innovative medicines since he took the helm in February last year. That’s involved shedding businesses like Alcon and parts of the company’s generic-drug division Sandoz, while building up its pipeline of new medicines through acquisitions worth around $15 billion.
Among those deals was Novartis’s $8.7 billion acquisition of AveXis Inc., a company that specializes in gene therapies, or treatments that insert new DNA into the body to fix diseases caused by a faulty gene. The AveXis deal handed Novartis a gene therapy for spinal muscular atrophy, an inherited muscle-wasting disease that usually leads to death before the age of two. Novartis expects a U.S. regulatory decision on that treatment, called Zolgensma, in the coming weeks.
Dr. Narasimhan said he didn’t expect the timeline for that decision to be affected by the recent disclosure of a patient’s death in a continuing European trial for Zolgensma. He said in a call with reporters that the child in question died from the respiratory complications of multiple viral infections and that it didn’t affect the safety profile of Zolgensma.
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