The pharmaceutical company was able to increase both sales and earnings and has accordingly confirmed its forecast for the year.
The Basler’s net sales rose slightly by 1 percent to USD 12.5 billion in the first three months of 2022. At constant exchange rates (cc), it was up 5 percent, Novartis said on Tuesday.
As usual, the pharmaceutical division Innovative Medicines made the most important contribution to sales. It turned over 10.2 billion US dollars (+1%) in the first quarter. The growth was supported by a strong performance of important therapies such as the heart drug Entresto, the MS therapy Kesimpta, the psoriasis drug Cosentyx and the gene replacement therapy Zolgensma.
This was offset by a negative effect from generic competition for long-established therapies such as Afinitor, Gleevec/Gleevec and Exjade.
Generics division with sales increase
The generics division Sandoz in turn increased sales by 2 percent to almost 2.4 billion US dollars. Here, after the lower basis for comparison in the previous year, business dynamics continued to normalize.
With a view to the strategic review of Sandoz, the group is sticking to its earlier statements that a decision will be made by the end of 2022 at the latest. All options are still conceivable, confirmed the top management.
Operatively, Novartis increased operating profit in the first quarter by 18 percent to almost 2.9 billion US dollars. The bottom line was an 8 percent higher consolidated profit of 2.2 billion. Excluding the impact of the profit from the stake in Roche, which Novartis sold to the Basel competitor in November 2021, net income rose by 23 percent.
Core, the focus of investors and analysts and adjusted for various influences, improved 3 percent in the first quarter. It was therefore in line with the management forecast and was just above the AWP consensus of the analysts’ estimates.
Confident look ahead
For the year as a whole, the Novartis management confirms the previous targets. At Group level, at constant exchange rates, both sales and core operating income are expected to grow by a mid-single-digit percentage.
On a divisional basis, Innovative Medicines is expected to grow mid-single-digit percentage revenue, while core operating income is expected to grow at a mid- to high-single-digit percentage rate, faster than revenue.
In the case of the Sandoz generics division, Novartis expects sales to remain largely at the prior-year level and a decline in core operating income in the low to mid-single-digit percentage range.
Novartis appoints Aharon (Ronny) Gal as Chief Strategy & Growth Officer
The pharmaceutical company Novartis has appointed Aharon (Ronny) Gal as Chief Strategy & Growth Officer effective August 1, 2022. He will lead the newly created Strategy & Growth function and will serve on the Novartis Executive Board.
Gal has more than 20 years of experience in the life sciences industry, including financial research and analytics, management consulting and business development, Novartis said in Tuesday’s news release marking the first quarter. Most recently, he worked at Sanford Bernstein, where he was a senior analyst covering the US biopharmaceutical industry. Before joining Bernstein, Gal worked at Canon and the Boston Consulting Group.
Novartis shares are initially undecided according to numbers
At the pharmaceutical company Novartis, the figures for the first quarter on Tuesday morning are initially seen as similar to the sales figures from competitor Roche the day before. Basically solid, but nothing that makes investors euphoric is roughly the tenor of the analysts.
At times, the paper is now up 1.57 percent at CHF 87.27 after it had risen by almost one percent in early trading, only to then briefly change sign.
In the first quarter, the Basler Group roughly met the average analysts’ expectations for group sales and core earnings at group level. Similar to its competitor Roche the day before, however, Novartis just missed expectations in terms of sales in the pharmaceuticals division, while the Sandoz generics division performed better than expected.
In the pharmaceuticals division, the heart drug Entresto together with the MS drug Kesimpta provided a positive surprise. According to Bernstein analyst Wimal Kapadia, for example, this is remarkable for the MS remedy in particular, since the competitive pressure in this indication is quite high.
A certain weakness can be identified above all in cancer therapies, adds Barclays analyst Emily Field. This is not entirely dissimilar to Roche. Kapadia von Bernstein adds that oncology remains difficult for other pharmaceutical companies as well, with failures in several key growth products.
Stifel analyst Eric Le Berrigaud adds that the positive trend in new drugs is being overshadowed by a stronger-than-expected decline in older brands, particularly in oncology, such as Gleevec, Tasigna, Afinitor or Sandostatin.
hr/gab
Basel (awp)