Zurich : A strong performance by its older medicines helped Novartis beat profit forecasts on Thursday, making up for its struggling eyecare business and the extra costs of a poor start for a new heart failure drug.
Although the world’s biggest prescription drugmaker’s first-quarter core net income fell 13 percent to $2.79 billion, it beat the $2.76 billion average of estimates from analysts polled by Reuters and lifted the company’s shares.
Novartis was forced to hire more sales people to get over the slow take-up of new heart failure drug Entresto, just one of the challenges facing chief executive Joe Jimenez.
The other main difficulties facing Jimenez include blood cancer drug Gleevec’s exposure to generics in the United States and the revenue slide at its Alcon eyecare business.
Core operating profit at Novartis fell 11 percent in dollars to $3.26 billion, but was down just 5 percent at constant exchange rates. The company said that left its 2016 forecast for sales and core operating profit broadly in line with last year’s within its reach.
“As expected, our results reflect additional investments behind our new launches and Alcon,” Jimenez said in a statement.
“We are on track with the plan we outlined in January to further focus our divisions, drive greater innovation and significant synergies and productivity,” he added
Revenue fell to $11.6 billion, lagging the poll average of $11.8 billion, despite better-than-expected sales of blockbuster blood cancer drug Gleevec, whose 22 percent decline to $834 million beat analyst forecasts of a 34 percent fall.
It also got help from psoriasis medicine Cosentyx, whose sales rose to $176 million from $22 million a year earlier.
SLOW LAUNCH CONTINUES
Entresto posted just $17 million in sales and for the full year, Novartis now expects just $200 million in sales, or less than half of consensus forecasts compiled by Thomson Reuters Cortellis.
Consequently, Novartis is expanding Entresto’s U.S. sales force and doubling down on direct-to-consumer ads.
“The slow launch of Entresto continues,” Berenberg analysts wrote in a note to investors.
Alcon sales fell 7 percent to $1.4 billion. Its 17 percent operating margin was worse than consensus forecasts of 20 percent, wrote Deutsche Bank analyst Tim Race.
“It appears a low-quality beat and the continued undershooting of Entresto and Alcon could offset the initial positivity,” he said.
Shares initially rose by 1.3 percent, but tapered gains to trade 0.7 percent higher at 0838 GMT, trimming their fall this year to 14 percent.
(Editing by Michael Shields and Alexander Smith)