Novartis revenue increases slightly thanks to Sandoz and Entresto

The company logo is seen at Swiss drugmaker Novartis’ new cell and gene therapy factory in Stein, Switzerland November 28, 2019. REUTERS/Arnd Wiegmann/File Photo GLOBAL BUSINESS WEEK AHEAD

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April 26 (Reuters) – Novartis (NOVN.S) said on Tuesday its first-quarter core operating profit rose 3%, helped by a rebound in generic drugs unit Sandoz and an increase in prescriptions for the treatment heart failure Entresto.

The Swiss drugmaker’s quarterly operating profit came in at $4.08 billion, below analysts’ average estimate of $4.13 billion, according to Refinitiv data, as sales growth of some drugs, including arthritis and psoriasis treatment Cosentyx, failed to meet expectations.

Entresto’s quarterly revenue jumped 42% to $1.1 billion, ahead of a market consensus of $1 billion.

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Core operating income at Sandoz, the maker of low-cost generic drugs that Novartis could put on sale, returned to growth in the quarter with a 21% gain to $538 million on the back of a rebound in remedies against the common cold.

The Swiss drugmaker reiterated that it plans to provide an update on its strategic review of Sandoz by the end of the year at the latest. Read more

Novartis, which confirmed its full-year 2022 earnings forecast on Tuesday, raised $20.7 billion in proceeds in December from the sale of its 33% stake in Roche (ROG.S) to the Swiss rival.

Despite plans to buy back shares of up to $15 billion, Novartis said it would retain enough buying power to buy companies and technology. Read more

As the market expects Sandoz to be priced at around $25 billion, investors are looking for clues as to how Chief Executive Vas Narasimhan will invest the money.

But in a call with the media on Tuesday, he said the targets would be up to $2 billion, well below deals in recent years.

The CEO said that although biotech company prices have retreated from excessive levels, they are expected to decline further.

“There’s always this adjustment in expectations that will take time to happen…we continue to screen aggressively,” Narasimhan said.

This month, Novartis unveiled plans for a streamlined structure that integrates its pharmaceutical and oncology units, targeting savings of at least $1 billion by 2024. Read more

The CEO said on Tuesday it would affect staff in the “single-digit thousands”, subject to discussions with works councils.

($1 = 0.9207 Swiss francs)

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Reporting by Ludwig Burger, editing by Miranda Murray, Vinay Dwivedi and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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