Novartis' second-quarter sales top estimates as Cosentyx leads growth

Headline results for the second quarter:

Innovative medicines sales

$8.9 billion

+10%

Sandoz sales

$2.5 billion

0%

Alcon sales

$1.8 billion

+7%

Revenue

$13.2 billion (forecasts of $12.9 billion)

+7%

Profit

$7.8 billion

Versus profit of $2 billion

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We delivered solid growth, with margins expanding and key growth drivers including Cosentyx delivering strong performance," remarked CEO Vas Narasimhan, adding that during the quarter, the company "completed the Alcon strategic review, exited the OTC joint venture and strengthened our innovation engine with the acquisition of AveXis."

Other results:

  • Oncology product sales: $3.4 billion, up 12 percent
  • Tasigna: $488 million, up 5 percent, driven by the US and Latin American markets
  • Gleevec/Glivec: $416 million, down 18 percent due to generic competition in most major markets
  • Promacta/Revolade: $292 million, up 39 percent on increased demand and continued uptake of the thrombopoietin class for chronic immune thrombocytopenia
  • Tafinlar/Mekinist: $284 million, up 31 percent on growth in melanoma and non-small-cell lung cancer
  • Jakavi: $239 million, up 28 percent, driven by the myelofibrosis indication and reimbursement of the second-line polycythemia vera indication in additional countries
  • Cosentyx: $701 million, up 43 percent on "strong volume growth" across all indications
  • Lucentis: $515 million, up 8 percent, led by Europe and emerging growth markets, including China
  • Entresto: $239 million, up 117 percent, driven by uptake in all markets
  • Kymriah: $16 million
  • Biopharmaceuticals: $363 million, up from $260 million in the year-ago period, mainly driven by Rixathon and Erelzi in the EU, and continued growth of Zarxio in the US
  • Emerging growth markets: $3.3 billion, up 8 percent, mainly driven by China and Russia
  • Net income: Included a gain of $5.7 billion from the sale of stake in the consumer healthcare joint venture with GlaxoSmithKline

What analysts said:

Commenting on sales of Cosentyx, which had missed expectations in the first quarter, Deutsche Bank's Tim Race said "it confirms Q1's blip was a combination of not just rebates but also wholesaler destocking," adding "all in all, we sum up the quarter as solid."

Looking ahead:

Narasimhan said Novartis expects to "be at the high end" of its 2018 sales guidance of growth in the low to mid-single digits on a constant currency basis, despite vowing not to make any further price increases in the US this year, with innovative medicines growing in the mid-single digits. Meanwhile, revenue from the Sandoz unit is now forecast to decline in the low-single digits, after earlier being estimated to be broadly in line with the previous year or fall slightly, with Alcon growing in the mid-single digits. Core operating income is predicted to grow in the mid to high-single digits.

Pipeline update:

Novartis disclosed that it has discontinued development of the dual SGTL1/2 inhibitor LIK066 for the treatment of obesity following a data readout from a Phase II study.

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