Novartis' innovative drug sales up 5 percent in Q4, led by Cosentyx, Entresto

Headline results for the fourth quarter:

Innovative medicines sales

$9 billion

+5%

Sandoz sales

$2.5 billion

-5%

Alcon sales

$1.8 billion

+2%

Revenue

$13.3 billion (in line with forecasts)

+3%

Profit

$1.2 billion (forecasts of $1.9 billion)

-40%

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

What the company said:

"In 2018 we reimagined Novartis," CEO Vas Narasimhan remarked, with the planned spin-off of its Alcon unit, which remains on track for the first half of the year, the sale of the Sandoz US oral solids and dermatology business, and exiting a consumer health joint venture with GlaxoSmithKline.

"We took major steps towards becoming a medicines company that focuses its capital on developing, launching, and creating global access to breakthrough medicines," Narasimhan said. "Looking ahead, we expect to sustain top and bottom line growth driven by the strength of our in line brands and our exciting lineup of 10 potential blockbuster launches by 2020," the executive added.

Other results:

  • Oncology product sales: $3.5 billion, up 8 percent
    • Tasigna: $476 million, down 2 percent
    • Gleevec/Glivec: $373 million, down 17 percent, due to generic competition in most major markets
    • Promacta/Revolade: $330 million, up 29 percent, driven by increased use in chronic immune thrombocytopenia
    • Tafinlar/Mekinist: $313 million, up 27 percent, boosted by higher demand in metastatic melanoma and non-small-cell lung cancer, as well as "strong uptake" in adjuvant melanoma in the US and Europe
    • Jakavi: $256 million, up 12 percent
    • Kymriah: $28 million, with the US the "main driver"
  • Gilenya: $836 million, up 1 percent, driven by increased demand in Europe and the US
  • Cosentyx: $806 million, up 31 percent, led by strong volume growth across all indications in the EU and US, where sales grew 34 percent
  • Lucentis: $520 million, up 7 percent, driven by strong retina market growth
  • Entresto: $318 million, up 72 percent, with continued strong sales growth across all regions
  • Biopharmaceuticals: $390 million, versus $309 million
  • Emerging growth markets: $3.2 billion, down 1 percent
  • Full-year sales: $51.9 billion, up 6 percent
  • Full-year profit: $12.6 billion, up 64 percent

Looking ahead:

Novartis expects annual sales to grow in the mid-single digits on a constant currency basis if the planned spin-off if its Alcon unit and the sale of its Sandoz US oral solids and dermatology business go ahead as planned. Meanwhile, operating income is forecast to grow in the mid-to-high single digits. If the two divisions remain part of the company for the full year, Novartis expects net sales to grow by low- to mid-single digits at constant currencies. The company indicated that the guidance assumes no generic competitor to Gilenya will enter the market in 2019.

In regards to Sandoz,  Narasimhan indicated that he will be ready to talk about the future of the generics unit following a revamp in the coming months, while still describing the business as "an integral part" of Novartis. "We're focused on transforming the business, making it an autonomous entity over the next 18 months that is able to compete as an independent unit within Novartis," he said, and "after we complete all that, then I think we can have further conversations about where we want to head from there."  

Commenting on potential increases to drug prices in the US, Narasimhan said "we are in a situation where we do take limited price increases where we think it is defendable and appropriate, but most of those price increases fall back into rebates." The executive added "and I think what we need to look at now is how do we enable those rebates to reduce patient out-of-pocket costs in the system."

Narasimhan indicated that the company "will continue to look at bolt-on acquisitions…over the coming years."

What analysts said:

Analysts at Credit Suisse said that Novartis' guidance "appears light of expectations."

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