Novartis' Q1 revenue tops forecasts as forward purchasing amid COVID-19 pandemic adds $400 million to sales

Headline results for the first quarter:

Innovative medicines sales

$9.8 billion

+11%

Sandoz sales

$2.5 billion

+9%

Overall revenue

$12.3 billion (forecasts of $12 billion)

+11%

Profit

$2.2 billion

+16%

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

What the company said:

"While there are many uncertainties for the coming year, we are maintaining our full-year outlook at this time," remarked CEO Vas Narasimhan. The company noted that "our operations and product demand remain very stable and strong" amid the COVID-19 pandemic, adding that the coronavirus outbreak positively impacted sales by around $400 million during the quarter due to forward purchasing. However, Novartis suggested that this will reverse in the remainder of 2020.

Other results:

  • Oncology product sales: $3.6 billion, up 10%
    • Tasigna: $487 million, up 12%, grew in all regions, with "solid uptake" in China
    • Promacta/Revolade: $403 million, up 31%, driven by double-digit growth in all regions
    • Tafinlar/Mekinist: $366 million, up 23%, led by demand in adjuvant melanoma as well as non-small-cell lung cancer
    • Gleevec/Glivec: $329 million, up 7%, with increased generic competition partly offsetting a favourable one-time revenue deduction adjustment in the US
    • Jakavi: $318 million, up 23%, driven by demand in the myelofibrosis, polycythemia vera indications
    • Kisqali: $161 million, up 77%, boosted by positive overall survival data from the pivotal Phase III MONALEESA-7 and MONALEESA-3 trials
    • Lutathera: $112 million, up 6%
    • Kymriah: $93 million, up 107%, grew strongly in Europe and in the US
    • Piqray: $74 million, benefiting from further uptake in PIK3CA mutation testing
  • Cosentyx: $930 million, up 18%, continued to grow strongly across indications and regions
  • Gilenya: $772 million, up 1%
  • Entresto: $569 million, up 59%, boosted by continued "demand-driven growth"
  • Lucentis: $487 million, down 9%, hit by the COVID-19 pandemic, which has disrupted ophthalmology practices
  • Zolgensma: $170 millionwith the US launch continuing "to progress well"
  • Biopharmaceuticals: $450 million, up 28%, with strong growth in Europe
  • Emerging growth markets: $3.1 billion, up 8%with sales in China growing 18% on a constant currency basis to $622 million

Looking ahead:

Novartis reaffirmed that it expects sales this year to grow in the mid- to high-single digits on a constant-currency basis, excluding Alcon, with core operating income forecast to increase in the high-single to low-double digits. The company noted that the guidance assumes "that we see a return to normal prescription and consumption dynamics during [the second quarter] in our major markets." The forecast also assumes that no generic versions of either Gilenya or Sandostatin LAR launch in the US this year.

Meanwhile, Novartis indicated that it is "leveraging…digital tools to limit the disruption caused by the [COVID-19] pandemic" on clinical trials. The drugmaker conceded that it is "seeing slowdowns in new enrollments in ongoing clinical studies and start-up with new studies," although it remains "confident the impact on our ongoing clinical trials is manageable" and does not expect delays to planned regulatory submissions this year.

What analysts said:

"The overall result...is positive," remarked Zuercher Kantonalbank analyst Michael Nawrath.

Pipeline updates:

Narasimhan said Novartis has paused new enrollment in the Phase III ORION-4 study due to the COVID-19 pandemic. The study is investigating inclisiran, also known as KJX839, in patients with hypercholesterolaemia and is expected to finish in 2024. Novartis recently said ORION-4 aims to recruit 15,000 participants from sites in the US and UK. The delay should not have a long-term impact on the trial if enrollment can resume in coming months, with Narasimhan saying "there are a few digital technologies we have deployed over the years that are helping us manage this situation."

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