Novartis lifts profit forecast as recovery from COVID-19 continues

Headline results for the third quarter:

  • Innovative medicines sales: $9.8 billion, up 2%
  • Sandoz sales: $2.4 billion, down 2%
  • Overall revenue: $12.3 billion (forecasts of $12.7 billion), up 1%
  • Profit: $1.9 billion, down 5%

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

What the company said:

"Novartis continues to deliver solid performance with double-digit increases in core operating income and expanding margins, despite the impact of COVID-19 on healthcare systems," remarked CEO Vas Narasimhan, adding "our key growth drivers and launches are performing well."

The company said that during the third quarter "overall market conditions have been recovering, though COVID-19 continues to weigh on certain therapeutic areas, most notably in dermatology, ophthalmology and the Sandoz retail business." Narasimhan noted "healthcare systems have realised the impact the pandemic had...broadly on non-communicable diseases and overall preventative measures and screening measures. There's a strong desire not to repeat that."

Novartis added that net income in the quarter fell mainly as a result of legal provisions, including a recent fine from the French competition authority related to marketing of Lucentis. Narasimhan said Tuesday that the company will appeal the decision.

Other results:

  • Oncology product sales: $3.7 billion, flat versus the prior year
    • Tasigna: $478 million, down 2%, with declines in emerging markets, Europe and Japan, partly offset by growth in the US
    • Promacta/Revolade: $442 million, up 16%, boosted by increased use in chronic immune thrombocytopenia and as first-line treatment for severe aplastic anaemia in the US
    • Tafinlar/Mekinist: $397 million, up 15%, with "strong growth" driven by demand in adjuvant melanoma and non-small-cell lung cancer
    • Jakavi: $335 million, up 20%, with "strong demand" in the myelofibrosis and polycythaemia vera indications
    • Gleevec/Glivec: $280 million, down 13%, hit by generic competition
    • Kisqali: $183 million, up 49%, benefiting from the ongoing impact of positive overall survival data from the Phase III MONALEESA-7 and MONALEESA-3 trials
    • Kymriah: $122 million, up 54%, growing strongly in Europe, the US and Japan
    • Lutathera: $119 million, flat versus the prior year, as the COVID-19 pandemic continued to have an impact on the brand
    • Piqray: $83 million, up 93%, with significant growth in the US
  • Cosentyx: $1 billion, up 8%, despite lower new patient starts due to COVID-19
  • Gilenya: $733 million, down 12%, due to increased competition and the impact of COVID-19
  • Entresto: $632 million, up 47%, with "strong growth" driven by demand as the first choice therapy for reduced ejection fraction heart failure
  • Lucentis: $515 million, up 3%, as sales have been "consistently recovering" from the COVID-19 impact since May
  • Zolgensma: $291 million, up 82%, with "significant growth" led by geographic expansion outside the US
  • Biopharmaceuticals: $498 million, up 16%
  • Emerging growth markets: $2.9 billion, down 1%, as double-digit growth in China, boosted by the launches of Entresto and Cosentyx, was offset by COVID-19-related declines other markets

Looking ahead:

Novartis still expects sales this year to grow in the mid-single digits on a constant-currency basis. The company added that core operating income is now forecast to grow in the low-double digits to mid-teens, lifted from a prior estimate of growth in the low-double digits.

According to Novartis, the guidance assumes that there is "a continuation of the return to normal global healthcare systems, including prescription dynamics, particularly ophthalmology," in the fourth quarter. The drugmaker noted that the forecast also assumes that no generic versions of Gilenya or Sandostatin LAR are launched in the US this year.

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