Novartis backs full-year outlook as COVID-19 pandemic continues to weigh on Sandoz unit

Headline results for the first quarter:

  • Innovative medicines sales: $10.1 billion, up 4%
  • Sandoz sales: $2.3 billion, down 9%
  • Overall revenue: $12.4 billion (forecasts of $12.5 billion), up 1%
  • Profit: $2.1 billion, down 5%

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

What the company said:

"Growth drivers and launches continued their strong momentum with double-digit growth for Entresto, Cosentyx, oncology growth drivers and Zolgensma," remarked CEO Vas Narasimhan. The executive added "we expect Sandoz performance to stabilise, in the near-term, after a challenging quarter," during which it was affected by a "historically weak" cough and cold season because of social-distancing measures.

Aside from Sandoz, Novartis explained that the COVID-19 pandemic also continued to cause disruption in several markets during the first quarter, particularly affecting dermatology, ophthalmology, the breast cancer portfolio and anti-infectives. Narasimhan indicated that apart from oncology treatment, demand for healthcare has now returned to normal levels in the US and China, and has been recovering in Europe in the past couple of months. 

Other results:

  • Oncology product sales: $3.8 billion, up 4%
    • Tasigna: $515 million, up 6%, with gains in the US and emerging growth markets partly offset by a decline in Europe
    • Promacta/Revolade: $463 million, up 15%, boosted by increased use in chronic immune thrombocytopenia and as first-line treatment for severe aplastic anaemia in the US
    • Tafinlar/Mekinist: $393 million, up 7%, due to continued demand in adjuvant melanoma and non-small-cell lung cancer
    • Jakavi: $363 million, up 14%, with "strong demand" in myelofibrosis and polycythaemia vera
    • Gleevec/Glivec: $272 million, down 17%, hit by increased generic competition
    • Kisqali: $195 million, up 21%, due to "solid" gains in Europe and emerging growth markets
    • Kymriah: $151 million, up 62%
    • Lutathera: $122 million, up 9%
    • Piqray: $78 million, up 5%, benefitting from new launches in Europe and emerging growth markets
  • Cosentyx: $1.1 billion, up 13%, continued growth across indications despite access changes in the US
  • Gilenya: $707 million, down 8%, affected by increased competition
  • Entresto: $789 million, up 39%, driven by demand as a "first-choice therapy" in heart failure patients with reduced ejection fraction
  • Lucentis: $545 million, up 12%, boosted by "strong" growth in China, where additional indications were included in the National Reimbursement Drug List
  • Zolgensma: $319 million, up 88%, led by Europe and emerging growth markets
  • Aimovig (ex-US territories excluding Japan): $47 million, up 31%
  • Kesimpta: $50 million, boosted by faster than expected conversion from free to paid scripts
  • Biopharmaceuticals: $511 million, up 14%, driven by sales in Europe
  • Emerging growth markets: $3.2 billion, up 4%, with "strong" growth in China to $744 million

Looking ahead:

Novartis reaffirmed that it expects sales to rise this year by a low- to mid-single-digit percentage in constant currencies, while core operating income is projected to grow in the mid-single digits, ahead of sales. The company added that innovative medicine sales are forecast to make mid-single-digit gains in 2021 as well, with Sandoz revenue declining in the low- to mid-single digits, revised from broadly in line.

The drugmaker said its guidance assumes "a return to normal global healthcare systems including prescription dynamics by mid-2021." Analysts predict sales of $52.1 billion for the year on adjusted profit of $6.35 per share.

What analysts said:

Edward Jones analyst Ashtyn Evans noted that "while this was a slightly disappointing quarter for Novartis, particularly in the generics segment, key drugs Entresto, Cosentyx and Zolgensma all grew by more than 10% and their sales results beat expectations."

Pipeline updates:

Novartis said that the Phase III PARADISE-MI study investigating Entresto in a head-to-head comparison with ramipril failed to meet its primary composite endpoint of reducing risk of cardiovascular death and heart failure events after an acute myocardial infarction. The company noted that numerical trends "consistently" favoured Entresto, adding that top-line results will be presented at the American College of Cardiology (ACC) Annual Scientific Session.

The company also said a large-scale UK study of its RNAi-based PCSK9 inhibitor Leqvio to lower cholesterol is now not expected to be completed until 2026, a year later than expected. "With the impact of COVID-19 in the UK, recruitment has been challenging," commented John Tsai, Novartis' head of drug development, adding that trial enrolment is now "starting to get back on track."

To read more Top Story articles, click here.