Novartis Raises 2024 Profit Forecast on Demand for New Blockbuster Drugs

(Bloomberg) — Sales of Novartis AG’s closely-watched prostate cancer drug Pluvicto disappointed in the latest quarter, taking the shine off a raised profit forecast from the Swiss pharma company.

Novartis shares fell 4% in Zurich, trimming this year’s gain to 12%, after sales of the treatment fell short of analysts’ estimates.

“Pluvicto’s a little bit behind, but we believe that in the long run we’re on the right trajectory,” Chief Executive Officer Vasant Narasimhan said during a Bloomberg TV interview. The next significant boost may come from approval in a new group of patients, which could triple the potential treatment population, he said. 

The drugmaker kept its overall sales forecast unchanged, despite raising its profit guidance for the second time this year, even as demand for its blockbuster treatments for psoriasis and multiple sclerosis grew.

Core operating income is expected to grow in the mid-to-high teens in 2024, the Basel, Switzerland-based drugmaker said on Thursday. That’s up from the low double-digit to mid-teens pace it predicted in April. 

Novartis is pushing for growth after its leadership wrestled for years to hone one of the most wide-ranging portfolios in the pharmaceutical industry and focus more on innovation. The final step, last year, was the spinoff of former generic-drug unit Sandoz. 

The company isn’t pursuing near-term deals on GLP-1 obesity drugs, Narasimhan said. It’s working on approaches that require less frequent dosing, have fewer side effects or spare muscle, not offering the fourth or fifth pill, or the seventh or eighth injection. “I don’t think that’s a good use of our capital,” he said.

Novartis is on track to meet its midterm sales and margin targets through 2028, Chief Financial Officer Harry Kirsch said in a briefing with journalists, adding that he sees “excellent” growth in China and the US despite political tensions.  

Second-quarter core earnings per share rose to $1.97, beating the $1.87 average estimate of analysts surveyed by Bloomberg. Cosentyx, for psoriasis, and other immunology drugs beat expectations. 

The forecast upgrade was widely expected, Naresh Chouhan, a London-based analyst with Intron Health, said in a note to investors. While Novartis’ newer drugs largely beat expectations, some older products such as eye injection Lucentis fell short, he said.

 

–With assistance from Allegra Catelli, Lisa Pham and Sophia Vahanvaty.

(Updates shares in the second paragraph, adds CEO comment in third)

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