Novartis reveals record half-year results

Heart drug Diovan, produced in Basel by Novartis, is a frontrunner Keystone

Net profit at Swiss pharmaceuticals company Novartis rose by 12 per cent for the first six months of this year – a record result.

The company said on Thursday that it expected the good results to continue for the rest of the year.

In a statement, Novartis said that half-year net profit stood at $3.1 billion ($4 billion) while net sales for the same period grew 11 per cent to $15.1 billion on strong performances in all divisions.

It added that strong expansion in the oncology and cardiovascular franchises had underpinned double-digit pharmaceuticals sales growth of 12 per cent.

“In the first half year, our broad healthcare portfolio delivered good results. Our oncology and cardiovascular medicines continued their dynamic growth based on unique patient benefits,” said Novartis CEO Daniel Vasella.

“In the second half of 2005, we expect new study results for several innovative compounds. The acquisitions of Hexal and Eon Labs progress as planned. Overall, we are on track to achieve our objectives for 2005.”

Generics

But Europe’s sixth-largest drug maker said that its recent near $7-billion deal to buy two makers of cheaper generic drugs would result in a one-off full-year charge on group net income of $250 million to $350 million.

The integration of two firms, the German Hexal and the United States generics firm Eon Labs into the Sandoz generics division would result in additional sales in the second half of over $1 billion.

Regulatory approval for the Eon Labs acquisition was expected in the third quarter, Novartis said.

However Sandoz suffered in the second quarter from a $30-million restructuring charge and a tough year which dragged operating profit down 40 per cent to $79 million.

Strong result

Commenting on the result, Lombard Odier Darier Hentsch analyst Karl Koch said that Novartis had put in a strong performance.

“The results are ahead of expectation due to higher sales in all divisions and particularly high profitability in the pharmaceutical division,” said Koch.

Novartis has increased its world-market share to 4.6 per cent in the first five months of the year, from 4.4 per cent a year ago.

The Basel-based pharmaceuticals company is depending on heart medicine Diovan and cancer drug Gleevac to boost growth until new drugs for diseases such as diabetes and multiple sclerosis can be introduced.

swissinfo with agencies

Key facts

First-half results:
Net profit: $3.1 billion (+12%).
Net Sales: $15.1 billion: (+11%).
Operating income: $3.5 billion.