Novartis forges ahead on growth path

Sales of pharmaceuticals continue to drive growth for Novartis. Novartis

The Swiss pharmaceutical group, Novartis, has reported that it is on track this year to record its largest-ever profit.

Europe’s number three drugmaker announced on Monday that third-quarter net income was up by seven per cent on the second quarter to $1.28 billion (SFr1.71 billion).

In a statement, the company said that sales in its flagship pharmaceuticals division had risen by 17 per cent in dollar terms to $4.04 billion, boosted by growth of the hypertension drug Diovan and the leukaemia drug Glivec/Gleevec.

Total sales in the third quarter rose by 16 per cent to $6.21 billion.

“I am pleased that we have succeeded in delivering sustained double-digit growth in both divisions [pharmaceuticals and healthcare],” commented Novartis chairman and chief executive Daniel Vasella. “Pharmaceuticals is gaining share in all our key markets.”

Group sales for the first nine months of 2003 were $18.13 billion, around 18 per cent up on the corresponding period last year.

However, net income for the first nine months was $3.66 billion or just three per cent up on last year’s performance.

Novartis commented that the three per cent growth was less pronounced than at the operating income level (+ 15 per cent) because non-operating income from associated companies and financial investments was significantly reduced.

Booming generics

Vasella also commented on Monday on the booming generics market. Generics are copies of brand-name drugs.

“Our generics business grew to become a global leader, contributing a cost-effective solution to help meet patients needs, while addressing healthcare budgetary constraints,” he said.

In its outlook, the company said it expected sales in local currency terms to rise at a high single-digit or low double-digit percentage rate for the medium term.

This was thanks to its solid portfolio of cardiovascular and cancer drugs, low exposure to patent expiries and the expanding generics business.

Novartis said that a sustainable increase could also be expected in operating income.

But it warned that operating margins were expected to dip slightly this year and next as the pharmaceuticals division continued its “vigorous” growth strategy to sustain market share gains and invest heavily in research and development.

Profit to rise

The group added that with strong operational performance continuing, both full-year operating and net income were expected to exceed the results of 2002, barring any unforeseen events.

Last week, Basel rival Roche reported that its sales from January to September had climbed by eight per cent compared with the comparable period last year to SFr23.35 billion.

But the company did not give any profit figures for the period.

Novartis holds a 32.7 per cent stake in Roche but its overtures for a merger have consistently been rejected.

swissinfo with agencies

In brief

Novartis has recorded a third-quarter net profit of $1.28 billion, in line with analysts’ expectations.

The company said growth in its pharmaceuticals business was boosted by sales of flagship brands Diovan (hypertension) and Glivec/Gleevec (leukaemia).

The company has repeated that it expects to make a record net profit this year.