Novartis announced Wednesday that fourth-quarter net income increased 2 percent year-over-year to $2.1 billion, although the figure missed analyst estimates of $2.4 billion, as the company was affected by currencies in emerging markets and a strong Swiss franc. Meanwhile, sales in the three-month period rose 2 percent to $15.1 billion, meeting analyst forecasts, while revenue from prescription drugs climbed 1 percent to $8.3 billion.
CEO Joseph Jimenez said the company «delivered strong performance in 2013," adding «our growth products continued to expand, rejuvenating our portfolio and reinforcing our growth prospects." The drugmaker noted that growth products, which include Gilenya and Afinitor, posted fourth-quarter revenue of $3.3 billion, representing 40 percent of pharmaceutical sales, versus 33 percent in the prior-year period. Sales of Gilenya jumped 51 percent year-over-year to $527 million, while revenue from Afinitor climbed 32 percent to $361 million.
Novartis added that sales at its Sandoz generics unit rose 1 percent versus the year-ago quarter to $2.4 billion, while revenue from vaccines and diagnostics increased 4 percent to $655 million, lifted by influenza vaccines, pre-pandemic vaccines and the meningitis immunisation Menveo. In addition, sales at the company’s Alcon division climbed 3 percent to $2.7 billion, with revenue from consumer health, which also includes animal health products, up 8 percent to $1 billion.
«If you strip out currency effects, Novartis absolutely had a good quarter," remarked Helvea analyst Odile Rundquist. Meanwhile, David Kaegi of Bank J. Safra Sarasin said the results were solid, adding that productivity measures helped offset margin pressure at the group level from generic competition.
For 2014, Novartis indicated that it expects overall sales to grow at a low to mid-single digit rate in constant currencies, down from an earlier estimate of growth of at least mid-single digits. The company noted that the forecast assumes that a generic version of Diovan monotherapy is launched at the start of the second quarter in the US, with generic competition predicted to be up to $3 billion this year, compared with $2.2 billion in 2013. Sales of Diovan reached $3.5 billion last year, down 20 percent from 2012.
Along with growth products, the drugmaker is looking for new medicines to treat cancer, heart failure and lung disease to offset revenues lost through patent expiries. Last week, Novartis received a negative opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use on a marketing application for serelaxin in patients with acute heart failure, although the company indicated that it plans to soon resubmit a filing for conditional approval of the relaxin receptor agonist. The drugmaker added Wednesday that it submitted a regulatory filing in the US for ceritinib, also known as LDK378, in ALK-positive non-small-cell lung cancer. The selective oral anaplastic lymphoma kinase (ALK) inhibitor received breakthrough therapy designation from the FDA last year.
Novartis is currently conducting a review of its businesses, which Jimenez said Wednesday is expected to be completed by the end of the summer. The company agreed last year to divest its blood transfusion diagnostics unit to Grifols for $1.7 billion as part of the restructuring, with recent reports suggesting that Novartis is in discussions about exchanging its vaccine and animal-health units with Merck & Co.'s over-the-counter (OTC) business. Novartis is also weighing options for its OTC unit, as well as its 6.3-percent stake in Roche.
«We are considering all options including potentially unique structures that would enable them to become leading businesses in their sector," Jimenez said, adding this could include joint ventures or other unconventional set-ups different from an outright acquisition or sale. The executive noted that he was a «big fan» of the OTC business and also cited the long-term potential of the vaccines unit, mainly due to the meningitis B vaccine Bexsero. Jimenez added that he «wouldn’t rule out any option» for dealing with the stake in Roche, although he suggested that the company would «have to get full value, and to date there has not been a way to do that. But it would be part of thinking about the entire Novartis portfolio.»