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Novartis sales below forecast in ‘transformative’ year

Published on 28/01/15 at 02:06pm
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Novartis’ fourth quarter sales have faded slightly as growth in pharmaceuticals is beaten back by generic competition, and the firm continues with its plethora of divestment deals.

Overall sales in Q4 were $14.6 billion, a slight decrease of 2% from the same period last year. Novartis chief executive Joseph Jimenez remains upbeat however, adding: “I’m confident that we are positioned for future success.”

He says: “2014 was a transformational year for Novartis. We improved our execution, while taking steps to focus the company on our three leading businesses with global scale. We delivered solid sales growth with margin expansion, strengthened innovation, and advanced our quality and productivity agendas.

Net sales in its pharma division stayed constant at $7.9 billion, with a volume of growth of 8% at constant exchange rates (CER) offset by a decrease of 8% from the impact of increasing generic competition – particularly for blood pressure treatments Diovan (valsartan) and Exforge (amlodipine and valsartan).

Cancer treatment Gleevec is also due to start losing patent in July this year which will be reflected later on in 2015 sales reports. But several key growth products helped keep the division afloat – together these drugs contributed to 46% of its sales.

Multiple sclerosis medicine Gilenya (fingolimod) had sales of $666 million, an increase of 32% at CER over the same period last year, while cancer treatments Tasingna (nilotinib) and Afintor (everolimus) had sales of $428 million (up 30%) and $426 million (up 24%) respectively.

Blood cancer medicine Jakavi (ruxolitinib) – which was recently recommended for an extended license by the EMA – saw the biggest sales increase of 91%, although it had lower overall sales than other growth products at $84 million.

Divestment deals

In April last year, Novartis and GlaxoSmithKline announced an asset-swap deal in which GSK will sell its cancer business to the Swedish firm for a maximum of $16 billion, and in turn Novartis will sell its non-influenza vaccine portfolio for up to $7.1 billion. The manufacturers will also combine their consumer health units under GSK’s majority (63.5%) control.

The vaccine division saw a 2% fall in sales compared to the same period last year, bringing in $494 million. Results from the oncology assets to be gained from GSK were not included in the Q4 report

Novartis is also planning to divest its influenza vaccine business to Australian biopharma firm CSL, and recently completed the $5.4 billion sale of its animal health division to Lilly. The company suffered a pre-tax impairment charge of $1.2 billion as a result of the CSL divestment.

Novartis is hoping these sales will allow it to focus on three core areas – pharmaceuticals, eye care and genetics. It says it expects the transaction with GSK to be completed in the first half of 2015, and the transaction with CSL to be completed in the second half of this year.

The firm reported full year earnings of $57.9 million, a very slight increase of 1% from 2013.

Site sale to Brighton University

Novartis has also just announced it will not be pondering the future of its Horsham site for much longer, after agreeing its potential sale to the University of Brighton.

A spokesman for the firm says: "We are delighted to be able to confirm that we are entering into exclusive negotiations with the University of Brighton for the sale of our former Horsham site at Wimblehurst Road.

“This is still subject to the usual negotiations when trying to agree a contract, but the University's proposal offers an exciting opportunity which could bring long term benefits to the town and local residents, as well as realise our ambition in leaving a scientific legacy at the site."

George Underwood

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