Novartis Q1 earnings drop as cancer drug sales falter
Swiss drugmaker Novartis (SIX: NOVN) on Thursday reported a 13% drop in net income for the first quarter on the back of falling sales for its bestselling cancer drug Gleevec as generic version of the therapy hit the markets.
The company posted net income of $2.01 billion. Sales were down 3% year-on-year to $11.6 billion impacted by currency movements, cost of new drug launches and restructuring costs.
Chief Executive Joseph Jimenez, said: “I am pleased we were able to show sales growth in constant currencies despite the entry of a generic version of Gleevec in the US. As expected, our results reflect additional investments behind our new launches and Alcon. We are on track with the plan we outlined in January to further focus our divisions, drive greater innovation and significant synergies and productivity. I remain confident in our long-term growth prospects, underpinned by our strong pipeline and the talent leading our Research and Development functions.”
The Switzerland-based company said it still sees 2016 revenue and core operating income to be broadly in line with 2015. Group net sales and core operating income are expected to be broadly in line with the prior year, after absorbing the impact of generic competition. Generic competition impact on sales is expected to be as much as USD 3.2 billion compared to USD 2.2 billion in 2015, the company said in a statement.
Sales for Gleevec dropped 22% to $834 million, following the launch of cheaper generic version of the drug in February.
Novartis is looking to offset the loss of sales via new product launches and said it has increased spending on marketing and sales to 23.6%.
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