No big thrill from Novartis in Q1, just a 'solid' $14B in sales

Novartis CEO Joe Jimenez

After Tuesday's precedent-setting deal announcement, today's earnings release from Novartis ($NVS) had to be an anticlimax. And it was: The results were described using unexciting words like "solid" and "flat" and "nice" and "largely in line."

About the most thrilling assessment came from CEO Joe Jimenez--and we use "thrilling" as a relative term. "We're off to a good start in the fiscal year," he said.

Quarterly sales were flat at $14 billion, about $200 million shy of analyst estimates. Profits jumped by 23%, but only because Novartis closed the sale of its blood diagnostics unit to Spain-based Grifols, scoring a $900 million gain in the process. Had that unit been included in sales, the Financial Times points out, Novartis revenue would have grown by 1%.

Beneath these overall numbers, there were a few standout items. The multiple sclerosis drug Gilenya, launched in 2010, grew by 31% for the period, to $552 million. Net sales in emerging markets grew by 9%--including a 17% leap in China, despite Chinese regulators' ongoing probe of potential corruption in the pharma industry.

All together, the newer drugs Novartis tags as "growth products" delivered $3.2 billion, up 17% year-over-year, making up 41% of the pharma group's sales. That's up from 31% for the same period last year.

And on the flip side, generic competition took a 6% bite out of pharma net sales, primarily because of cut-rate rivals for its bone drug Zometa/Aclasta, now off patent for a full year. Gleevec sales in the U.S. faltered by 4%, sliding to $1.1 billion.

Meanwhile, Afinitor, the oncology drug that recently won a new indication in breast cancer, slowed a bit, because of a move to shorter treatment times in the U.S.; the company cut its long-term sales forecast for the drug's breast-cancer use to $1.7 billion from $2 billion. It brought in $357 million for the quarter, up 19%.

About a year from now, Novartis' cancer franchise will look quite a bit different than it does today, thanks to the asset swap with Glaxo ($GSK) announced Tuesday. Actually, the entire company will look quite different, as Jimenez and Chairman Joerg Reinhardt wrap up their strategic review--quite quickly, we might add.

If you've been following the story, you know that Novartis agreed to buy GSK's cancer franchise for up to $16 billion, sell its vaccines business to the British drugmaker for up to $7 billion, and team up on a joint consumer-health business run by Glaxo. It also agreed to sell its animal health unit to Eli Lilly ($LLY) for $5.4 billion.

- see the release from Novartis
- read the FT story (reg. req.)

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