Novartis gets 4% sales lift as 'growth products' make good on their label

Novartis' ($NVS) third-quarter profit may have gotten a large boost from the sale of its Idenix ($IDIX) stake to Merck ($MRK) this summer, with cost cuts kicking in, too. But when it comes to top-line results that topped analysts' forecasts, the company has its own hot sellers to thank.

In addition to a 44% hike in third-quarter earnings, the Swiss pharma giant posted a 4% sales rise to $14.7 billion. While pharma revenue came in flat, Novartis' growth products performed well enough to offset the damage from generics to blockbuster Diovan, which helped take an 8% bite out of sales.

Those growth products did it by putting up $3.5 billion in net sales, a 16% increase over the year-ago quarter. Multiple sclerosis pill Gilenya, cancer treatment Afinitor and leukemia therapy Tasigna drove the boost, each posting growth that topped 20% to help growth products generate 44% of overall pharma sales.

Gilenya in particular shined, pushing forth despite an increase in competition in both the U.S. and abroad. Outside the U.S, the oral therapy churned out the best first-half sales tally in the MS market, pharma chief David Epstein said on an investor conference call. Afinitor also tapped multiple growth sources beyond its breast cancer indication, while Tasigna delivered its double-digit growth numbers 7 years post-launch, he noted.

Emerging markets also came up big for the Basel-based drugmaker, leaping ahead 13% in constant currencies on the back of standout showings in China, Brazil and Russia. IMS now ranks Novartis as the No. 2 pharma company in developing markets, Epstein said.

"We're still not seeing a slowdown in emerging markets despite the fact that the economies are slowing down," CEO Joe Jimenez said on the call.

Growth in these areas is something Novartis is ready to get used to, now that it has shed a group of underperforming units. Since undergoing a lengthy strategic review, the company has divested its blood diagnostics business to Spain's Grifols, sold its animal health unit to Eli Lilly, agreed to a multibillion-dollar asset swap that sent most of its vaccines unit to GlaxoSmithKline and carved out a consumer health joint venture, and--as of Sunday--cast off the remainder of the vaccines business to Australia's CSL.

"The transformation continues to be on track," Jimenez said on the call.

- read the release

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