New Novartis meds help relieve Gleevec generics pain

Novartis

It’s accentuate-the-positive time at Novartis. The Swiss drugmaker’s sales and earnings suffered in the first quarter, thanks to an early generic version of blockbuster leukemia drug Gleevec. But as the company was quick to point out, growth in newer products helped pick up the slack.

Gleevec took the honors as Novartis’ ($NVS) biggest-selling med after generics took down blood pressure med Diovan, and until the company struck a generics licensing deal with patent challenger Sun Pharmaceuticals last year, it seemed destined to stay in that top slot for some time.

Now that a copycat is on the market—as of February 1—Gleevec is losing altitude fairly quickly, with a 20% decline for the first quarter to $834 million. Eye injection Lucentis and cancer med Afinitor both fell as competition in their fields heated up. And Diovan and Exforge, another hypertension remedy that’s now off patent, both took 20%-plus hits to sales.

So, it’s understandable that Novartis would want to brag about the newer meds that filled those gaps. Its fast-moving psoriasis med Cosentyx, which has outstripped previous sales estimates since its launch last year, delivered $176 million. Gilenya, its multiple sclerosis pill, has zoomed up to become the company’s second-best seller at $698 million for the quarter. And Tasigna, a leukemia-fighting follow-up to Gleevec, grew 6% to $382 million, despite cross-competition from the Gleevec copycat.

Entresto, however, came in short of expectations again. The so-far-underperforming heart failure med made its debut last year to much fanfare, but it’s been struggling to gain traction. It delivered just $17 million for the quarter, short of analyst forecasts, and as Bernstein analyst Tim Anderson notes, the company for the first time unveiled a 2016 sales estimate for the drug. It’s $200 million, and Bernstein had expected twice as much.

“It was a reasonable Q1 when measured against expectations, but indicative of the headwinds [Novartis] faces in 2016,” Anderson said in a Thursday note to investors. “Competitive pressures on major brands like Afinitor and Lucentis, investment in Alcon, and modest expectations for new launch Entresto are strong currents for 2016 (and beyond).”

In the balance, the drugmaker’s net sales for Q1 slipped to $11.6 billion from $11.9 billion, a 3% decline, though sales actually ticked upward slightly in constant currencies.

Earnings dropped by either measure, as the Gleevec effect combined with increased spending on new drug launches—including Cosentyx and Entresto—and some new investments in the struggling eye unit Alcon. Earnings per share came in at 85 cents, down from 96 cents during the same quarter of 2015. That’s a decline of 11% in dollar terms, or a 3% slide ex-foreign exchange.

Outside of the pharma division, Alcon’s results slid, but not unexpectedly so, thanks to the reasons CEO Joe Jimenez outlined with Novartis’ fourth-quarter earnings release. The generics business Sandoz came in flat as higher volume was offset by pricing pressures.

“I am pleased we were able to show sales growth in constant currencies despite the entry of a generic version of Gleevec in the U.S.,” Jimenez said in a statement on Thursday. “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.”

- get the Q1 earnings release from Novartis

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