Novartis is gaining in emerging markets. It's also seeing growth in newly launched products, including a few potential blockbusters. Both very good things--and sorely needed to offset a manufacturing shutdown and eroding sales of its top-selling drug.
For the second quarter, Novartis ($NVS) sales dropped by 4% to $14.3 billion. As The Wall Street Journal points out, the blood-pressure remedy Diovan lost 16% of its sales to generic competition in Europe. And production at the troubled consumer-drug plant in Lincoln, NE, hit sales in that division by 24%.
Overall, however, the numbers came in better than expected. And despite the strong dollar, Novartis expects to keep to its 2012 sales forecast. That goal--sales that match last year's at constant exchange rates--may not seem much of a stretch, but Diovan loses patent protection in the U.S. in September. The drop in sales after that will make a 16% decline look tame.
So, Novartis really needs continued growth in emerging markets, where sales increased by 6% for the quarter, to $3.4 billion. It also needs a continued boost from newer drugs, including the multiple sclerosis pill Gilenya and cancer drug Afinitor. Altogether, recently launched drugs accounted for 29% of net sales, compared with 25% last year, the company pointed out. Gilenya is a particular bright spot, with $283 million in Q2 revenues. CEO Joe Jimenez says it's on track to reach blockbuster status by year's end.