Still free from Diovan rivals, Novartis hikes forecast once again

Novartis CEO Joseph Jimenez

Today, Novartis ($NVS) had the pleasure of hiking its 2013 forecast for the second time this year. And once again, it has Diovan to thank--or, to put a finer point on it, Novartis has Ranbaxy Laboratories to thank. The ongoing bumbling at the Indian generics maker means there's still no copycat version of Diovan to drain away sales of the blockbuster blood-pressure drug.

Diovan and its variant Diovan HCT went off patent last year, and generic versions of the combo drug--which melds Diovan with a diuretic--rolled out soon after. But Diovan in its solo state has no copycat competition. So, the precipitous drop expected for Diovan sales still hasn't come. Some strong growth in newer drugs--particular the cancer treatment Afinitor and the multiple sclerosis pill Gilenya--helped lead the pharma division to a 4% sales increase (1% including currency effects).

Overall, Novartis sales were up for the third quarter (4%, to $14.3 billion). Even units that had been lagging earlier this year--vaccines, for instance--turned in Q3 sales growth. After fixing the manufacturing problems that held Sandoz back last year, the generics business delivered an 11% sales increase, partly because of the Fougera buyout last fall, partly on growth in emerging markets and biosimilars. And those watching China sales for trouble can relax a bit; despite the government corruption-and-pricing probe, Novartis sales in the country grew by 18%, only four percentage points less than the growth rate there in 2012.

Profits fell short, however, with a decline of 9%, thanks to the weakened yen and emerging-markets currency effects, plus an increase in R&D spending. 

Now, Novartis expects sales to grow in the low- to mid-single digits and profits to match or better last year's. In a footnote, that forecast is qualified this way: "Based on a modeling assumption that the launch of a generic Diovan monotherapy in the U.S. will not happen in 2013."

As Reuters notes, analysts see the upgraded forecast in a similar way: It's not because of stellar performance in the underlying business. And Novartis notes that the Diovan hit will come sometime, namely next year. It's a temporary reprieve. 

Meanwhile, the company's strategic review--begun in August, soon after Chairman Joerg Reinhardt stepped into his job--is continuing, CEO Joe Jimenez told reporters today. Units that don't have the global scale to vie for the lead in their respective markets could find themselves on the block. Analysts are eyeing vaccines as a possibility, though management changes in animal health might mean that unit would go up for sale first.

- see the Novartis release (PDF)
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