|Novartis CEO Joe Jimenez|
2. Novartis ($NVS)
2014 revenue: $57.996 billion
2013 revenue: $57.355 billion
As one of the few Big Pharma companies to post any sales growth at all, Novartis didn't have a lot to complain about when unveiling its 2014 results.
Sure, its blockbuster hypertension drug Diovan did take a big sales hit from generics--declining to $2.3 billion from $3.5 billion--but the Swiss drugmaker had enjoyed a long reprieve there. Generics maker Ranbaxy Laboratories' manufacturing problems held off copycat competition for more than 18 months after Diovan's patent expired.
And yes, the newly off-patent Exforge franchise suffered a slight decline in the fourth quarter, as did the TOBI respiratory group, also thanks to generic competition. Overall, some of the strongest growth figures for the full year belonged to units that Novartis has since unloaded, vaccines (thanks to the new meningitis B shot Bexsero) and consumer health. Plus, margins still didn't meet CEO Joe Jimenez's specifications, and with the Swiss franc uncoupled from the fast-declining euro, the company was facing up to the fact that it might need to move some costs out of its home country.
But for a company whose top seller lost more than $1 billion, Novartis did pretty well. Newer drugs, including the multiple sclerosis blockbuster Gilenya and the cancer meds Tasigna and Afinitor, delivered growth of one-quarter and more. Plus, solid growth from the Alcon eye care unit and the Sandoz generics business helped offset that generic pain.
And fact is, more than any other company on this list--except its deal partner GlaxoSmithKline ($GSK)--Novartis is looking at a quite different result for the year ahead. Under a set of deals closed in March, consumer health, vaccines and animal health all come off its books, with OTC meds moving to a joint venture with GSK, the vaccines unit to GSK ownership, and animal health to Eli Lilly ($LLY). Novartis gains Glaxo's oncology business, including the relatively new melanoma fighters Tafinlar and Mekinist, and the company figures it can put its own expertise toward building up sales and developing new indications.
Meanwhile, Novartis is anticipating approval for its heart failure drug LCZ696, which has been hailed as a game-changing treatment--and pegged as a potential "megablockbuster" by pharma chief David Epstein. Its psoriasis drug Cosentyx just hit the market, and analysts are looking for big things there, too.
Those two drugs won't have time to pay off in a big way in 2015, however. In fact, Novartis says profits will grow faster than sales this year, as Jimenez and his team focus on squeezing more costs out of procurement and business services, among other things. The company forecasts a "high single-digit" boost to core operating profits, on a mid-single-digit increase in sales.
-- Tracy Staton (email | Twitter)
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