Despite strong nine-month results at Novartis, pharma heads will roll

Swiss drug major Novartis reported first three-quarter 2007 financial results that beat consensus forecasts, helped by a lower-than expected tax rate and better-than-thought figures from its Consumer Health business but, because of setbacks it its core business, surprised observers by announcing 1,260 job cuts in the USA and a reorganization of its pharmaceutical management, see later.

Group sales for the nine months advanced 13% to $28.1 billion, driven by all divisions but especially Vaccines and Diagnostics and the Sandoz generics unit. Operating income rose 9% to $6.5 billion, excluding a one-time incremental environmental provision of $590.0 million. Net income for the reporting period doubled to $11.1 billion thanks to an after-tax gain of $5.2 billion from the sales of the firm's Medical Nutrition and Gerber businesses (Marketletters passim).