Novartis' posts solid 2nd-qtr 2006 profit, despite heavy Chiron integration costs

Novartis' second-quarter 2006 profits fell below expectations, as the firm was hit by costs related to last year's acquisition of US biotechnology firm Chiron (Marketletter November 7). Earnings per share totaled $0.72 versus consensus forecasts of $0.77.

During the period, the Swiss drug major saw a 4% rise in net income on second-quarter 2005, to $1.73 billion, which was below analysts' consensus estimates of $1.82 billion. On the day of the news, July 17, shares in Novartis fell 0.2% to 67.05 Swiss francs, but this was not a sign of investor unease as the drop was in line with European drug stocks.

Also of comfort to investors was the fact that Novartis raised its guidance for 2006, forecasting high single digit growth in drug revenue as well as double-digit sales for the group as a whole, with Chiron expected to contribute $1.0 billion in sales and $200.0 million in full-year profit.