Novartis sales in third-quarter 2012 disappoint; EPS in line

Swiss drug major Novartis (NOVN: VX) reported third-quarter 2012, showing that net sales reached $13.8 billion (-7%, -2% at constant exchange), arguing that its pharmaceutical business is well positioned to offset patent expiries. Sales of its top-selling drug Diovan (valsartan), which lost patent protection in the USA on September 21, fell 32% in the third quarter to $969 million.

Core operating income was $3.9 billion (-5%, -3% cc) in third quarter, with operating income coming in at $3.0 billion (+3%, +5% cc). Core earnings per share were $1.34 (-8%, -6% cc) in third quarter. Novartis shares dipped 0.5% to 56.90 Swiss francs in early trading this morning, as net sales fell short of the average forecast in a Reuters poll of $14.032 billion, while core EPS fell 6% to $1.34, in line with consensus.

Commenting on the results, Joseph Jimenez, chief executive of Novartis, said: “While Novartis net sales were impacted by the patent expiration of Diovan and a down quarter in Sandoz and Consumer Health, our launch brands performed well and now represent 29% of Group sales. Pharmaceuticals had another solid quarter. Our excellent record on innovation continues with new approvals for innovative products like Afinitor [everolimus] in advanced breast cancer, the recent EU filing of QVA149 in COPD [chronic obstructive pulmonary disease] and encouraging news in heart failure. I am confident that this improves the long-term growth prospects of the business.”