Novartis earnings plummet but major drug release paves the way for improvement
Earnings fell by 32 per cent at Novartis in the second quarter, but new medicine releases are expected to counteract the negative impact.
During the three months ending June, net income was $1.86bn (£1.2bn) for the Swiss pharmaceutical giant, compared with $2.72bn earned in the same period last year.
Net sales also declined from $13.3bn to $12.7bn over the same period, which the company put down to the impacts of a strong US dollar and poor performance by associated companies.
Investors reacted fairly negatively to the news, with shares falling as much 1.56 per cent to $104.46 at pixel time.
But according to chief executive Joe Jimenez, there is little to worry about it in the long term, thanks to the recent release of certain medicines.
Entresto, which only just received approval from the US Food and Drug Administration (FDA), has the ability to cut deaths from heart failure by 20 percent and hospitalisations at roughly the same rate. Few advances so significant have been made in the pharmaceutical sector in past decades.
Reuters estimates sales will reach $1bn by the end of next year and $3.73bn by the end of 2019.
Jimenez expects the drug to pump in $5bn in annual revenues at its peak.
Novartis had a strong quarter for innovation, with US approval and launch of both Entresto and Glatopa being key highlights. Additionally, we reported a broad range of positive clinical data across franchises, including Tafinlar/Mekinist in metastatic melanoma and Cosentyx in ankylosing spondylitis.