GENEVA: Swiss drug maker Novartis AG reported a sharp decline in the first-quarter net profit, that reflected the absence of prior year’s hefty asset disposal gain. Drop in net sales also hurt profit mainly due to loss of exclusivity for its cancer drug Gleevec/Glivec in the US. Looking forward, the company still expects flat net sales and core operating income for fiscal 2016.
Net income for the first quarter fell to $2.0 billion from $13.0 billion in the prior year. Earnings per share decreased to $0.85 from $5.40.
The prior year results were benefited by $12.8 billion exceptional divestment gains from the portfolio transformation transactions and $0.5 billion additional transaction related expenses.
Core net income was $2.78 billion or $1.17 per share versus prior year’s $3.20 billion or $1.33 per share.
On average, three analysts polled by Thomson Reuters expected earnings of $1.19 per share. Analysts’ estimates typically exclude special items.
Core operating income declined 11 percent from last year to $3.26 billion.
Net sales from continuing operations dropped 3 percent to $11.60 billion from $11.94 billion in the prior year, while analysts were looking for $11.90 billion. At constant currencies, net sales were up 1 percent as strong growth in Growth Products offset Gleevec impact.
Growth Products, an indicator of the ongoing rejuvenation of the company’s portfolio, contributed $3.9 billion in sales, or 34 percent of total net sales, and were 24 percent higher than last year.
Pharmaceuticals net sales were $7.7 billion, down 3 percent due to generic competition and weak pricing.
Sandoz net sales were flat as volume growth of 11 percentage points more than offset 7 percentage points of price erosion. Alcon net sales fell 7 percent.
In Emerging Growth Markets, which comprise all markets except the US, Canada, Western Europe, Japan, Australia and New Zealand, net sales grew 5 percent at constant currency, led by Brazil and Turkey.
Looking ahead for fiscal 2016, Novartis continues to expect group net sales and core operating income to be broadly in line with the prior year at constant currencies, after absorbing the impact of generic competition. Generic competition impact on sales is expected to be as much as $3.2 billion compared to $2.2 billion in 2015.
The anticipated currency impact for the year is negative 2 percent on sales and negative 3 percent on core operating income.
