Novartis has posted a disappointing set of financials for the third quarter which has seen net profits fall 12% to $1.57 billion, as generic versions of some of its big sellers starts to take effect, though analysts are pleased at the announcement of job losses in the USA.
The job cuts are part of a plan to “strengthen and streamline” its pharmaceuticals organisation which will a reduction of about 240 positions at its US headquarters, while its sales force while the US salesforce will be reduced by 510 Novartis and 510 third-party representatives. The majority of these reductions will be accomplished by not filling vacant positions, and the initiative will lead to cost savings of $230 million in 2008.
Group sales growth was just 5% to $9.61 billion, while pharmaceutical revenues dipped 2% to $5.88 billion, though the reductions came as no surprise. Nevertheless, there was strong revenue growth from its key drugs, and its blood pressure lowerer Diovan (valsartan) put in a stellar performance, with sales up 14% to $1.27 billion, while Glivec/Gleevec (imatinib) also did well with sales also up 14% to $783 million.
However, generic competition in the USA seriously impacted blood-pressure-lowering drug Lotrel (almodipine/benazepril), which collapsed 81% to $66 million, while “mature products ” in its ophthalmics/dermatology/gastrointestinal/urology sector, including Lamisil (terbinafine) fell 57% to $127 million, while the fallout following the market withdrawal of the irritable bowel syndrome drug Zelnorm (tegaserod) continues.
Chief executive Daniel Vasella was upbeat, however, saying that despite the
anticipated weak quarter in pharmaceuticals, “we showed a strong operational performance driven by our other businesses”, notably vaccines and diagnostics. This demonstrates “that our focused diversification at least partially balances the risks recently seen in the pharmaceutical industry with heightened Food and Drug Administration demands and a more aggressive and risk-taking generics industry in the USA,” he added.
After losing several products to generics, new products such as Tekturna (aliskiren), Lucentis (ranibuzumab), and Exforge (amlodipine plus valsartan) are “creating the foundation for a new growth phase that will be visible” starting in the second half of 2008, Dr Vasella continued, adding that the 14 positive US and European regulatory decisions already received in 2007 augur well for the future”.
There will be more details of the results and analysis in tomorrow’s PharmaTimes World News.