Novartis saw its sales surge ahead in the fourth quarter of 2005, helped by strong performances by its branded and generic pharmaceuticals businesses, although profits were held back a little by acquisition costs.
Sales were up 14% to $8.7 billion, with pharmaceuticals up 6% and generics unit Sandoz leading the charge with an 81% hike on the back of its acquisitions of Hexal and Eon Laboratories in 2005. Underlying growth at Sandoz was 2%, a welcome return to organic growth after a downturn in local currencies in 2004, commented chef executive Daniel Vasella.
Operating profit fell marginally to $1.5 billion for the quarter, on the back of integration costs and a write-off related to Novartis’ decision not to pursue development of cholesterol-lowerer pitavastatin.
For the full year, sales rose 14% to $32 billion, while operating income rose 10% to $6.9 billion. Novartis said 2006 would be another record year, with ‘high single-digit sales growth in local currencies,’ and for the group as a whole, pharma sales ‘growing in the mid-to-high single digits.’
Big buys ‘unlikely’
On the issue of acquisitions - with the rumour mill linking Novartis to both Serono and SkyePharma in recent weeks - Vasella stressed that the first priority is to grow the company organically. After spending nearly $14 billion on acquisitions in 2005, any further big acquisitions are unlikely, he said, though smaller deals may be considered.
Meanwhile, looking at the performance of individual products, growth in the pharma division was once again driven by Diovan (valsartan) for high blood pressure - up 26% to $994 million in the fourth quarter - as well as cancer drug Glivec/Gleevec (imatinib), which advanced 32% to $590 million. Femara (letrozole) for breast cancer also put in a good showing, rising 32% to $146 million on the back of increased use in adjuvant treatment settings.
Thomas Ebeling, CEO of Novartis Pharma, noted that, with five new product launches in 2005 and 10 projects in development with sales potential of $500 million or more, Novartis has the pipeline to maintain its sales growth.
2005’s launches included iron chelator Exjade (deferasirox), a drug for thalassaemia which Novartis believes will top the $500 million threshold, as well as Xolair (omalizumab) for severe asthma in the UK and Germany and Aclasta (zoledronic acid) for the bone disorder Paget’s disease in Germany and other European markets.
Focalin (dexmethylphenidate) for attention deficit hyperactivity disorder has started well with $46 million in sales in its first six months on the US market, said Ebeling, while COX-2 inhibitor Prexige (lumiracoxib) has captured 29% of the market for this class of drug in Brazil, its first launch country. The European roll-out of this drug has now started with a launch in the UK.
Turning to the late-stage product pipeline, Ebeling highlighted: Galvus (vildagliptin) for diabetes; the new hypertension drug Rasilez (aliskiren); Aclasta in osteoporosis; FTY720 (fingolimod), its orally-active drug for multiple sclerosis; and Exforge, a combination of valsartan and amlodipine for high blood pressure.