Novartis is celebrating a leap of 24% (30% at constant exchange rates) in earnings for the first quarter, but despite an increase booked for sales the figures missed expectations.
The Swiss drugmaker said net income leapt to $2.97 billion for the period, up from $2.39 billion a year ago, equating to earnings share of $1.21 versus $0.97.
Net sales inched up 1% to $14 billion, missing analysts' average forecast of $14.25 billion (according to Reuters) as strong performances by growth products and emerging markets were countered by generic erosion and dragged down a further 2% by currency exchange effects.
Pharmaceuticals net sales came in at $7.8 billion (-1%, +1% CER), with volume growth of 6 percentage points and a positive price impact of 1 percentage point mostly offset by the impact of generic competition (-6 percentage points, mainly for Zometa/Aclasta, which completed a full year of generic impact in the US).
The division's operating income dropped 13% (-7% CER) to $2.2 billion, mainly because of $252 million in net restructuring charges related to the US field force, the Suffern plant closure in the US, and otherl restructuring initiatives outside of the US and Switzerland.
At eye unit Alcon sales climbed 3% (6% at CER) to $2.6 billion with strong growth in the Surgical franchise tempered by moderate growth in Ophthalmic Pharmaceuticals.
Generics unit Sandoz also saw net sales rise 3% to $2.3 billion, as volume growth of 14 percentage points more than compensated for 10 percentage points of price erosion.
Elsewhere, the Vaccines unit saw sales jump 13% (12% at CER) on a pro forma basis to $215 million for the first quarter, driven by the meningitis franchise, particularly Menjugate shipments to Latin America, strong Menveo sales, and the launch of Bexsero in several European private markets as well as Australia and Canada, while those at Consumer Health were up a respectable 5% at $1.0 billion.
2014 outlook unchanged
Looking forward, the drugmaker says that, barring unforeseen circumstances, its 2014 outlook remains unchanged.
However, its Novartis business will likely look distinctly different next year, with a mega transformation through deals worth more than $25 billion announced earlier this week.
The transactions - acquiring GSK oncology products to strengthen its pharmaceuticals division, selling its vaccines unit to GSK to maximise its value, creating a consumer health joint venture with GSK, and divesting Animal Health to Lilly - will provide a strong financial proposition for the firm, it said.
"From year one after closing, we expect an improvement in growth rates of sales, core operating income and core operating income margin, with each component of the deals creating value," the Novartis noted.
The transaction are expected to close next year.