Novartis' stock slipped this morning after first-quarter results showed a fall in earnings, largely because of generic competition and the temporary closure of a US manufacturing plant.

The Swiss drug giant posted an 8% drop in profit to $3.1 billion as its performance was hit by generic competition to its top-selling drug Diovan (valsartan), which has lost its patent protection in Europe, and suspension of production at the Lincoln, Nebraska manufacturing site due to quality issues back in December 2011.

Overall, group sales dipped 2% to $13.7 billion, but revenues from Novartis' pharmaceuticals unit inched up 2% to $7.8 billion, as new product launches helped counter the drop in Diovan turnover, which fell 15% to $1.2 billion over the period.

Of the new drugs, turnover of Afinitor (everolimus), an oral inhibitor of the mTOR pathway used across multiple diseases, shot up 60% to $143 million, the chronic myeloid leukaemia drug Tasigna (nilotinib) leapt 39% to $209 million, and eye drug Lucentis (ranibizumab) also continued to do well, growing 30% to $567 million.

In addition, new kid on the block Gilenya (fingolimod), the first oral treatment approved for multiple sclerosis, continued to capture market share, bringing in sales of $247 million during the period.

Novartis' Alcon unit also fared well, booking a 5% rise in revenue to $2.5 billion. On the downside, sales in its Sandoz unit fell 10% to $2.1 billion, mainly because of increased competition for the blood thinner enoxaparin, while turnover from the vaccines and diagnostics business dropped 19% to $299 million, largely due to an exceptionally strong first quarter in 2011.

Elsewhere, Consumer Health suffered a 20% drop in first-quarter sales to $932 million, as performance was impacted by the suspension of production at the Lincoln site, but the company said it is hoping to resolve all issues and begin shipping products again mid-year. 

Looking forward, Novartis said its outlook for the full year remains unchanged, with group constant currency net sales expected to be in line with 2011, and a group core operating income margin slightly below that of last year.