A 32% leap in first-quarter net income to $1.96 billion has prompted Swiss drug giant Novartis to reiterate an expected record performance for 2006.

But, despite the solid growth in profit - largely spurred by a $129 million one-time gain from the sale of Nutrition & Santé unit earlier this year - shares in the group dipped in early-morning trading as investors felt that results came in at the lower end of targets.

Group revenues were $8.3 billion for the period, rising 17% but falling just shy of the $8.5 billion targeted by a Reuters’ poll of 20 analysts. Growth was driven by a strong performance by the pharmaceuticals unit and the group’s generics arm Sandoz, which was bolstered by acquisitions and recent product launches.

Net sales from pharmaceuticals climbed 5% to $5.1 billion, but rose 9% in local currencies and outpaced the market. Revenues were propelled by strong double-digit growth of the cardiovascular and oncology franchises, and the neuroscience franchise also performed well, the firm said. Turnover of the group’s leading anti-hypertension medicines Diovan/Co-Diovan (valsartan), up 16% at $939 million, and Lotrel (amlodipine), leaping 28% to $295 million, helped push cardiovascular sales up 14%. The cancer drugs Gleevec/Glivec (imatinib), climbing 18% to $559 million, Femara (letrozole), rocketing 33% to $152 million, and the recently-launched iron chelator Exjade (deferasirox) drove a 10% rise in oncology sales.

In the US, net sales rose 15% to $2.1 billion, as turnover of drugs such as Diovan, Lotrel, Zelnorm (tegaserod), Zometa (zoledronic acid), Gleevec/Glivec, Femara and Exjade buoyed lower sales of Elidel (pimecrolimus), affected by a change in prescribing information, and Visudyne (verteporfin), which has suffered in the wake of rising competition.

In other regions: net sales in Europe fell 7% in US dollars but inched up 1% in local currencies; in the world’s second-largest pharmaceutical market, Japan, they dropped 10% in US dollars but rose 1% in local currencies; and particularly strong performances by emerging markets pushed sales up 28% (+31% local currencies), mainly on strong double-digit growth in Turkey, Russia, China and India.

Revenues from Novartis’ generics unit Sandoz rocketed 78% to $1.4 billion, as solid growth in the retail business as well as new product launches and the purchase of Hexal and Eon Labs led its growth. Key launches since the first quarter of last year included the antibiotics azithromycin (Zithromax) and ceftriaxone (Rocephin) in the US as well as terbinafine (Lamisil) and a fentanyl (Duragesic) patch in Germany, the company noted.

With regard to the coming year, the future looks fairly bright for Novartis. Its portfolio leaders are performing well, and the creation of a fourth division - vaccines and diagnostics – on the back of its acquisition of vaccine maker Chiron for $5.4 billion, should also help boost growth. “Our new vaccines and diagnostics division… will provide new growth opportunities driven by innovation and urgent public health needs,” stated Novartis' Chief Executive Daniel Vasella.

And commenting on the results for the period, he remarked: “I am pleased with the strong start of Novartis in 2006 with yet another quarter of market share gains, thanks to the fast growth of our new and well established products…I am confident that Novartis will continue to grow strongly and achieve another full year of record sales and earnings.”

For the full year, the company is expecting high single-digit growth of group sales - excluding its new Chiron division - as well as a mid-to-high single-digit hike in revenues from the pharmaceuticals unit.