Swiss drug giant Novartis has posted strong sales and earnings growth for the year 2010, but fourth-quarter income slipped and the firm warned of a tough year ahead.

Novartis booked a 14% rise in total sales to $50.6 billion for the full year, driven by strong growth in all businesses as well as newly launched products, which contributed 21% of net sales compared to 16% in the prior year. 

Pharmaceuticals sales were up 7% at $30.6 billion, with generics unit Sandoz achieving revenue growth of 14% to $8.5 billion on strong growth in US retail generics, biosimilars and emerging markets. Sales from the vaccines and diagnostics segment jumped 25% to $2.9 billion, with a healthy push from pandemic flu vaccines, while the consumer health division grew 7% $6.2 billion. 

Operating income was up 15% to $11.5 billion, driven by the strong sales but held back a little (2 percentage points) by currency fluctuations, net income jumped 18% to $10 billion and earnings per share grew 16% to $4.28.

Looking ahead, the company warned that sales of its pharmaceuticals unit would be hit this year by price reductions in 2010, the full impact of healthcare reform in the US and generic competition to some of its products (Femara [letrozole] and Diovan [valsartan]), and consequently forecast 2011 growth in low- to mid-single-digits.

Fourth-quarter sales up, earnings down

For the fourth quarter, Novartis saw sales rise 10% to $14.2 billion, with pharmaceutical sales growing just 3% as price erosion continued to bite.

Sales generated by Sandoz grew 10% to $2.4 billion with 21 percentage points of volume expansion from new product launches. But the company's performance was dragged down by a 74% drop in turnover of the vaccines and diagnostics to $361 million, as the prior year's result was boosted by $1.0 billion of A(H1N1) pandemic flu vaccine sales absent from the 2010 quarter. In addition, consumer health revenues stayed level with the year-ago quarter at $1.6 billion.

One time charges during the quarter also helped depress operating income by 6%, though excluding these the result inched up 2% to $3.2 billion. Fourth-quarter net income slipped 2% to $2.3 billion, while earnings per share were down 6% at $0.95.