Novartis International AG, a world leader in the pharmaceutical segment, has posted strong financial performance during the third quarter ended September 2014. Its net earnings went up sharply by 45.1 per cent to $3,240 million from $2,233 million in the corresponding quarter of last year. Its operating income increased by 14 per cent to $3 billion with operating margin at 20.3 per cent of net sales. Its net sales improved by 3.6 per cent to $14,704 million from $14,196 million. With hefty jump in profits, EPS moved up to $1.33 as against $0.90 in the last period.
Joseph Jimenez, CEO, said, “Novartis delivered a very strong third quarter. We delivered solid sales growth with margin expansion. At the same time, we reached key innovation milestones, particularly with LCZ696 in heart failure and AIN457 in psoriasis, underlining the innovation power of the company.”
Novartis' pharmaceuticals net sales remained almost flat at $7,925 million during the third quarter as against $7,893 million in the same quarter of last year due to stiff competition from generics. Sales of Diovan declined by 49.7 per cent to $420 million from $835 million and that of Galvus moved down by 7.3 per cent to $293 million from $316 million. The sales of Exforge remained stagnant at $365 million. Its R&D expenditure declined by 2.5 per cent to $2,161 million from $2,216 million.
The net sales of Alcon division improved by 5 per cent to $2,665 million from $2,539 million on account of strong growth in surgical and moderate growth in vision care and ophthalmic pharmaceuticals. Surgical sales was driven by strong equipment sales, particularly the Centurion phacoemulsification cataract platform and the LenSx femtosecond laser platform. Its ophthalmic pharmaceuticals sales went up by 3 per cent despite a soft otic and allergy season in the US. Vision care sales grew by 3 per cent by strong growth of Dailies Tota1 and AirOptix colors, which offset a decline in contract lens care solutions.
Sandoz division sales moved up by 5.6 per cent to $2,401 million from $2,273 million. The US delivered double-digit retail generics and biosimilars sales growth, benefiting from the launch of the generic version of Diovan monotherapy. Western Europe (excluding Germany) grew by 4 per cent while sales in Germany declined by 4 per cent.
The sales of vaccines went up sharply by 30 per cent to $588 million from $452 million in the prior-year period. The increase was mainly driven by influenza, with approximately 47 million doses shipped globally in the third quarter, compared to 22. 5 million doses in the last period. Sales of recently launched Bexsero also contributed to performance.
For the nine months period ended September 2014, Novartis' net sales increased by 2.2 per cent to $43,363 million from $42,429 million in the similar quarter of last year. Its net profit jumped by 23.1 per cent to $8,793 million from $7,145 million. Its pharmaceuticals sales remained flat at $23.9 billion, Alcon division sales improved by 4 per cent to $8.1 billion and Sales of Sandoz division improved by 4.5 per cent to $7.1 billion. Vaccines net sales increased by 13 per cent to $1 billion from $919 million for the same period in 2013.
Following the transactions with GSK and Lilly in April 2014, Novartis has separated the Group's reported financial data for the current and prior year into discontinuing operations (Animal Health, OTC and all of the vaccines division except for certain intellectual property rights and related other revenues which will be retained by Novartis) and continuing operations (Pharmaceuticals, Alcon and Sandoz Division).