Novartis International AG has suffered setback during the fourth quarter ended December 2014 and its net profit declined sharply by 26 per cent to $1,487 million from $1,999 million in the corresponding period of last year. Its net sales also declined by 2 per cent to $14,633 million from $14,926 million. With lower net profit, its EPS declined to $0.62 from $0.81 in the last period.
Its net profit declined mainly due to an exceptional pre-tax impairment charge of $1.1 billion related to the pending divestment to CSL Ltd of the influenza vaccines business. Currency had a negative impact of 10 percentage points, primarily due to the weakening of the euro, yen and ruble against the US dollar.
Its pharmaceutical sales declined by 5.6 per cent to $7,860 million from $8,323 million in the same quarter of last year due to generic competition for Diovan monotherapy and Exforge. Growth products generated $3.6 billion of division net sales, growing 18 per cent over the same period last year. The sales of Alcon division, led by robust growth in the ophthalmic pharma and surgical franchises, improve marginally by 1.8 per cent to $2,703 million from $2,655 million. Similarly, sales of Sandoz division moved up by 4.2 per cent to $2,512 million due to strong growth in US due to new launches.
Joseph Jimenez, CEO, said, “2014 was a transformational year for Novartis. We improved our execution, while taking steps to focus the company on our three leading businesses with global scale. We delivered solid sales growth with margin expansion, strengthened innovation, and advanced our quality and productivity agendas. I'm confident that we are positioned for future success.”
During April 2014, Novartis announced the transactions with GlaxoSmithKline Plc and Eli Lilly & Co and subsequent transaction with CSL Ltd. The company has separted the Group's reported financial data for the current and prior years into 'discontinuing operation' and 'continuing operations'. The company expects the transaction with GSK to be completed in the first half of 2015, and the transaction with CSL to be completed in the second half of 2015.
For the full year ended December 2014, Novartis' net sales improved marginally by 1.1 per cent to $58 billion from $57.4 billion in the previous year. Its net income moved up by 12 per cent to $10.3 billion from $9.1 billion. EPS worked out to $4.21 as against $3.70 in the last year. The pharmaceutical sales for the year declined by 1.2 per cent to $31.8 billion from $32.2 billion in the previous year and that Alcon division sales by 2.9 per cent to $10.8 billion from $10.5 billion. Sandoz division registered sales growth of 4 per cent to $9.6 billion as against $9.2 billion. For discontinuing operations, net sales grew by 6 per cent to $5.8 billion. During the year Novartis divested stake in LTS Lohmann Therapie Systeme AG and Idenix Pharmaceuticals, Inc and recorded gain of $0.12 billion.
The company expects its sales to grow in 2015 by mid-single digit, after absorbing the impact of generic competition and core operating income is expected to grow ahead of sales at a high-single digit rate.