Novartis AG has reported flat growth in net profit during the second quarter ended June 2012 on account of strong dollar. Its net profit improved marginally by 0.3 per cent to $2733 million from $2726 million in the corresponding period of last year and its operating profit declined by 4 per cent to $3188 million.

Its net sales declined by 4.1 per cent to $14,303 million  from 14,915 million due to expiration of Diovan patent. Products launched since 2007, which include Lucentis, Gilenya, Afinitor, Tasigna and Galvus, continued to perform strongly. These recently launched products grew 8 per cent to USD 4.1 billion and now comprise 29 per cent of Group net sales, up from 25 per cent a year ago. The rejuvenation of its portfolio is key to our long-term growth.

Pharmaceuticals had another quarter of good underlying growth despite the Diovan patent expiration in Europe, with net sales of USD 8.3 billion. Recently launched products, the key growth driver for pharmaceuticals, generated USD 2.8 billion of net sales. These products now represent 34 per cent of division sales, compared to 28 per cent in the year-ago period.

Alcon net sales grew one per cent to $ 2.6 billion in the quarter. This robust performance was led by strong surgical sales growth of 3 per cent, benefiting from strong cataract product sales in the US and Emerging Growth Markets, as well as contact lens sales growth of 2 per cent

Sandoz net sales declined 13 per cent to $2.1 billion driven by 7 percentage points of price erosion. Volume was flat, as the expected lower sales for enoxaparin (USD 156 million in the second quarter of 2012 compared to $ 284 million in the 2011 period and US authorized generics, together with the market decline in Germany, offset strong double-digit growth in the rest of Western Europe, Asia, Central and Eastern Europe, and biosimilars.

Vaccines and diagnostics net sales were up 17 per cent to $349 million. Sales growth was driven by Menveo, which continued to see double-digit growth in the US, as well as the timing of bulk paediatric shipments in 2011, which produced a weak comparative quarter. Consumer health, which includes OTC and animal health, declined 24 per cent to $904 million in the quarter, impacted by the suspension of production at the Lincoln, Nebraska manufacturing site.

Commenting on the results, Joseph Jimenez, CEO of Novartis, said: "Novartis achieved eight significant regulatory milestones in the second quarter, including CHMP recommendation for Afinitor in advanced breast cancer, further enhancing our future growth prospects. Pharmaceuticals and Alcon delivered solid financial performance and operating leverage in the second quarter, underpinned by our continued focus on portfolio rejuvenation, with recently launched products now representing 29 per cent of Group net sales compared to 25 per cent last year."

For the first half ended June 2012, net profit declined by 8.8 per cent to $5060 million from $5547 million in the corresponding half of last year. Its operating profit also declined by 10.9 per cent to $6003 million from $6730 million.

The Group net sales amounted to USD 28.0 billion in the first half ended June 2012, with the strong sales of recently launched products offsetting the negative impact of the Diovan patent expiration. Pharmaceuticals net sales expanded to $ 16.1 billion with 9 percentage points of volume growth partly offset by the impact of generic entries of 5 percentage points. Excluding the impact of Diovan and other patent expires, the division grew 8 per cent in constant currencies. Alcon net sales rose 3 per cent to $5.2 billion. Sandoz sales were down 12 per cent to $4.3 billion in the first half compared to a very strong base in the prior year, driven by declines in the US and Germany partly offset by double-digit sales growth in the rest of Western Europe and Asia and continued strong results from biosimilars.

Vaccines and diagnostics net sales declined 3 per cent to $648 million compared to the year-ago period, impacted by the timing of release of bulk paediatric shipments. Consumer health sales declined 22 per cent $1.8 billion mainly due to the suspension of production at its US manufacturing facility in Lincoln, Nebraska.