Novartis International AG has suffered a setback during the third quarter ended September 2013 mainly due to the impact of generic erosion, increased investment in multiple promising pipeline projects and higher cost of good sold over a low prior-year base. Its net income declined by 6.3 per cent to $2,264 million from $2,417 million in the corresponding period of last year. Its net sales moved up by 3.9 per cent to $14,338 million from $13,807 million. EPS worked out to $1.26 as against $1.31 in the last period.

Excluding the impact of patent expiries, underlying nets sales grew by 10 per cent in constant currencies. This performance was fueled by growth products, which contributed US$ 4.6 billion or 32 per cent of group net sales, up 17 per cent over the prior-year period. Generics impacted sales by approximately $0.5 billion, mainly due to Diovan and Zometa. Sales continued to benefit from the delayed entry of generic competition for Diovan Monotherapy in the US.   

Joseph Jimenez, CEO, said, “Novartis delivered strong sales performance in the third quarter, with all divisions contributing to growth. We achieved impressive momentum in innovation, and set an industry record with our third FDA Breakthrough Therapy designated product of he year for BYM338 in a degenerative muscle disease. Our strategy of leading through science-based innovation is the right one for the business, for patients, and for our shareholders.”

Novartis' pharmaceutical sales increased only by 1.4 per cent to $7,893 million during the quarter under review from $7,783 million in the similar quarter of last year due to generic competition for Diovan and Zometa. The sales of Gilenya, Afinitor, Tasigna, Galvus, Lucentis, Xolair, the Qfamily and Jakavi improved and contributed 39 per cent of pharmaceutical division net sales, compared to 32 per cent in the same period. The pharmaceutical sales in Europe increased by 6 per cent to $2.7 billion and that in US increased by 4 per cent to $2.6 billion. Sales in emerging markets improved by 8 per cent to $1.9 billion.

The sales of Alcon division moved by 3 per cent to $2,539 million from $2,460 million in the corresponding quarter of last year and that of Sandoz division improved by 11 per cent to$2.3 billion. The US, Western Europe, emerging markets and biosimilars all delivered strong double-digit sales growth. The sales of vaccines and diagnostics remained almost stagnant at $594 million during the third quarter of 2013.

For the nine months ended September 2013, Novartis' sales increased by 2.4 per cent to $42,842 million from $41,845 million in the same period of last year. However, its net income declined by 1.7 per cent to $7,234 million from $7,361 million. Currency had a negative impact of 2 percentage points, mainly from the weakening yen and emerging market currencies against the US dollar. Its pharmaceutical sales remained almost same at $23,891 million during the first nine months of 2013 and its operating profit declined by 4 per cent to $7,363 million.