Tuesday, January 27, 2015
Swiss pharmaceutical giant Novartis AG on Tuesday reported a fall in fourth-quarter profit but said it expects its business to gain momentum this year despite uncertainty spawned by the strengthened Swiss franc.
Basel-based Novartis said net sales would grow by a mid-single digit percentage this year compared with 2014, when stripping out the effect of foreign-exchange rate fluctuations. Core operating income, which excludes certain charges and expenses, will likely grow at a slightly faster rate, the company said.
Last year marked the start of a sweeping overhaul of the company, aimed at refocusing it on three core businesses—pharmaceuticals, eye care and generics—where it says it has the size and reach to compete as the global pharmaceutical industry consolidates.
Novartis Chief Executive Joe Jimenez said during a media briefing Tuesday that he doesn’t expect the recent surge in value of the Swiss franc to have a material impact on sales, but added the company is “taking a look” at its cost base, both in Switzerland and globally.
Earlier this month, the Swiss National Bank decided to abandon the 1.20 Swiss francs-a-euro cap, sending the value of the franc soaring and potentially inflicting higher costs on Switzerland’s banks and many export-reliant companies. The franc gained as much as 29% in value versus the euro and 28% against the dollar shortly after the SNB’s move, and remains at elevated levels relative to both currencies.
The currency fluctuation comes at a sensitive time for Novartis, which is in the midst of a revamp.
For the fourth quarter, Novartis reported a 26.5% drop in fourth-quarter net profit attributable to shareholders to $1.49 billion, from $2.03 billion in the same quarter a year earlier. The decrease is mainly because of a charge related to the sale of Novartis’s flu vaccines business, the company said.
Core net income in the quarter, which excludes some items, rose to $2.91 billion from a restated $2.89 billion, Novartis said.
The company reported that sales declined 2% to $14.63 billion in the quarter, missing analysts forecast of $14.68 billion. Sales were hurt by generic competition for Diovan, a blockbuster blood-pressure medicine, the company said. Stripping out the impact of currency fluctuations, sales rose 4%.
As part of its continuing overhaul, Novartis said in January it had completed a roughly $5.4 billion sale of its animal-health division to Indianapolis-based Eli Lilly & Co.Novartis is also acquiring London-based GlaxoSmithKline PLC’s oncology unit for around $14.5 billion, adding to its lineup of cancer drugs.
At the same time, Glaxo is paying $5.25 billion for Novartis’s vaccines business. The two companies will also combine their over-the-counter drug businesses under Glaxo’s management.
http://www.wsj.com/
