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Novartis lowers core operating profit outlook in Q2 results

pharmafile | July 19, 2016 | News story | Manufacturing and Production, Research and Development, Sales and Marketing 2016, Novartis, Q2, results 

Novartis has warned that its profits may decline this year as it issued second quarter results, with generic competition for Gleevec, investments in innovation and a growth plan for its Alcon eye care unit hit core operating income.

Operating income was down 4% to $3.33 billion, net income fell 2% to $2.93 billion while core earnings per share fell 1% to $1.23. Net sales flatlined with volume growth offset by generic competition and pricing.

In terms of profits, they could be set to take a hit as the Swiss company invests heavily in promoting its new heart failure drug, Entresto. Novartis has taken the decision to invest in a US primary care field force and add incremental medical support. They expect sales of the drug to be approximately $200 million for the full year.

Since Entresto’s launch last summer, however, it has failed to set the market alight. While Novartis retains expectations of annual sales of $5 billion or more, sales in Q2 reached only $32 million.

Other encouraging signs came as psoriasis drug Cosentyx generated sales of $260 million and, in terms of innovation, positive Phase III trial results in advanced breast cancer and COPD present positive signals as new drugs go before regulators.

Joseph Jimenex, CEO of Novartis, says: “Performance in Q2 was solid despite a full quarter of Gleevec loss of exclusivity impact in the US. We have strong innovation momentum from earlier-than-expected Class I Entresto guidelines, positive Cosentyx data showing durability of response in AS and PsA, the early stop of the LEE011 trial, and positive FLAME results for Ultibro. We will increase investments behind these growth opportunities, particularly Entresto, in the second half of 2016 for long-term growth.”

Another interesting detail hidden deep down in the results is the issuing of a complete response letter from the US Food and Drug Administration to the company regarding their proposed biosimilar for Neulasta (pegfilgrastim). No more details were given on this FDA rejection but it comes in stark contrast to the recommendation it received last week for its biosimilar candidate for Enbrel (etanercept).

Sean Murray

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