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By Denise Roland
Novartis AG reported strong sales of new drugs including gene therapy Zolgensma, a sign the company's focus on cutting-edge medicines is starting to pay off.
The Swiss pharmaceutical company on Wednesday said revenue from continuing operations rose 8% to $12.4 billion in the fourth quarter of last year, while core operating income, a measure watched closely by analysts, increased 11% to $3.46 billion. Net income fell 7% to $1.1 billion on a one-time tax charge.
Novartis is becoming a smaller but more focused company under Chief Executive Vas Narasimhan, who took the helm nearly two years ago. He has shed the company's consumer health-care and eye-care units and trimmed its generics business, Sandoz.
Dr. Narasimhan has also bulked up the prescription-medicine pipeline through deals. Among the drugs that powered Novartis's growth last year were two that were added through acquisitions: Zolgensma, a gene therapy for a muscle-wasting disease in infants; and Lutathera, a cancer drug that delivers a radioactive dose to tumor cells in the body.
Both drugs exemplify Novartis's focus on cutting-edge drugs. Zolgensma provides a working version of the gene that is at fault in spinal muscular atrophy, a disease whose sufferers cannot control their muscles. It was last year one of the first gene therapies to be approved for sale in the U.S. Lutathera is a radiopharmaceutical, a kind of drug that carries radioactive particles to tumors for close-range radiotherapy.
Novartis's strategy to take a leading position in new kinds of medicine, especially gene therapy, has also created challenges.
Zolgensma has attracted attention for its eye-catching price tag: at $2.1 million, it is the world's most expensive drug. Novartis has defended the price by saying it is a one-time treatment and that it is saves money in the long run over an alternative therapy that is given regularly.
The high price sparked initial resistance from insurers, but Novartis has since secured wide coverage. Novartis said that almost all patients with commercial insurance and more than half of those with Medicaid have plans that cover Zolgensma.
The gene therapy also attracted scrutiny over the summer when Novartis told the U.S. Food and Drug Administration that scientists at the unit that developed it had manipulated product-testing data in mice. The agency criticized Novartis for failing to disclose the issue earlier but said it didn't affect its view that the drug was safe and effective.
Other drugs that helped drive Novartis's growth last year were Cosentyx for psoriasis and certain rheumatoid conditions, and Entresto for heart failure.
Dr. Narasimhan said he expected the company's growth to continue next year. Novartis forecast net sales to grow by a mid-to-high-single-digit percentage, and core operating profit to increase by a mid-high or low-double-digit percentage in 2020.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
January 29, 2020 04:28 ET (09:28 GMT)
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