Novartis Posts Sales Growth as It Slims Down -- Update
January 29 2020 - 4:43AM
Dow Jones News
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)
Copyright (c) 2020 Dow Jones & Company, Inc.
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