NVS Novartis AG

--Novartis raised its outlook for its 2020 core operating income while maintaining its previous guidance on sales

--Innovative medicines drove third-quarter sales growth, but the coronavirus continued to hit other parts of the business

--The Swiss giant's earnings were hit by a fine connected to the marketing of its Lucentis eye drug

By Cecilia Butini

Novartis AG said Tuesday that third-quarter net profit fell while sales grew, and raised its 2020 outlook for core operating income as it sees healthcare recovering from the initial disruption caused by the pandemic.

The Swiss pharmaceutical major said it now expects core operating income growth in the low-double to mid-teen digits, having previously guided for core operating income growth in the low double digits. Net sales are still expected to grow by mid-single digits.

The expectations are conditional on a return to normal global health-care systems, including prescription dynamics, in the fourth quarter, Novartis said.

Chief Executive Vas Narasimhan said during a call that the company has observed patient visits going back to normal levels by the end of September after experiencing disruptions in the early phases of the coronavirus pandemic, but that he nonetheless expects volatility going forward.

For the third quarter, the company posted net profit from continuing operations of $1.93 billion, down from $2.04 billion for the same quarter a year prior.

Operating income was $2.41 billion, up from $2.36 billion.

Core operating income came in at $4.07 billion compared with $3.75 billion the previous year.

Legal provisions dragged Novartis's earnings. Last month, the company was slapped by the French antitrust authority with a fine of around 385 million euros ($454.7 million) for alleged abusive practices in the marketing of its Lucentis eye drug.

Mr. Narasimhan said the company is in the process of appealing the regulator's decision, but that it nevertheless needs to pay the fine first. The executive said Novartis disagrees with the ruling and that it has acted fully in line with guidelines set forth by the European Medicines Agency.

Novartis's third-quarter net sales from continuing operations rose to $12.26 billion, from $12.17 billion in the prior-year period, the company said.

Innovative medicines and pharmaceuticals drove sales growth, with Zolgensma, Entresto and Cosentyx among the key performers. This was partly offset by a decline in Lucentis and other ophthalmology products, which was mainly due to lower demand caused by the pandemic, Novartis said.

The company said that although overall market conditions recovered throughout the third quarter, the coronavirus continued to weigh on parts of its business, including dermatology, opthalmology and Sandoz retail.

Write to Cecilia Butini at cecilia.butini@wsj.com

(END) Dow Jones Newswires

October 27, 2020 05:54 ET (09:54 GMT)

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