Novartis Raises Core Operating Income View As Virus Drag Lessens -- Update
--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
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 email@example.com
(END) Dow Jones Newswires
October 27, 2020 05:54 ET (09:54 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Historical Stock Chart
From Oct 2020 to Nov 2020
Historical Stock Chart
From Nov 2019 to Nov 2020