Novartis announces first-quarter results

Novartis has reported a 13% increase (in US dollars) in first-quarter sales for 2006, which reached US$8.3bn following "dynamic growth in pharmaceuticals, Sandoz" [Novartis" generic arm] acquisitions of Hexal and Eon Labs and recent product launches".

Of this total, the company's pharmaceuticals division accounted for $5.1bn, rising 5%; its consumer health division for $1.8bn, rising 4%, and Sandoz for $1.4bn, rising 78%. Volume increases and acquisitions each contributed eight percentage points to net sales growth; currencies had a negative impact of four percentage points and net price increases contributed one percentage point.

Group operating income rose by 31% to $2.2bn following "strong business expansion" and a one-time gain of $129m from the divestment of Nutrition & Sante, while pharmaceuticals operating income increased by 19%. Net income climbed 32% to $2.0bn and earnings per share grew 32% to $0.83 per share.

Growth in the pharmaceuticals division was triggered by the anti-hypertension medicines Diovan/Co-Diovan and Lotrel - up 16% to $939m and 28% to $295m respectively - which helped push the cardiovascular franchise to a 14% increase in sales, and a 10% rise in oncology sales following 18% growth to $559m for Gleevec/Glivec and 33% growth to $152m for Femara.

Net sales in the division were up 15% to £2.1bn in the US but down 7% in Europe, where Lamisil, Clozaril and Foradil were hit by generic competition. A 10% fall was experienced in Japan, the world's second-largest pharmaceutical market, although there was good news in "emerging growth markets', where a 28% rise was seen following double-digit growth in Turkey, Russia, China and India.

Sandoz was driven by strong growth in eastern Europe, Canada, Germany and Switzerland, as well as new product launches, which included azithromycin (Zithromax) and ceftriaxone (Rocephin) in the US and a fentanyl (Duragesic) patch in Germany.

r&d expenses rose 2% in the quarter but fell to 18.3% as a percentage of net sales. Regulatory submissions for Galvus (type 2 diabetes) and Rasilez (hypertension) in the US, and Exforge (hypertension), Sebivo (hepatitis B) and Lucentis (age-related macular degeneration) in Europe were completed in the quarter, while European submissions for Galvus and Rasilez remain on track for completion in 2006.

According to Novartis, its share of the global health care market (including pharmaceuticals and Sandoz) stood at 5.4% for the first two months of 2006, up from 5.2% in the first-quarter of 2005, with its pharmaceuticals sector increasing its share to 3.9% from 3.8%.

Novartis" equity increased by $0.6bn to $33.8bn and its cash flow by $0.9bn to $2.1bn. The company is forecasting record levels of operating and net income for the full-year, with high-single-digit net sales growth in the group and mid-to-high single digit growth in pharmaceuticals. The addition of a "vaccines & diagnostics" division following the acquisition of Chiron is expected to provide "a new strategic growth platform".