Novartis Q2 Earnings Miss, Sales Top On Cosentyx, Entresto

Swiss pharma giant Novartis AG (NVS - Free Report) reported results for second-quarter 2018, wherein revenues beat estimate, driven by strong performance of Cosentyx and Entresto. However, earnings fell short.

Second-quarter 2018 adjusted earnings of $1.26 per share (excluding the one-time gain) missed the Zacks Consensus Estimate of $1.27 but were up from $1.22 recorded in the year-ago quarter.

Novartis AG Price and Consensus

Novartis AG Price and Consensus | Novartis AG Quote

Revenues increased 7% to $13.1 billion, as volume growth driven by Cosentyx and Entresto was partially offset by the negative impact of generic competition and pricing. Revenues also beat the Zacks Consensus Estimate of $12.7 billion.

All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.

Quarter in Detail

Novartis operates under three segments: Innovative Medicines (Pharmaceuticals), Alcon (Ophthalmology unit) and Sandoz (Generics).

The Innovative Medicines division recorded sales of $8.9 billion, up 8% driven by a 6% growth in pharmaceuticals and 10% growth in oncology.  Generic competition impacted sales at the segment, primarily due to the entry of generics for Gleevec, in the United States and Europe, and certain ophthalmology products. Pricing too impacted sales.

Psoriasis Cosentyx continues to gain traction. Cosentyx sales increased to $701 million, up 40% driven by strong growth in all indications, in the United States and EU. Entresto’s sales more than doubled to $239 million, driven by increased worldwide uptake.

Oncology franchise grew 10%, driven by Promacta/Revolade, Tafinlar plus Mekinist, Jakavi and uptake of Kisqali and Kymriah, and contribution from the Advanced Accelerator Applications acquisition. Kisqali’s uptake in the United States is encouraging and the drug will be launched in some EU countries as well.

Sales at the Sandoz division were $2.5 billion, down 2% due to price erosion in the United States. Sales in the United States declined due to competitive pressure. Biopharmaceuticals sales grew 34%, mainly driven by launches of Rixathon, the biosimilar version of Rituxan (rituximab); Erelzi, the biosimilar of Enbrel in the EU; and Zarxio (filgrastim) in the United States.

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