What Can Investors Expect from Novartis's 4Q15 Earnings?
Pharmaceuticals
Novartis’s (NVS) pharmaceuticals segment includes the research, development, manufacturing, distribution and selling of patented prescription drugs throughout the world. It consists of products for therapeutic areas including oncology, cardio-metabolic, immunology and dermatology, retina, respiratory, neuroscience, and established medicines.
The pharmaceutical segment’s overall contribution is ~60% of Novartis’s total revenue. For more details about the pharmaceutical segment, read Pharmaceuticals Was Novartis’s Biggest Revenue Earner in 2014.
Positive growth contributors
The products that are expected to have positive growth during 4Q15 include Gilenya, Tasigna, Afinitor, Galvus—a combination of Mekinist and Tafinlar, COPD products like Ultibro Breezhaler, and new products like Cosentyx.
Gilenya is an oral therapy for multiple sclerosis. Due to the increased demand for Gilenya, the revenue is expected to rise by more than 13% to $754 million in 4Q15—compared to $666 million in 4Q14. Gilenya’s annual revenue is expected to rise by ~12.5% at $2.8 billion for 2015—compared to 2.5 billion for 2014. Gilenya competes with Biogen’s (BIIB) Tecfidera and Sanofi’s (SNY) Aubagio.
Afinitor is an MTOR inhibitor. It’s used to treat various types of cancer including breast cancer and kidney cancer. Although analysts estimate Afinitor’s revenue to remain flat in 4Q15 compared to 4Q14, the annual revenue is expected to rise by ~7% to $1.7 billion for 2015—compared to $1.6 billion for 2014. Afinitor competes with Bristol-Myers Squibb’s (BMY) Opdivo.
Tasigna is used to treat chronic myeloid leukemia. It’s expected to report a 4% rise in the revenue for 4Q15 compared to 4Q14. Also, the annual revenue is expected to rise by more than 9% to $1.7 billion for 2015—compared to $1.5 billion for 2014. Tasigna competes with Pfizer’s (PFE) Bosulif.
Products with negative growth
Many pharmaceutical products are exposed to competition due to patent expiry or better products in markets. As a result, they’re expected to report a fall in the revenue during 4Q15. A few of the key products that expect a fall in the revenue include Gleevec and Exforge.
Gleevec is the blockbuster drug of Novartis. It’s used to treat chronic myeloid leukemia. Gleevec is expected to report a fall of ~4% in its 4Q15 revenue at $1.2 billion—compared to $1.24 billion for 4Q14.
Investors can consider ETFs like the PowerShares International Dividend Achievers ETF (PID) or the iShares Global Health Care ETF (IXJ) to divest the risk.