Novartis A.G. NVS reported first-quarter 2015 earnings of 96 cents per share, down 3% from the year-ago period. Core earnings per share came in at $1.33, down from $1.35 in the year-ago period but above the Zacks Consensus Estimate of $1.09.
Novartis posted revenues of $11.9 billion, up 3% year over year (down 7% on a reported basis) but surpassed the Zacks Consensus Estimate of $7.1 billion.
All growth rates mentioned below are on a year-on-year basis and at constant exchange rates.
Quarter in Detail
Following the divestiture of its diagnostics business in Jan 2014 and the agreement to sell its Vaccines business in Apr 2014, Novartis now operates in three divisions: Pharmaceuticals, Alcon and Generics (Sandoz).
The Pharmaceuticals division recorded sales of $7.1 billion in the reported quarter, up 1% as volume growth was offset by the negative impact of generic competition primarily for Diovan monotherapy, Exforge (generic entry in the U.S. in Sep 2014 and for Exforge HCT in Dec 2014,) and Vivelle-Dot in the U.S. Growth products (any product launched in the last five years or those with exclusivity through 2018) – Gilenya, Afinitor, Tasigna, Galvus, Lucentis, Xolair, the chronic obstructive pulmonary disease portfolio and Jakavi – contributed 41% to total sales in the quarter.
The Alcon Division recorded sales of $2.6 billion in the quarter, up 5% driven by growth in Surgical and Ophthalmic Pharmaceuticals.
Sales in the Sandoz division increased 9% to $2.2 billion primarily due to volume growth, partially offset by price erosion. Sales of retail generics in the U.S. and biosimilars led to strong growth on recent launches. Biosimilars generated sales of $122 million, up 19%.
We remind investors that in Mar 2015, Novartis acquired certain oncology products and pipeline compounds from GlaxoSmithKline GSK for $16 billion. In exchange, it sold the non-influenza Vaccines business to Glaxo for $7.1 billion. Novartis also completed the divestment of its animal health division to Eli Lilly and Company LLY in Jan 2015. In Jan 2014, Novartis completed the sale of its blood transfusion diagnostics unit to Grifols S.A. for $1.7 billion.
2015 Outlook Reiterated
Novartis expects sales to grow in mid-single digits in 2015. Generics are projected to impact sales by $2.5 billion in 2015 (accounting for the recent launch of generics for Exforge in the U.S) compared to $2.4 billion in 2014.
Pipeline Update
Novartis’ pipeline progress in the first quarter was impressive. The company received FDA approval for Farydak (panobinostat) in combination with in combination with Velcade and dexamethasone for the treatment of multiple myeloma patients who have received at least two prior regimens, including Velcade and an immunomodulatory agent.