Novartis's Sales Remain Stagnant in Q2
Swiss company Novartis has reported a 4% year-on-year decrease in the group's sales in the second quarter
IHS Global Insight Perspective
Swiss company Novartis has reported a 4% year-on-year (y/y) decline in sales to USD14,303 million in the second quarter. When calculated in constant currencies, however, the company's sales increased 1% y/y.
The sales performance was mainly driven by recent product launches. The strength of the dollar continued to have a negative impact, with the company estimating that the negative impact of currency exchange was around 5 percentage points
Novartis confirmed that the outlook for 2012 remains unchanged. The company estimates that if the current average exchange rates were to prevail, however, then it would have a 4% negative impact on sales.
Swiss pharma major Novartis has announced second quarter results showing that the company's performance remained flat during the quarter. The company reported net sales of USD14,303 million, a 4% year-on-year (y/y) decline (with a 1% increase in constant currencies). The Vaccines and Diagnostics division showed a significant increase in sales of 17% y/y, the performance of which was driven by the United States sales of Menveo (meningococcal—groups A, C, Y and W-135—oligosaccharide diphtheria CRM197 conjugate vaccine). Alcon also reported a 1% increase in sales, which was primarily driven by the strong surgical sales due to the robust sales of cataract products in the US and emerging markets, and strong contact lens sales. Although the pharmaceutical division reported a 1% decline, in constant currencies, however, it reported a 4% y/y increase. The company's generics division, Sandoz, reported a net sales decline of 13% y/y. This decline was attributed to "declining prices, lower high-margin sales in the US and Germany, and higher investments in quality assurance, manufacturing, and development of biosimilars and respiratory products". The consumer health division also reported declines of 24% y/y. These declines were caused due to the suspension of the production site in Nebraska.
Novartis: Q2 2012 Financial Results (USD Mil.)
Q2 2012 Sales
% Change Y/Y (as reported)
Net Sales (from continuing operations)
- Pharmaceutical Sales
- Vaccines and Diagnostics
- Consumer Health (from continuing operations)
Cost of Goods Sold
Marketing and Sales
Group Operating Income*
R&D Expenses As Percentage of Total Sales
0.1 pp lower
0.4 pp higher
Group Net Income
* IHS Global Insight estimate: net sales minus R&D, cost of goods sold and sales, general, and administrative expenses (marketing and sales expenses + general and administrative expenses)
The company further published half year results that showed a 3% y/y decline in net sales (no change in constant currencies), and a 9% y/y decline in net income (a 5% decline in constant currencies).
Novartis, H1 2011 Consolidated Financial Results, Unaudited (USD Mil.)
% Change Y/Y
In terms of sales for individual products, the company's hypertension drug Diovan (valsartan) continues to be at the top; however, its sales have declined 16% y/y due to patent expiry. The fall in the sales of Diovan was offset, however, by the sales of the company's recently launched products (launched since 2007) including ophthalmology drug Lucentis (ranibizumab), multiple-sclerosis drug Gilenya (fingolimod), renal cell carcinoma drug Afinitor (everolimus), chronic myeloid leukaemia drug Tasigna (nilotinib), and diabetes drug Galvus (vildagliptin). These drugs reported 12%, 258%, 72%, 39%, and 36% increases, respectively.
Apart from Diovan, the other drugs that reported decline in sales included hypertension drug Tekturna/Rasilez (aliskiren, 38%), Parkinson's disease treatment Comtan/Stalevo (levodopa + carbidopa + entacapone, 14%), and cancer complications drug Zometa (zoledronic acid, 11%).
Novartis: Q2 2012, Top 20 Products (USD Mil.)
Q2 2012 Global Sales
% Change Y/Y
% Change Y/Y in cc**
Voltaren (excl. OTC)
Outlook and Implications
Novartis reported fairly stagnant results for the second quarter of 2012, with group net sales declining 4% y/y to USD 14,303 million, and net income remaining flat at USD 2,733 million. The company estimated that the negative impact of the currency exchange was around 5 percentage points, however, due to the strengthening of the dollar. Thus, when estimated in constant currencies, net sales increased 1% y/y, while net income increased 5% y/y. The strength in sales was attributed to the sales of recently launched products, including Lucentis, Gilenya, Afinitor, Tasigna, and Galvus, which comprise 29% of the net sales of the company, and offset the negative impact on sales from the patent expiry of Diovan. Gilenya continues to be the second top selling product for the company despite the revision of its approval by the European Medicines Agency (EMA) and US FDA due to reports of heart failure (see Europe: 23 April 2012: EMA Recommends New Advice for MS Treatment Gilenya and United States - Switzerland: 15 May 2012: FDA Warns Against Gilenya Use in Cardiac Patients).
The group further reported positive regulatory decisions for several of its drugs, including positive recommendations by the EMA's Committee for Medicinal Products for Human Use for Afinitor, myelofibrosis treatment Jakavi (ruxolitinib), and chronic obstructive pulmonary disease treatment Seebri Breezhaler (glycopyrronium). Furthermore, Signifor (pasireotide) was granted approval for the treatment of Cushing's disease in the EU, while Afinitor also received FDA approval for the treatment of non-cancerous kidney tumours associated with tuberous sclerosis complex.
The company's 2012 outlook therefore remains unchanged. The company estimates, however, that if the June average exchange rates were to continue through the rest of the year, then it would have a negative impact of 4% on sales and a 3–4% negative impact on operating income.
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