Novartis Q1 Sales Miss Estimates as Entresto Generics Hit Growth Prospects
Novartis Faces Challenges from Entresto Generics and Patent Expiries
First-Quarter Financial Performance
April 28 (Reuters) - Swiss drugmaker Novartis reported first-quarter core operating profit and sales below market expectations on Tuesday, as generic competition for its top-selling heart drug Entresto weighed on results.
Shares of the drugmaker declined 3% in premarket trading on Tuesday.
Operating Income and Analyst Expectations
Quarterly group operating income, adjusted for special items, declined 12% to $4.9 billion, below average analyst expectations of about $5.1 billion cited by Visible Alpha.
Impact of Patent Expiries
Novartis is navigating its largest patent expiry in the last two decades, including for Entresto, which made up 14% of its total net sales last year.
Company Response and Outlook
CFO Mukul Mehta said on a call with reporters that the results were in line with the company's internal expectations.
Growth Prospects for the Second Half
"We do expect growth to return back to our P&L in second half of this year," he said.
Entresto Sales and Generic Competition
Entresto saw first-quarter sales drop 42% to $1.31 billion after its U.S. patents expired and competing generics were launched. Entresto faces patent expiries in Europe starting November.
Analysts were expecting sales of $1.37 billion for the first quarter ended March 31, according to data compiled by Visible Alpha.
Other Drugs Facing Generic Pressure
Blood disorder drug Promacta and leukemia treatment Tasigna also face competition from generics, increasing the pressure on Novartis to deliver sales growth from newer drugs.
Total Net Sales and Full-Year Forecast
Total net sales for the quarter came in at $13.11 billion, compared with analysts' expectations of $13.40 billion.
The Swiss group has said it expects its sales to decline by $4 billion this year due to competition from generics for Entresto and the other two drugs. The Basel-based company also confirmed its full-year forecast of a low single-digit percentage core operating income drop, excluding currency swings.
(Reporting by Marleen Kaesebier and Bhanvi SatijaEditing by Ludwig Burger and Louise Heavens)
