Swiss drugmaker
Novartis AG
(
NVS
) in April reported first-quarter 2012 earnings per share (
EPS
) of $1.27, down from the $1.4 posted a year earlier.
First-quarter revenue fell to $13.7 billion from last year's $14
billion. Earnings dropped 18 percent, to $2.3 billion.
Novartis' revenue was hit by generic drug competition and
manufacturing problems at its factory in Lincoln, Nebraska. This
year, Novartis faces addition�al challenges to
revenue, as its top-selling drug Diovan for hypertension loses
patent protection.
However, the company isn't taking patent protection lying down.
Its recent $50 billion acquisition of Alcon (
ACL
), a developer of eye-care products, as well as the launch of new
drugs, will help offset any patent losses. The
com�pany expects 2012 revenue to be roughly in line
with 2011.
Novartis' portfolio contains plenty of proven, big-selling drugs.
The compa�ny's sales of Afinitor, for the treatment of
advanced kidney cancer, leaped 60 percent in the first quarter to
$143 million; sales of the chronic leukemia drug Tasigna jumped
39 percent to $209 million; and sales of eye drug Lucentis
in�creased 30 percent to $567 million. Moreover, the
company's Gilenya, the first oral treatment approved for multiple
sclerosis, continues to capture market share and generated sales
of $247 million during the period.
Novartis' Alcon unit also performed well, racking up a 5 percent
increase in revenue to $2.5 billion. On the downside, the
company's Consumer Health segment endured a 20 percent drop in
first-quarter sales to $932 million, stemming from the suspension
of its troubled Lincoln manufacturing site. However, the company
has now resolved these glitches and expects to resume
full-throttle production by mid-year.
Novartis continues to funnel substantial resources into
developing new prod�uct lines. The company spent $9.6
billion in research and development (R&D) last year, about
16.4 percent of revenue. This R&D commitment is paying off
with a deep bench of potentially profitable products. The company
recently an�nounced plans to make regulatory filings
for more than 60 new drug treatments through 2015.
Novartis also reached an agreement to acquire the Chinese
vaccines compa�ny Zhejiang Tianyuan Bio-Pharmaceutical
Co, as part of a strategic push into the fast-growing and
potentially vast vaccine market in China.
In addition to its growth prospects, Novartis sports an
attractive dividend yield of 4.49 percent. The company's earnings
yield is around 7 percent, which means it pays out nearly 65
percent of earnings as dividends
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