) reported fourth quarter 2013 earnings per share of 83 cents, up
1% from the year-ago period. Core earnings per share came in at
$1.20, down 3% from the year-ago period and below the Zacks
Consensus Estimate of $1.22.
All growth rates mentioned below are on a year-on-year basis
and at constant exchange rates (CER).
Fourth quarter revenues increased 4% year over year to $15.1
billion but missed the Zacks Consensus Estimate of $15.4
Quarter in Detail
Novartis operates in five divisions: Pharmaceuticals, Alcon,
Generics (Sandoz), Vaccines & Diagnostics and Consumer
The Pharmaceuticals division recorded sales of $8.3 billion in
the reported quarter, up 4% driven by strong volume growth. The
division continues to benefit from the delayed entry of generic
competition for Diovan monotherapy in the U.S. Diovan is
indicated for hypertension.
Key drugs at Novartis such as Gilenya, Afinitor, Tasigna,
Galvus, Xolair, Arcapta Neohaler/Onbrez Breezhaler, Seebri
Breezhaler and Jakavi contributed 40% to total sales in the
fourth quarter of 2013.
The Alcon Division recorded revenues of $2.7 billion in the
fourth quarter, up 6% driven by growth in the Surgical Franchise.
The growth in the Surgical Franchise was driven by demand for
laser technology. Additionally, vision care business increased
driven by strong sales in contact lenses. Sales in Ophthalmic
Pharmaceuticals were driven by market share gains across fixed
dose combination glaucoma and infection/inflammation
Sales from the Sandoz division increased 1% to $2.4 billion
primarily due to higher sales of generic valsartan HCT in the
U.S. and four months of Fougera sales.
Sales at the Vaccines and Diagnostics division were up 3% to
$655 million. The growth in this division was driven by seasonal
influenza, pre-pandemic sales including H7N9 in the U.S. and
Consumer Health sales at Novartis were up 10% to $1.0 billion
driven by strong growth in key brands along with re-launches of
several products that were adversely impacted by supply issues in
Full year Results
Sales in 2013 came in at $57.9 billion, up 4% from 2012 but
missing the Zacks Consensus Estimate of $58.1 billion. The entry
of generics (Diovan and Zometa/Aclasta) impacted sales by $2.2
billion. Core earnings per share of $5.09 were up 4% from a year
ago and beat the Zacks Consensus Estimate of $5.07 per share.
Novartis expects sales to increase in low to mid single digits
in 2014. Assuming the generic Diovan Mono is launched in the U.S
in the second quarter of 2014, generics are projected to impact
sales by $3.0 billion in 2014 as compared to $2.2 billion in
Novartis received 18 product approvals in 2013. Key among them
includes - Ultibro Breezhaler for chronic obstructive pulmonary
disease (COPD) in Europe, Bexsero for MenB infections, approval
for AirFluSal Forspiro for asthma and COPD in the EU. Novartis
also filed AIN457 for approval in the U.S. and EU for
moderate-to-severe plaque psoriasis.
The company's breast cancer candidate LEE011 has advanced into
a phase III trial. Meanwhile, Sandoz also advanced its
biosimilars pipeline by initiating a clinical trial on
) Humira (adalimumab).
We remind investors that Novartis sold its blood transfusion
diagnostics business to Grifols in 2013 for $1.7 billion.
Fourth quarter results were disappointing as Novartis missed
our estimates. Sales of Lucnetis and Gilenya were also
disappointing. We expect the entry of generic Diovan Meno to
impact sales in the second half of 2014. We remind investors that
Diovan was one of the key drugs of Novartis, generating over $3.5
billion in sales.
Novartis currently carries a Zacks Rank #3 (Hold). Right now,
) look well positioned. Both carry a Zacks Rank #1 (Strong Buy).
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