Swiss pharmaceutical giant Novartis ( NVS )
reported third quarter 2012 earnings per share of $1.01, down 1%
from the year-ago period. Third quarter 2012 core earnings per
share came in at $1.34, down 8% from the year-ago period. Core
earnings also missed the Zacks Consensus Estimate $1.38 per share.
Lower revenues led to the year-over-year decline in earnings.
Third quarter revenues of $13.8 billion declined 7% from the
year-ago period. Revenues also missed the Zacks Consensus Estimate
of $14.4 billion. Divisions like Pharmaceuticals, Alcon, Vaccines
and Diagnostics, Sandoz and Consumer Health recorded declining
sales. Foreign exchange negatively impacted third quarter revenues
Quarter in Detail
Novartis reported that Pharmaceuticals division sales declined
5% to $7.8 billion in the reported quarter. Revenues were impacted
by the Diovan patent expiration in the EU, generic competition for
key products and negative pricing. Moreover, Diovan lost
exclusivity in the US on September 21, 2012. Revenues from the
segment are expected to decline further in the future.
Products like Lucentis, Tasigna, Afinitor, Gilenya and Galvus
continued to perform well. Newly launched products accounted for
29% of the total sales recorded by the Pharmaceutical division
during the third quarter of 2012.
Gilenya could, however, face competition from Biogen
Idec 's ( BIIB ) oral multiple sclerosis (MS) candidate
BG-12, which is currently under regulatory review in the EU and
Meanwhile, Afinitor is now approved in both the US and the EU to
treat patients suffering from advanced breast cancer. Approval for
this indication is expected to boost Afinitor sales significantly.
During the quarter, Novartis also received EU approval for Jakavi
(myelofibrosis) and Seebri Breezhaler (chronic obstructive
The Alcon Division recorded revenues of $2.5 billion in the
quarter, down 1% affected by the slower procedures and competition
in the EU.
Sales from the Sandoz division declined 13% to $2.0 billion
mainly due to price erosion of 6 percentage points. Sales at the
Vaccines and Diagnostics division declined 11% from the year-ago
quarter to $582 million. the decline was primarily due to lower
northern hemisphere flu sales.
Consumer Health sales at Novartis were down 22% from the
prior-year quarter to $938 million. Sales continued to be affected
by supply shortages due to the suspension of operations at
Novartis' Lincoln facility in Nebraska.
2012 Guidance Reaffirmed
Novartis reaffirmed its 2012 sales guidance at constant currency
and expects it to be in line with 2011 levels. Sales are expected
to be negatively impacted by about 3-4% due to foreign currency
Currently, we have a Neutral recommendation on Novartis. The
company carries a Zacks #3 Rank (Hold rating) in the short run.BIOGEN IDEC INC (BIIB): Free Stock Analysis
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