The FINANCIAL — Swiss drug maker Novartis AG reported on October 27 a 42 percent decline in its third-quarter net profit, reflecting one-time items and the weakness in net sales. Looking ahead, the company confirmed its outlook 2015 for growth in net sales and Core operating income at constant currencies, according to Nasdaq.
For the third quarter, net income plunged to $1.81 billion from last year’s $3.10 billion. Earnings per share were $0.75, down 41 percent from $1.27 last year.
The company attributed the decline in earnings mainly to provision for conditional settlement in principle of specialty pharmacies case, slightly below $0.4 billion, and the absence of prior-year gain from sale of Idenix Pharmaceuticals, Inc. shares to Merck & Co.
Core net income was registered at $3.06 billion or $1.27 per share, compared with $3.13 billion or $1.28 per share last year.
Core operating income declined 3 percent to $3.5 billion, while core operating income margin improved 2.2 percentage points, mainly due to strong performance at Pharmaceuticals and Sandoz.
Net sales dropped 6 percent to $12.27 billion from $12.99 billion a year ago, with strong US dollar hurting sales by 12 percent. On a constant currency basis, sales grew 6 percent.
In the Pharmaceuticals division, net sales were weak on generic competition of 5 percentage points largely for Diovan monotherapy, Exforge and Exelon Patch in the US.
Eye-care unit Alcon’s net sales were hurt mainly by weak surgical and Ophthalmic Pharmaceuticals sales.
For fiscal 2015, the company continues to expect continuing operations net sales to grow mid-single digit at constant currency, after absorbing the impact of generic competition expected to be approximately the same as the prior year’s $2.4 billion. Core operating income is still expected to grow ahead of sales at a high-single digit rate.
Regarding the warning letter issued by FDA on October 22 to Sandoz Division concerning their Indian sites in Kalwe and Turbhe, the company noted that the letter does not contain any new issues, and that Sandoz will continue to work closely with the FDA to ensure all observations are resolved to the Agency’s full satisfaction. No supply disruptions are expected.
In Zurich, Novartis shares settled at 90.55 Swiss francs on Monday, up 0.17 percent. Meanwhile, on the NYSE, the shares were down 0.7 percent in the regular trading and 2.26 percent in the extended trading.
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