The result of pharmaceutical group Novartis was also affected by the strength of the dollar in the third quarter of 2022. Reported net sales fell 4 percent in the third quarter to $12.5 billion. Meanwhile, at constant exchange rates (cc) it rose 4 percent, Novartis said on Tuesday.
The pharmaceutical division Innovative Medicines exceeded US$ 10.3 billion (-3 percent). Once again, drugs like the heart drug Entresto or the psoriasis drug Cosentyx had a significant impact on sales, according to Novartis. But newer drugs such as Cesampta, Kisqali or Pluvicto are also well developed.
Counterfeit products cause problems
According to the information, imitation products had a negative effect of 4 percent. This was mainly due to generics for Afinitor/Votubia, Gilenya, Glivec/Gleevec and Exjade.
Sandoz, the generics division, reported sales of 2.2 billion (-7 percent). Volume increases added 10 points to growth, while pricing partially offset this with a negative 6 point impact.
Analysts expected more sales
As a result, operating profit of US$2.2 billion was negative 33 percent compared to the same period last year. The Group justifies this specifically by higher impairments and higher restructuring costs.
Net income fell 43% to $1.6 billion. In addition to lower operating profits, the sold Roche stock also made itself felt in the result.
Core adjusted operating income, which is important to analysts, fell 4 percent in the third quarter. The increase in fixed exchange rates was 5%.
With the figures announced, Novartis remained just below the analysts’ forecasts on the sales side, and remained roughly at the expected level on the profit side.
Better prospects for generic drugs
Novartis management confirms previous targets for the year as a whole. At the group level, at constant exchange rates, both sales and core operating income are expected to grow in the mid-single-digit percentage range.
But the group has raised the outlook for its generics division for the second time this year. For Sandoz, Novartis now has sales growth in the low to mid-single-digit percent range (formerly: low-single-digit percent range) and low-single-digit percentile (formerly: largely prior year).
Big layoffs are coming
Currency effects are likely to continue to weigh on Novartis. For the full year, the Group expects a negative exchange rate impact of 7 percentage points on net sales and 8 percentage points on core operating income.
Novartis confirms the previous program regarding the planned split of the Sandoz generics division. So you continue to target the second half of 2023 for the IPO. As part of these plans, Richard Saynor (54) will be appointed Sandoz’s next CEO and will leave the Novartis Executive Board with immediate effect. However, he will continue to report directly to Novartis CEO Vas Narasimhan (46) and lead the Sandoz division.
Cost savings targets are also approved by management. By 2024, approximately $1.5 billion will be saved. The required one-time reconfiguration costs are estimated to be 1 to 1.2 times the savings. In its restructuring process, Novartis is also facing massive layoffs: 8,000 layoffs worldwide and 1,400 in Switzerland. (SDA/sfa)