Novartis Is Still Very Confident Despite The Great Pressure of The Market
Author：admin Release Time：March 30, 2011 Category：Business & Market
Novartis is still optimistic about this year in strengthening the market price pressure, as in many medical trade show overburdened health managers struggle to reduce costs though.
The Swiss pharmaceuticals group predicted sales would rise by up to 10 per cent in 2011, with “low to middle” single-digit percentage point growth in its core drugs operation.
The improvement would come in spite of looming challenges to Diovan, the group’s blockbuster drug for high blood pressure, which starts to lose patent protection from next year.
However, falling sales of Diovan would be compensated by new products such as Gilenya, the world’s first oral treatment for multiple sclerosis, Tasigna, for leukaemia, and Afinitor, for cancer, predicted Joe Jimenez, chief executive.
Mr Jimenez declined to give detailed profits forecasts, but noted that “our outlook is quite positive”, with the group expecting to beat the $9.97bn earned last year.
He noted that newly launched drugs were already accounting for more than 21 per cent of sales, with Gilenya, Tasigna and Afinitor all having “blockbuster” status – meaning annual sales exceeding $1bn. Further growth would come from expansion in emerging markets and the full integration of eyecare group Alcon.
The predictions came as an 18 per cent rise in net profits took earnings almost to the $10bn mark and sales, up 14 per cent to $50.62bn, exceeded $50bn for the first time. The company proposed a 6 per cent dividend increase to SFr2.20 ($2.32) a share.
“Novartis achieved excellent results in 2010 as all divisions contributed to above-market growth,” added Mr Jimenez, noting that all divisions had grown faster than their markets.
He argued the results vindicated his strategy of driving down costs and boosting efficiency to maintain spending on research and development.
Productivity gains were apparent in the $1bn the group said it had saved last year in procurement alone, with competitive tendering now covering about 40 per cent of relevant purchases.
The impact was as evident in the group’s substantially improved free cash flow, reducing net debt prompted by the Alcon acquisition to $14.9bn at the end of December.
Jon Symonds, chief financial officer, noted that the swift pace of debt reduction provided leeway for smaller $500m-$1bn acquisitions, such as this week’s $470m Genoptix deal.
The fourth quarter results slightly below analyst expectations, net profit fell two per cent to 2.27bn, despite a 10 per 14.2bn in every jump in sales. Novartis said the profit is charged by the currency factors and one-time hit.
