Novartis Reports Rise In Q3 Net Income

Novartis has maintained the strong underlying momentum of 2009 as third-quarter net sales grew 7% in local currencies, while reported net sales rose 3% to $11.1b as four percentage points of growth were lost to adverse currency movements. Pharmaceuticals (+11%) led the performance, while consumer health (+5%) and sandoz (+4%) achieved local-currency gains in challenging markets. Vaccines and diagnostics (-16%) fell on sharply lower sales of H5N1 (avian flu) pandemic vaccines in 2009.

Operating income advanced 13% to $2.6b, while the group’s operating income margin rose 2.1% points to 23.8% of net sales on margin improvements in pharmaceuticals, sandoz and consumer health. Operating income was up 9% when adjusted for currency movements, exceptional items and amortization of intangible assets.

Net income rose 1% to $2.1b as the 13% increase in group operating income was largely offset by a loss from associated companies due to $89m of charges for Roche’s restructuring of Genentech and an Alcon-related R&D project impairment, increased financing costs and a higher tax rate. As a result, basic earnings per share (EPS) only climbed to $0.93 from $0.92 in the 2008 quarter.

Daniel Vasella, chairman and CEO of Novartis, said: “I am pleased with our strong underlying performance, led by the momentum of our Pharmaceuticals business, outpacing the competition and benefiting from innovative product growth rejuvenating the portfolio. Our investments in R&D show excellent results, with many key approvals in 2009, most notably the anti-cancer therapy Afinitor and the biotechnology medicine Ilaris. Deliveries of H1N1 pandemic flu vaccines are underway as Novartis works at full capacity to meet public health demands. The Sandoz generics business also made good progress, coupled with a turnaround in the US. We expect record full-year underlying results based on the significant progress to date in 2009.”