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Novartis raised its profit outlook for the year on Tuesday after its main growth drugs sold well, even as a $1.9 billion writedown on an experimental muscle-disease medicine cut its reported quarterly profit by more than two-thirds.
The Swiss drugmaker reported third-quarter sales of $14.52 billion, up 4% from $13.91 billion a year earlier. Core operating income, the company’s preferred measure that strips out one-time items, rose 11% to $6.04 billion, and the core margin widened to 41.6%. Core earnings per share were $2.46, up 9%.
The hit from del-desiran
Reported operating income fell 59% to $1.84 billion and net income dropped 70% to $1.20 billion, mainly because Novartis took a partial impairment on del-desiran, a drug being developed for myotonic dystrophy type 1, or DM1, a form of muscular dystrophy. CEO Vas Narasimhan said the DM1 trial result “was not what we had hoped,” but that the data showed signs of clinical activity and the company is working out the development path. He said programs in two other muscle diseases, FSHD and DMD, continue to progress well.
An impairment is an accounting charge that writes down what a company paid for an asset when its prospects look weaker. It does not use up cash. Free cash flow in the quarter was $5.1 billion, down 18%.
What is driving sales
Growth came from newer priority medicines. The release lists Kisqali for breast cancer up 37% at constant currencies, multiple sclerosis drug Kesimpta up 22%, leukemia drug Scemblix up 67%, cholesterol drug Leqvio up 63% and psoriasis drug Cosentyx up 9%. Those gains more than offset lost sales from cheaper generic copies of older drugs.
For the full year, Novartis still expects net sales to grow by a low single-digit percentage. It now expects core operating income to be flat to up by a low single-digit percentage, an upgrade from its earlier forecast of a low single-digit decline. Over nine months, sales were up 2% in dollars at $42.04 billion, and core operating income was down 1%.
The company also reported positive Phase III results for remibrutinib in relapsing multiple sclerosis, a U.S. approval for Rhapsido in chronic inducible urticaria, and U.S. and China approvals for Pluvicto in an additional prostate cancer setting.
JBizNews Desk | Basel
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