UPDATE 2-Novartis sticks to goals after swine flu sales boost

Tue Apr 20, 2010 6:07am EDT

* Novartis Q1 EPS rises to $1.29, beats forecasts

* Sticks to full-year guidance

* Shares rise 1.3 pct, outperform sector

(Adds details from conference call, analyst comment, shares)

By Katie Reid

ZURICH, April 20 (Reuters) - Swiss drugmaker Novartis AG (NOVN.VX) is confident about meeting its 2010 goals after governments buying up its vaccines during the H1N1 pandemic lifted the group to forecast-beating first-quarter results.

Earnings per share rose to $1.29 in the first quarter, beating the average estimate of $1.11 in a Reuters poll, thanks also to strong sales of new blood pressure drugs Exforge and Tekturna, and cancer drugs Zometa and Femara. [ID:nLDE63E1U9]

Novartis repeated it expects group sales to grow at a mid-single-digit percentage rate in constant currencies this year, while sales at its pharmaceuticals division are seen growing at a mid- to high single-digit rate.

Chief Executive Joe Jimenez, who took over from Daniel Vasella in February, said Novartis was not raising its 2010 sales growth target despite an 18 percent rise in first-quarter sales as the strong flu vaccines shipments will dwindle throughout the rest of the year.

Pandemic flu vaccines boosted first-quarter sales by $1.1 billion -- about $400 million above the group's target at the beginning of the year, Novartis said.

"At a first glance, (the results were a) big beat versus consensus but mainly due to higher H1N1 flu vaccine sales," analysts at Julius Baer said. "Quality of the beat is therefore rather low and not sustainable."

"Its most important drug Diovan suffered from price cuts in Japan and missed consensus. All in all, we expect just a slight positive share price reaction today as results look not that good on a second view," they said.

At 1004 GMT, Novartis shares were trading 1.3 percent higher at 57.15 Swiss francs, compared with a 0.4 rise in the European pharmaceuticals sector .SXDP.

Eli Lilly (LLY.N) topped polls on Monday and strong sales of cancer drugs at growth cross-town rival Roche (ROG.VX) pushed it to better-than-expected results last week. [ID:nN19188587] [ID:nLDE63D1LO]

Investors will watch results from U.S. rivals Biogen (BIIB.O) and Johnson & Johnson (JNJ.N) later on Tuesday, and from Abbott (ABT.N), Amgen (AMGN.O) and Genzyme GENZ.O on Wednesday for more clues about the health of the industry.

ACQUISITON DISCIPLINE

Novartis, which has agreed to buy a majority stake of eyecare group Alcon ACL.N from Nestle SA (NESN.VX) for $28.1 billion, will now go for smaller, bolt-on buys in its generics and vaccines and diagnostics units, Jimenez told reporters on a conference call.

The comments come just one day after Novartis snapped up privately held U.S. company Oriel Therapeutics to boost its generics portfolio in the multibillion-dollar market for respiratory drugs. [ID:nLDE63I05N]

Novartis expects to complete the buy of the 77 percent stake in Alcon in the second half of the year, but Jimenez declined to give any update on how plans to acquire the remaining 23 percent from minority shareholders were proceeding.[ID:nLDE60K031]

Novartis expects Alcon to create new growth, cushioning the forthcoming loss of exclusivity on treatments like top-selling blood pressure drug Diovan.

First-quarter sales of Diovan, which is facing increased competition from the generic version of Merck & Co's (MRK.N) hypertension drug Cozaar, fell 1 percent to $1.4 billion.

Novartis trades at a premium to AstraZeneca (AZN.L) and Sanofi-Aventis (SASY.PA) thanks to promising new drugs such as multiple sclerosis pill FTY720 and a broad business base, but it trails Roche and GlaxoSmithKline (GSK.L). (Editing by Sharon Lindores and Karen Foster)

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Comments (1)
solittletime wrote:
There are better ways to avoid a flu than only taking a vaccine.

Apr 21, 2010 11:09am EDT  --  Report as abuse
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