Novartis says drugs unit to outshine

By Sam Cage

NEW YORK (Reuters) - Novartis AG's (NOVN.VX) drugs unit will continue to outgrow a sickly overall pharmaceuticals market, driven by new treatments for cancer, multiple sclerosis and lung disease, its divisional chief said on Monday.

Joe Jimenez told the Reuters Health Summit in New York he expected the overall global drugs market to grow by a meager 3 to 4 percent in 2010 -- significantly less than the 4 to 6 percent seen by leading forecaster IMS Health.

But Novartis' pharmaceutical business, which accounts for nearly two-thirds of group sales and which led rivals with 11 percent growth in local currencies in the nine months to September, had the momentum to outshine others.

"As long as we have a strong pipeline and we're continuing to launch compounds, we're going to continue to grow faster than the rest of the market," he said.

Hefty price increases and windfall sales arising from the H1N1 outbreak are helping major pharmaceutical companies, but long-term problems like more competition from makers of generic drugs have not gone away.

Jimenez sees a series of factors in the next two years that will crimp industry growth, including U.S. healthcare reform, price cuts in Japan and a government budget squeeze in Europe.

REVENUE GAP

Novartis loses patent protection on its top-selling blood pressure drug Diovan in 2012 -- rivals like Pfizer Inc (PFE.N) and GlaxoSmithKline Plc (GSK.L) face similar problems -- and is developing a clutch of new medicines to fill the gap.

New lung drug QAB149 was on track to receive final European Union approval before the end of the year and Jimenez said the Swiss drugmaker would meet with U.S. regulators in the coming weeks to iron out issues, before starting combination trials.

QAB149's biggest potential lies in use alongside other drugs, including Vectura Group Plc's (VEC.L) NVA237.

Jimenez said the lower dose of oral multiple sclerosis drug FTY720, which Novartis plans to file with regulators next month, was "clearly approvable" and would be an attractive option for patients seeking an alternative to injections.

It is in a head-to-head race with Merck KGaA's (MRCG.DE) cladribine to be the first oral MS drug on the market and the German group has stolen a march having already filed for approval in the United States.

Jimenez also highlighted recently launched cancer drug Afinitor as a potential multibillion-dollar seller, adding its early commercial success had increased confidence in its prospects.

Despite this, Novartis is keen to acquire rights to new drugs -- either via acquisitions or licensing deals -- particularly in areas where it already has expertise, such as cancer, cardiovascular and metabolic diseases, Jimenez said.

"We have over 150 projects in clinical development and over 60 of them are new compounds. But that's still not going to stop us from going out and finding good assets -- and they're out there," he added.

(Reporting by Sam Cage, additional reporting by Ben Hirschler, editing by Matthew Lewis)