* Q1 core EPS $1.27 vs Reuters poll $1.32
* Sales down 2 pct at $13.74 bln vs forecast $13.85 bln
* Stoppage at Lincoln factory, tough comparisons in Sandoz
* Expects Gilenya to become a "blockbuster" this year
* Shares dip 0.6 pct, compared to slightly firmer sector
(Adds CEO, analyst comment, shares)
By Caroline Copley
ZURICH, April 24 Swiss drugmaker Novartis AG
on Tuesday stuck to its outlook for lower
profitability this year, as a stoppage at a U.S. manufacturing
site and tough annual comparisons for its Sandoz division hit
first-quarter core earnings.
Chief Executive Joseph Jimenez said he expected production
at a consumer health manufacturing site in Lincoln, Nebraska -
which has annualised sales of $1 billion - to restart in May,
with shipments resuming mid-year.
The stoppage to sort out quality issues sent net sales in
the consumer health division down 20 percent in the first
quarter. F i rst-quarter sales fell 2 percent to $13.74 billion,
just below analysts' average forecast of $13.85 billion.
"A good performance in Pharma made up for the Vaccines and
Consumer shortfalls, with the clear message being that the
Lincoln ... plant restart is going to be a slow process
extending well into 2013," Jefferies analysts said in a note.
Shares in Novartis were down 0.6 percent by 0725 GMT, versus
a flat European pharmaceuticals sector.
Novartis is racing to develop new drugs as patent expiries
on some of its best-selling drugs to start to bite.
It got some relief last week when European and U.S. health
regulators decided to back the use of its big drug hope,
multiple sclerosis pill Gilenya, albeit with stronger warnings
on heart risks.
Gilenya posted sales of $247 million in the first quarter,
despite being blighted by safety warnings. Jimenez said he
expects Gilenya to achieve blockbuster status - with sales of
more than $1 billion - this year.
Another promising development was that Novartis's lung drug
QVA149, which it is developing in partnership with Vectura
, met its primary end point in the first four late-stage
studies in patients with chronic obstructive pulmonary disease
Novartis expects to file the drug for regulatory approval in
the United States at the end of 2014.
Novartis is also pinning its hopes on its eyecare group
Alcon, plus its presence in emerging markets, its strong Sandoz
generics unit and its newest products to shield margins in the
face of growing price pressure from cheaper copies of its drugs.
Its high blood pressure drug Diovan, which sells $6 billion
a year, went off-patent in Europe last year and it will lose
exclusivity in the United States this September. Japan follows
Sales of its newest products, including eye drug Lucentis,
grew 16 percent in the first quarter and now make up 28 percent
of the group total.
"It's clear our new product launches are more than
offsetting our patent expiries," Jimenez told a media call.
The Basel-based group reiterated its guidance for a core
operating income margin slightly below the 27.2 percent reached
in 2011, on a constant currency basis, as its top line comes
under pressure from generic copies of its medicines.
In addition, Novartis expects the strengthening dollar to
have a negative impact of approximately 2-3 percent on sales and
operating income, if exchange rates seen in March prevail for
the rest of the year.
Core earnings per share fell 10 percent to $1.27 in the
first quarter, compared to the average estimate of $1.32 in a
Reuters poll of analysts in which estimates ranged between $1.22
and $1.49. [ I D:nL6E8FK5CI]
Jimenez said Novartis did not need acquisitions to grow, but
bolt-on acquisitions in the range of $1 to $3 billion could play
(Reporting by Caroline Copley; Editing by Mark Potter and Jane