* Q4 sales $15.08 bln vs poll average of $15.09 bln
* Core EPS $1.20 vs $1.28 forecast in Reuters poll
* Expects 2014 sales to grow in the low to mid-single digits
* CEO wants portfolio review complete by summer
* Proposes dividend of 2.45 Sfr per share, up 7 pct
By Caroline Copley
BASEL, Jan 29 Novartis is looking at
options, such as joint ventures, for three smaller businesses to
bring them in line with its world-leading pharmaceutical
operations, it said on Wednesday, in a review due to be
completed by the end of summer.
The Basel-based firm has been casting a fresh eye over its
operations following the departure of veteran chairman and
one-time CEO Daniel Vasella, the architect of the merger of
Ciba-Geigy and Sandoz that created Novartis in 1996.
While new chairman Joerg Reinhardt has defended the
diversified strategy, he says Novartis wants all its businesses
to be among world leaders, casting doubt over three sub-scale
units: over-the-counter drugs, animal health and vaccines.
Global drugmakers are under increasing pressure from
investors to step up the pace of restructuring and unlock value
trapped inside large firms.
On Wednesday, Chief Executive Joe Jimenez told reporters he
hoped the review would be concluded by the end of summer.
"We are considering all options including potentially unique
structures that would enable them to become leading businesses
in their sector," he said, adding this could include joint
ventures or other unconventional set-ups different from an
outright acquisition or sale.
Sources have said that Novartis is discussing swapping its
animal health and human vaccines businesses for Merck & Co Inc's
over-the-counter products unit in a deal that could
boost earnings at both companies.
Jimenez said he was a "big fan" of Novartis'
over-the-counter business, where drugs are paid for by consumers
and are branded allowing for premium pricing.
He also cited the long-term potential of vaccines thanks to
its meningitis B vaccine Bexsero and said its animal health
division had synergies with its research operations, although it
remained a smaller business.
Shares in Novartis - which gained almost 24 percent last
year on investor hopes for a restructuring - were trading up 0.6
percent to 71.75 francs at 0848 GMT, in line with the European
Novartis said fourth-quarter net sales rose 2 percent to
$15.08 billion, compared to the average analyst forecast for
$15.09 billion in a Reuters poll. Core earnings per share fell 3
percent to $1.20, compared to the $1.28 mean estimate.
Foreign currency swings shaved 11 percentage points off
fourth-quarter operating income, with the company hit in
particular by a sharp slide in emerging market currencies and a
weaker Japanese yen, as well as a stronger Swiss franc.
David Kaegi, an analyst with Bank J. Safra Sarasin, said the
results were solid and said productivity measures had helped
offset margin pressure at the group level from generic
Many of Novartis' European peers have now put the so-called
"patent cliff" - where best-selling drugs lose market
exclusivity - behind them.
But Novartis is still awaiting some cheaper, copycat
competition for its once best-selling blood pressure pill
Diovan, since Ranbaxy Laboratories has faced
regulatory delays for its generic version.
While the delay granted Novartis a temporary reprieve last
year, that hit has been pushed into 2014. It now expects further
generic competition to launch in the United States at the
beginning of the second quarter.
The Basel-based firm guided for 2014 net sales to grow in
the low to mid-single digits, a slightly less confident forecast
than last year, when it told investors to expect growth of at
least mid-single digits this year and next.
Novartis said it still expected core earnings to grow ahead
of sales, helped by productivity measures.
The company must also seek to plug the hole left by the
upcoming expiration of its patent for leukaemia drug Gleevec.
It is banking on new products such as multiple sclerosis
pill Gilenya and cancer drug Afinitor to help it grow sales and
profits through this patent loss.
Novartis is also pinning its hopes on a slew of potential
'blockbuster' treatments for cancer, heart failure and lung
But that ambition hit a stumbling block last week, when the
European health regulator took an unfavourable position on its
heart failure drug serelaxin, forcing the company to delay its
original launch plans.
The company said it would lift its dividend to 2.45 Swiss
francs per share for 2013, compared to the 2.30 francs it paid
out last year.
While this is less yield than European peers like
GlaxoSmithKline, Sanofi and AstraZeneca
, it is comparable to crosstown rival Roche,
where growth is currently more visible at Novartis, Kepler
Cheuvreux analyst Fabian Wenner said.