Novartis cuts outlook, faces U.S. Tasigna delay

By Sam Cage

ZURICH (Reuters) - Novartis AG (NOVN.VX) cut its full-year results outlook as generic competition pressured sales of a key blood-pressure drug, and said U.S. regulators had delayed the approval process for an important cancer treatment.

Novartis said on Tuesday it now expected mid-single-digit percentage growth in group net sales and low-single-digit growth in drug sales, slightly lower than its previous forecast.

But strong second-quarter sales of key drugs and a pledge to step up share buybacks countered the bad news.

Novartis shares were 0.8 percent lower at 65.75 Swiss francs by 1122 GMT, slightly underperforming the sector.

Europe's major pharmaceutical companies are under pressure to increase returns after a series of high-profile setbacks that have hit investors' and the general public's confidence.

Shares in Novartis, Europe's third-largest pharma firm by sales, have been pressured by a slew of disappointing news in recent months and were down nearly 6 percent so far this year before Tuesday's session, more than the European sector .SXDP.

"Novartis Q2 results were overall slightly ahead of our forecasts and consensus, thanks to better than expected organic growth as well as lower than expected tax payments," WestLB analyst Andreas Theisen said in a note.

Net profit at Novartis from continuing operations rose 18 percent to $1.94 billion in the second quarter, in line with analysts' forecasts, on the back of a 10 percent rise in sales.

Although earnings guidance has been lowered, this had been flagged by the company and was probably priced into shares, said Vontobel analyst Karl-Heinz Koch.

Novartis also said U.S. regulators had extended their review period for cancer drug Tasigna by three months to review additional data. No new studies are required.

"The delay in the Tasigna approval will not change our estimates significantly, but further increases the risk profile of Novartis," Kepler Equities analyst Denise Anderson said in a note.

The drugmaker sweetened the pill for shareholders by pledging to complete previously announced share buybacks and purchase the remaining open amount of up to $4 billion in shares by February 2008.

The company said it would use its free cash flow and proceeds from two divestments to Nestle (NESN.VX) to fund targeted acquisitions and share buybacks.

SLOWING GROWTH

Flagship products Diovan for high blood pressure and Glivec for cancer helped boost sales in Novartis's pharmaceuticals division by 6 percent to $6.06 billion.