ZURICH (Reuters) - Fresh from engineering Hospira’s $15 billion sale to Pfizer (PFE.N), drug company executive Michael Ball has a new mission — rescuing Novartis’s Alcon eye care division, whose continuing slump led the Swiss drugmaker to fall short of earnings forecasts once again at the end of 2015.
The Canadian-born Ball was appointed to replace Alcon chief Jeff George, Novartis NOVN.VX said on Wednesday as it reported financial results for the last three months of 2015.
As Hospira’s chief executive, Ball earned $12 million annually before moving last February to broker its sale to Pfizer (PFE.N), at a price that was a 40 percent premium. He reaped about $90 million in 2015 by selling Hospira shares, U.S. regulatory filings indicate.
Novartis Chief Executive Joe Jimenez has given Ball the task of reviving Alcon, where struggling surgical equipment sales have been exacerbated by too few innovative products. It also undermined customer loyalty by cutting spending on training and education for surgeons.
“If you look at the mistakes that were made that have led to the slowdown, we were not as vigilant enough... on ensuring that the innovation pipeline would result in continued growth,” Jimenez said.
“The second is, I think we went a little too far on cost savings, we reduced some of the services that they had grown accustomed to at Alcon.”
Ball, who led Botox-maker Allergan, an Alcon rival, from 2006 to 2011, is getting an extra $200 million from Jimenez this year to boost marketing including direct-to-consumer ads.
Novartis said on Wednesday that its fourth-quarter core net income fell 5 percent to $2.707 billion, missing the average analyst forecast of $2.967 billion.
It has missed forecasts for three straight quarters, a stark contrast to cross-town Basel, Switzerland rival Roche ROG.VX, which last year upgraded its outlook and is expected to report rising 2015 revenue on Thursday.
Novartis shares fell 3.1 percent by 1330 GMT (8:30 a.m. ET) after Jimenez predicted 2016 sales and core operating income will be only “broadly in line” with 2015. Revenue fell 5 percent to $49.4 billion in 2015, with core operating income slipping 5 percent to $13.8 billion.
Analysts said the outlook was dismal.
“There’s no avoiding the fact that 2015 ended slowly and the outlook for 2016 is disappointing,” said Alistair Campbell, a Berenberg analyst.
“Novartis now has much to prove in 2016 and will take time to win back investor enthusiasm.”
Alcon is not Novartis’s only headache.
The drugmaker, which on Wednesday announced a $1.4 billion restructuring program aimed at saving $1 billion annually from 2020, faces expiration of patents on drugs including blood-cancer treatment Gleevec that produce $3 billion in revenue.
“2016 will be a bit of a transition year, as we get through Gleevec,” Jimenez said. “But once that generic exposure lessens in 2017 and 2018, you should see the true underlying growth come through.”
Additionally, Novartis so far has been plagued by slower-than-expected uptake of its new heart failure medicine Entresto, with only $5 million in fourth-quarter revenue.
Editing by Keith Weir