Novartis raises profit estimate after quarterly beat

Novartis has left its sales outlook unchanged for the year. (Bloomberg pic)

LONDON: Swiss drugmaker Novartis AG is plotting a faster course after spinning off its Alcon eye-care business.

Earnings excluding some items are expected to increase by a high single-digit percentage, the Basel, Switzerland-based company said Wednesday, raising its guidance.

Adjusted earnings per share beat analysts’ estimates in the first quarter. The stock rose as much as 2.8% in Zurich trading, recording its biggest gain so far this year.

Novartis is shaking up its strategy to spur growth, narrowing its focus on cutting-edge drugs for cancer and rare diseases and betting on treatments such as gene therapies to potentially cure severe illnesses.

In his first year at the helm, chief executive officer Vas Narasimhan split with Alcon, ditched a stake in a consumer-health venture and carried out three crucial acquisitions to revamp the Swiss drugmaker.

“This quarter has been all about transformation for us,” Narasimhan said in a television interview.

Novartis is turning to new drugs like Mayzent, a multiple sclerosis treatment that was cleared in the US last month, as sales of key blockbusters fade.

Like crosstown rival Roche Holding AG, the company is at a turning point as it works to replace some stalwarts with a new generation of medicines.

The drugmaker expects two more big approvals in the first half of 2019: one for gene therapy Zolgensma, which treats a lethal childhood disease called spinal muscular atrophy, and a new breast cancer drug.

Earnings per share for the first quarter rose to US$1.21 a share, the company said in a statement, beating estimates.

The results underscore the significance of psoriasis treatment Cosentyx, which could become the company’s largest medicine in 2019.

Sales of the drug surged 41% to US$791 million, exceeding the average analyst prediction of US$775 million.

The earnings also highlight the pressure on the generics unit Sandoz, which is set to become a standalone business within the broader company and undergo what Novartis has called a “transformation.”

Novartis appointed Richard Saynor as the new chief executive for the unit on Wednesday. The division had been run by an interim manager after Richard Francis, its previous CEO, left at the end of March.

Novartis left its sales outlook unchanged for the year. Its prior estimate for adjusted earnings, published in January, was for a mid- to high-single-digit percentage gain.