Swiss drugmaker Novartis's fourth-quarter net profit rose 62% to $1.5 billion, driven by sales of blood pressure and cancer drugs, but missed forecasts as the strong dollar weighed.
Novartis said on Wednesday it expected 2009 to be an “increasingly challenging environment,” seeing group sales growing at a mid-single-digit rate and drug sales at a mid- to high-single-digit rate.
“We achieved our full-year objectives for sales growth in local currencies and delivered a strong operating performance, but the fourth-quarter results were significantly impacted by the volatile currency markets,” Novartis spokesman John Gilardi said.
Pharmaceutical makers like Novartis have proven relatively resilient in the economic downturn as healthcare is usually one of the last areas where consumers cut back spending.
Novartis shares lost 15% in 2008, much less than the wider Swiss blue-chip market .SSMI and suffering financial stocks like UBS AG. But like many pharmaceutical makers, Novartis still has problems to overcome.
Fourth-quarter sales rose 1% to $10.1 billion, but were up 8% in local currencies which strips out the impact of fluctuating exchange rates. The group proposed a dividend of 2 Swiss francs ($1.76).
Comparisons to the previous year were helped by the washing out of a one-off restructuring charge taken in the fourth quarter 2007.
The Basel-based company faces looming loss of patent protection for its top-selling Diovan blood pressure drug and tougher paths to markets for new products, and is trying to diversify and develop a clutch of new medicines to fill the revenue gap.
It recently submitted lung disease drug QAB149 for European and US approval and also brought forward regulatory filing of ACZ885, to treat rare auto-inflammatory diseases, to December 2008 from a previously expected 2009.
But it had one setback in the new product pipeline after US regulators asked for a late-stage trial of promising meningitis vaccine Menveo to be expanded. Filing of Menveo for use in infants is now expected in 2011, Novartis said. Novartis trades at nearly 11 times forecast 2009 earnings, a premium to European drugmakers like AstraZeneca Plc and Sanofi-Aventis SA, due to promising new drugs like FTY720 for multiple sclerosis.
It is roughly in line with GlaxoSmithKline Plc and a discount to Swiss rival Roche Holding AG.
Novartis had been expected to post fourth-quarter net profit of $1.9 billion and sales of $10.5 billion, according to a Reuters poll. (Reuters)