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Profits drop at Novartis

Pharma major Novartis AG showed for the first time in six years a decline in quarterly net profit.

Novartis, Europe’s second largest pharmaceutical producer failed to meet analysts expectations who projected a fourth-quarterly net profit of $1, 5 billion. Instead of the $1,5 billion the company has only managed to produce a net profit of $931 million for the Q4 of 2007, which is a 41% drop compared to results in 2006 over the same period although sales revenue was increased by 5,7%. Novartis shares took a dive to negative 3 yesterday. The company reported that it buys back shares for $9,2 million. According to experts it still will not be enough to ease the company’s situation on the long run, which would require to invest more into research and development in order to issue new possibly profit-maker products. The Basel-based group said growth was also hit by regulatory issues, such as the US withdrawal of irritable-bowel syndrome drug Zelnorm and the rejection of pain-killer Prexige. Novartis also announced that it will cut 2500 jobs in the next to years, a move resulting in the savings of $1,6 billion until 2010. (Napi Gazdaság)