Swiss drugmaker Novartis’s newest medicines will come under the microscope when it posts quarterly results on Tuesday as investors seek reassurance it can compensate for patent expires on its top sellers. Diovan, which sells $6 billion a year, goes off patent this year in Europe, with the United States and Japan following in 2012 and 2013.
The Basel-based group is seen posting a 7.4 percent rise in core earnings per share to $1.46, despite the strong Swiss franc, which soared to record highs against the dollar and the euro this year before the Swiss National Bank stepped in and imposed a cap on the franc against the euro.
Novartis boasts one of the strongest pipelines in the industry, and sales of recently launched multiple sclerosis pill Gilenya, cancer drug Tasigna and eye drug Lucentis will be closely watched. Also in focus will be the results of recently acquired eyecare group Alcon, a central plank of Novartis’s drive to diversify its business.
“We forecast a solid set of results boosted by the consolidation of Alcon. Pharmaceuticals will see the anticipated impact of generic erosion. Hence the focus will be on the performance of new drugs,” analysts at Helvea said. Investors are also keen to see if Novartis’s push to cut costs as well as its shift to more specialized medicines for diseases such as cancer are protecting profitability in the face of the robust franc, which has made doing business in Switzerland very costly.
The group is seen sticking to its full-year guidance of sales growth around the double-digit percentage mark in constant currencies, while growth in its pharma unit is seen in the low- to mid-single digit range. It has also forecast that its core operating margin in constant currencies should improve.
Novartis is currently trading at 10 times expected 2012 earnings. Cross-town rival Roche, which warned earlier this month that the franc was likely to take a hefty chunk out of its full-year earnings, is trading at 10.4 times.