Sales Top Forecasts

Swiss drugmaker Novartis AG said its key new multiple sclerosis pill was exceeding its expectations as it posted forecast-beating first-quarter sales, thanks to robust demand for its newest drugs. Sales at the group, which has just wrapped up its buyout of U.S. eyecare firm Alcon, rose 14 percent in constant currencies to $14.03 billion, boosted by strong demand for recently launched drugs such as Gilenya, Lucentis, Afinitor and Tasigna. Chief Executive Joe Jimenez told reporters that Gilenya, the first pill to treat the debilitating disease of multiple sclerosis, was already bringing in "significant revenues". First-quarter sales of the drug were $59 million. At 0822 GMT, Novartis shares were trading 2.8 percent higher, outperforming at 0.6 percent rise in the European healthcare index. Analysts expect Novartis shares, which have lost over 11 percent of their value so far this year and have lagged the rest of the sector, to rise as the group resumes its share buyback and investors buy in to its strong pipeline. "With a good Gilenya number, Alcon synergy expectations edged up and the share buyback now able to restart, we anticipate the shares moving better," Jefferies analyst Jeff Holford said. FLU BLUES The solid performance of new products, highlighting the group's ability to get products to market, helped the drugmaker to weather a $1.1 billion absence of pandemic flu sales from a year ago. A number of Novartis's rivals are also facing a loss of sales from flu-related products and last week Roche reported a 47 percent slump in Tamiflu sales. Novartis said it still expects net sales to grow around the double-digit mark in 2011 and it aims to improve core operating income margin in constant currencies. But the group said it would have to absorb price cuts, generic competition and the loss of sales from the H1N1 pandemic flu vaccine. Novartis is bracing for the patent loss of blood pressure drug Diovan in more European countries this year, but Jimenez said the group had so far been able to defend sales volume a little better than expected. His comments come after Eli Lilly & Co's shares were knocked on Monday due to worries about looming generic competition for its biggest drugs. Pharmaceutical companies across the globe are grappling with with U.S. healthcare reforms and a push by cash-strapped governments in Europe to slash the prices of drugs, along with competition from cheaper generic drugs. The Basel-based group said it had seen a negative pricing impact of 2 percentage points in its pharma division, mainly due to healthcare cost-containment measures, while generics entries and product divestments also had a 2 percentage point negative impact. Jimenez said the healthcare reform in the United States should have a manageable impact on Novartis, which reported first-quarter core earnings per share of $1.41, in line with the average analyst forecast in a Reuters poll of $1.40. Investors will now eye results due later from Johnson & Johnson as well as from Abbott later this week, for more insight into the health of the industry. Novartis, which has just closed the $50.9 billion Alcon deal, is hoping the acquisition will help it diversify and give it protection against patent losses on big-selling medicines such as key cancer drug Femara. Alcon contributed $1.9 billion of net sales in the first quarter. Novartis now expects annual cost synergies to exceed $300 million and it is eyeing a reduction of head office and general and administration costs by up to 40 percent. Novartis said it had bought back Novartis and Alcon shares totaling $3.2 billion to reduce dilution due to its Alcon buy and further repurchases would help to further limit dilution.