Oct. 22 (Bloomberg) -- Novartis AG, Europe’s biggest drugmaker by sales, raised its forecast for the second time this year after a generic competitor to one of its biggest-selling medicines failed to appear.
Sales this year will increase at a low- to mid-single-digit percentage rate in constant currencies, and core operating income will be in line with or better than the previous year, Basel, Switzerland-based Novartis said in a statement today. In July, the company predicted a low-single-digit percentage decline in earnings, with sales rising at a similar rate.
Novartis is benefiting from Ranbaxy Laboratories Ltd.’s inability to begin selling a copy of the Diovan blood-pressure treatment in the U.S., where regulators are assessing the Indian company’s quality control. New products such as the Gilenya pill for multiple sclerosis and the cancer drug Afinitor also now make up about a third of revenue, Chief Executive Officer Joe Jimenez said.
“All in all, this was a strong quarter, particularly for the pharma division, with Gilenya the star performer,” Alistair Campbell, an analyst at Berenberg Bank in London, wrote in a report today. The higher forecast “is not due to fundamental over-performance in the underlying business and will be viewed as a one-off.”
Novartis’s crosstown rival, Roche Holding AG, last week maintained its forecasts for the year. European companies including GlaxoSmithKline Plc and Shire Plc report later this week, with analysts predicting Glaxo’s sales in China will be hit by a probe into alleged corruption.
Third-quarter profit fell 3 percent as currencies in Asia and Latin America fell against the dollar amid signs of slowing economic expansion. Earnings excluding some costs declined to $3.1 billion from $3.2 billion a year earlier. Analysts predicted profit of $3.12 billion, according to the average estimate compiled by Bloomberg.
Novartis climbed 1 percent to 68.55 Swiss francs at 10:25 a.m. in Zurich. The stock has returned 23 percent this year, including reinvested dividends, through yesterday, beating the 20 percent return for the Bloomberg Europe Pharmaceutical Index.
Sales increased 4 percent to $14.3 billion, matching the average estimate. Sales of Gilenya rose 63 percent at constant exchange rates to $518 million, and Afinitor gained 65 percent to $337 million.
Chairman Joerg Reinhardt started a review of the drugmaker’s businesses after taking his post in August, saying they should either rank among industry leaders or be looked at for possible sale. The process is continuing, Jimenez said today on a call with journalists.
Slowing economies in emerging markets, where Novartis generated 24 percent of sales in 2012, prompted the International Monetary Fund on Oct. 8 to cut its global growth forecast for 2013. The Indonesian rupiah and Indian rupee declined against the dollar during the quarter and, among developed markets, Novartis was hurt by weakness in the yen.
Sales in the pharmaceutical division grew 1 percent, to $7.9 billion, as the company raised prices and sold more drugs. The Alcon eye-care unit saw revenue grow by 3 percent to $2.5 billion on sales of its surgical products.
Revenue at Sandoz, the company’s generics unit, grew 11 percent to $2.3 billion, aided by last year’s acquisition of Fougera. Vaccines sales rose 2 percent to $594 million, and sales of consumer health products rose by 11 percent to $1 billion.
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