Novartis Profit Slumps as Sales Miss Estimates

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July 17 (Bloomberg) -- Bloomberg’s Sam Fazeli examines second-quarter profit from Novartis as declining sales dragged down profits and looks at the company’s work with Google on smart contact lenses. He speaks on “On the Move.”

Sam, what happened then with novartis?

Disappointed but not buy anymore just margin -- an inner misfortune.

It is quite difficult for to look at the orderly numbers, especially for a company such as novartis which has a cross in swiss franks.

And a whole host of other currencies that are affected.

You know currencies have been volatile in the past quarter.

That was not the only reason.

Analysts overestimated how much diovan worse going to sell in the second quarter.

Not by much.

It'sj just gone generic.

Something that can be explained away.

What is interesting as they have kept their guidance on the top line for the year, but it looks like analysts are a little bit below that guidance figure.

Tell me more about the outlook for 2014 because this is a business that is going to structural changes.

Those structural changes, you will not notice necessarily on the group numbers this year.

All those deals do they did with glaxo.

They close early next year.

So the company started dividing up its pnl and helping people look at continuing and discontinuing operations.

But what is interesting is that they've got a slightly higher, if you look at the midway and -- midrange orf sales, but that is not changed since the first quarter.

What has become clear is their expectations for earnings growth.

They are going for a reasonably higher number than the numbers are forecasting.

32% of sales are coming from growth products, which are things they ought in 2009 or h ave patents out for 2018. tell me about what they are doing with google.

If you look at the alcomm business where all of these contact businesses are living.

The two pieces that were not doing so well were th elee ocular lens, the ones that get surgeons to replace and contact lenses, particularly in the contact lens care world as people are switching to more disposable.

There is a lot of competitive rusher.

Innovation is key.

This fits that.

This is very innovative.

We need to see if they can give results.

People are used to, one of the indications suggested this is for diabetic so they can get a constant measure of their glucose levels.

You leadve a microchip in your lens to your smart phone.

What they need to do is to prove that it is as sensitive as a glucose monitor.

That took quite a long time to develop.

A fascinating direction they're moving in.

They are cutting admin costs as they face generic competition.

Yes.

What will you see with this company is that as it products switch to more specialty care products to more oncology type products where the prices are healthier and the cost of selling them our lord, less than if you were selling to every corner shop gp, the reality is that that automatically brings down the selling and administered it costs.

The same is true for novartis's r&d. they have the biggest r&d budget.

They're close to $10 billion per annum.

They are expecting that to come down.

Thank you for joining us.

This text has been automatically generated. It may not be 100% accurate.

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