Novartis CEO’s rejuvenation work pays off as earnings expected to increase

Bloomberg

Swiss drugmaker Novartis AG is plotting a faster course after spinning off its Alcon eye-care business.
Earnings excluding some items are expected to increase by a high single-digit percentage, the Basel, Switzerland-based company said on Wednesday, raising its guidance. Adjusted earnings per share beat analysts’ estimates in the first quarter. The stock rose as much as 2.8 percent in Zurich trading, its biggest intraday gain so far this year.
Novartis is shaking up its strategy to spur growth, narrowing its focus on cutting-edge drugs for rare diseases and betting on treatments such as gene therapies to potentially cure severe illnesses. In his first year at the helm, Chief Executive Officer Vas Narasimhan split with Alcon, ditched a stake in a consumer-health venture and carried out three crucial acquisitions to
revamp the Swiss drugmaker.
“This quarter has been all about transformation for us,” Narasimhan said in a Bloomberg TV interview.
Novartis is turning to new drugs like Mayzent, a multiple sclerosis treatment that was cleared in the US last month, as sales of key blockbusters fade. Like crosstown rival Roche Holding AG, the company is at a turning point as it works to replace some stalwarts with a new generation of medicines.
“Very high prices” can be justified for revolutionary medicines like Zolgensma that may cure patients in one infusion but cost millions, Narasimhan said, but the company is looking at ways to mitigate them with staggered payments or even reimbursements if the medicine doesn’t work as well as expected.
Adjusted earnings for the first quarter rose to $1.21 a share, the company said in a statement, beating estimates. The results underscore the significance of psoriasis treatment Cosentyx, which could become the company’s top-selling medicine in 2019. Sales of the drug surged 41 percent to $791 million, exceeding the average analyst prediction of $775 million.
The earnings also highlight pressure on the generics unit Sandoz, which is set to become a standalone business within the broader company and undergo what Novartis has called a “transformation.”