A Look at Novartis AG (ADR) (NVS)’ Second Quarter

Page 1 of 2

Novartis AG (ADR) (NYSE:NVS)The story of the second quarter for Novartis AG (ADR) (NYSE:NVS) offered mixed results for investors. The company’s net sales were up 1%, and EPS was down 6% year over year. Novartis AG (ADR) (NYSE:NVS) managed to narrowly beat Wall Street estimates on EPS — $1.30 compared to $1.29 — and revenue — $14.49 billion compared to $14.39 billion. The company cited a weakening yen versus the dollar and increased generic competition as the major factors in its lackluster performance. Shares felt little effect from the report, down less than 1% after the release. Here is a little dive into some other notable takeaways from Novartis AG (ADR) (NYSE:NVS)’ second quarter.

The Diovan surprise
Novartis AG (ADR) (NYSE:NVS) will continue to receive a boost in sales from its home run high blood pressure drug Diovan after Ranbaxy Laboratories generic version of the drug ran into regulatory delays. Novartis AG (ADR) (NYSE:NVS) was expecting to lose about $3.5 billion worth of sales worldwide to generic competition; however, with this delay in the United States that number has been adjusted down to $2.7 billion.

Diovan currently accounts for about 11.5% of pharmaceutical sales for Novartis AG (ADR) (NYSE:NVS), and continuing sales from the United States will bring in about $100 million a month until Ranbaxy is able to release its version. The windfall of unanticipated revenue led Novartis to upgrade its 2013 group outlook to include low-single-digit sales growth and low-single-digit decline in operating income.

This news is a fortunate surprise for Novartis, though it is not something that will continue to benefit the company over the long term. Once Ranbaxy is able to release its generic version of Diovan in the U.S. market, Novartis acknowledges that it will face even steeper sales erosion in the United States. Sales of Diovan will decrease dramatically as the far cheaper generic version will supplant much of its market share.

Business segment performances
Novartis experienced marginal sales growth in its Alcon (medical devices) and Sandoz (generic manufacturing) divisions and the Vaccines & Diagnostics and Consumer Health divisions posted double-digit sales growth. Most impressive of these was Consumer Health, which consists of over-the-counter medicines and veterinary products. That division grew sales 11% to $1 billion and managed an operating profit of $23 million compared to effectively zero in the same quarter last year.

The only division that saw sales decline was Pharmaceuticals, which shrunk 2% to $8.1 billion.

Generic competition for Zometa, Diovan HCT, and Diovan (outside of the U.S.) brought negative price effects and significant sales decreases. The weakening yen was also a contributing factor. Some of the sales loses were balanced by increased sales volume in other drugs, but not enough to offset the market share taken by the generic competition.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!