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 Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

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!