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

5 Best States for Golf Adventures

Top 15 Places To Visit Before You Die

10 Most Expensive Smartphones in the World

10 States with Lowest Physician Density

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

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!