Swiss pharmaceutical giant Novartis (NYSE: NVS) on Thursday surprised Wall Street by reporting a year-over-year increase in net earnings in Q2, helped by higher sales and a one-time divestment gain. The company said its earnings grew 14% to $1.34 per share, even as analysts were anticipating a decline.
Riding on the strong sales of its psoriasis drug Cosentyx and oncology drug Entresto, total net sales during the quarter improved 4% to $11.76 billion, surpassing the street view of $11.5 billion. On a constant currency basis sales of Cosentyx grew 25%, and Entresto jumped 81%.
The stronger-than-expected results sent the stock up 5.5% during pre-market hours. NVS stock has gained 29% in the trailing 52 weeks.
Outlook raised
Novartis raised its outlook for full-year 2019 net sales growth to mid to high-single-digit in constant currency. Non-GAAP operating income is now expected to grow low double-digit to mid-teens. The guidance excludes Alcon and the Sandoz US oral solids and dermatology business from both 2018 and 2019.
CEO Vas Narasimhan said, “We continue to progress our breakthrough medicines pipeline, with the launches of Zolgensma and Piqray, and are on track for the upcoming pivotal trial results of Entresto in preserved ejection fraction heart failure, ofatumumab in multiple sclerosis, and fevipiprant in asthma.”
A badge on CEO
The better quarterly results act as a badge of honor to the CEO’s efforts in streamlining the company to focus on more its profitable units. Novartis has been jettisoning underperforming segments to create a more lean and profitable firm.
In April, the company completed the spin-off of Alcon, which was a major revenue-generating unit for Novartis.
Separately, it divested three products to Italian pharmaceutical company Recordati for $390 million, jettisoned a JV with GlaxoSmithKline and sold the US oral solid drugs unit to India-based Aurobindo Pharma. Novartis is aiming to put its focus on the Innovative Medicines business.
During the second quarter, sales at Innovative Medicine unit 5%, while Sandoz net sales edged down1%.