Novartis AG (NYSE:NVS) reported earnings for second quarter of 2012. The Swiss pharmaceutical major reported a $2.73 billion profit, which is almost equal to last year’s corresponding quarter’s $2.72 billion in income. Novartis reported that second-quarter earnings per share fell 7 percent to 138 cents, which trumps analyst estimates of 133 cents in Reuters poll. The total sales declined 4% with $14.3 billion, from $14.92 billion a year ago.
Although the company’s earnings are flat when compared to the previous year, Novartis achieved its goal of maintaining consistent profits, and analysts were pleasantly surprised by a plan that works on good cost control and efficiency gains.
The pharmaceutical giant is facing the same troubles as other drug companies in Europe, with austerity measures and budget cuts. Novartis is struggling to show growth amid patent expirations on key drugs, particularly Diovan for high blood pressure, whose patents expired in US and Canada. It is relying on new products, like the Multiple Sclerosis pill, Gilenya, to fill the gap. Another major obstacle to overcome is the weakening value of the dollar, and research and acquisition of new drugs
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Shares of Novartis were up 1.6 percent by mid-afternoon on the Zurich exchange, at 55.96 Swiss francs ($57) . Novartis AG (NYSE:NVS) also showed improvement in the New York exchange. Stock closed on $56.36 yesterday, the shares are presently trading at $57.24, which is a boost of 1.55%.
The sale of the latest drugs improved 8% in this quarter. Products launched in 2007, Gilenya, Lucentis, Afinitor, Tasigna and Galvus, now make up 29 percent of group net sales. The company is hopeful of boosting its sales in the future with the drug Afinitor, which is a treatment for advanced stages of breast cancer. Novartis is expecting the new drug to increase sales beyond the $1 billion mark. It is noteworthy that breast cancer is the most commonly diagnosed Carcinoma in females, developing in 1 in every 8 women in the US. Another drug which is expected to generate revenues above $1 billion for Novartis is Gilenya, an oral treatment for the genetic disorder Multiple Sclerosis.
The earnings for future quarters are also expected to improve with the resumption of productions at Novartis plant in Lincoln, Nebraska. The unit went under due to quality control issues, and cost a total of $490 million due to suspension. The annual sales from the Nebraska unit equal $1 billion, the suspension seriously effected sales in first quarter of this year.
Johnson and Johnson (NYSE:JNJ), a New Jersey based company, released Q2 earnings two days ago, 130 cents earnings per share were reported , beating the analyst consensus of 129 cents EPS. The company’s revenue for the quarter was down .7% on a year-over-year basis.
Abbot Laboratories (NYSE:ABT), Chicago based drug major, also reported quarterly earnings. The report paralleled Wall Street estimates. Total sales were $9.81 billion which is 2% increase from last year’s corresponding quarter, narrowly down from Reuter’s estimate of $9.84 billion. Profits were 123 cents per share against 121 cents diluted per share a year ago.
The quarterly earnings from Novartis are the first to come from major pharmas of Europe. Glaxo Smith Kline will be announcing Q2 results on 25th July, Merck & Co. Inc (NYSE:MRK) will announce earnings two days later on 27th July. Pfizer Inc. (NYSE:PFE) will report on July 31st. Novartis ranks among the top ten pharmaceutical companies of the world.