Novartis boasts strong new drug sales, streamlined marketing spend in Q2 earnings
The latest earnings news from Novartis is that things are on track. The Swiss drug maker reported second quarter net sales of $14.3 billion, down 4% compared to the same period last year. The company noted, however, that the 4% loss is not, in fact, a 4% loss, but a 1% gain in constant currency terms.
Pharmaceutical sales were $8.3 billion, representing at 1% drop in US dollars, but a 4% gain if measured using the constant currency metric, and comes in spite of the fall-off in sales of blood pressure medication Diovan since it was exposed to generic competition.
Sales of new products, including MS drug Gilenya, cancer treatment Afinitor, leukemia drug Tasigna, macular degeneration drug Lucentis and diabetes therapy Galvus, grew 8% during the quarter, to $4.1 billion, and now account for 29% of net sales, compared with 25% a year ago. The company's presentation for the quarter also showed that the company's Q2 marketing spend, which hit a high of 29.6% of sales in 2009 and has declined ever since, continues to shrink, making up 26% of sales for the period just ended. The company cited geographic reallocation of spend, a portfolio shift to specialty care and sourcing optimization as factors in the slimmer spending.
Jefferies analyst Jeffrey Holford said in a July 19 research note that good cost control helped the company deliver a core EPS that was higher than expected.
The company is also working to regain its OTC footing and expects to put Excedrin back on shelves in the fourth quarter. Quality control issues forced the company to cease production of the painkiller in December, and demand from migraine sufferers has fueled a burgeoning grey market for the drug on eBay.