On Thursday, Novartis was able to beat forecasts for profit thanks to strong performances from older medicines, making up for its eye care business that continues to struggle and the extra costs due to a poor start for its new drug for heart failure.
Although the largest prescription drug maker in the world saw first quarter net income drop by 13% to just over $2.79 billion, it beat the estimates of $2.76 billion of analysts and helped lift shares of the company in trading.
Novartis had to hire additional sales personnel to overcome the slow start to Entresto, its new drug for heart failure. That was just one challenge that has been facing Joe Jimenez the CEO.
The other big difficulties that Jimenez is facing include the drug for blood cancer Gleevec, which is now exposed to generics in the U.S., along with the slide in revenue generated at its eye care business Alcon.
The core operating profit for Novartis was down 11% to $3.25 billion, but was down by 5% at a constant rate of exchange. The company said it left its forecast for 2016 in line with last year for core operating profit and sales.
Revenue was lower ending the quarter at $11.6 billion, which was slightly behind Wall Street estimates of $11.8 billion, even though sales were better than had been expected Gleevac, whose drop of 22% to just over $834 million, beat forecast of analysts of a drop of 34%.
Novartis also received help from Cosentyx its psoriasis medicine, whose sales increased from $22 million one year ago to over $176 million.
However, Entresto posted sales of just $17 million and now for the complete year, Novartis is expecting only sales of $200 million equal to less than 50% of forecasts by analysts.
Novartis therefore is expanding the sales force for Entresto in the U.S. and doubling down on ads that are direct to consumers.
Alcon sales were down 7% to just over $1.4 billion. Its operating margin of 17% is worse than the 20% by forecasters.