Novartis ( NVS) said its posted a 4% rise in net income for the second quarter, but the gain would have been 15% excluding charges for the acquisition of Chiron. Despite the charges, Daniel Vasella, the chairman and CEO of Novartis, predicted Monday that his company would achieve "another year of record sales and earnings." Sales of prescription pharmaceuticals, Novartis' dominant division, are expected to grow at a high-single-digit rate, while total corporate revenue should advance at double-digit rates in local currencies, the company said. For the three months ended June 30, Novartis earned $1.71 billion, or 73 cents a share, on revenue of $9.18 billion. For the same period last year, it earned $1.65 billion, or 70 cents a share, on revenue of $8 billion. Although prescription pharmaceuticals account for most sales and profits, the best-performing of Novartis' four divisions was its Sandoz generic-drug unit. Sales climbed 74% to $1.45 billion, and operating income more than doubled to $207 million,
thanks to a pair of acquisitions . The vaccines and diagnostics unit posted a second-quarter operating loss of $38 million on sales of $127 million, due to $67 million in one-time charges related to the Chiron acquisition. Although Novartis didn't provide a figure, the executive in charge of the division, Joerg Reinhardt, told analysts during a conference call that he was "confident" the company could produce more U.S. flu vaccine this year than last year. Plagued by manufacturing problems that wiped out its U.S. production during the 2004-2005 flu season, Chiron eventually provided 13 million shots for 2005-2006, well below the 30 million doses the company had forecast. A few months before Novartis assumed control, Chiron said it had the capacity to make 40 million doses for the 2006-2007 season. Earlier this year, Novartis purchased the 56% of Chiron that it didn't already own.
Novartis has several potentially big-selling products that could enter the market later this year or next year, including Galvus, a once-a-day diabetes treatment that
attracted favorable attention at the recent American Diabetes Association conference in Washington. Galvus was accepted for review by the Food and Drug Administration in March, and Novartis will seek European Union approval by the end of the year. Another hopeful is the cancer drug Tasigna, a follow-up to the company's Gleevec. Although still in clinical trials, the company predicted Monday that it would submit the drug for U.S. and EU approval in late 2006 rather than its earlier forecast of 2007. The drug is targeted at a form of leukemia in patients for whom Gleevec doesn't work or causes too many side effects. Also on the agenda is Rasilez, a blood-pressure treatment whose application to the FDA was filed in April. Novartis said the application to the EU "remains on track" for year-end. The company is also seeking clearance for another blood-pressure drug, Exforge, which combines two existing drugs, in the U.S. and EU. Next year, Novartis will try to get U.S. approval of Prexige, a treatment for arthritis and acute pain that belongs to the class of drugs known as COX-2 inhibitors. COX-2's have caused considerable pain for Merck ( MRK) and for Pfizer ( PFE). Merck withdrew Vioxx from the market in September 2004, and Pfizer suspended sales of Bextra in April 2005 following an FDA request. Pfizer has vowed to seek reinstatement of Bextra. Meanwhile, it continues to sell its other COX-2 drug Celebrex. Novartis submitted a Prexige application to the FDA in 2002, and the agency asked for more information in 2003. Novartis later withdrew its application so it could gather more test data. Novartis also is resubmitting a Prexige application to the EU. The drug is already available in 13 countries, primarily in Latin America.
Among its biggest products, Novartis reported that the blood-pressure drug Diovan recorded first-half sales of $2 billion, a 16% gain in local currencies vs. the same period last year. Gleevec revenue rose 19% to $1.2 billion, the blood-pressure drug Lotrel advanced 26% to $643 million, and the bone-cancer pain drug Zometa gained 4% to $627 million. Sales of the fungus-infection drug Lamisil fell 13% to $483 million due to generic competition in several European markets, even though U.S. sales rose 14%. Revenue from the organ-transplant drug Neoral slipped 1% as generic competition in the U.S. was nearly offset by sales in other markets. Novartis' shares were off 22 cents to $54.21.