Updated from 1:40 a.m. EDT

Novartis ( NVS), the Swiss drugmaker, said second-quarter earnings fell 10% to $2.04 billion from $2.25 billion on currency changes and higher financing costs.

Sales in the quarter fell 2% to $10.5 billion.

In a statement Thursday, Novartis reaffirmed its outlook for "strong underlying momentum" in 2009, with net sales rising at a mid-single-digit rate in local currencies.

Net sales in the company's pharmaceuticals operations are now expected to grow at a minimum high-single-digit rate in 2009.

Second-quarter sales in its drugs unit rose 3% to $7.12 billion.

"I am pleased that our pharmaceuticals business continues to deliver double-digit underlying growth, driven by the strong momentum of our recently launched products," said CEO Daniel Vasella.

Vasella said Novartis benefited from its introduction of the new Afinitor drug against kidney cancer in the United States and by the first approval for llaris as a new biologic therapy for auto-inflammatory diseases.

"We continue to expect record underlying results in constant currencies based on innovation and productivity initiatives," Vasella said, adding that the company was advancing well in efforts to produce a vaccine against swine flu. Clinical trials are beginning this month, he said.

Novartis said its higher financing costs included a bond of 1.5 billion euros issued during the second quarter.
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