© Reuters. FILE PHOTO: The company’s logo is seen at the new cell and gene therapy factory of Swiss drugmaker Novartis in Stein, Switzerland, November 28, 2019. REUTERS/Arnd Wiegmann/File Photo
By Ludwig Burger
FRANKFURT (Reuters) -Novartis on Tuesday raised its full-year earnings forecast on strong drug sales and mapped out the planned separation and stock market debut of its generic medicines division Sandoz for early October.
The Swiss drugmaker said in a statement it expected group core operating income to grow by a “low double-digit” percentage in 2023, up from high single-digit growth previously projected.
Novartis shareholders will vote on the proposed Sandoz spin-off and complete separation at an extraordinary general meeting on Sept. 15.
A listing on the SIX Swiss Exchange, combined with an American Depositary Receipt programme in the United States, was scheduled for early the following month, said Chief Financial Officer Harry Kirsch.
Second-quarter group sales rose 7% to $13.6 billion, above an analyst consensus of $13.2 billion, Refinitiv Eikon data showed, while adjusted operating profit increased 9% to $4.67 billion, surpassing a consensus of about $4.3 billion.
Gains were driven by better-than-expected sales of heart failure drug Entresto, up 37% in local currencies at $1.52 billion. Novartis is in a legal battle with generic drugmakers seeking to launch cheaper copies ahead of an anticipated end to Entresto’s patent protection in 2025.
Kesimpta, a new once-a-month injection against multiple sclerosis, also beat expectations with quarterly revenues more than doubling to $489 million.
Sales of newly launched Pluvicto, a radiotherapy against prostate cancer, came in at $240 million after a manufacturing facility upgrade in New Jersey helped to overcome production shortages.
“It’s really a broad-based growth on the whole portfolio,” CFO Kirsch said on a media call.
The shares jumped 3.5% to 87.97 Swiss francs, their highest in more than a week, with JP Morgan analysts pointing to a strong set of results.
Sandoz, which analysts have said accounts for slightly over 10% of the group’s value, would have a “low-to-mid single-digit” billion dollar amount in net financial debt, consistent with a “BBB” investment grade credit rating, Kirsch added.
Sandoz, which accounted for about 10% of group core operating profit of $16.7 billion last year, was put under a strategic review by Novartis CEO Vas Narasimhan in 2021 following mounting pricing pressures in the U.S. off-patent drug sector.
As a standalone group, it will be banking on growth in the lucrative segment of biosimilars, cheaper versions of off-patent biotech injection drugs that are made from modified living cells, competing with Fresenius, unlisted Boehringer Ingelheim, Organon Teva and Amgen (NASDAQ:).
Swiss pharma major Novartis is also initiating a previously flagged share buyback programme worth up to $15 billion to be completed by year-end 2025, following the completion its previous share buyback in June 2023.