Swiss-based pharmaceutical giant Novartis reported second quarter earnings declined, but the company is optimistic about its pipeline, particularly heart disease drug Entresto, CEO Joe Jimenez said Tuesday.
The FDA recently approved the drug, which has demonstrated the ability to cut deaths from heart failure by 20 percent and hospitalizations at roughly the same rate. There have been few significant advances in treatment in past decades.
"When you look at our results, the best part of the quarter was the innovation," Jimenez told CNBC's "Squawk Box." "We shipped [Entresto] right after we got FDA approval, and we think this is going to be a multibillion dollar drug for the company."
Thomson Reuters recently estimated sales at $1 billion by 2017 and $3.73 billion by 2019. Jimenez said Novartis believes the drug will drum up $5 billion in revenues at its peak.
He said Entresto addresses the root causes of congestive heart failure, a condition in which the heart cannot pump enough blood to the body. The drug essentially reduces the burden on the heart.
About 26 million people around the world and 6 million in the United States suffer from congestive heart failure. The condition claims the lives of many patients within five years of diagnosis, Jimenez said.
The average hospital stay associated with the condition is $11,000, whereas Entresto costs about $12.50 a day, or $4,500 a year, he said. Jimenez acknowledged that the price is well above current cost of care but said it reflects better outcomes.
Novartis' second-quarter net income dropped 32 percent over the same quarter last year, brought down primarily by poor performance from associated companies and negative effects of a strong U.S. dollar, the company said Tuesday.
Net income was $1.856 billion, down from $2.723 billion in the same quarter in 2014. Net sales were down 5 percent to $12.694 billion and earnings per share from continuing operations dropped to 77 cents from $1.11 last year. Analysts in a Reuters poll had forecast net sales of $12.8 billion.
Group sales are expected to grow by mid-single digits and operating income is expected to grow ahead of sales at a high-single-digit rate, Novartis has said.
"In times of great currency fluctuation, what you have to do is look at constant currency, and I feel like we had a solid quarter," Jimenez said. "We had some nice margin improvement, and if you look at operating performance, we were right at consensus on revenue, right at consensus on operating income."
"But below the line, things that are more difficult to forecast like associated company income and some hedging gains, that's where there was a difference versus consensus."
Novartis said its core group's net income was down 8 percent to $3.07 billion but would have been up 5 percent in constant currencies.
If the U.S. dollar maintains its mid-July strength for the rest of the year, it will contribute to a 9 percent drop in sales and 13 to 14 percent on core operating income, the company said.
—The Associated Press and Reuters contributed to this story.
CORRECTION: The drug Entresto costs about $12.50 a day, or $4,500 a year. That fact was misstated in an earlier version of this article.