Novartis Fourth-Quarter Profit Climbs 23%


Swiss pharmaceutical giant Novartis said Thursday fourth-quarter net income rose 23% thanks to double-digit percentage sales growth in top-selling blood pressure and blood cancer drugs.

Novartis reported fourth-quarter net income of $1.66 billion, or 70 cents per share, from $1.35 billion, or 58 cents per share in the same quarter a year ago.

The earnings were below the 78 cents per share forecast by analysts polled by Thomson First Call. Investors were not initially impressed by the performance, and the stock is trading down 0.7% in Switzerland this morning.

Quarterly net income does include one-time costs related to a recall of contact lenses. About 12 million contact lenses, less than 1% of the total manufactured, were recalled for quality reasons, Reuters reported. Excluding extraneous items, operating income for the quarter was $1.82 billion, up from $1.49 billion in the same quarter a year ago.

Quarterly sales climbed 16% from the year-ago to $10.1 billion, topping analysts' expectations for sales of $9.97 billion. Sales of blood pressure medication Diovan rose 13% in the quarter, while sales of blood cancer drug Gleevec rose 14%.

For 2007, Novartis is predicting net sales to rise at a mid- to high-single-digit rate.

"The numbers are looking good, especially sales, but the outlook for 2007, appears to very cautious," Karl-Heinz Koch, pharmaceutical analyst at Swiss private bank Vontobel, told Dow Jones. "It is probably tied to uncertainty about the timing of the launch of diabetes drug Galvus and hypertension drug Tekturna." Koch has a "buy" rating on the stock.

"We are of the opinion that the drugs Galvus and Tekturna will make it to the market (this year) and will achieve blockbuster status," Andreas Theisen, pharmaceutical analyst at WestLB told on Wednesday.

"We’re happy 2006 was a successful year but more importantly we’re well set up for the future and have done the right investments in R&D for 2007," Daniel Vasella, chairman & CEO of Novartis, told "Squawk Box Europe" Thursday, but added "we will have constant headwinds from the point of view of healthcare costs and cost containment measures."