Novartis Lowers Growth Forecast On Suspension of Zelnorm Sales; Shares Fall

Shares of Novartis AG fell 4% in trading Friday after the company announced it will have to suspend its U.S. and Canadian sales of IBS-drug Zelnorm, due to an apparent link to angina, heart attacks and strokes. The decision came after the FDA requested 'further discussion' on the medicine, leading the company to cut its growth targets for 2007. Zelnorm was considered to be one of Novartis' key growth drivers in the coming year. The company will work with the FDA to hopefully make the drug available to people with no other treatment options. While the company says it hasn't found a connection between Zelnorm and increased cardiovascular risk, the FDA culled data from 29 clinical trials, showing a risk of 0.11% for those on Zelnorm, versus a far more insignificant risk of 0.01% for those that took the placebo. Novartis CEO, Daniel Vasella, denied the FDA's claims, saying "there was no reason to pull it... for the appropriate patient population it is a product that has great benefits." As a result of having to pull Zelnorm from the North American market, the company forecast growth for FY2007 at 5%; previously Novartis had projected growth in the mid- to high single-digit range.

Sources: Press Release, Wall Street Journal, MarketWatch, Reuters
Commentary: Biotech Day In Review: Novartis Pulls Zelnorm Off The Market • Teva v. Novartis: Federal Decision Has Broad Implications For Generics • Novartis Gets Sooner Than Expected FDA Approval for Hypertentsion Drug
Stocks/ETFs to watch: Novartis AG (NVS). Merck & Co. (MRK). Competitors: Pfizer Inc. (PFE), Wyeth (WYE), Schering-Plough Corp. (SGP), Novartis AG (NVS), Teva (TEVA), AstraZeneca plc (AZN), GlaxoSmithKline plc (GSK), Sanofi-Aventis (SNY), Eli Lilly & Co. (LLY), Abbott Laboratories (ABT), Amgen (AMGN). ETFs: Pharmaceutical HOLDRs (PPH)

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