Novartis Beats Street with 11% Q1 Profit Jump

Drug manufacturer Novartis yesterday reported an unexpected 11% rise in Q1 net profit, ahead of forecasts, on strong sales of heart medication Diovan and cancer treatment Gleevec. Net income reached $2.17 billion ($0.92/share) from a restated $1.95 billion ($0.83). Analysts were expecting $1.82 billion. Diovan and Gleevec lifted sales in the pharmaceuticals division by 17% to $5.9 billion while overall net sales were up 18% to $9.8 billion, ahead of rival Roche Holding's 16% gain. The Sandoz generics unit posted a 19% boost in sales. Q1 operating profit came in at $2.453 billion, up from $2.202 billion, on revenue of $9.819 billion, up from $8.301 billion. CEO Daniel Vasella pushed the introduction of Tekturna, a newly approved hypertension drug, during the quarter as diabetes drug Galvus was delayed. The company reiterated its full-year forecast for record-setting operating and net profit. The company expects revenue to grow at least 5% following the removal from the market of Zelnorm, an irritable bowel syndrome medication, on safety concerns.

Sources: Bloomberg, Reuters, Forbes
Commentary: Novartis Lowers Growth Forecast On Suspension of Zelnorm Sales; Shares Fall • Novartis Gets Sooner Than Expected FDA Approval for Hypertension Drug
Stocks/ETFs to watch: Novartis AG [ADR] (NVS). Competitors: Roche Holding Ltd. [ADR] (RHHBY), Merck & Co. Inc. (MRK), GlaxoSmithKline plc [ADR] (GSK), Sanofi-Aventis [ADR] (SNY). ETFs: Pharmaceutical HOLDRs (PPH), Market 2000 HOLDRs (MKH), Europe 2001 HOLDRs (EKH)

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