Swiss pharmaceutical giant Novartis AG saw its Q3 earnings more than triple on a $5.3 billion one-time gain from the sale of Gerber and Medical Nutrition to Nestle SA, but its profit from continuing operations fell to $1.57 billion, a 12% decline from Q3 2006 net income of $1.79 billion, and well short of analysts' expectations for profit of $1.75 billion. Revenue increased 9% to $9.61 billion, as strong performance in the company's vaccines and diagnostics units offset weakness in pharma sales (full earnings call transcript later today). Novartis's loss of exclusivity over key drugs such as Zelnorm, Lotrel, Lamisil and Famvir to generic drugmakers cut into profits more than expected. The company announced plans to cut 1,260 U.S.-based marketing jobs, with expected savings of $250 million a year. Novartis confirmed its full year guidance despite the profit miss. According to Zurich-based analyst Denise Anderson, Novartis's results "really do underline what happens when you lose profit from blockbuster drugs. The fourth-quarter is traditionally weak for Novartis, don't assume the worst is over."
Commentary: Novartis’s CEO Has No Plans for a Major Merger • Teva's Generic Famir Victory Overshadowed by Novartis' Emergency Injunction • Novartis: A Dividend Payer With Foreign Currency Exposure
Stocks/ETFs to watch: NVS. Competitors: GSK, PFE, MRK. ETFs: XLV, MKH
Earnings call transcript: Novartis Q2 2007
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