Revenues for Novartis AG’s top drug, Gleevec, fell by a staggering 22% to only $834 million for the first quarter of 2016. A lower priced version of the drug, whose generic name is Imatinib, was launched by Zurich Sun Pharma in February 2016 after Novartis’ patent for the drug expired on January 4, 2015. The cheaper version discounts Gleevec by 30%.
This has led to a slide in Novartis AG’s total revenue, going down to $11.6 billion from last year’s Q1 of 11.9 billion. Novartis did not even hit analysts’ slightly lowered estimate of $11.89 billion.
The CEO of Novartis, Joseph Jimenez, is showing optimism for the company’s results. “I am pleased we were able to show sales growth in constant currencies despite the entry of a generic version of Gleevec in the US.”
The company increased marketing expenditures by 1.1% for its new drugs to compensate for anticipated weakening of Gleevec sales. This translated to an increase of 24% to $3.9 billion of these newly introduced products.
Even if core net income fell by 13% to $2.8 billion from $3.2 billion last year, Jimenez emphasized that this is partly due to investments for future developments. “As expected, our results reflect additional investments behind our new launches and Alcon. We are on track with the plan we outlined in January to further focus our divisions, drive greater innovation and significant synergies and productivity. I remain confident in our long-term growth prospects, underpinned by our strong pipeline and the talent leading our Research and Development functions.”
Novartis further claims that it made strides in its lists of priorities in 2016, including “strengthen innovation; capture cross-divisional synergies; and build a higher-performing organization.”
Other good performers for the company are Gilenya, Tasigna and Jakavi which all had stellar sales and increases at $698 million (up 12%), $382 million (up 6%) and $124 million (up 44%) respectively.
Cosentyx, a medication for psoriasis, showed fast uptake in Q1, leading to total sales of $176 million. It benefitted from approval of 3 indications: psoriasis, ankylosing spondylitis and psoriatic arthritis.
Biopharmaceuticals also grew by 50% to revenues of USD 214 million.
Growth from Brazil and Turkey also helped Novartis. Its market increased by 17% and 19%, respectively, in those countries.
Novartis placed a lot of focus on Alcon, its eye care division. Still, revenues from that segment fell 7% to $1.4 billion due to slow surgical sales (down by 3%) and a drop in contact lens proceeds (down by 4%).
Another slow performer is Entresto, a new medication for heart failure. Novartis is expecting yearlong revenue of $200 million for the drug, but the first quarter only delivered $17 million. The slow acceptance of the drug is attributed to doctors’ hesitation to prescribe it because it is not yet widely accepted through insurance. Novartis assures that this will change through broader insurance coverage during the year and a larger sales force to push the drug.