Zurich: Loss of patent exclusivity on a key cancer drug eroded first half net profits, Swiss pharmaceutical giant Novartis said Tuesday, as it said it would step up investments to market a new heart treatment.
Net earnings slid 8 per cent to $3.8 billion (Dh13.95 billion or €3.4 billion) as the rising value of the dollar helped push sales down 2 per cent to $24.1 billion in the first half of 2016.
In the second quarter, net profit slid 3 per cent to $1.8 billion on sales of $12.5 billion, a drop of 2 per cent.
“Performance in Q2 was solid despite a full quarter of Gleevec loss of exclusivity impact in the US,” chief executive Joseph Jimenez said in a statement, referring to Novartis-developed imatinib used in the treatment of several cancers, including certain types of leukaemia, that went off patent in the United States in January 2015.
The company, which launched a restructuring drive earlier this year to face the challenge from losing patent exclusivity, saw generics eat away nearly all the sales volume growth in its main Innovative Medicines unit.
Novartis’s own generics unit, Sandoz, saw sales edge up 1 per cent overall as price erosion wiped out much of the impact of a 10 per cent increase in volumes.
The company said it would step up investments to boost sales of its heart failure treatment Entresto, which following regulatory approval has now received recommendations in treatment guidelines in the United States and European Union.
“We expect this to accelerate the uptake of Entresto and maximise future peak sales,” said the company, although it noted the investments could lead to a low single-digit drop in operating income.
It forecast $200 million in Entresto sales this year, and said new products should help offset the impact of generic competition to keep net sales broadly in line with those of last year, excluding the impact of currency fluctuations.
Shares in Novartis climbed 0.1 per cent in early trading in a Swiss market that dropped 0.2 per cent.
