Novartis Profit Rises; Its Chairman Will Step Down

The board is proposing that Jörg Reinhardt, the chairman of the German rival Bayer HealthCare, succeed Mr. Vasella. Joseph Jimenez will remain as chief executive.

Novartis said that its profit rose in the fourth quarter but that sales were flat because of price cuts and competition from cheaper drugs. Net income was $2.08 billion, compared with $1.21 billion in the period a year earlier, when it took a $900 million charge from ending its clinical study into wider uses of the hypertension drug Tekturna.

The results were slightly above most analysts’ expectations.

Mr. Jimenez said Novartis had a strong range of new products coming from research and development — including an infant vaccine for meningitis — and predicted net sales to grow after 2013.

Fourth-quarter sales were almost flat at $14.83 billion, compared with $14.78 billion in the period a year earlier, and sales in 2013 are expected to suffer from the expiration of patents on the hypertension drug Diovan.

Novartis said Gilenya, its once-a-day pill against multiple sclerosis, attained what it called “blockbuster status,” with full-year sales of $1.2 billion in 2012.

Novartis expects the Food and Drug Administration to carry out an inspection in the coming months at its plant in Lincoln, Neb., which was shut down at the end of 2011 after officials found numerous problems with quality control. Mr. Jimenez told reporters in a conference call that in the meantime, the company was relying on third-party manufacturers to ensure the continued supply of products like Excedrin across the United States.

Separately, Abbott Laboratories said on Wednesday that its profit fell 35 percent in the fourth quarter on costs from the spinoff of its drug business into the new company AbbVie.

Abbott completed the split on Jan. 1, leaving it with a business model built around generic drugs, medical implants and nutritional formula. AbbVie will market the company’s branded prescription drugs, including the popular anti-inflammatory drug Humira.

In Abbott’s last quarter as a combined unit, the company earned $1.05 billion, or 66 cents a share, compared with $1.62 billion, or $1.02 a share, in the period a year earlier.

Earnings were weighed down by a number of one-time charges, including $265 million in separation costs. Excluding that and other charges, Abbott would have earned $1.51 a share. Revenue increased 4 percent, to $10.84 billion.

Analysts polled by FactSet expected, on average, earnings per share of 70 cents a share on revenue of $10.61 billion.

Finally, Amgen, the maker of the anemia treatments Aranesp and Epogen, posted a 16 percent drop in fourth-quarter profit as higher costs for production, marketing, research and other items offset higher sales for many of its biologic medicines. The results fell short of Wall Street expectations.

Net income was $788 million, or $1.01 a share, compared with $934 million, or $1.08 a share, in the period a year earlier.

Excluding one-time items, net income would have been $1.40 a share, 4 cents less than analysts expected, on average, according to FactSet.

Revenue rose 11 percent, to $4.42 billion.

Sales were led by the immune disorder treatment Enbrel, up 23 percent, to $1.16 billion, and Neulasta and Neupogen for fighting infection in cancer patients. They had a combined $1.31 billion in sales, down 1 percent.

Sales of Aranesp and Epogen fell 9 percent and 1 percent, to a combined $968 million.

Several newer drugs, like Prolia, Xgeva and Sensipar, had double-digit jumps in revenue.

Article source: http://www.nytimes.com/2013/01/24/business/novartis-profit-rises-its-chairman-will-step-down.html?partner=rss&emc=rss