Novartis (NVS) has a strong presence in the healthcare market across the world. This Switzerland based company has a presence in the field of oncology, neuroscience, ophthalmology and generics.
However, like many of its peers, Novartis is facing generic competition and pricing pressure for some of the products in its pharmaceutical segment. Diovan Mono was one of the key drugs of Novartis and the entry of generics impacted sales in the fourth quarter of 2014. Moreover, entry of generic competition for Exforge in the U.S also negatively impacted sales.
In this scenario, investor focus remains on late-stage pipeline candidates and their commercial potential, apart from the usual top-and bottom-line numbers. Moreover, Novartis has undertaken a reorganization of its portfolio in 2014 to focus on its core capabilities of pharmaceuticals, eye care and generics. The company sold its animal health business to Eli Lilly and Company (LLY) for $5.4 billion in Jan 2015. Novartis entered into an agreement with GlaxoSmithKline (GSK) in Apr 2014 to divest its vaccines business (excluding flu) to Glaxo. On the other hand, Novartis would acquire Glaxo’s oncology products.
Novartis has a disappointing earnings track record with the company missing estimates in three of the last four quarters with an average miss of 0.98%. Estimate revisions have gone down significantly for 2015 in the past few days.
Currently, Novartis has a Zacks Rank #4 (Sell), but that could definitely change following the company’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: Novartis beat on earnings by a wide margin. Our consensus called for EPS of $1.13, and the company reported EPS of $1.21.
Revenue: Revenues also surpassed expectations. Novartis posted revenues of $14.6 billion, compared to our consensus estimate of $14.1 billion.
Key Stats: Once again, the pharmaceutical segment delivered with key drugs performing well. The key drugs at Novartis – Gilenya, Afinitor, Tasigna, Galvus, Lucentis, Xolair, the chronic obstructive pulmonary disease portfolio and Jakavi continue to drive growth. However, generic competition for Diovan monotherapy and Exforge negatively impacted sales in the fourth quarter. Generics are projected to impact sales by $2.5 billion in 2015 (accounting for the recent launch of generics for Exforge in the U.S) compared to $2.4 billion in 2014.
Check back later for our full write up on this Novartis earnings report later!
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