Novartis expects to return to operating profit growth this year, with new Chief Executive Vas Narasimhan inheriting the Swiss drugmaker just as revenue from its latest medicines accelerates and the impact of expiring patents fades. The company said on Wednesday core operating profit would rise by a mid-to-high single-digit percentage this year, while sales would grow by a low-to-mid single-digit percentage.
That compares with a 1 percent decline in core operating profit last year on a 1 percent rise in sales. Narasimhan, who takes over on February 1 as CEO Joe Jimenez exits after eight years at the helm, forecast robust growth from psoriasis treatment Cosentyx and heart failure medicine Entresto will overcome plunging revenue from patent-expired Gleevec, once Novartis's top seller.
"As the CEO, my priorities will be driving our next growth phase," the 41-year-old US doctor from Pittsburgh said in a statement. Narasimhan will earn 8.9 million Swiss francs ($9.3 million) in 2018, 26 percent less than Jimenez's 11.3 million franc 2017 pay as "this is his first group CEO role", Novartis said.
Despite forecasting "sustainable growth," Novartis still has some unfinished business left by Jimenez. Narasimhan must decide whether to spin off its eye care unit Alcon, though action is unlikely before 2019 as the once-lagging unit returns to growth. In 2017, Alcon sales rose 4 percent to $6 billion.
Narasimhan must also grapple with a stuttering generics business: Sandoz sales - down 1 percent to $10.1 billion in 2017 - are expected to slip again this year as it is buffeted by US pricing pressures.
Nonetheless, fourth-quarter results provide a positive backdrop. Core operating profit in the quarter rose 7 percent to $3.2 billion, compared with the $3.17 billion average forecast in a Reuters poll. Sales rose to $12.9 billion, versus the Reuters poll average of $12.6 billion.
Cosentyx revenue hit $2.1 billion for the whole of 2017, 84 percent more than a year ago, while Entresto, which since its 2015 launch has lagged expectations, finally hit the company's own internal target with $507 million in sales.
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