ZURICH: Swiss drugmaker Novartis forecast sales and profits to grow at a faster pace this year as recent drug successes and its portfolio overhaul help it weather the impact of generic competition.
Excluding currency moves, the Basel-based firm on Tuesday said it expected mid-single digit sales growth and core operating income to increase at a high-single digit rate in 2015.
Still, a surge in the Swiss franc following a shock move by the Swiss central bank to scrap its policy of capping the currency's value may complicate Novartis' efforts to improve margins.
Novartis, which generates just 2 percent of sales but has around 13 percent of its costs in Switzerland, said it expected the stronger franc to knock about 12 percentage points off core operating income this year and 7 percentage points off sales.
Chief Executive Joe Jimenez sought to reassure investors that the franc's surge would not derail efforts to increase margins, saying the company would take a hard look at procurement and other services that it has in Switzerland.
To eke out further savings Novartis has consolidated some back-office functions, which were spread across all divisions and account for over $6 billion in expenses, into one shared service organisation.
Shares in Novartis, which slumped as much as 16 percent on the day the SNB scrapped the cap, were trading up 0.7 percent at 0835 GMT at 87.60 francs, while the European healthcare sector slipped 0.1 percent.
Novartis unveiled a series of deals last year which will see it focus on a smaller number of higher-margin businesses once it concludes a $20 billion asset swap with GlaxoSmithKline in the first half.
The company hopes the restructuring as well as the recent approval of its new psoriasis drug Cosentyx, which could bring in annual sales of more than $1 billion, will help it buffer cheaper copycat competition to blood pressure medicines Diovan and Exforge.
The anticipated launch of heart failure treatment LCZ696 should also generate multi-billion-dollar revenues. Analysts expect the drug to gain approval in the United States by the middle of this year.
Net sales fell 2 percent in the fourth quarter to $14.63 billion, slightly ahead of the average forecast for $14.6 billion in a Reuters poll. Core net income rose 1 percent to $2.9 billion in line with forecasts.
The company said it would raise its dividend to 2.60 Swiss francs per share for 2014, compared to the 2.45 francs it paid out last year. This was below the average forecast for 2.67 francs in a Reuters poll.
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