Novartis's share price undervalues the business, the Swiss drugmaker's finance chief was quoted as saying, and the long-term growth prospects for the industry were good.
"Our price-earnings ratio has roughly halved in the last seven years, while earnings per share have risen by some 100 percent. Sooner or later this performance will again be reflected in the share price," Chief Financial Officer Raymund Breu told the Finanz und Wirtschaft newspaper.
Breu acknowledged that some of Novartis's problems were home-made, such as delays in the introduction of a number of new drugs. But much of the low valuation had to do with lukewarm investor sentiment towards the sector.
Long-term growth prospects for the pharmaceutical industry were good, Breu said, because of an ageing population, the rise of diseases linked to an unhealthy lifestyle and higher demand for medicines in emerging countries. Novartis stock still trades at a premium compared to some other European drug majors, but analysts have questioned whether that is sustainable given its thin portfolio of new drugs.