Novartis (NOVN.S.), based in Switzerland, announced on Tuesday that it is increasing its profit prediction for the entire year for the third time. The company cited cost reductions and higher-than-expected pricing for a multiple sclerosis (MS) medicine as the reasons for the increase.
The pharmaceuticals manufacturer with headquarters in Basel stated in a statement that it expects its group core operating income to expand by a percentage that is “mid to high teens” in 2023, which is an increase from its earlier prediction that it would grow by “low double-digits to mid teens.” Sandoz was spun off and listed on the stock market on October 4.
Kesimpta is a once-monthly medication for multiple sclerosis that may be self-injected. During the third quarter, sales of Kesimpta more than doubled to $657 million, exceeding an analyst forecast of $525 million. Revisions to reflect higher-than-anticipated pricing in Europe were the driving force behind this increase. In the field of multiple sclerosis, Novartis competes with Roche, whose medicine Ocrevus is administered as a hospital infusion two times per year.
Sandoz being spun off implies that Novartis CEO Vas Narasimhan, who previously oversaw efforts to reduce the number of employees and concentrate on a smaller number of therapeutic areas and geographic markets, will now emphasize innovation within the company’s core operations. After coming under pressure from investors to achieve further development milestones, he earned a huge gain this year when research showed that breast cancer medicine Kisqali helped a larger patient population than was previously thought.
According to Chief Financial Officer Harry Kirsch, the improved prognosis results from faster-than-planned efficiency benefits from job reduction and more benign cost inflation. During a call with the media, Kirsch stated that the reorganization initiative is “completely on schedule and slightly ahead from the standpoint of savings.”
The firm said third-quarter group sales increased by 12% to $11.78 billion, excluding contributions from Sandoz. This figure was higher than the average estimate of analysts, which the company cited as $11.25 billion. The adjusted operating profit increased 17% to $4.41 billion, higher than the experts’ median prediction of $4.18 billion.
Revenues from the psoriasis and arthritis medicine Cosentyx increased by 4%, reaching a figure higher than anticipated at $1.33 billion. This was one of the items that drove the performance.
In keeping with the consensus of the industry, the company’s best-selling product, Entresto, had an increase in sales of 31%, reaching $1.49 billion; nonetheless, the heart failure medication still faces several obstacles.
Novartis is engaged in a legal battle with generic drugmakers attempting to sell cheaper versions of Entresto before the patent protection for the treatment is expected to expire in the year 2025.
Additionally, on September 1, Novartis filed a lawsuit against the United States government to stop the Medicare drug-price negotiating program, which includes Entresto.
