(Reuters)Novartis, a Swiss drug company, said that earnings at its generic drug division, Sandoz, would probably stay the same this year instead of going down. It also said that a strategic review of the unit’s future was going as planned.
Novartis said in a statement on Tuesday that it still expects its the core operating income to grow in the mid-single-digit percentage range by 2022.
The company repeated what it had said before, which was that it would give an update on Sandoz’s future by the end of 2022.
During the second quarter, the number of prescriptions for generic drugs went up in markets outside of the United States because patients were no longer held back by restrictions related to the pandemic.
In a call with journalists, the head of finance, Harry Kirsch, said that Sandoz’s better growth prospects did not make it less likely that the company would change hands.
He also said that getting growth back “shouldn’t mean that you keep it.”
The big pharma company also said that it now wants to save $1.5 billion from a group-wide plan to cut costs. Before, it had hoped to save at least $1 billion by 2024.
In a statement, the company said, “Our streamlined organisational model is being put into place well.”
Core operating income fell by 2% to $4.27 billion in the second quarter, which was a little more than the average analyst estimate of $4.19 billion, according to a Refinitiv poll.
A strong dollar reduced the value of sales made outside of the United States.
Novartis had to stop making radioligands, which are precise nuclear cancer medicines, in May, which added to the decline. Gilenya sales were also hurt by the fact that there were other drugs that did the same thing.
Entresto’s quarterly sales went up by 27% to $1.13 billion, which was a bit less than expected but still a sign of growth.
Cosentyx, a drug used to treat psoriasis and arthritis, saw its sales increase by 9 percent to $1.28 billion, which was expected by the market.
The Indian-born CEO is trying to prove that he is an efficient leader at a time when the Swiss drug company is getting huge windfalls of cash, like the $20.7 billion it got last year from selling its 33 percent stake in Roche back to its rival, also Swiss, and from a possible sale of Sandoz.
Even though it wants to buy back up to $15 billion in shares, Novartis says it will still have enough money to buy companies and technologies that will help it grow.
If internal drug development gets enough money, Novartis would focus on “bolt-on” takeovers and avoid big deals, said Kirsch, who is in charge of finance.
He also said that, given the group’s market value of $200 billion, bolt-on deals could still be worth several billion dollars.
$1 is worth 0.9752 Swiss francs.
