By Helena Smolak
Novartis raised its midterm sales guidance, citing higher revenue expectations for key drugs and product launches, as the company seeks to expand in the U.S.
The Swiss pharmaceutical company will look at potential mergers and acquisitions as it continues to pursue its goal of becoming one of the top five pharma companies in the U.S. in the coming years, Chief Executive Vas Narasimhan said Thursday in a call with reporters. The company said it ranked tenth in the U.S. by sales as of the second quarter.
Novartis has embarked on a major reshuffle of its portfolio in recent years to become a company purely focused on innovative medicines, spinning off eyecare specialist Alcon and generic drugmaker Sandoz while shedding its stakes in cross-town rival Roche and a consumer health joint venture with the U.K.'s GSK.
It also made several acquisitions along the way, striking deals for China's SanReno Therapeutics, Germany's MorphoSys and U.S.-based Mariana Oncology this year.
"We have more work to do because our U.S. peers continue to also expand quite significantly," Narasimhan said. "We won't do M&A just to get us into the top five, but clearly we want to get there."
The company is targeting an equal split between sales coming from the U.S. and what it generates elsewhere. For the first nine months of the year, Novartis's U.S. sales amounted to $15.14 billion, or 41% of the group's total.
Novartis now expects annual currency-adjusted sales to grow by 6% through 2028, having previously guided for growth of 5%. It anticipates its 2024-29 annual sales growth at 5% and expects mid-single-digit sales growth after 2029.
The company's guidance assumes heart drug Entresto, its top-selling product, will lose patent protection in the U.S. next year.
However, Novartis lifted peak annual sales estimates for five of its key drugs--Cosentyx for immunology indications, Kisqali for breast cancer, Kesimpta for multiple sclerosis, Pluvicto for prostate cancer, and recently launched cholesterol treatment Leqvio, which has been its fastest-growing drug this year.
The company reiterated its core operating income margin target of 40% by 2027 due to productivity improvements. With Narasimhan at the helm, Novartis has reduced its workforce and overhauled its organization.
Novartis currently has more than 30 medicines in its pipeline, with most of them expected to have U.S. exclusivity in the 2030s or beyond, it said. The company anticipates more than 15 data readouts from experimental drugs for possible filings in the next two years, it said.
It has eight drugs in its portfolio with potential to bring in annual peak sales of $3 billion, and expects to launch in the near term four more that could reach multi-billion annual sales. Nevertheless, it is facing pressure from expected generic competition for aplastic anemia drug Promacta and leukemia treatment Tasigna, as well as Entresto, next year.
The company's confidence in its prospects for the medium term opens up an even bigger gap between its guidance and consensus estimates, Vontobel analyst Stefan Schneider said.
Write to Helena Smolak at helena.smolak@wsj.com
(END) Dow Jones Newswires
November 21, 2024 06:29 ET (11:29 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments