Novartis profit tops expectations as pandemic impact ebbs
Wed Jul 21 2021
Rachel Long (522 articles)

Novartis profit tops expectations as pandemic impact ebbs

Swiss drugmaker Novartis (NOVN.S) beat second-quarter sales and profit expectations on Wednesday, while keeping its 2021 guidance unchanged, as disruption from the coronavirus pandemic waned.

“While demand is starting to return to pre-COVID-19 levels in most geographies and therapeutic areas, we still see a slight impact on parts of our business for example in oncology, generics and certain geographies,” it said.

“We are assuming further easing of COVID-19 restrictions in the second half of the year with a positive impact on business dynamics.”

Finance chief Harry Kirsch told reporters that the pandemic was still weighing, for instance, on cancer patients’ diagnostic rates, which crimped sales of products sold via hospitals.

He estimated business was probably averaging 80-90% of pre-COVID levels, with strong divergences by category and country.

Novartis boosted core net profit by a fifth to $3.72 billion. Core operating income rose 18% to $4.35 billion. The gain of 13% in constant currencies was up around 4% excluding the impact of destocking in the year-earlier quarter after customers rushed to lay in supplies early last year, it said.

Sales in the three months through June rose 14% to $12.96 billion, a gain of 9% when stripping out currency fluctuations.

Analysts polled by Refinitiv had on average expected net profit of $3.46 billion on revenue of $12.52 billion.

Novartis said its key drug brands were performing well and its product development pipeline continued to progress.

It reiterated it expected 2021 sales to grow by a low- to mid-single digit percentage rate at constant currencies, with core operating income growing at a mid-single digit rate.

Its shares rose 2.2% in early trading, ahead of the European health care sector index (.SXDP), which was up 0.9%.

Vontobel analyst Stefan Schneider said results clearly beat expectations but the company’s failure to upgrade its guidance “indicates that the pandemic situation has not yet returned fully to pre-pandemic levels and that the situation remains somewhat unpredictable due to the emerging variants”.

Rachel Long

Rachel Long

Rachel Long is our Desk Correspondent covering Stock Markets across the globe. She is based in New York