Pharmaceuticals boost Novartis profit

Chairman and CEO Daniel Vasella has said Novartis reaped the rewards of strategy focus in 2001 Keystone Archive

The Novartis healthcare group in Basel has reported an "excellent performance" in 2001, with net profit climbing by eight per cent to SFr7 billion ($4.12 billion).

The company announced on Thursday that sales had increased by ten per cent over the previous year to SFr32 billion, driven by pharmaceuticals and the sustained dynamism of its United States business, where pharmaceuticals sales jumped by 24 per cent.

Novartis chief financial officer, Raymund Breu, told swissinfo the company’s refocusing on its healthcare business had brought positive returns.

“I think the results that we have published proves that our strategy of focusing the money behind the pharmaceutical sector and our operation in the US is really working,” explained Breu. “We have now achieved higher growth rates than in the past and this is really the result of this refocusing.”

Fast growing in US

Chairman and chief executive Danial Vasella underlined the group’s strong performance in the US.

“Our increased level of investment and marketing and sales, with the priority on key growth drivers resulted in a sales growth of 24 per cent in pharmaceuticals in the US, elevating us to one of the fastest growing major pharmaceutical companies there,” said Vasella.

The US now accounts for 43 per cent of total Novartis sales, up from 40 per cent in 2000.

“Pharmaceuticals obtained 15 product approvals around the world – more than any other company in our industry – and the new product roll-outs will help sustain our growth momentum in 2002,” he added.

Six Novartis pharmaceutical brands again achieved individual annual sales of more than SFr1 billion, including Diovan used in the therapeutic area of hypertension, which increased sales by 53 per cent to SFr1.88 billion.

Income rising

Novartis said in a statement that barring any unforeseen events, group sales were expected to increase in the mid to high single-digit range this year, with operating and net income rising.

Earnings per share rose in 2001 by ten per cent to SFr2.73.

The company said it was proposing to raise its 2001 dividend to 90 centimes per at the annual shareholders’ meeting.

Novartis said that investments in research and development rose to a new high of SFr4.2 billion, mainly to drive the strong pharmaceutical pipeline, which is currently stocked with 66 projects in clinical development.

Focus on healthcare and pharmaceuticals

Commenting on company strategy, Novartis said it would pursue its growth path with its focus on healthcare and pharmaceuticals as its core business.

It said it planned to invest “vigorously” in growth assets and further build global brands, exploiting and expanding its competitive marketing and sales organisation to increase leadership in key areas and gain market share.

Novartis’ commitment to innovation will be reinforced with new levels of investment in R&D, adding a significant number of new research staff and consistently building strong links with centres of excellence in the science and biotech communities, the statement said.

Following news earlier in the week that the company was to sell its health and functional foods business, chief financial officer, Raymund Breu, told swissinfo that the company had no intention of selling anything else.

“We are very happy with what we’ve got right now and we have not planned any further divestitures,” explained Breu. “The sales of the health and functional food business made a lot of sense as it was the furthest away from our pharmaceutical functional core.”

Strong balance sheet

The company said it had maintained its AAA credit rating, with the strength of its balance sheet at the end of 2001 undiminished, despite several “significant transactions” during the year.

These included the acquisition, as a long-term investment of 21,3 per cent of the voting rights of Roche for SFr5.2 billion, the spending of SFr826 million to acquire product and marketing rights and further purchases of Novartis treasury shares for SFr3.9 billion.

Raymund Breu assured swissinfo that at this stage Novartis had no interest in increasing its stake in Roche.

swissinfo