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Novartis posts record profits

Novartis sales are up 10 per cent in a year when net profits reached record highs

(swissinfo.ch)

The Swiss healthcare group, Novartis, made a record net profit of SFr7.21 billion ($4.32 billion) last year, a rise of eight per cent over 1999.

At the presentation of its annual financial results in Basel, the company said sales in 2000 had risen by 10 per cent to reach SFr35.8 billion.

The chairman and chief executive officer of Novartis, Daniel Vassella described the results as "excellent".

"As growth accelerated, sales, net income and free cash flow before acquisitions rose to record levels and Novartis attained important strategic objectives," he said.

One of those was the aim of becoming a pure healthcare company by successfully completing the spin-off and subsequent merger of its Agribusiness with Zeneca Agrochemicals to form Syngenta, the world's leading agribusiness company, he said.

Pharmaceuticals drove last year's business with sales rising by 15 per cent in Swiss francs to SFr17.6 billion. Six products each exceeded the SFr1 billion sales mark.

Novartis announced it would spend an additional SFr1billion on the launch of five new products. This is expected to cut the group's operating margin by one to two percentage points in 2001.

"But this is an investment and in later years we will have higher sales growth and hopefully higher profits again," the company's chief financial officer, Raymund Breu told swissinfo.

The marketing and distribution efforts are aimed mainly at the United States. "In pharmaceuticals, we sell about 38 per cent of our products there. It's the largest market, the most dynamic and the most profitable too," Breu added.

Novartis also announced a fresh SFr4 billion share buyback, saying that it did not need to hoard cash for acquisitions. It also plans a 40 to one share split to improve liquidity following expected changes in Swiss securities laws.

The group said it would not be completely passive on the mergers and acquisitions front.

"We cannot allow ourselves to close our eyes fully for the next two to three years on what is going on in the industry...big opportunities in pharmaceuticals come along once very 10 years and you can't say 'sorry guys'," he said.

However, Breu added that a major acquisition could be "dangerous" at this stage if it deflected attention from the launch of new products that Novartis is counting on to accelerate sales growth.

At its annual shareholders' meeting, Novartis will propose a dividend of SFr34 per share, up from SFr32 in 1999.

swissinfo with agencies


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