1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
investingdaily
investingdaily
Articles (204)  | Author's Website |

Growth Spotlight: Novartis AG

June 21, 2012 | About:

Swiss drugmaker Novartis AG (NYSE:NVS) in April reported first-quarter 2012 earnings per share (EPS) of $1.27, down from the $1.4 posted a year earlier. First-quarter revenue fell to $13.7 billion from last year’s $14 billion. Earnings dropped 18 percent, to $2.3 billion.

Novartis’ revenue was hit by generic drug competition and manufacturing problems at its factory in Lincoln, Nebraska. This year, Novartis faces addition­al challenges to revenue, as its top-selling drug Diovan for hypertension loses patent protection.

However, the company isn’t taking patent protection lying down. Its recent $50 billion acquisition of Alcon (ACL), a developer of eye-care products, as well as the launch of new drugs, will help offset any patent losses. The com­pany expects 2012 revenue to be roughly in line with 2011.

Novartis’ portfolio contains plenty of proven, big-selling drugs. The compa­ny’s sales of Afinitor, for the treatment of advanced kidney cancer, leaped 60 percent in the first quarter to $143 million; sales of the chronic leukemia drug Tasigna jumped 39 percent to $209 million; and sales of eye drug Lucentis in­creased 30 percent to $567 million. Moreover, the company’s Gilenya, the first oral treatment approved for multiple sclerosis, continues to capture market share and generated sales of $247 million during the period.

Novartis’ Alcon unit also performed well, racking up a 5 percent increase in revenue to $2.5 billion. On the downside, the company’s Consumer Health segment endured a 20 percent drop in first-quarter sales to $932 million, stemming from the suspension of its troubled Lincoln manufacturing site. However, the company has now resolved these glitches and expects to resume full-throttle production by mid-year.

Novartis continues to funnel substantial resources into developing new prod­uct lines. The company spent $9.6 billion in research and development (R&D) last year, about 16.4 percent of revenue. This R&D commitment is paying off with a deep bench of potentially profitable products. The company recently an­nounced plans to make regulatory filings for more than 60 new drug treatments through 2015.

Novartis also reached an agreement to acquire the Chinese vaccines compa­ny Zhejiang Tianyuan Bio-Pharmaceutical Co, as part of a strategic push into the fast-growing and potentially vast vaccine market in China.

In addition to its growth prospects, Novartis sports an attractive dividend yield of 4.49 percent. The company’s earnings yield is around 7 percent, which means it pays out nearly 65 percent of earnings as dividends

About the author:

investingdaily
Investing Daily provides stock market advice and investment newsletters to help independent investors achieve a secure and rewarding financial future. The site’s coverage focuses on finding the most profitable emerging trends in the investment universe to bring investors pragmatic and in-depth coverage of the names that are taking advantage of these opportunities.

Visit investingdaily's Website


Rating: 2.0/5 (8 votes)

Comments

Please leave your comment:


GuruFocus Mobile App


User Generated Screeners


joshmeltzertopMFPicks
joshmeltzertopHFPicks
COLEROBILLARDPRICE/NCAV
pawankumarMyScreen
pawankumarMyScreenPB
pawankumarMyScreen3
dpostelDIVIDENDS
dementorCheap FCF generators
rael2222AAAA
herb.singhRiserMay2016

Select portfolio(s):

  • Loading...

Why you are interested?

Your selection and notes will be stored in your portfolio.

Login to add portfolio
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK