Swiss drugmaker Novartis delivered a mixed second-quarter report Tuesday, but Novartis stock popped on the company's bullish full-year outlook.
The unexpected saving grace came from Novartis' Sandoz division, which sells its generic drugs. During the June quarter, Sandoz sales jumped 5% in constant currency. The unit has been a frequent laggard, however, and Novartis is now deciding whether to sell it, spin it off or keep it.
"Sandoz performance allows us to increase its guidance for the full year and the strategic review is on track," Novartis Chief Executive Vas Narasimhan said in a written statement. For the year, Novartis expects Sandoz sales to climb by a low single-digit percentage.
On today's stock market, Novartis stock hiked 4% higher to 86.
Novartis Stock: Sandoz Outgrows Newer Meds
Novartis earned an adjusted $1.56 a share on sales of $12.78 billion in the June quarter. Analysts polled by FactSet expected Novartis to earn $1.51 a share on $12.88 billion in sales. On a year-over-year basis, Novartis earnings fell 6% while sales dipped 1%.
Excluding the impact of exchange rates, sales jumped 5% and earnings inched 1% higher.
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Sandoz sales were $2.3 billion. Novartis' innovative medicines business generated $10.5 billion, rising 5% excluding the impact of exchange rates. Novartis noted strength from treatments for heart failure, multiple sclerosis, psoriasis, breast cancer and spinal muscular atrophy.
But generic competition had a 3 percentage point impact on several drugs, including cancer treatments Affinitor and Gleevec, an iron reducer called Exjade, multiple sclerosis drug Gilenya and high blood pressure med Exforge. Novartis also noted lower drug prices had a 4 percentage point impact on sales.
Novartis still expects annual sales of its innovative medicines to grow by a mid single-digit percentage — a bullish point for Novartis stock considering the light second-quarter sales.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
