The pharmaceutical company not only increased its profits significantly through the sale of Roche shares in 2021.
(Photo: Reuters)
Zurich The Swiss pharmaceutical company Novartis made a profit of around 24 billion dollars (21.2 billion euros) last year, almost three times the previous year’s figure. This was mainly due to the sale of treasury shares in competitor Roche. The dividend for investors will rise from 3 to 3.10 francs per share, as Novartis announced on Wednesday.
Day-to-day business was also better for the group thanks to business in the pharmaceuticals division. Sales climbed by six percent to around 51.6 billion dollars (45.6 billion euros) compared to the previous year. Adjusted for currency fluctuations, the increase was four percent. Adjusted operating income grew eight percent to $16.6 billion.
Thus, Novartis was slightly below the analysts’ expectations in terms of sales, but above them in terms of operating profit. For this year, the Group is targeting a mid-single-digit percentage increase in both indicators on a constant currency basis.
Novartis boss Vas Narasimhan referred to a total of six therapies that are intended to reduce dependence on particularly strong-selling drugs whose patent protection is about to expire. These so-called innovative drugs accounted for 52 percent of sales, after 44 percent in the previous year. They are also growing at double-digit rates.
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“That’s the portfolio rejuvenation that we want to see,” says Narasimhan. In addition, the group has another 20 therapies in development, which it believes have the potential to generate billions in sales. Narasimhan is convinced that the share price will recover as soon as this realization catches on among the shareholders.
Novartis is making little progress in corona therapy
There was no news on the sale of the Sandoz generics division. The spin-off is ongoing, but all options are still being examined, said the Novartis boss. Even Sandoz remaining in the group is still possible. Recently, large consortia of private equity investors had expressed an interest in acquiring Sandoz. A sale could bring Novartis around $20 billion.
Sandoz is suffering from the effects of the corona pandemic. Because of the measures taken against the virus, many classic colds and flus do not occur, and sales of off-patent medicines such as cough and cold remedies remain low. For the year as a whole, sales fell by two percent. However, the division’s profitability surprised analysts positively.
The Basel-based pharmaceutical company is still unable to report any breakthrough in the development of a therapy against Covid-19. A drug developed with biotech company Molecular Partners is under review by the US Food and Drug Administration (FDA). The talks are constructive, said Narasimhan.
The group is also working on its own pill against severe corona infections. Similar products are already on the market. However, these can sometimes have serious side effects. Therefore, if successful, he still sees potential for a Corona pill from Novartis. “We’ll see how it goes over the course of the year,” said Narasimhan.
Novartis shares fell by around three percent on Wednesday and have not recovered from the slump at the beginning of the pandemic to this day. The price is still 16 percent below the level of February 2020. Novartis boss Narasimhan was self-critical on Wednesday: “The share price is not where we would like to see it.”
Vontobel analyst Stefan Schneider sums up the mood on the stock exchange: “The pandemic has continued to leave its mark and important growth drivers are falling short of expectations.”
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