Ways2Capital Reviews : Novartis/Sandoz Q3CY18 Results, Stable US Pricing Pressure, Upbeat Commentary On Biosimilar Business

Pharma major, Novartis reported its Q3CY18 numbers yesterday. Its net sales grew 2.9% yoy while in constant currency terms the growth was 6% yoy to $12.8bn. Operating profit declined by 17.7% yoy to $1.9bn. Operating margins declined by 380bps yoy to 15.2% in Q3CY18.

Novartis’s generic business, Sandoz continued to report poor performance. Sandoz’s net sales declined by 6% yoy to $2.4bn in Q3CY18 as US sales declined by 17% in constant currency terms due to continued industry-wide pricing pressure. Ex-US, net sales grew by 2% in constant currency, global biopharma sales grew 21% in constant currency terms.

Company has said it faced 8% price erosion in Q3CY18 mainly in the US, vs. 9% in Q2CY18. This however was partially offset by 4% volume growth.

Core operating income declined 7% yoy to $541mn in Q3CY18, Operating margins were at 22.4% in Q3CY18 vs. 22.1% in Q3CY17.

Company has said that it is hopeful to bring gAdvair in the market in the end of CY2019E, note that Cipla is also developing its generic on Advair. Sandoz has launched adalimumab in Europe and has approval on infliximab. The company expects to launch Pegfilgrastim (upon approval) in Europe in Q4. Mylan/Biocon are also chasing European approval on Pegfilgrastim, while they have launched its US biosimilar Fulphila in July 2018. Sandoz’s rituximab and Etanercept biosimilars have continued to do well.

Company believes that the biosimilar business penetration is yet to reach maximum level and expects the innovators to fight back in form of prices. Company is hopeful of the biosimilar business in Europe.
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