Novartis Says Q4 Profit Rises 54 Percent to $2.32 Billion
From Associated Press (January 26, 2010)
GENEVA--Swiss drug maker Novartis AG on Tuesday reported a 54
percent rise in fourth-quarter net profit to $2.32 billion on
strong sales and favorable exchange rates, and announced the
appointment of Joe Jimenez as its new chief executive.
Earnings per share rose 53 percent to $1.01 from $0.66 in the same
quarter of 2008, when Novartis posted a net profit of $1.51
billion.
The results met analysts' expectations and Novartis share rose 1.4
percent to 56.50 Swiss francs ($54.16) on the Zurich
exchange.
Sales of Novartis products, which include the hypertension drug
Diovan and anticancer drug Glivec _ known as Gleevec in the United
States, rose 28 percent to $12.93 billion in the September-December
period from $10.08 billion the previous year.
"The fourth quarter has been especially strong," outgoing CEO
Daniel Vasella told reporters in a conference call, noting that
Novartis benefited from better exchange rates and the shipment of
large orders of swine flu vaccine in the final three months of
2009.
Vasella said the planned takeover of eye-care company Alcon Inc.,
which has met with resistance from some minority shareholders,
would "propel Novartis to the global leadership position in
eye-care and create a new growth platform."
Novartis said it has appointed Jimenez, the head of its global
pharmaceuticals division, to succeed Vasella effective from Feb. 1.
Jimenez, a U.S. citizen, is a graduate of Stanford University and
the University of California, Berkeley.
"After 14 years as CEO it is the right time to complete the
carefully planned CEO succession process, which started over a year
ago," Vasella said. The 56-year-old medical doctor, who is regarded
in his native Switzerland as a symbol of the country's powerful
pharmaceutical industry, will retain his post as chairman of the
board.
Novartis offered a positive outlook for 2010, predicting
mid-to-high single digit growth in its pharmaceuticals division and
mid single digit growth overall. Vasella said much would depend on
whether the Alcon deal proceeds as planned. "That is the swing
factor," he said.
Novartis, which already owns 25 percent of Alcon, has said it will
buy Nestle SA's 52 percent stake for $28 billion in cash before
carrying out a merger with Alcon that would give it control of the
remaining 23 percent held by minority shareholders.
Some minority shareholders have launched legal action in protest
against what they perceive as an unfairly low offer to them of
approximately $153 per share, compared with $168 per share that
Novartis is paying Nestle.
"Obviously we think that our offer is fair," Vasella said.
He gave a cautious outlook on future orders for its vaccine for
swine flu, or H1N1, saying demand may not hold up now that many
countries perceive the pandemic to be milder than previously
thought.
"I don't know what the demand will be ... but it will be fairly
moderate," Vasella said.
Novartis has been investing heavily in new products, anticipating
the expiry of patents on some of its blockbuster drugs in the
coming years. The company said it has received regulatory approval
for more than 30 new drugs and is currently working on 145
pharmaceutical projects.
Novartis also announced it will propose an increased dividend of
2.10 francs ($2.02) per share at its Feb. 26 annual general
meeting. In addition, it plans to ask shareholders to approve
executive pay packages and introduce a so-called 'clawback clause'
in future contracts to ensure it can retrieve unjustified
bonuses.
Posted: January 2010
