Novartis Profits Jump

Novartis on Jan. 28 reported a 25% jump in 2008 net profit and shrugged off the economic downturn to forecast a record year ahead despite market skepticism. Net profit reached $8.16 billion.

Sales increased 9% to $41.6 billion, driven by vaccines, diagnostics and consumer health products, and a revival in the core pharmaceutical business.

Signs of slower sales in the final quarter with a rise of just one percent to $10 billionfailed to dampen the spirits of company chairman and chief executive Daniel Vasella. "Novartis anticipates another year of record results in 2009, continuing on its path of sustainable growth," Vasella said, while acknowledging hurdles.

Those included pressures for cuts in drug prices, the increasing use of generic drugs and what Novartis regards as "conservative regulators" overseeing medicines and weakening intellectual property rights. "The new one to add is the recession because it would be an illusion to believe that governments with less tax income can spend in the same way," he said.

"Thanks to successful innovation and a leading market position of our healthcare business portfolio, Novartis achieved a strong performance in 2008," Vasella said. Key sellers on the pharmaceutical side were cancer and cardiovascular drugs, while vaccines were driven by deliveries of pandemic H5N1 or 'bird-flu' influenza vaccines to the US government, offsetting lower sales of seasonal flu vaccines.

Barring unforeseen events, the company is targeting record revenues and earnings for the full year, and "superior growth in a challenging environment." In local currency terms, sales should growing in the mid to high single-digit range, it added.

Earlier this month, the company announced a deal with the U.S. government to supply pandemic flu vaccines worth $486 million , including a plant to be built in North Carolina.

Vasella said Novartis would pursue its plans for Alcon, the world's leading opthalmological supplier, despite the credit squeeze. The group is aiming to buy an additional 52% stake between January 2010 and July 2011.