DAVOS: Novartis CEO Sees Blockbusters Mitigating Patent Losses

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DAVOS, Switzerland—CEO Joe Jimenez is confident Novartis AG (NVS) will be able to quickly mitigate the drop in revenue from patent expirations with help from a pipeline of potential blockbuster drugs already on the market.

The Swiss drug maker’s shares skidded more than 2% Wednesday amid concerns about its outlook, complicated by patent expiration for Diovan, its top-selling medicine. The blockbuster heart drug lost patent protection in Europe in November and will lose protection in the U.S. at the end of 2012.

“Once we are out from under that in about six quarters, the company should return to growth,” says the Novartis chief executive on the sidelines of the World Economic Forum here.

Jimenez has faith in seven drugs with blockbuster potential, or possible sales of more than $1 billion a year.

“These are drugs that we launched two or three years ago and continue to grow at 30%, 40%, 50%” a year, he says. As examples, he touts type 2 diabetes drug Galvus, which posted sales of $700 million in 2011, and cancer drug Tasigna, which is growing at about 40% a year.

“These are the drugs that have enabled me to say sales for ‘12 in line with ‘11 despite the fact that we have $2.5 billion of generic erosion,” Jimenez says.

Novartis forecast sales in 2012 in line with 2011 and a slight drop in operating income margin.

Jimenez notes that pharmaceuticals account for only 50% of Novartis’s sales, with the remainder coming from generics, vaccines and diagnostics and consumer health businesses.

“We’re spread across these high-growth areas of health care but we are still focused,” he says.

He isn’t about to take the company into the shampoo business. “We are going to stay in science-based innovation with pharmaceuticals at the core,” he says.



Original Article Source by Barrons.com