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US Galvus delay could impact Novartis Q3 FY07 results

A delay in the US approval of Swiss-based Novartis' diabetes treatment Galvus (vildagliptin) and other drug development setbacks have forced the company to lower its FY07 guidance twice.

A delay in the US approval of Swiss-based Novartis' diabetes treatment Galvus (vildagliptin) and other drug development setbacks have forced the company to lower its FY07 guidance twice.

Vontobel analysts have said Q3 may be the first in six years to show a decline in pharmaceutical sales and operating profits at Novartis. The company's mainstray drugs, antihypertensive Lotrel (amlodipine/ benazepril), antifungal Lamisil (terbinafine) and the IBS treatment Zelnorm (tegaserod), may also show depressed profits due to generic competition. Zelnorm was taken off the US market in March 2007, after the FDA said the drug was not safe.

A Reuters poll of 13 analysts reveals that Q3 FY07 operating profit from continuing operations could drop two per cent to USD 1.9bn. Diovan and Glivec will continue to drive sales.

Novartis' shares have dropped nine percent so far in 2007, which exceeds the fall in the European index, caused by setbacks at GlaxoSmithKline (GSK) over its diabetes drug, Avandia (roseglitazone) and Sanofi-Aventis' pipeline woes.

Some of the analysts polled by Reuters say that Novartis could be undervalued, compared with the European sector, as it has a heathy new drug portfolio, as well as exhibiting strong growth potential in generics and vaccines.

30th September 2008

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