Novartis weathers the COVID-19 storm in Q3, lifts outlook

Swiss pharma company Novartis has lifted its outlook for 2020 after its core operating income climbed by 11% in the third quarter (Q3).

As restrictions across the globe continued to lift throughout Q3, Novartis was able to recover from some of the worse negative impacts of the pandemic.

For its core operating income, Novartis reported an 11% increase to $4.06bn, which was mainly driven by a decrease in spending and an improved gross margin. Net sales remained stagnant at $12.3bn in the quarter, accounting for the difference in currencies.

Despite profits from net income falling to $1.93bn in the quarter, compared to $2.04bn in the same period last year, Novartis is still expecting an increase in its outlook going into 2021.

The company is expecting net sales to increase in the mid-single-digits, while guidance for its core operating income has been upgraded from low-double-digits to low-double-digits to mid-teens.

Novartis’ main growth drivers, and protectors against the continuing impact caused by the COVID-19 pandemic, includes its spinal muscular atrophy (SMA) gene therapy Zolgensma and chronic heart failure med Entresto (sacubitril/valsartan), which grew by 79% and 45% in the quarter, respectively.

In addition, sales of the company’s plaque psoriasis treatment Cosentyx (secukinumab) increased by 7%, with its HER2-negative breast cancer therapy Kisqali (ribociclib) also growing by 50%.

Novartis added that COVID-19 had negatively impacted some areas of the business, particularly in its dermatology, ophthalmology and Sandoz retail business units.

Novartis chief executive officer Vas Narasimhan added on a call with reporter this morning that the company would need to adapt to the pandemic if future lockdowns occur.

However, he added: “I think healthcare systems are getting much better at managing the pandemic and ensuring patients are getting the care they need for all the other medical conditions that are critically important to treat even in the face of this pandemic."

In the second quarter (Q2) of 2020, Novartis reported a drop in its sales and profits due to the COVID-19 pandemic.

Novartis’ net profit fell by 4% in Q2, although core operating income also increased in that period to $3.7bn, again thanks to lower spending in the quarter.

Going into the new year, its performance will depend on the rate of COVID-19 infections, which are steadily increasing again since the first wave of the epidemic.

In spite of the continuing impact of COVID-19, Novartis also added that its drug development operations are continuing with ‘manageable disruptions’.