Novartis Reports Strong Q1, Cites Alcon’s Contact Lens Gains for the Period

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ZURICH— Novartis AG (NYSE: NVS) reported results for the first fiscal quarter, ending March 31. The company said that worldwide results reflected net profit attributable to shareholders of $2.94 billion from restated earnings of $2.37 billion a year earlier, for the period. Sales were up 1 percent to $14.02 billion from a restated $13.88 billion.

Commenting on the results, Joseph Jimenez, CEO of Novartis, said: “Novartis delivered a solid quarter, with all divisions contributing to growth. We made progress in innovation…The transformational deals announced on Tuesday position the company for future success based on our sharpened focus, innovation power and financial strength.”

On the Tuesday prior to the release of the financials, Novartis unveiled a series of transactions valued at more than $25 billion, including the purchase of GlaxoSmithKline (GSK.LN) PLC's oncology unit and the sale of its own low-margin vaccines and animal-health businesses. The planned overhaul, which follows a yearlong review of Novartis's businesses, concentrates the company's focus on three key areas—pharmaceuticals, generics and eyecare.

For the first quarter, Alcon net sales were $2.6 billion, up 3 percent (6 percent in constant currency), with strong growth in the surgical franchise tempered by moderate growth in ophthalmic pharmaceuticals, Novartis’ statement said. Surgical’s performance rose 6 percent, driven in part by Alcon’s new cataract surgery phacoemulsification platform, the Centurion Vision System.

Ophthalmic pharmaceuticals’ revenues were flat, (rising 3 percent in constant currency) and saw continued growth in the dry eye category.

Alcon’s Vision Care business grew by 4 percent (5 percent at constant currency), as a result of “robust sales in contact lenses, led by Dailies Total1. Alcon operating income was $380 million, a decline of 8 percent, but an increase of 3 percent at constant currency rates, the company said.

Novartis also announced the creation of a shared services organization, Novartis Business Services (NBS), to improve profitability and free up resources that can be reinvested in growth and innovation. NBS will consolidate a number of business support services currently spread across divisions, including IT, Financial Reporting and Accounting, Real Estate & Facility Services, Procurement, Payroll and Personnel Administration and the Pharmaceuticals Global Business Services. Novartis has appointed Andre Wyss as Global Head of NBS, a newly created Executive Committee position reporting directly to CEO Joe Jimenez. Wyss has had a distinguished, 30-year career with Novartis in a range of operating roles.