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Novartis lifts profit outlook as hospitals cope better with COVID

John Miller
·2-min read
FILE PHOTO: The logo of Swiss drugmaker Novartis is pictured at the French company's headquarters in Rueil-Malmaison

Novartis lifts profit outlook as hospitals cope better with COVID

FILE PHOTO: The logo of Swiss drugmaker Novartis is pictured at the French company's headquarters in Rueil-Malmaison

By John Miller

ZURICH (Reuters) - Novartis <NOVN.S> nudged up its operating profit guidance on Tuesday, as the Swiss drugmaker predicted healthcare systems would navigate a second COVID-19 wave better than the first and keep drug sales flowing.

The company now expects 2020 operating income growth in a low-to-mid double-digit percentage range, compared with a low double-digit rate forecast previously. Sales are seen rising by a mid single-digit percentage, unchanged from previous guidance.

Third-quarter core net income climbed 8% to $3.47 billion (2.66 billion pounds), above analysts' average forecast of $3.32 billion in a Refinitiv poll. Sales rose 1% to $12.3 billion, missing the $12.7 billion forecast.

Chief Executive Vas Narasimhan acknowledged COVID-19 disruptions could still derail 2020 targets, but said hospitals, doctors and patients had learned from lockdowns earlier this year that delayed treatment and hit sales of Novartis medicines.

"Healthcare systems have realized the impact the pandemic had ... broadly on non-communicable diseases and overall preventative measures and screening measures," Narasimhan said. "There's a strong desire not to repeat that."

Novartis has been boosting profitability, including by trimming thousands of jobs, and has sold more than a dozen plants since 2019 as it slims production.

A week ago, Roche <ROG.S> CEO Severin Schwan also predicted a second "healthcare lockdown" was unlikely, despite rising cases.

In July, Novartis trimmed its 2020 sales outlook due to COVID-19 disruptions.

The company said third-quarter market conditions were recovering, though some areas remained sluggish including dermatology, where psoriasis medicine Cosentyx's sales were up only 7%, a quarter of last year's pace, to $1 billion.

Third-quarter net income fell to $1.9 billion, from $2 billion in 2019, as Novartis settled a legal case where the French government fined it 385 million euros (349 million pounds) over abusive practices to push eye injection Lucentis.

Narasimhan pledged on Tuesday to appeal.

(Reporting by John Miller; editing by Brenna Hughes Neghaiwi and Mark Potter)