Zurich: Swiss drugmaker Novartis AG raised its full-year sales goal on the back of strong demand for its newest products and stood by its offer to buy out minority shareholders in eyecare group Alcon.
Second-quarter earnings per share rose 18% to $1.06, compared with the average forecast for $1.05 in a Reuters poll of analysts, as higher-than-expected demand for its pandemic flu vaccine also boosted its top line.
Novartis bumped up its full-year sales guidance and now sees group sales growing at mid- to high-single-digit rates in constant currencies. The group also sees operating and core margins rising as it keeps a close eye on cost control.
Sales at its pharmaceuticals unit are still seen growing at a mid-to high-single-digit rate in constant currencies this year and chief executive Joe Jimenez said on a conference call top-selling Diovan was performing well in the face of new generic competition.
Novartis shares were indicated to open nearly 1% higher, according to premarket data provided by Clariden Leu.
“Very solid Q2 figures. Novartis is doing fine with its productivity initiatives and showed an excellent cost control. The improved sales guidance is a little positive surprise,” DZ Bank analyst Thomas Maul said in a note.
Novartis, which agreed to buy a 77% stake in Alcon from Nestle in two stages, is holding firm on its offer of 2.8 Novartis shares for each Alcon share despite fierce opposition from Alcon’s independent director committee.
The bid, which equates to $142.4 per Alcon share, is significantly below both the average price of $168 paid to Nestle and Alcon’s Wednesday closing price of $156.11.
Novartis is buying Alcon to diversify and insulate itself from the effects of losing patent protection on big selling medicines such as blood pressure drug Diovan, but many analysts have said it is paying too much for the deal.
The group still expects its purchase of the majority stake to close either late in the third quarter or in the fourth quarter, and Novartis still plans to push through buying the remaining 23% under Swiss law, Jimenez said.
Swiss mergers require approval of two-thirds of shareholders and a simple board majority.
Novartis, which is kicking off Big Pharma’s reporting season, trades at around 9.4 times 2011 earnings, at a discount to Swiss rival Roche Holding AG, but at a premium to AstraZeneca Plc and GlaxoSmithKline Plc thanks to its promising pipeline.