(Reuters) – Switzerland’s Novartis (SIX:NOVN) on Tuesday raised its full-year earnings forecast for the third time, citing cost cuts and higher-than-forecast prices for a multiple sclerosis (MS) drug.
The Basel-based drugmaker, which spun off and listed generic drugs business Sandoz (SIX:SDZ) on Oct. 4, said in a statement that it expects group core operating income to grow by a percentage of “mid to high teens” in 2023, up from “low double-digit to mid teens” predicted previously.
Third-quarter sales of Kesimpta, a once-a-month MS treatment that can be self-injected, more than doubled to $657 million, beating an analyst consensus of $525 million, driven by adjustments to reflect higher-than-expected prices in Europe.
In MS, Novartis competes with Roche, whose Ocrevus drug is a twice-a-year hospital infusion.
For Novartis CEO Vas Narasimhan, who previously led a push to slash jobs and focus on fewer therapeutic areas and geographic markets, the Sandoz spin-off means greater reliance on innovation at the core business.
Having come under investor pressure to deliver more development milestones, he scored a major win this year when breast cancer drug Kisqali was shown to help a wider patient group in a study.
Faster-than-planned efficiency gains from the job cuts and more benign cost inflation contributed to the improved outlook, said Chief Financial Officer Harry Kirsch.
The restructuring programme is “fully on track and slightly ahead from a savings standpoint”, Kirsch said in a media call.
Third-quarter group sales rose 12% to $11.78 billion, excluding contributions from Sandoz, above an analyst consensus of $11.25 billion provided by the company.
Adjusted operating profit increased 17% to $4.41 billion, surpassing the average analysts estimate of $4.18 billion.
Among products driving the performance, revenues from psoriasis and arthritis drug Cosentyx gained 4% to a better-than-expected $1.33 billion.
Sales of its best-selling product Entresto gained 31% to $1.49 billion, in line with the market view, but the heart failure drug is facing several challenges.
Novartis is in a legal battle with generic drugmakers seeking to launch cheaper copies ahead of an anticipated end to Entresto’s patent protection in 2025.
In addition, Novartis on Sept. 1 sued the U.S. government, trying to halt the Medicare drug-price negotiation programme, which includes Entresto.
