Novartis lifts 2020 forecast as drugmaker counters Covid impact

[ZURICH] Novartis AG's outlook for the year has improved as the Swiss drugmaker's new products, including a gene therapy that sells for US$2.1 million, help counter disruption from Covid-19.

Earnings excluding some items will likely increase by a low double-digit to mid-teens percentage in 2020, the Basel-based drugmaker said on Tuesday. Novartis's prior forecast was for a low-double-digit percentage rise.

A heart drug, psoriasis treatment and gene therapy called Zolgensma that was approved in the US last year are helping Novartis grapple with changing patterns in hospital admissions that have delayed care for cancer and other conditions. Competitors Pfizer Inc, Eli Lilly & Co and Merck & Co are all due to follow with their results later on Tuesday.

"We're on track to finish the year strongly," Chief Executive Officer Vas Narasimhan told reporters on a call.

The company said Covid-19 continues to hamper demand for skin and eye treatments, along with some Sandoz drugs, and Mr Narasimhan said the company would need to adapt if there are further severe lockdowns.

Shares of Novartis were little changed in early Zurich trading.

Doctor visits for most types of therapies returned to pre- Covid levels by September, he said. Disruptions in health-care visits began to emerge again in the first two weeks of October, he said.

"I expect there to be volatility on this front," he said. "That said, I think health-care 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." Novartis is benefiting from gains for products such as Zolgensma. Geographic expansion outside the US and increased newborn screening are buoying the gene therapy, and total sales are still expected to grow by a mid-single-digit percentage for the year.

Legal costs, including a fine by French regulators last month for restricting competition in eye treatments, weighed on the results. Novartis also agreed earlier this year to pay US$678 million to resolve a whistle-blower case in the US, in which the drugmaker was accused of paying kickbacks to doctors.

BLOOMBERG