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Novartis sees bright future for eye unit
[ZURICH] Swiss pharmaceutical giant Novartis said on Tuesday a strategic review of its eye care unit showed that Alcon can deliver strong growth, but that a possible spin-off or listing is at least two years away.
While a decision on Alcon's fate had been expected by the end of this year, the firm said it wanted further quarters of sales growth and better profit margins before taking a decision, meaning that no action was likely before the first half of 2019.
Novartis also released on Tuesday quarterly results which showed a 7 per cent increase in net profit to US$2.08 billion on a 2 per cent increase in sales to US$12.4 billion.
But over the first nine months of the year net profit was down one per cent to US$5.7 billion.
Novartis confirmed its annual outlook of sales similar to the US$48.5 billion registered last year and operating profits near or slightly below the US$12.9 billion recording in 2016.
The firm said it had made significant progress in its strategic review of Alcon, part of which was a decision to transfer over-the-counter Novartis ophthalmic products into the division beginning in January.
As part of the review it "updated Alcon's strategic plan which confirms that it has the potential to grow sales at or above market while delivering profitability at least in line with the industry," the company said.
Sales rose by 6 per cent in the third quarter to US$1.5 billion. Over nine months, the rise in sales was 3 per cent to US$4.5 billion.
"Alcon delivered strong growth in both sales and core operating income," chief executive Joseph Jimenez said.
Numerous analysts had doubted Novartis would come to a decision on Alcon's fate by the end of the year given the upcoming change in leadership.
Mr Jimenez, who has been chief executive since 2010, is set to hand over the reins at the end of January to Vasant Narasimhan, who has been the firm's global head of drug development and chief medical officer since February last year.