Novartis doubles down on new drugs as sales slump for top cancer med
- Novartis ramped up its investment in several new drugs as generic competition for its top cancer drug weighed on revenue in the second quarter, the Swiss company said Tuesday.
- Increased spending on marketing for Novartis' underperforming heart failure drug Entresto, coupled with a continued decline in sales of Gleevec, is expected to lead to flat or low single digit declines in 2016 core operating income, Novartis said.
- U.S. sales of Gleevec, which went generic in that market in February, tumbled by 48% in the second quarter, hurting the performance of Novartis' main pharmaceuticals unit. Novartis hopes sales growth from Entresto, as well as from its new psoriasis drug Cosentyx, will help offset lower revenue from Gleevec. Entresto has failed to live up to expectations so far.
Chief executive Joe Jimenez said Novartis decided to accelerate its spending plans for marketing Entresto after earlier-than-expected treatment guidelines recommended use of Entresto in heart failure.
"We made decision to increase spending in second half of the year significantly versus our original budget," Jimenez said. Novartis is building out its primary care field force in the U.S. and investing more in raising disease awareness and medical education.
These efforts are on top of the previously announced expansion of its clinical development program for Entresto.
Yet despite the strong clinical data and new guidelines supporting use of Entresto, sales remained modest in the second quarter, totaling only $32 million. This is nearly double first quarter sales of $17 million though, and Novartis still expects to hit $200 million in cumulative annual revenue by year end.
Elsewhere, Novartis saw stronger performance from its psoriasis drug Cosentyx, another newcomer which Novartis hopes will help drive future revenue. Sales in the second quarter hit $260 million, up from $30 million in the same period a year prior.
Speaking to investors on a call Tuesday, Jimenez called Cosentyx's launch "one of the most successful drug launches in Novartis history," and said the company plans to test the drug head to head against AbbVie's market-leading Humira.
But supporting the launches of Cosentyx and Entresto hasn't come cheap. Increasing spending in marketing and selling both drugs is expected to weigh on core operating income, Novartis said.
Overall net sales for the company were nearly $12.5 billion in Q2, down 2% from a year earlier. Both net income and core profit fell as well.
Increased competition for Gleevec and Lucentis led to double-digit declines for both drugs. Worldwide revenue from Gleevec fell 25% to $891 million, while Lucentis sales were down by 12%.
Net sales from Novartis generics unit Sandoz increased slightly, driven mainly by increased sales volume.
But Novartis did disclose a setback for its biosimilars pipeline, indicating Sandoz had received a complete response letter from the Food and Drug Administration for its biosim version of Amgen's Neulasta. The company said it would work closely with the FDA to address its concerns.
Novartis has bet big on the growth of the U.S. biosimilar market and is in late-stage development for four other biosimilars. And an FDA advisory panel recently backed approval of Novartis' version of Amgen's Enbrel, setting up a potential approval later this year.
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