Novartis finds stability in Cosentyx amid company shake-ups
- Novartis expects its blockbuster inflammation drug Cosentyx to grow further in the new year, providing a reliable boost to the company's bottom line as it deals with a large-scale restructuring and generic threats to its top-selling brand, Gilenya.
- Sales of Cosentyx reached $806 million in the fourth quarter and totaled $2.84 billion across 2018, representing year-over-year increases of 33% and 36%, respectively. Paul Hudson, CEO of Novartis Pharmaceuticals, said on a Wednesday earnings call that first quarter sales would be "broadly in-line" with fourth quarter sales, though volume should grow.
- Cosentyx isn't bearing all the weight, however. Fourteen other franchises brought in at least $1 billion to Novartis last year. Four of those were new blockbusters, including the thrombocytopenia drug Promacta and the chronic heart failure medication Entresto. Novartis recorded net sales of $51.9 billion for the full year, and expects that figure to rise by the mid-single digits in 2019.
Novartis is spinning out its eye care unit Alcon and selling off the U.S. dermatology and generic oral solids pieces of its Sandoz business. While both transactions should wrap up before the end of 2019, the units have weighed on Novartis' growth story in recent quarters.
In its latest earnings presentation, the Swiss pharma reported a 9% increase year over year in net sales from its innovative medicines unit. Net sales from Alcon rose 4%, while Sandoz declined 2%. Overall, net sales across the company increased 6%.
Newer-to-market drugs have helped pick up slack elsewhere in Novartis' business. Cosentyx (secukinumab), for instance, is one of the company's most successful launches to date, with sales having grown every quarter since first coming to market in 2015.
Cosentyx works by inhibiting a pro-inflammatory protein called interleukin-17A, or IL-17A. Eli Lilly's Taltz (ixekizumab) also targets IL-17A, while Bausch Health's Siliq (brodalumab) focuses specifically on IL-17. Despite the competition, Cosentyx maintains a market leadership position — something Novartis executives expect to continue even with the imminent introduction of AbbVie's IL-23A inhibitor, risankizumab.
"Whilst not particularly concerned about the clinical profile of risankizumab, I think another IL-23 will be another IL-23," Hudson said on Wednesday's earnings calling. He noted, however, that "AbbVie must be taken somewhat seriously because of their heritage and leverage in the market."
"We're hyper vigilant about what that could mean, but I can assure you we're well prepared," he said.
Entresto (sacubitril/valsartan), a heart drug launched in 2015, has also become a key growth driver. Though it took longer than Novartis expected, Entresto broke into the blockbuster club this year with $1.03 billion in sales.
Novartis touts how it owns or has a license to 15 in-market blockbusters. Yet the company is arguably just as excited about its pipeline, which executives say holds at least 10 potential blockbusters set to launch by 2020.
Three therapies slated to launch in the U.S. this year, pending regulatory approval, are: BAF312, to be branded as Mayzent, for secondary progressive multiple sclerosis; AVXS-101, to be branded as Zolgensma, for spinal muscular atropy; and RTH258, for wet age-related macular degeneration.
RTH258 and AVXS-101 could each threaten top-selling products in their respective markets. Yet as a gene therapy, the latter will likely faces several bumps on the road to carving out market share as payers grapple with finding an appropriate reimbursement model.
Novartis believes it has laid the groundwork for strong adoption, however.
"I can tell you unequivocally, we'll be ready with all sorts of payment models at launch," Hudson said. "The installment approach has been well-received in conversation, but it's not essential for everybody. But we will be [ready] with what we think is the most flexible way to come to market for the payers."
Novartis shares were down almost 2% at market open Wednesday.
Follow Jacob Bell on Twitter