Wednesday January 28, 10:01 AM
Novartis profit jumps 25%
By Andre Lehmann
BASEL (AFP) - Swiss pharmaceutical giant Novartis (Virt-X: NOVN.VX - news) on Wednesday reported a 25 percent jump in 2008 net profit and shrugged off the economic downturn to forecast a record year ahead despite market skepticism.
Net profit reached 8.16 billion dollars (6.2 billion euros), the group said in a statement.
Sales increased nine percent to 41.6 billion dollars, driven by vaccines, diagnostics and consumer health products, and a revival in the core pharmaceutical business.
Signs of slower sales in the final quarter with a rise of just one percent to 10 billion dollars failed to dampen the spirits of company chairman and chief executive Daniel Vasella.
"Novartis anticipates another year of record results in 2009, continuing on its path of sustainable growth," Vasella said.
Barring unforeseen events, the company is targeting record revenues and earnings for the full year, and "superior growth in a challenging environment."
In local currency terms, sales should growing in the mid to high single-digit range, it added.
The Basel-based company's share price dropped 3.8 percent to 49.5 Swiss francs at the opening in a largely stable market as the results came in below analyst forecasts for 8.5 billion dollars.
"At first sight it's a solid showing from the Basel company and a contrast with many other pharmaceutical companies," analysts at Swiss private bank Wegelin said.
"Nonetheless, the (high) expectations were not entirely fulfilled; that could be a worry in the short term for disappointed market players," they cautioned in a market report.
Novartis shareholders get a 2008 dividend of two Swiss francs a share, up 25 percent over last year.
The company said higher taxes and the costs of financing its April 2008 purchase of a 24.8 percent stake in eye care maker Alcon (NYSE: ACL - news) weighed on its result, with both factors cited by analysts for the fall in thare price.
"Thanks to successful innovation and a leading market position of our healthcare business portfolio, Novartis achieved a strong performance in 2008," Vasella said.
Key (NYSE: KEY - news) sellers on the pharmaceutical side were cancer and cardiovascular drugs, while vaccines were driven by deliveries of pandemic H5N1 or 'bird-flu' influenza vaccines to the US government, offsetting lower sales of seasonal flu vaccines.
Earlier this month, the company announced a deal with the US government to supply pandemic flu vaccines worth 486 million dollars (371 million euros), including a plant to be built in North Carolina.
Novartis bought its stake in Alcon, the world's leading eye care company, from Nestle (Virt-X: NESN.VX - news) last year for 10.4 billion dollars.
Vasella said Novartis would pursue its plans for Alcon despite the credit squeeze. The group is aiming to buy an additional 52 percent stake between January 2010 and July 2011.
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