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Novartis prescribes growth
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July 15, 1999: 9:48 a.m. ET
Swiss pharmaceutical group vows to focus on growth; sales up slightly
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LONDON (CNNfn) - Sales at Swiss pharmaceutical group Novartis rose modesty in the first half of 1999 as healthy demand for the company's generic and prescription drugs offset across-the-board declines in its troubled agribusiness division.
But Novartis, created in 1996 through the merger of Ciba-Geigy and Sandoz, warned that growth in pharmaceuticals -- its biggest revenue generator -- is likely to be "soft" in the third-quarter compared with the robust performance of a year earlier.
The company vowed to focus in coming months on plowing more investment into growth, marketing and sales, and on laying the regulatory groundwork for a slew of new drugs currently in its pipeline. Novartis CEO Raymund Breu told Reuters the company expects to launch 14 new drugs from 2000 to 2002.
Novartis limited its report Thursday to sales performance in the first half and second quarter of the year. The company plans to release full earnings figures Aug. 26.
The numbers showed uniform sales growth across the company's Healthcare and Consumer Health divisions, its first- and third-largest businesses, respectively.
Total first-half group sales rose 1 percent to 16.31 billion Swiss francs ($10.34 billion) from 16.2 billion, Sales for the first quarter, without divestitures, were 8.43 billion francs, up 1 percent from 8.29 billion a year earlier.
But sales in Novartis's second-largest division, Agribusiness, declined broadly as tough market conditions bit into the crop protection, seeds and animal health businesses. For the second quarter, ended June 30, the unit's sales fell 10 percent to 2.375 billion Swiss francs from 2.643 billion Swiss francs a year earlier. First-half sales had an identical percentage decline, to 4.778 billion Swiss francs from 5.306 billion.
Last month, Novartis announced plans to cut 1,100 jobs in the unit, representing just over 6 percent of its 18,000 workforce, as part of a two-year drive, dubbed "Project Focus", to strengthen competitiveness and revive sales in the ailing division.
Sales in Healthcare, comprised of pharmaceuticals, generics and Ciba Vision eye products, rose an aggregate 7 percent to 4.747 billion francs in the second quarter, and 6 percent over the first half, to 9.014 billion francs. Consumer Health revenues increased 7 percent over the quarter and 6 percent for the first six months of the year.
Novartis credited strong demand for its new-class hypertension drugs, Diovan and Co-Diovan, whose sales increased 90 percent, gaining a wider market berth globally and in the united states, with some of the division's sturdy 7 percent sales growth.
Pharmaceutical sales rose 10 percent in the U.S. market, offsetting weakness in Brazil.
Agribusiness, the lone underperformer, was hit by price pressures and acreage reductions in the crop protection business in the United States and Europe, and low levels of crop disease in certain markets.
Looking ahead, the company forecast continued sales growth in Healthcare and Consumer Health this year, "and an unchanged difficult marketplace for Agribusiness."
-- from staff and wire reports
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