Novartis posts 32% rise in Q3 net profit

ZURICH/SWITZERLAND: Drug maker Novartis AG on Monday reported a 32-percent rise in net profit for the third quarter due to strong sales and the positive impact from a weak U.S. dollar.

Novartis said it would implement cost-cutting measures, including reducing its U.S. sales force by 550. Net profit rose to US$2.08 billion in the three months ending September 30, from US$1.57 billion in the same period last year when the company booked an exceptional one-off charge for environmental cleanup operations.

Sales grew 12 percent to $10.75 billion. ``We are still on course with sales as well as profit,'' Chief Executive Daniel Vasella told analysts. The Basel-based company said it was regaining ground lost to generics manufacturers, particularly in the United States, and had overcome the loss of its bowel drug Zelnorm, which was withdrawn from the U.S. market last year.

It said it benefited from enhanced performance of pharmaceuticals in all regions as well as solid sales growth in vaccines and diagnostics and productivity gains in consumer health. ``We have achieved strong results in the third quarter of 2008 despite significant volatility in the global economic environment,'' the company said, adding that it was ``rejuvenating'' its portfolio with recently launched pharmaceutical products providing US$2.1 billion in sales so far this year.

The company said it hopes to continue growth by expanding in emerging markets. Novartis also announced that the head of its vaccines and diagnostics division, Joerg Reinhardt, has been appointed chief operating officer and will report directly to Vasella.

For the first time, figures included the 25-percent stake Novartis has purchased in U.S. eye-care company Alcon Inc.
Novartis said the absorption of Alcon had a negative impact on its third-quarter balance sheet because of the high purchase cost.

Analysts at Zuercher Kantonalbank rated the results as positive, but noted that they had been affected by several one-off events during the quarter and the year earlier period. Novartis shares closed down 0.3 percent to 59.35 Swiss francs (US$51.53) on the Zurich exchange.