Legal provisions swallow chunk of Novartis profit

Novartis AG said Tuesday that third-quarter profit fell 42% from the same period a year ago, as the Swiss drug giant agreed to settle claims that it used rebates to get specialty pharmacies to increase prescriptions.

Net income fell to $1.81 billion from $3.1 billion a year earlier, when it earned money on the sale of shares of Idenix Pharmaceuticals to Merck.

October 27 Novartis Chief Executive Officer Joe Jimenez hopes measures to boost the company’s slumping Alcon eye-care business won’t take years, he told Reuters on Tuesday.

The company says it’s not admitting wrongdoing as part of the settlement, and, in fact, continues to use a few similar tactics-at least for now-because they’re created to keep patients on their medication regimens. Sales also fell short of estimates.

Novartis shares were trading down 2.3 percent to 88.50 Swiss francs in mid-morning trading on the Swiss stock exchange, whose main index was off 0.90 percent overall. The company expects continuing operations net sales to grow mid-single digit at constant currency, and core operating income to grow ahead of sales at a high-single digit rate. “Alcon had another bad quarter”, wrote analysts from Barclays.

“You are going to see more of those, to strengthen the pipeline on all three divisions”, Jimenez said. New drugs including heart medicine Entresto, forecast to generate $4.7 billion in sales in 2020 according to Thomson Reuters Cortellis, have not yet contributed significantly to results.