Regulatory delays and Covid-19 lower the expectations of the giant Novartis for 2021

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Regulatory delays and Covid-19 lower the expectations of the giant Novartis for 2021

The expectations of the Novartis laboratory for 2021 do not convince investors. The Swiss pharmaceutical company pointed to delays in the approval of two drugs, which together with the effects of the pandemic on sales means that the market punishes the company with a fall of close to 3% after the presentation of 2020 results, which analysts they see as disappointing. This company, one of the three major laboratories in the world together with Pfizer and Roche, closed 2020 with an upward turnover of 2.5%.

For now, the cardiovascular drug Leqvio, in which the company has invested close to 10 billion dollars, Reuters reports, is still pending a review by the FDA (US drug agency), although in Europe it already has the green light . Vas Narasimhan, Novartis CEO, explained that the approval schedule for this cholesterol-lowering drug is awaiting the FDA after the agency outlined “conditions related to inspection of facilities” of a supplier. “To a large extent, the deadlines are out of our control,” he told reporters in a video conference.

In addition, the expansion of the use of Zolgensma against spinal muscular atrophy (now only used for infants) is stalled, as the FDA seeks new safety data. This drug is known for its high price of 2.1 million per patient in the US market. “We are still waiting for our data in animals in the middle to the second half of this year,” Narasimhan said, on the prospects for resumption of the trials with Zolgensma.

Like many drug makers, Novartis faced challenges from the coronavirus pandemic, as lockdowns kept patients away from hospitals. Regulatory hurdles are adding to its burden this year.

In conjunction with these regulatory updates, Novartis reported that Novartis’ fourth-quarter net revenue increased 3% to $ 3.03 billion, compared to the average analyst forecast of $ 3.15 billion, according to a Refinitiv survey. Sales increased 1%, to 12,770 billion, without reaching the consensus forecast of 12,880 million, since health restrictions due to Covid-19 affected drug sales.

“We hope to continue to see the effects of the pandemic on the health care system during the first half,” Narasimhan acknowledged. Novartis announced that in 2021 it expects to register a growth in its revenues of approximately between 1% and 5%.

On the positive side, the company advanced that its new cardiovascular drug Entresto has been one of the great drivers of growth, with 2.497 million dollars in 2020, 44% more.

Novartis has proposed increasing its dividend by 1.7% to 3 Swiss francs and forecasts that 2021 net sales will grow at a low to medium single digit percentage rate. “The outlook for 2021 is below our expectations,” say analysts at Zuercher Kantonalbank.

Novartis does not have vaccines in the works for Covid-19, and several of its drugs failed in efforts to repurpose them for pandemic use, but it is still hopeful of a partnership with Swiss Biotech Molecular Partners to produce a new treatment for the coronavirus.

Results

Novartis obtained a net profit of 8,071 million dollars (6,654 million euros) in 2020, which represents an improvement of 12.9% compared to the company’s result in the previous year, according to the pharmaceutical company.

Net turnover reached 48,659 million dollars (40,115 million euros), 2.5% above last year’s income.

“Novartis posted strong performance in 2020 across all of our strategic priorities, despite the challenges of Covid-19,” stated Vas Narasimhan, who expressed confidence that the strategic progress made will allow the company to increase its revenue and profits up to 2025.

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