Novartis AG: Combating $2 Billion in Lost Saleshttp://www.fool.com/investing/general/2014/02/04/novartis-ag-combating-2-billion-in-lost-sales.aspx Todd Campbell
February 4, 2014
At Novartis, (NYSE: NVS) patent expiration for blockbuster drugs Diovan and Zometa shaved more than $2 billion from the top line in 2013. Sales of blood pressure drug Diovan sank 20% and revenue from Zometa fell 53% as each squared off against generics for the first time.
While those lost sales are significant, they may only be the tip of the iceberg, given that the two drugs still represent more than $4 billion of Novartis' sales. That means Investors should expect a lot more of that revenue to migrate to less-costly cousins this year, creating a stiff headwind for Novartis. While two fast-growing therapies, MS drug Gilenya, which is winning share from Biogen's (NASDAQ: BIIB) Avonex, and cancer drug Afinitor, picked up the slack last year, helping Novartis generate net sales of $58 billion, up 2% from 2012, they'll need an even better year this year to make up the difference.
Changing of the guard
So far, Gilenya is enjoying considerable success thanks to outperforming Biogen's $3 billion-a-year blockbuster Avonex during trials. Gilenya reduced MS relapses by 52% compared with Avoniex in those studies, giving Novartis a valuable marketing advantage as it rolls the drug out into more markets. As a result, Gilenya's global sales grew to $1.9 billion last year, up 62% from a year ago.Meanwhile, year-over-year sales of Biogen's Avonex were flat in the fourth quarter and up just 3% for the full year.
Gilenya's rapid growth was outdone by Novartis' Afinitor, a treatment for HER2-negative breast cancer, kidney cancer, and pancreatic cancer. Afinitor revenue totaled $1.3 billion in 2013, up 64% year over year. Even though the U.K.'s chief price watchdog recommended against paying for the $4,600-per-month cancer treatment, Afinitor's international sales still jumped from $385 million in 2012 to $618 million last year.