Novartis: A Good Story Repeated

The past six months have been reasonably kind to big-cap pharmaceutical companies, what with Pfizer (NYSE:PFE) and Merck (NYSE:MRK) coming up off the mat and companies like GlaxoSmithKline (NYSE:GSK) and Wyeth (NYSE:WYE) doing OK, too. And although Novartis (NYSE:NVS) now trades near a 52-week high, I'm not sure the good times are necessarily over for this somewhat-adventuresome Swiss pharmaceutical giant.

Results for the first quarter were once again solid. Total revenue rose 13% as reported (up 17% in local currencies), with about 8% of that growth coming courtesy of acquisitions. Pharmaceuticals, the biggest and most profitable business, saw reported revenue climb 5%, with the top 10 drugs growing just slightly faster.

Profitability, too, was improved. Although gross margins eased off a bit, reported operating profits rose 31%. While it's true that a good bit of this improvement was from acquisitions in the generics business and a favorable divestment, pharmaceutical operating income was nevertheless up 19%.

To put it simply, Novartis has been a busy company of late. Not only did it finalize its deal to buy Chiron -- it also added several new products to the pipeline, with deals with the likes of Servier, Identix Pharmaceuticals (NASDAQ:IDIX), and SGX (NASDAQ:SGXP).

Furthermore, it made meaningful clinical progress as well. Filings for Galvus (for diabetes) and Rasilez (for hypertension) are now into the FDA, and the company is in discussions to begin phase 3 studies of FTY720 -- a promising oral therapy for multiple sclerosis.

Although I don't own Novartis shares and have about as much drug exposure as I want for the time being, I still think this is a solid idea in the big-cap pharma world. The company not only has a good pipeline, but the valuation is still attractive without needing to make particularly aggressive assumptions. While there's always the risk of clinical disappointment and/or management distraction (these folks seem to like doing deals), the shares are still worth a look.

For more pharm-fresh Foolishness, pop one of these:

• Novartis Marches On
• Pfizer Inches Forward
• Wait for More Bad News for Merck

Pfizer is a Motley Fool Inside Value recommendation, whileMerck and GlaxoSmithKline are Motley Fool Income Investor recommendations. Take the newsletter that best fits your investing style for a 30-day free trial.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).