Novartis Marches On

Like some sort of Swiss Godzilla, Novartis (NYSE:NVS) seems to be stomping around and buying up assets left and right. Not only has the company (relatively) recently gobbled up generics firms Hexal and Eon Labs, but it also devoured Bristol-Myers' (NYSE:BMY) U.S. OTC business. Now it's going for Chiron (NASDAQ:CHIR) as well.

Sometimes rampant acquisition plans are a reflection of internal weakness, but I'm not sure that's entirely fair in this case. For the fourth quarter, Novartis reported that sales rose 14% (18% in local currencies) to almost $8.7 billion. Pharmaceutical growth was a modest 6% in dollars, as was OTC growth of 5%, but reported growth in the Sandoz generics business was 81% (though organic growth was more on the order of 2%).

Novartis provided a breakout of total dollar-based revenue growth that I found interesting and helpful. Volume was up 9%, acquisitions added 10%, currencies subtracted 4%, and pricing was down 1%. That all adds up to 14% growth, though it's pretty clear that performance was much more modest on an organic "same-store" basis.

Unlike some large pharmaceutical companies (like, say Pfizer (NYSE:PFE) or Merck (NYSE:MRK)), Novartis isn't getting thumped too hard by generic competition or drug withdrawals. In fact, leading drugs like Diovan and Gleevec are still growing by more than 20%. What's more, FDA approvals could lead to some promising new drugs, like Galvus for diabetes (formerly LAF237) and Rasilez for high blood pressure, entering the market in the next year or two.

It's also true that Novartis may not be done with its shopping. Swiss drug company Serono (NYSE:SRA) has put itself up for sale, and Novartis is widely considered a favorite here -- especially as an entrance to the multiple sclerosis market. Of course, plenty of other drug companies, including fellow Swiss company Roche, will have something to say about that.

All in all, it's easy to like where Novartis sits today. The current pharmaceutical business is OK, and the newly expanded generics business could be a solid cash producer. Throw in a solid pipeline and a reasonable valuation, and the stock could still be worth a look for new money in the pharmaceutical space.

For more pharmaceutical Foolishness:

• More Big, Boring Growth at Genentech
• More Good News From Novartis
• Novartis Keeps Gorging

Pfizer is a Motley Fool Inside Value pick, while Merck is a selection of Motley Fool Income Investor .

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