Industry Trend Analysis - Cyclical Sales Pattern Hampers Sandoz's Revenues - JUNE 2017

BMI View: Sandoz's net sales are showing a cyclical pattern in which Q1 sales fall compared to the preceding Q4 sales; these latest results continue that trend. Overall, net sales continue to hover stubbornly around the USD2.5bn mark, but the fall in sales in Europe in particular will be disappointing. Quarterly sales of USD2.75bn in 2017 are still achievable, but will require a reversal of fortunes. Sandoz will be buoyed by the increasing importance of its Biopharmaceuticals segment to net sales, but the lack of specific details remains notable.

Novartis has announced its Q117 results, including those for its generics subsidiary, Sandoz. In Q117, Sandoz achieved net sales worth USD2,430mn, down slightly by 0.6% over the USD2,445mn reported for Q116, and down by a more substantial 6.7% against the USD2,605mn reported in Q416. Novartis reported that volume growth of nine percentage points was partially offset by eight percentage points of price erosion, adding that performance in Q117 was impacted by increased pricing pressures in the US.

Sandoz's operating income in Q117 reflected a similar situation, and stood at USD343mn, down by 0.9% over the USD291mn reported a year earlier and down by 6.0% compared to the USD365mn reported in Q416. Core operating income was USD460mn; this was down by 5.2% over the prior year period's USD497mn, and down by 11.7% over the USD521mn reported for Q416.

Sales Continue To Hover Around USD2.5bn
Sandoz's Quarterly Top-Line Results (USDmn)
Source: Novartis, BMI

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