Industry Trend Analysis - Improving US And Biopharmaceutical Sales Will Be A Priority For Sandoz - SEPT 2017

BMI View: Sandoz's Biopharmaceuticals division will need to show improvement in the coming quarters; sales have fallen for the last two quarters, but the firm's biosimilars portfolio remains a key part of Sandoz's outlook, having taken a dominant position in Europe. Overall sales in Europe have seen a n increase, but faltering US sales threaten to impact Sandoz's results for the rest of 2017. Quarterly sales of USD2.75bn remain achievable in Q3 17 or Q417, but the results achieved so far this year suggest that this will be more difficult.

Novartis has unveiled its Q217 results for the period ended June 30 2017. Included were the results for the company's generics and biosimilars subsidiary, Sandoz. Sandoz's sales in Q217 were worth USD2,451mn, up slightly by 0.9% over the USD2,430mn reported for Q117, but down by 4.9% over the USD2,577mn reported for Q216. Novartis noted that in constant currency terms this was a fall of 4% over Q16 and commented that the decrease came as volume growth of four percentage points was more than offset by eight percentage points of price erosion, mainly in the US. Global performance in Q217 was impacted mainly by increased pricing pressure in the US and prior year launch timing. Net sales across Europe and the rest of the world grew by 3% in constant currency terms over Q216.

Sandoz's operating income reached USD330mn, down by 3.8% over the USD343mn reported for Q117 and down by 13.2% over the USD380mn reported a year earlier. Core operating income reached USD497mn. This was up by 8.0% over the USD460mn reported for Q117, but down by 7.1% over the USD535mn reported for Q216. Novartis commented that Sandoz's sales in the region were driven by strong growth in Italy, France, Switzerland and Russia, but partly offset by declines in Germany and Poland.

Faltering US Sales A Cause Of Concern
Sandoz's Quarterly Sales By Region (USDmn)
Source: Novartis, BMI

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