Novartis hurt by generics, factory woes

Novartis’ first-quarter profit dropped 8 percent on generic competition and manufacturing glitches at a consumerhealth products factory in Nebraska.

Net income excluding some costs fell to $3.09 billion ($1.27 per share) from $3.4 billion ($1.41) a year earlier, the company said Tuesday. Analysts predicted profit of $1.28 per share, the average of 10 estimates compiled by Bloomberg.

Chief Executive Officer Joe Jimenez is facing the loss of billions in revenue as the company’s topselling drug, Diovan, loses patent protection this year. The company, Europe’s biggest drugmaker, bought the Alcon eye-care business and has introduced new medicines such as Gilenya, the first pill for multiple sclerosis, to offset the losses.

“We expected a challenging quarter, and we delivered in line with our expectations,” Jimenez said on a conference call with reporters.

Sales, which fell 2 percent to $13.7 billion, were hurt by the entry of generic forms of Diovan in Europe. The drug loses U.S. patent protection in September. The company’s own generics business, Sandoz, also lost exclusivity on products including a copy of Sanofi’s blood-thinner Lovenox.

Net income according to generally accepted accounting principles, which includes one-time charges, fell 18 percent to $2.3 billion.

The company repeated that it expects sales this year to be in line with 2011’s at constant exchange rates, while its core operating margin will be “slightly below” last year’s.

Novartis fell 1.5 percent to $55.07. The stock has gained 2.9 percent this year including reinvested dividends, compared with a 20 percent return for the Bloomberg Europe Pharmaceuticals Index of 18 companies.