Novartis calls results encouraging

Novartis Chief Executive Officer Joe Jimenez pointed to early signs of a revival at the Swiss drugmaker’s Alcon eyecare division, which will strengthen his hand as he considers an exit from the ailing business.

Alcon’s revenue in 2017 will probably grow by a low “single-digit” percent, the Basel, Switzerland-based company said in a statement on Tuesday. That’s a change from April, when the company had said the unit’s sales may be unchanged from the prior year or expand slightly. During the second quarter, sales for the business expanded 1 percent.

The turnaround at Alcon will “improve the options we have available to us,” Jimenez said. Novartis has said that it is reviewing all options, including a spin-off or initial public offering for the division, and plans to provide an update by the end of the year.

“If we were to do a capital markets exit, we’d want to see a number of quarters of consecutive growth,” Jimenez said. “Hopefully we can continue this momentum and drive additional growth in the back half of 2017 and into 2018.”

Novartis said Tuesday that its profit rose 10 percent in the second quarter, helped by gains from divestments, to $1.98 billion from $1.81 billion a year earlier.

Net sales, however, were down 2 percent, slipping to $12.24 billion from $12.47 billion. While sales grew in terms of volume, Novartis said that revenue took a hit from generic competition and pricing.

The company reaffirmed that its full-year outlook for net sales is broadly in line with last year’s. Its core operating income is expected to remain steady or decline by a percentage in the low single digits.

For the year’s first half, net profit was off 5 percent at $3.64 billion and sales slipped 1 percent to $23.78 billion.

“After a long period of retrenchment and heavy investment, Alcon has finally delivered a quarter with clear sales growth in its two main sub-divisions,” Alistair Campbell, an analyst at Berenberg Bank, said in a note to clients.

Jimenez told investors in October 2015 that Novartis was doing a “deep analysis” of Alcon and that he hoped to come up with a plan to get the unit “back to a decent growth rate.” The company has acknowledged that the turnaround, which Jimenez had hoped to see in 2016, has taken longer.

Jimenez reiterated his confidence in returning the Swiss drugmaker to growth next year. Novartis is turning to newer medicines, including heart drug Entresto, psoriasis treatment Cosentyx and Kisqali for breast cancer to help counter a decline in sales of its blockbuster Gleevec chemotherapy treatment, which is losing ground to cheaper copycat drugs.

Use of Entresto, which had a slow start, and Cosentyx will be expanded to include new indications, Novartis said in May. Kisqali will also be key to the company’s growth as it moves ahead with tests in cutting-edge immuneoncology, in which the body’s defense system is primed to attack tumors.

The Associated Press contributed to this report.