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Novartis: Q2 2022 Earnings Update

Industry: Healthcare
Current: Company Performance

Novartis reported a decrease in sales of 1.4% in Q2 2022 on an annual basis but grew 5% on constant currency basis
Novartis reported earnings per share (EPS) of $0.77
Novartis reiterated mid-single digit sales growth in 2022

On July 19, 2022, Novartis reported Q2 sales of $12.8 billion (a decrease of 1.4% year-over-year, a +5% constant currency growth) on core earnings per share (EPS) of $1.56.

Summary: Novartis’s Q2 2022 sales declined 1.4% as compared to the same period in 2021. Novartis reports its sales across two segments: Innovative Medicines and Sandoz.

Innovative Medicines business declined by 0.9% vs 2021 (+5% constant currency growth). While Entresto, Kesimpta, Cosentyx, Kisqali and Zolgensma showed a strong sales growth, but generic competition impacted drugs like Afinitor/Votubia (46% drop in YoY sales), Gleevec/Glivec (21% drop in YoY sales), Exjade, Gilenya (ex-US, 23% drop in YoY sales) and Exforge (19% drop in YoY sales). Pricing had negative impact of 4 percentage points, whereas volume contributed to 13 percentage points in growth.
Sandoz business declined by 3.2% vs 2021 (+5% constant currency growth). Pricing had negative impact of 6 percentage points, whereas volume contributed to 11 percentage points in growth.

The company reported an core operating income of $4.27 billion during Q2 2022, a year-over-year decrease of 2%. On the bottom line, the company reported a EPS of $0.77, whereas the core earnings came to $1.56 per share.

Guidance: Novartis’ guidance for the full year 2022 (in constant currency):

Sales expected to grow mid-single digit
Core operating income expected to grow mid-single digit
Innovative Medicines:
- Sales expected to grow mid-single digit
- Core operating income expected to grow mid to high single digit, ahead of sales
Sandoz:
- Sales expected to grow low single digit (revised upwards from broadly in line)
- Core operating income expected to be broadly in line with prior year (revised upwards from to decline low to mid-single digit)

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