Novartis backs 2018 outlook; Cohen affair ‘closed’
(Updates with CEO comments, details on Cohen affair.)
Novartis AG (NOVN.EB) on Wednesday backed its positive outlook for 2018 after second-quarter net group sales grew and reiterated that it considers the Michael Cohen affair closed, following weeks of turmoil in which the Swiss pharmaceutical giant has been scrutinized by the media and authorities for its ties to U.S. President Donald Trump’s former personal attorney.
The statement comes after a report by Democratic Senators last Friday disputed parts of Novartis’s account of its interactions with Mr. Cohen, who had a $1.2 million consulting contract with the company.
Net sales for the company grew to $13.16 billion from $12.24 billion in the second quarter, mainly underpinned by drugs Cosentyx and Entresto, Novartis said, with its oncology division registering continued growth throughout the year after suffering from the loss of exclusivity for its blockbuster drug Gleevec/Glivec.
The Swiss company said net income soared to $7.77 billion from $1.98 billion, benefiting from a $5.7 billion net gain from the sale of its stake in a consumer healthcare joint-venture with GlaxoSmithKline PLC (GSK), which Novartis said means the on-quarter comparison isn’t meaningful. Novartis sold the stake for $13 billion, it said.
Novartis backed its outlook for the year, expecting group net sales to grow at a low- to mid-single digit rate.
The company said Wednesday that it has upheld its "innovation momentum," with its flagship drug Kymriah being approved for a second indication in the U.S., as well as positive opinions in the European Union–the first step toward entering the bloc’s market.
Novartis is undertaking a number of measures this year to focus its operations, including the spinning off its Alcon eye-care unit, which is valued at more than $20 billion. Earlier this month, the company said it will abandon antiviral and antibiotic research.
On a call with reporters Wednesday, CEO Vasant Narasimhan, who has been vocal about effecting this shift, once again stressed the company’s progress in this direction.
Turning to the Cohen links, Mr. Narasimhan said he considers the matter closed and that it hasn’t influenced Novartis’s drug pricing in the U.S. He said that the company’s net pricing didn’t grow in the second quarter.
Mr. Trump has frequently criticized pricing strategies in the pharmaceutical industry.
Novartis’s ties to Mr. Cohen’s company, Essential Consultants LLC, were disclosed in May. At the time, the company said it had made a mistake entering the agreement with Essential Consultants and that it considered the matter closed.
A report by four Democratic Senators last Friday, however, disputed much of the company’s account of the interaction, saying Novartis played down its ties to Mr. Cohen, and that contact between the two lasted six months longer than initially claimed.
The report said Novartis could have exited the contract with Mr. Cohen sooner than it did, and would have avoided paying him the $1.2 million in fees for what Novartis said was the consultancy it received on "health-care policy matters."
Novartis has said it was unable to exit the contract earlier than it did due to legal limitations.
Last Friday, Novartis said it disagreed with the senatorial report and repeated that entering the agreement with Mr. Cohen had been a mistake.
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