July 17, 2013 | By Carly Helfand, FiercePharma
Why exactly a generic version of Novartis’ blood-pressure drug Diovan has yet to hit the market is a bit of a mystery, but one thing is clear: The company is benefiting from the delay.
Novartis ($NVS), which should have been in the middle of dealing with Diovan patent losses, today raised its guidance on account of its missing competitor. The company said it now expects full-year sales to grow at a low single-digit rate, where it had earlier predicted net sales to turn up flat. It also guided for core earnings to decline in the low single digits, revising guidance for a mid-single-digit drop. Leerink Swann analyst Seamus Fernandez noted that quarterly sales beat the firm’s estimate by $264 million, driven “almost exclusively” by Diovan.
The Swiss drug giant braced for a blow last September as Diovan’s patent expired, but India’s Ranbaxy Laboratories, which held exclusive rights to produce the copycat version, never delivered. The generics maker has had plenty of regulatory issues that may have held up its plans.
After settling an expensive and lengthy series of manufacturing and regulatory woes, in June Ranbaxy reportedly received a Form 483 from the FDA following an inspection of supplies for valsartan, the Diovan generic. Whether or not that factored in, Ranbaxy never got the go-ahead from U.S. regulators, and though Mylan ($MYL) tried to get the FDA to nix the exclusivity in light of that fact, it was unsuccessful.
While 2013 may look better for Novartis investors, the effects are only temporary. Diovan is expected to take a bite from 2014 sales and earnings. “This is good news, but only short term, as the sales impact is merely delayed into 2014,” analyst David Kaegi of J. Safra Sarasin bank told Reuters.
For now, Novartis is welcoming extra Diovan revenue, especially considering the mixed second-quarter results from some of its key growth products. Drugs like the MS pill Gilenya, which soared 65%, were also able to offset performances from cancer drug Afinitor and eye drug Lucentis, which registered below some analysts’ expectations: On the whole, the company’s “growth products” grew 13% to $4.5 billion.
Emerging-market growth was also up for Novartis, led by China, which posted an increase of 25%. “I would expect that Novartis could at least grow at the market levels as the access to healthcare in China continues, maybe not at 25% but definitely double digits,” CEO Joe Jimenez said on a conference call. Jimenez also acknowledged the recent Big Pharma bribery allegations in China, confirming that Novartis had not been contacted by Chinese officials.