Novartis ups yearly outlook but market focuses on disappointing Pluvicto

By Ludwig Burger

FRANKFURT (Reuters) -Novartis raised its 2024 earnings guidance for the third time on Tuesday, buoyed by wider use of its prescription drugs, but its shares fell as the market focused on lower-than-expected sales of a promising radiopharmaceutical.

The Swiss drugmaker said it expects full-year core operating income, adjusted for one-off items, to grow by a “high teens” percentage, compared with previous guidance of “mid- to high teens”.

Revenues from Pluvicto, a prostate cancer drug that is seen as pioneering a class of precision radiotherapies, rose a currency-adjusted 50% to $386 million, but just 36% when stripping out a favourable one-off price adjustment in Europe.

One trader said that fell short of expectations for the product, weighing on the stock.

Barclays analysts said in a note that the miss on Pluvicto, which previously benefited from production site upgrades, was likely attracting market attention.

“Increased promotional efforts are underway, but the benefit of this will take time to kick in,” Barclays analysts said.

The shares were down 2.6% at 0949 GMT, making them the second-biggest decliners in the STOXX Europe 600 Health Care index.

Novartis, which has cut jobs and spun off generic drugs business Sandoz to focus on new drug development, also posted better-than-expected third-quarter earnings, helped by revenue gains from anti-inflammation drug Cosentyx, among other factors.

Lower costs from an organisational overhaul started in 2022 was also continuing to help, CEO Vas Narasimhan said on a media call.

“The changes we’ve made to become a focused pure-play company focused on key therapeutic areas, focused on key geographies, is really working,” he said.

Quarterly adjusted core operating income rose 17% to $5.15 billion, beating an average analyst estimate of more than $4.8 billion.

Quarterly Cosentyx sales rose 27% to $1.69 billion, helped by its recent approval to treat hidradenitis suppurativa, a painful acne-like skin condition.

(Reporting by Ludwig Burger; Editing by Jason Neely and David Holmes)