Novartis Profit Boosted by Disposals

ZURICH--Novartis AG on Thursday reported a huge rise in first-quarter earnings as the completion of a major transaction delivered exceptional gains.

Basel-based Novartis said net profit attributable to shareholders leapt to $13 billion from $2.94 billion a year earlier as the company closed deals with GlaxoSmithKline and Eli Lilly and Co.

The company said the sales resulted in an exceptional operating income gain of $12.8 billion and a net income gain of $10.8 billion.

Net income from continuing businesses, which reflects the company's actual businesses, fell to $2.31 billion from $2.45 billion a year earlier.

The pharmaceutical giant reported sales dropped 7% to $11.94 billion from $12.77 billion a year earlier based on operations the company still owned. Analysts had forecast $12.61 billion.

The performance comes shortly after Novartis completed a series of transactions valued at more than $25 billion that refocused the drug group on three core areas: pharmaceuticals, generics and eye care. The sweeping overhaul, which included the purchase of GlaxoSmithKline's oncology unit, has transformed Novartis into a cancer powerhouse with roughly a fifth of its revenue expected to come from cancer drugs.

The overhaul has also opened up new opportunities for Novartis to cut costs by consolidating support functions that had previously been spread throughout the company.

Write to Andrew Morse at [e-mail]

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