Novartis 1Q Profit Rises About 23%

ZURICH-- Novartis AG said sales of newly-launched drugs helped push first-quarter net profit about 23% higher, a strong performance that comes as the pharmaceutical giant embarks on a major overhaul of its sprawling product portfolio.

Cancer treatment Afinitor and multiple sclerosis pill Gilenya, two of the company's newest treatments, contributed to sales growth, the company said Thursday. Sales in emerging markets, most notably China, also helped drive the company's results.

The performance comes as Novartis readies for a series of deals, announced earlier this week, that will refocus the pharmaceutical giant on areas where it has the heft to compete. On Tuesday, Novartis said it would buy GlaxoSmithKline's oncology unit, a deal that bulks up its already-potent lineup of cancer products, while Glaxo will acquire Novartis's vaccines business. In a separate transaction, Novartis will sell its animal health business to Eli Lilly and Co.

"These transactions are consistent with our strategy to lead through science-based innovation and would further accelerate our future growth, " Novartis said in a statement. The deals, in total, are worth more than $25 billion.

The company's first-quarter net profit attributable to shareholders rose to $2.94 billion. The result narrowly missed analyst expectations for $3.05 billion.

Sales rose 1% to $14.02 billion from a year-earlier restated $13.88 billion, missing expectations for $14.22 billion.

On Thursday, Novartis offered new details on its planned transformation. It said it plans to create a shared-services organization to improve profitability. The organization will consolidate some support functions that are currently spread across the company's divisions. These include information technology, financial reporting and accounting.

Write to Marta Falconi at [e-mail]

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