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Novartis’s Innovative Medicines Segment in 2016

Mike Benson - Author
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Mar. 27 2017, Updated 9:08 a.m. ET

The Innovative Medicines segment

Novartis’s (NVS) Innovative Medicines segment, formerly referred to as its Pharmaceuticals segment, consists of products for therapeutic areas including oncology, cardio-metabolic, immunology and dermatology, retinal, respiratory, neuroscience, and established medicines.

The overall contribution of the Innovative Medicines segment to NVS’s revenue was ~67% at $32.6 billion in 2016.

The Innovative Medicines segment includes two business units from Novartis: Novartis Pharmaceuticals and Novartis Oncology.

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Key Innovative Medicines products

Growth products, including Gilenya, Tasigna, Galvus, a combination of Mekinist and Tafinlar, Promacta and Revolade, Jakavi, Entresto, and Cosentyx, drove a 20% rise in the segment’s revenue to $17.1 billion in 4Q16—nearly 35% of its total revenue.

Gilenya (fingolimod) is an oral therapy used for the treatment of multiple sclerosis. Due to increased demand, the therapy’s revenue rose 14% at a constant exchange rate to $3.1 billion in 2016, compared to $2.8 billion in 2015. Gilenya reported double-digit growth in most of markets. The therapy competes with Biogen’s (BIIB) Tecfidera (dimethyl fumarate) and Sanofi’s (SNY) Aubagio (teriflunomide).

Tasigna (nilotinib), a drug for the treatment of chronic myeloid leukemia, reported a 10% revenue rise at a constant exchange rate to $1.7 billion in 2016, following increased sales in both US markets and global markets. Tasigna competes with Pfizer’s (PFE) Bosulif (bosutinib).

A combination of Tafinlar (dabrafenib) and Mekinist (trametinib) is used in the treatment of BRAF V600+ metastatic melanoma. The combination has been approved in over 60 countries for the treatment of unresectable melanoma and in 35 countries for the treatment of metastatic melanoma. The combination reported a rise in revenue to $672 million in 2016, compared to $453 million in 2015.

To divest risk, investors can consider ETFs such as the PowerShares International Dividend Achievers ETF (PID), which holds 1.5% of its total assets in Novartis.

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