How Did Novartis Perform in 1H17?

In 1H17, Novartis (NVS) reported revenues of around $23.8 billion, a ~1% decline on a year-over-year (or YoY) basis. In 2Q17, Novartis generated revenues of around $12.2 billion, a ~2% decline on a YoY basis and a ~6% increase on a quarter-over-quarter basis.

In 1H17, Novartis reported operating income and net income of around $4.2 billion and $3.6 billion, respectively, compared to $4.5 billion and $3.8 billion in 1H16. In 2Q17, the company reported operating income and net income of around $2.3 billion and $2.0 billion, respectively, compared to $2.1 billion and $1.8 billion in 2Q16. In 2Q17, the growth in operating income was primarily driven by higher divestment gains and lower amortization compared to 2Q16.

The chart above demonstrates the revenue curve of Novartis from 1Q16 to 2Q17 and analysts’ estimates for 3Q17 and 4Q17. In 1H17, Novartis reported basic earnings per share of $1.54 compared to $1.60 in 1H16. In 2Q17, the company reported basic EPS of $0.84 compared to $0.76 in 2Q16.

In 2Q17, Cosentyx and Entresto were the primary contributors to revenue growth. In 2Q17, Cosentyx witnessed ~88% growth on a YoY basis.

In 1H17, Novartis’s oncology business unit reported revenues of around $6.0 billion, which reflected a ~7% decline on a YoY basis. In 2Q17, Novartis’s oncology business generated revenues of around $3.1 billion, a ~7% decline on a YoY basis and 8% growth on a quarter-over-quarter basis.

In 2Q17, Novartis’s pharmaceutical unit generated revenues of around $5.2 billion, which is 5% growth on a YoY basis. This unit includes opthalmology, immunology and dermatology, neurology, respiratory, and cardio-metabolic drugs. In 2Q17, the opthalmology, immunology and dermatology, neurology, respiratory, and cardio-metabolic segments reported revenues of around $1.4 billion, $979 million, $864 million, $393 million, and $113 million, respectively.

Novartis’s peers in the oncology drugs market include Roche (RHHBY), Celgene, Amgen (AMGN), AbbVie (ABBV), Bristol-Myers Squibb, Takeda Pharmaceuticals, Eli Lilly, Merck, and others. The Vanguard FTSE Developed Markets ETF (VEA) invests ~0.96% of its total portfolio in Novartis.