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Novartis’s Q2 2018 Earnings: Sandoz

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Sandoz, the generics arm

Sandoz, the generics arm of Novartis (NVS), is a market leader in differentiated generics. It reported nearly flat revenues at ~$2.46 billion during Q2 2018 compared to $2.45 billion during Q2 2017. Revenue growth was driven by a 2% favorable impact of foreign exchange, offset by a 2% decline in operating revenues.

The above chart compares the quarterly revenues for Sandoz since Q1 2017.

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Performance of Sandoz products

Sandoz’s US markets reported a 16% decline in operating revenues to $692 million during Q2 2018, mainly due to competition from other products.

Its European markets reported a 7% growth in operating revenues to $1.2 billion during Q2 2018, driven by the continued uptake of retail products and biosimilars in Germany, Italy, and the United Kingdom.

Its Asia, Africa, and Australasia markets reported a 2% decline in operating revenues at $341 million, while the Latin America market reported a 2% decline in operating revenues at ~$98 million.

Biopharmaceuticals

Sandoz’s biopharmaceuticals portfolio reported revenues of $363 million during Q2 2018, a 34% growth at constant exchange rates compared to Q2 2017. Growth was driven by an increase in sales from the US and European markets, following the strong performances of Rixathon and Erelzi in the European markets, and Zarxio and Omnitrope in the US markets.

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Retail generics

Retail generics reported revenues of $2 billion during Q2 2018, an 8% decline at constant exchange rates compared to Q2 2017. The decline was mainly driven by a 22% decrease in US sales at constant exchange rates.

Anti-infective franchise

The anti-infective franchise reported revenues of $332 million, a 9% growth in operating revenues compared to Q2 2017.

The First Trust Strategic Income ETF (FDIV) holds 0.9% of its total investments in Novartis AG ADR (NVS), 0.9% in Novo Nordisk ADR (NVO), 0.9% in CVS Health (CVS), and 0.6% in National Health Investors (NHI).

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