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Novartis’s Business Segments in Q2 2018

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Novartis’s business segments

Novartis AG (NVS) is a holding company providing pharmaceutical solutions. It classifies its business into the following three business segments:

  • Innovative Medicines, the prescription medicines business
  • Sandoz, the generics business
  • Alcon, the eye care business

The above chart compares segment revenues for Novartis since the first quarter of 2017. Let’s look at its segment revenues for Q2 2018.

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Innovative Medicines

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

The segment reported 10% growth YoY (year-over-year) in revenues to ~$8.9 billion in Q2 2018 compared to ~$8.1 billion in Q2 2017. Pharmaceutical products reported a 6% growth in operating revenues. Oncology products reported a 10% growth in operating revenues.

The increase in volumes had a positive impact of 12 percentage points during the quarter, while pricing had a negative impact of 1 percentage point. Generic competition had a negative impact of 3 percentage points on sales growth.

Sandoz

Sandoz, the company’s generic pharmaceuticals business, reported nearly flat revenues at ~$2.46 billion in Q2 2018 compared to $2.45 billion in the second quarter of 2017.

A volume growth of 7 percentage points was more than offset by the impact of price erosion, which impacted sales negatively by 9% during the quarter.

Alcon

Alcon, Novartis’s eye care business, reported a 7% YoY growth in revenues to ~$1.8 billion in Q2 2018 compared to ~$1.7 billion in the second quarter of 2017. At constant exchange rates, surgical products reported an 8% growth in revenues, while vision care reported a 1% growth.

The First Trust Value Line Dividend ETF (FVD) holds 0.5% of its total investments in Novartis (NVS), 0.5% in Sanofi (SNY), 0.5% in Bristol-Myers Squibb (BMY), and 0.5% in Johnson & Johnson (JNJ).

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