Novartis sees no coronavirus disruption amid China growth

By John Miller

BASEL, Switzerland (Reuters) - Novartis is not seeing any disruption to its supply chain due to the coronavirus outbreak, CEO Vas Narasimhan said on Wednesday, as the Swiss drugmaker predicted rising sales and profit in 2020, including from its growing Chinese market.

Fourth-quarter core net income rose to $2.99 billion, a 13% rise in constant currencies, as its new Zolgensma gene therapy gained traction and sales of five-year-old drugs Cosentyx and Entresto continued to power ahead.

Fourth-quarter sales rose 9% to $12.4 billion.

For 2020, the Swiss drugmaker expects net sales to grow in a mid-to high-single-digit percentage range, with core operating income expected to grow in the high-single to low-double-digit percentages.

Narasimhan got help from new therapies like Zolgensma, launched in May at a $2.1 million-per-patient list price, as well as Cosentyx, a psoriasis and arthritis drug which has replaced decade-old Gilenya as Novartis's top-selling medicine.

In China, the company has asked staff to work from home until Feb. 10 while suspending business travel to and from Wuhan, the city where the coronavirus is believed to have emerged from a food market. Narasimhan said the situation was developing very quickly and must be monitored, but for now he believed Novartis's business would emerge unscathed.

"First and foremost, our concern is for our own associates," Narasimhan said on a call with reporters. "We're also working to support the public health infrastructure in China, as best we can, with our local teams. We don't see any disruptions to our supply chain at this point in time."

China now accounts for more than $2 billion in annual business for Novartis, and in 2020 produced double-digit growth, including the launches of Cosentyx and Entresto, the company said.

Overall, Cosentyx's sales for the 12-month period rose 28% to $3.6 billion, heart drug Entresto was up 71% to $1.7 billion and Zolgensma for spinal muscular atrophy hit $361 million.

For the company's main drugs business in 2019, the core margin improved to 33.5% of sales, and Narasimhan said the company was on track to reach mid-to-high 30s core margin as a percentage of sales "in the mid-term".

Novartis shares were up 0.1% to 92.69 francs in early trading.

(Additional reporting by John Revill; editing by Michael Shields and Mark Potter)