The drugmaker also said a review of its pipeline will lead to more approvals and higher sales by 2017. Novartis's stable of cancer drugs and sales are set to grow annually for the next five years, despite the anticipated loss of exclusivity on its cancer drug Gleevec, the company said.
The Alcon unit is now set to grow at a mid- to high-single digit rate. The company said last month group sales would do better than previously expected. Europe's biggest drugmaker by sales has begun a review of units such as its animal-health operation that lack global scale.
Novartis announced this month it would sell its diagnostics unit to Grifols SA for $1.68 billion, part of a strategic review of its market segments. The company now has three units with global scale, Jimenez said: pharmaceuticals, the eye-care business Alcon and the generics arm Sandoz. Novartis has said it wants its businesses to be among the industry leaders or it will consider divesting them.
The healthcare sector represents important cross currents from the perspective of a globally oriented thematic investor. From first principles the energy, technology and healthcare sectors represent areas of research from which new inventions or discoveries can literally create value by changing forever how we live or lives.
Healthcare tends to do this through investing in technological development which creates new therapies as well as lowering the cost and increasing the availability of existing products. The net result is that the sector is both large and diverse, with a comparatively small number of companies dominating the global market.
Novartis is a global Autonomy with diverse revenues and yields 3.14%. It is also an S&P Europe 350 Dividend Aristocrat. The share has been ranging below CHF80 since 1998 and has returned to retest its highs. A sustained move below the 200-day MA would be required to question medium-term potential for a successful upward break.
On seeing this lengthy base formation I was prompted to look for other large pharmaceutical companies with potentially similar patterns. Astra Zeneca (DY 5.79%), Sanofi (DY 3.53%), UCB (DY 2.04%) have all rallied back to test the upper side of more than decade long ranges and against the current background look more likely than not to be able to sustain breakouts over the medium term.
More broadly, two additional healthcare stocks are particularly notable at present. UK listed BTG has rallied impressively over the last month to post new 10-year highs. While a pause to consolidate in the region of the 2011 peak is possible the share appears to be in the process of completing a first step above its long-term base.
US listed Alkermes broke out of a decade long base in April and spent much of the intervening period in a ranging consolidation. It broke out again last week and shares BTG's medium-term first step above the base completion characteristics.