Novartis says Q2 net profit up 12 percent to $2.7B

By the Associated Press | July 19, 2011 | 2:26 AM EDT

GENEVA (AP) — Swiss drug maker Novartis AG saw net profits rise 12 percent to $2.73 billion in the second quarter amid strong sales of new products and healthy growth in emerging markets such as China.

But the strength of the Swiss franc weakened bottom-line results, and most analysts had expected a bigger rise in profits from the $2.44 billion Novartis earned during the same period last year.

Chief executive Joseph Jimenez said he would look at ways to reduce the company's costs in Switzerland, where it has a large workforce but only 1.5 percent of global sales.

"When the Swiss franc appreciates against the dollar we have the benefit on the sales side but we get a hit on the cost side," Jimenez said. The American-born CEO said he was aiming to "reduce the total cost that we have in Swiss francs. I wouldn't want to speculate whether that meant jobs or meant anything else."

Group sales in the April to June period increased by 27 percent to reach $14.92 billion from $11.72 billion last year. Factoring out the weakness of the U.S. dollar, sales rose 19 percent in constant currencies.

Sales grew 30 percent in China and 20 percent in India during the quarter, reflecting the company's efforts to expand into new markets.

Jimenez also highlighted the successful recent launch of oral multiple sclerosis medicine Gilenya, which had sales of $138 million this year and $79 million in the second quarter alone.

"This is turning out to be one of the most successful product launches in recent years," he said.

The integration of eyecare company Alcon, and the decreased year-on-year distortion from the sale of pandemic flu vaccine also helped Novartis' bottom line in the second quarter.