Swiss pharmaceutical giant Novartis raised its earnings guidance for the second time this year on Tuesday despite a legal setback in the United States and announced it will spin off its generics unit later this year.
The company, which is focusing on its core pharmaceutical operations, said it plans to spin off its Sandoz generics unit at the beginning of the fourth quarter by listing its shares on the SIX Swiss stock exchange.
After the spinoff, Novartis will focus on five core therapeutic areas: cardiovascular, immunology, neuroscience, solid tumours and haematology.
During the second quarter, Novartis saw its net profits jump by 54 percent from the same period last year to $2.3 billion thanks to both rising sales and lower restructuring charges.
Sales rose by 9 percent during the April-June period to $13.6 billion, beating the analyst consensus of $13.2 billion established by Swiss financial news service AWP.
The pharmaceuticals division drove the increase in sales, rising by nine percent to $11.2 billion, as its leading drugs such as heart failure treatment Entresto enjoyed a strong performance.
Novartis said it would appeal a US court ruling invalidating its patent for Entresto and noted no generic version of the medication is on the market in the United States.
Chief executive Vas Narasimhan said the strong performance of its medications plus its pipeline of future drugs gives Novartis confidence over the medium term and enables it to raise its 2023 outlook for a second time.
It now expects sales growth in the high single digits for 2023, compared to mid-single digits previously. Core operating income is now expected to post a low double-digit increase, compared to high single digit growth.
The company's "robust balance sheet and expected future growth" allows it to return $15 billion to shareholders "while maintaining the flexibility for continued strategic bolt-on acquisitions," Narasimhan said in a statement.
Novartis shares were up 3.1 percent in afternoon trading.
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