Novartis turns bullish as Gleevec sales exceeds view

NovartisThere is a growing concern over the drop in the sales of the blood cancer drug named Gleevec that has lost its exclusivity in this year 2016. It has resulted in the selloff in the share of Novartis Ag (NYSE: NVS) which is the 2nd biggest drug manufacturer. As on Tuesday’s close, the shares of this drug manufacturer declined to $68.09.

The decline in the share price is further aided by the lower than expected revenue in the 3rd quarter of the present financial year. The company is trying hard to minimise the losses caused due to the decline in the sale of its primary drug Gleevec. We can anticipate that the stocks are going to be bullish in the coming days.

Novartis is a Switzerland-based company and has reported revenue of $12.26 billion in the 3rd quarter of the fiscal year 2016. In the same period last year, the company said a figure of $12.265 billion. There is a decline of 4% to $2.938 billion or $1.23 per share as compared to $3.061 or $1.27 per share. The analysts at the Thomas Reuters conducted a survey in which it was anticipated that this drug manufacturing company to post earnings of $1.18 on each share for total revenue of $12.25 billion.


Entresto which is the blockbuster drug of the company Novartis Ag has made a total sale of $53 million in the 3rd quarter of 2016. This figure is more than $21 million as compared to the previous quarter. However, it fell short by $5 million as Jeffries expected total revenue of $58 million. The company is optimistic that its drug Entresto will do well in the coming times and it will help in meeting the target of $200 million.

Sales of Tafinlar and Mekinist increased to $172 million, and there is a rise of 29% in the year to year growth. It is a combo drug from metastatic melanoma in the oncology division. Similarly, there is an increase of 47% to $149 million and 44% to 168 million for the drug Jakavi and Promacta respectively.

There is a 15% growth in year-on-year to the tune of $790 million in the revenue of Gilenya which is multiple sclerosis drugs. Tasigna which is another cancer drug like Gleevec has reported income of $441 million with year-on-year growth of 8%. Cosentyx which is a Psoriasis treatment drug has made revenue of $305 million but still missed the figure of $315 as estimated by the analysts. The company has clarified that the drug is doing well and it will give them a blockbuster status in the coming days.

To revive the eye care business, Novartis is trying to focus on surgical and vision care through its drug Alcon. In this context, the company has moved ophthalmic medicines into the category of pharmaceuticals. There is a 2% decline in the revenue of Alcon to $1.4 billion. Similarly, the Sandoz biotech unit declined by 1% to $2.5 billion. Surprisingly, quarterly revenue from Gleevec sales posted income of $834 million against the estimate of $738 million projected by the analysts.

There is an indication of oversold scenario by the stochastic oscillator. So in the coming time, it is likely that the share price will pull back.

Novartis Stock Price Nov 23rd 2016

Novartis Stock Price: November 23rd, 2016

Based on this fundamental and technical forecast, we advise all our traders to invest in a CALL Option and set the target price to $75 or below. Also, the expiry period should be placed in December’s final week.

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