Novartis books $1.9 billion hit from drug trial setback, but lifts guidance
NVS•Novartis booked a $1.9 billion impairment charge tied to a drug trial setback and raised its full-year core operating income guidance to low single-digit growth, from a previously expected low single-digit decline.
1. Trial charge and guidance
Novartis reported a 61% drop in third-quarter operating income, largely due to a $1.9 billion partial impairment charge for del-desiran, which was being tested for myotonic dystrophy. The drug was obtained through the company’s $12 billion acquisition of Avidity. Novartis raised its full-year core operating income guidance to low single-digit percentage growth after strong demand for key cancer and multiple sclerosis drugs, while maintaining its forecast for low single-digit net sales growth.
2. CEO defends strategy
CEO Vas Narasimhan said the trial setbacks were part of drug development and that the company did not need to change its M&A strategy. Third-quarter core operating income, adjusted for special items, rose 10% at constant exchange rates, beating analyst expectations.
