Novartis Consumer Health Profits Boosted By Sales, Division Merger
This article was originally published in The Tan Sheet
Executive Summary
Sales expansion and costs savings from the merger of Novartis' Self-Medication and Nutrition businesses drove Consumer Health division profits in the first six months of 1999, the firm announced Aug. 26.
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Sales expansion and costs savings from the merger of Novartis' Self-Medication and Nutrition businesses drove Consumer Health division profits in the first six months of 1999, the firm announced Aug. 26. Novartis first half consumer health sales of CHF 2.5 bil. (approximately $1.6 bil., based on an exchange rate of U.S. $1 = CHF 1.55) represented an 8% increase in local currencies (6% in Swiss francs) compared to the year-ago period. The division's first half operating income for continuing businesses was $188 mil., increasing its operating margin to 11.6%, up from 10.1% for the same period a year ago. The firm said it has increased Consumer Health R&D investment to speed the development of functional foods and to prepare for the U.S. launch of a new pediatric OTC line under the Gerber brand. The division's first half R&D expenditures were up 20% to $50 mil. Novartis announced its plan to merge the self-medication and nutrition units into Consumer Health about a year ago (1 (Also see "Novartis merging OTC, nutrition businesses into new Consumer Health division." - Pink Sheet, 31 Aug, 1998.)). Health and functional nutrition sales accounted for 54% of the division's business, with OTCs making up 35% and medical nutrition comprising 11%, the firm reported. Fifty-three percent of division sales were in the Americas, while Europe accounted for 42% and Asian, African and Australian sales, 5%. OTC Lamisil athlete's foot cream, which received FDA approval in March, became a leader in its category after just four weeks on the market, the firm reported (2 (Also see "Novartis Lamisil AT OTC Antifungal Said To Work In One Week" - Pink Sheet, 15 Mar, 1999.)). "The success of Gerber Nature Lock in the U.S. and continued growth in Latin America underpinned the good performance in Infant & Baby Nutrition," Novartis noted. Consumer Health realized a pre-tax gain of $227 mil. from the sale of non-core businesses, including OLW Snacks, Eden Group and Wasa crisp bread. "Trimmed of these businesses, Consumer Health is now focused on health-oriented, value-added products and on track to achieve the anticipated annual cost synergies" of $45 mil., the company said. Overall, Novartis reported a 7.2% rise in operating income, from $2.6 bil. to $2.8 bil. The increase resulted from higher profits in Healthcare and Consumer Health, which more than offset a decline in Agribusiness operating income. |