Novartis profits decline as Alcon continues to struggle

First-quarter earning fell 12 percent at Novartis as profits from its Fort Worth-based Alcon eye-care unit declined and the company’s best-selling cancer medicine, Gleevec, faced generic competition.

Profit declined to $1.17 a share, excluding some items, the Swiss company said in a statement. Revenue fell 3 percent to $11.6 billion, compared with analysts’ average projection of $11.8 billion.

Sales of Gleevec dropped 22 percent after the drug lost patent protection in the U.S. in February, opening the door to generic versions of the $4.7 billion-a-year product.

Alcon continued to struggle as the company implements a plan to put the unit’s growth back on track. Alcon revenue dropped 7 percent to $1.4 billion, and profit plunged 36 percent to $243 million in the first quarter.

In January, Novartis named Michael Ball to replace Jeff George as CEO at Alcon and announced a broad restructuring plan designed to turn the business around by the end of 2016. Novartis CEO Joe Jimenez said the company, a leading maker of surgical equipment and drugs for eye care, as well as contact lenses, needed to reignite product innovation.

During a conference call Friday, Ball said he is optimistic about Alcon’s prospects, saying the company has increased investments in promising R&D projects in the surgical and vision care areas, as well as making small acquisitions to add new technologies.

“Alcon needs more innovation driven by a better understanding of customer needs,” Ball said. “The prospects look very good for this company, and I love the opportunities.”

On April 1, as part of the restructuring, Alcon’s opthalmic drug business was transferred to the Novartis pharmaceuticals division. Alcon employs more than 4,000 at its campus in south Fort Worth.

Novartis has been trying to boost revenue from new medicines like Entresto for heart failure and the Cosentyx skin treatment.

Analysts have cut their sales estimates for Entresto by 35 percent in the last three months amid weak demand for the drug, which generated $17 million in the quarter. Analysts had estimated $20.2 million in sales. Novartis forecast about $200 million in Entresto sales for this year.

Cosentyx, which will soon face competition from a new psoriasis medicine sold by Eli Lilly, had sales of $176 million, beating analyst estimates of $137.1 million.

The drugmaker is sticking to its forecast that 2016 sales and core operating income will be largely unchanged from last year on a constant exchange rate basis.

Staff writer Steve Kaskovich contributed to this report, which includes material from Bloomberg News.

This story was originally published April 22, 2016 at 12:26 PM with the headline "Novartis profits decline as Alcon continues to struggle."