UPDATE 3-Novartis raises sales goal as new drugs sell well

* Q2 EPS rises to $1.06 vs poll forecast $1.05

* Core EPS $1.20 versus $1.18 market expectation

* Raises full-year sales goal

* Sticking to its offer for Alcon minority shareholders

* Shares rise 0.6 percent, in line with sector index

(Releads, adds detail, analyst comment, updates shares)

By Katie Reid

ZURICH, July 15 (BestGrowthStock) – Novartis AG (NOVN.VX: ) kicked off
the Big Pharma reporting season on a positive note by raising
its full-year sales goal on the back of strong demand for its
newest products, shrugging off drug price cuts across Europe.

The Swiss drugmaker’s second-quarter earnings per share rose
18 percent to a forecast-beating $1.06 as higher-than-expected
demand for its pandemic flu vaccine also boosted its top line.
[ID:nLDE6681HC]

Novartis, which also said on Thursday it was sticking by its
offer to buy out minority shareholders in eyecare group Alcon
(ACL.N: ), bumped up its full-year group sales guidance to mid- to
high-single-digit growth rates in constant currencies.

This is in line with its forecast for its pharmaceuticals
unit as key drugs like top-selling Diovan perform well.

Investors will now eye results from rivals GlaxoSmithKline
(GSK.L: ) and Roche (ROG.VX: ) next week for more clues as to how
the sector is coping with European governments’ efforts to
wrestle with record budget deficits by slashing drug prices.

“(The) guidance uplift despite EU price cuts should be seen
as a positive for both Novartis and the entire sector given
investor uncertainty on the impact of EU price cuts,” analysts
at Deutsche Bank said in a note.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a related preview please double click on [ID:nLDE66B12L]
For graphic on companies see http://r.reuters.com/fej96m
For more on pricing pressure in Europe see [ID:nLDE6501DZ]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Novartis had been able to offset the lower prices in Europe
with volumes from its new products, which now account for some
20 percent of group sales, Chief Executive Joe Jimenez told
journalists on a conference call.

“We were able to insulate Novartis from that cost
containment that some of our peers may see when they announce
their results in the coming days,” said Jimenez, an all-American
collegiate swimmer now battling the price cut tide.

STRONG PIPELINE

Uncertainty about how Novartis will clinch the buyout of
Alcon have weighed on its shares this year, overshadowing the
strength of its pipeline. [ID:nLDE6661RT]

“Our forecasts suggest that Novartis has one of the better
revenue growth profiles through 2015, despite losing Femara in
2011 and Diovan in 2012 to generics — this is partly driven by
the pending acquisition of Alcon,” Bernstein analysts said,
adding cancer drugs Glivec and Tasigna were likely to grow for
the foreseeable future.

At 1034 GMT, shares in the group were trading 0.6 percent
higher, largely in line with the European drugs sector (.SXDP: ).

Blood pressure drug Diovan was performing well in the face
of new generic competition, Jimenez said. A generic version of
Merck & Co’s (MRK.N: ) rival drug Cozaar was launched recently.

Jimenez, who took over as CEO this year, added he was
bullish on eye drug Lucentis despite the possibility some
countries may start to use Roche’s Avastin as a cheaper
alternative. [ID:nLDE65915P]

One fly in the ointment, however, was that Novartis’ cancer
drug Afinitor failed in a late-stage study in advanced carcinoid
tumours — success in this indication would give it an extra
boost on its way to becoming a blockbuster.

But analysts said this was not a major setback and the group
may yet be able to publish positive data after looking at the
trial results again with regulatory authorities.

CONFIDENT ON ALCON

Novartis, which agreed to buy a 77 percent stake in Alcon
from Nestle (NESN.VX: ), is holding firm on its offer of 2.8
Novartis shares for each Alcon share despite fierce opposition
from Alcon’s independent director committee. [ID:nLDE667034]

The bid, which equates to around $143 per Alcon share, is
significantly below both the average price of $168 paid to
Nestle and Alcon’s Wednesday closing price of $156.11.

It is a big deal for avid fly fisherman Jimenez to land.

Novartis is buying Alcon to diversify and insulate itself
from the effects of losing patent protection on big selling
medicines, but many analysts have said it is paying too much.

The group expects its purchase of the majority stake to
close either late in the third quarter or in the fourth quarter,
and it still plans to push through buying the remaining 23
percent under Swiss law, Jimenez said.

Novartis trades at around 9.4 times 2011 earnings, at a
discount to Swiss rival Roche , but at a premium to AstraZeneca
Plc (AZN.L: ) and GlaxoSmithKline thanks to its promising
pipeline.
(Editing by Michael Shields)

UPDATE 3-Novartis raises sales goal as new drugs sell well