UPDATE 4-Novartis Q3 tops poll, new products sell well

* Novartis Q3 core EPS rises 16 pct to $1.36

* Beats average estimate of $1.29 in Reuters poll

* Excluding Alcon stake, sticks to sales growth guidance

* Shares rise 0.6 percent, outperform weaker sector

(Adds details, updates shares)

By Katie Reid

ZURICH, Oct 21 (BestGrowthStock) – Switzerland’s Novartis AG
(NOVN.VX: ) posted forecast-beating quarterly results as its
newest drugs sold well, strengthening its position in the battle
for a full takeover of U.S. eyecare group Alcon Inc (ACL.N: ).

Novartis, seeking to buy out the rest of Alcon, said on
Thursday core earnings per share rose to $1.36 in the third
quarter, beating the average estimate of $1.29 in a Reuters
poll. [ID:nLDE69H131]

“This is a good quarter for Novartis, and shares should
continue to perform and help Novartis put further pressure on
Alcon’s (Independent Directors Committee) IDC,” Vontobel analyst
Andrew Weiss said.

At 1233 GMT Novartis shares were trading 0.6 percent higher,
outperforming a 0.9 percent drop in the European healthcare
sector index (.SXDP: ).

A raft of upbeat data, including U.S. approval for multiple
sclerosis drug Gilenya, has boosted sentiment in Novartis, which
is now trading at a premium to cross-town rival Roche (ROG.VX: ).

“Data on new medicines such as MenB, our meningococcal
vaccine candidate, give me confidence that our pipeline will
continue to deliver,” Novartis Chief Executive Joe Jimenez said.

Its newest products generated 20 percent of quarterly
sales and the group saw strong demand for its new generic
version of Sanofi-Aventis’ (SASY.PA: ) blood thinner Lovenox as
well as for cancer drug and blockbuster hopeful Afinitor.

Sales of key blood pressure drug Diovan held up despite
competition from generics — a generic version of Merck & Co’s
(MRK.N: ) rival drug Cozaar was launched recently.

Basel-based Novartis is sticking to its full-year sales
guidance of mid- to high-single-digit growth rates in constant
currencies, but this target is boosted to the low to mid teens
when the recently secured 77 percent stake in Alcon is included.

Its third0quarter sales rose 13 percent to $12.58 billion,
beating expectations. This contrasts with other drugmakers,
including Roche, GlaxoSmithKline (GSK.L: ) and Eli Lilly (LLY.N: )
whose sales fell short of expectations. [ID:nLDE69J1NA]
[ID:nLDE69C1FI] [ID:nN21267529]

Novartis said Alcon would be slightly negative to operating
income margin and slightly positive to core operating income

“We see this quarter as building on strong momentum from the
current portfolio as well as providing a solid base for growth
from recent pipeline successes,” Deutsche Bank analyst Tim Race

“We expect the share to better reflect this following
completion of the last step of the Alcon acquisition,” Race
said, adding he expected the buyout would be completed in the
fourth quarter of this year.


Novartis stuck to its offer to Alcon minority shareholders
of 2.8 Novartis shares for each Alcon share — a bid Alcon’s IDC
has repeatedly rebuffed as too low.

The recent rise in Novartis shares as well as a strong rise
in the Swiss franc means that its stock offer for the remaining
23 percent is now looking more attractive. [ID:nLDE69H0HY]

But Jimenez said he could not speculate on what either the
Alcon board or the IDC now thought about the offer.


GRAPHIC on how deal value has fluctuated, click on:

GRAPHIC on pharma sector: http://r.reuters.com/xaw97p

Story on Novartis biosimilar sales [ID:nLDE69K10V]

The bid is worth around 9 percent more than when it was
first announced and is very close to the average price of $168
it paid Nestle for the 77 percent stake, but is still shy of the
$180 some shareholders have said they would be willing to take.

Novartis is buying Alcon to diversify and insulate itself
from the effects of losing patent protection on big selling
medicines such as Diovan.

Novartis trades at around 11 times expected 2011 earnings,
while Roche, which has been hit by a string of disappointing
pipeline developments, trades at about 10 times. [ID:nLDE69C1FI]
(Editing by Michael Shields)

UPDATE 4-Novartis Q3 tops poll, new products sell well