Novartis warns of U.S. price pressure on Sandoz generics

By John Miller

ZURICH (Reuters) – Novartis warned on Wednesday that price pressure on its generics drugs in the United States has intensified in the second quarter, cutting into its Sandoz division’s sales growth in the world’s largest healthcare market.

The Swiss drugmaker, which is holding an investor event in Boston, also said in a statement that it continued to review “all options” for its struggling Alcon eyecare unit.

An update on the future of loss-making Alcon, which is among $50 billion in assets Novartis is considering unloading, is expected by the end of the year.

Novartis’s Sandoz business, whose $10.1 billion in revenue in 2016 made up a fifth of the company’s total, joins generics makers including India’s Sun Pharmaceutical Industries and Lupin that have said revenue growth will be muted this year amid intensifying U.S. price pressure.

“The impact of U.S. pricing pressure and prior year launch timing is expected to have a higher impact on second quarter 2017 sales growth than (in the) first quarter,” Novartis said.

Even so, Novartis said it was leaving Sandoz’s full-year sales targets unchanged, as it still sees the division’s revenue “broadly in line” with 2016.

Consolidation among drug distributors has hit generics makers’ ability to negotiate on prices, while regulatory scrutiny has also made hikes tougher.

Beyond the price squeeze, Sandoz has also been hurt by the delay of a new generic version of Glatopa, a copy of Teva’s multiple sclerosis drug Copaxone, due to a warning letter on a third-party manufacturing site in Kansas run by Pfizer.

(Editing by Michael Shields)