The first of the big pharmas reveal Q2 earnings, with Novartis warning its profits may decline as it spends more on marketing. As Hayley Platt reports, pharma has benefitted as a defensive sector post-Brexit but still faces big challenges.
Earnings season kicks off for the big pharma firms with a possible profit warning from Novartis. Sales of its new heart failure drug Entresto aren't going well. It generated just $32 million in the second quarter - compared to Cosentyx, a treatment for psoriasis which achieved eight times that. The Swiss drugs maker says Entresto has the potential to make $200 million too and its prepared to invest in marketing the drug to help. But despite falling sales of its leukemia treatment Gleevec, profits for Novartis in the second quarter came in just slightly better-than-expected. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "Their prominent cancer drug is facing generic competition and so a sales decline is expected there. A source of hope is the new heart disease drug is going to step in after winning some approval in the U.S." Pharmaceuticals have been seen as a defensive sector for some time. Brexit one reason for a surge in recent share performance. (SOUNDBITE) (English) INFORMA, EDITOR OF SCRIP, ELEANOR MALONE, SAYING: "It actually looks like probably on balance it's going to be good for the sector particularly in the UK at the minute if you look at AstraZeneca and GSK's share prices, they shot up immediately the result came out." Still there are plenty of headwinds ahead. (SOUNDBITE) (English) INFORMA, EDITOR OF SCRIP, ELEANOR MALONE, SAYING: "Pricing is an issue especially in Europe. Another issue is emerging markets, growth is going down in quite a lot of them or indeed reversing. China's not so easy anymore." Roche reports earnings on Thursday. It recently launched a drug in the multi-billion dollar cancer space. Although still in third place behind Merck and BMS - it's expected to carve out a fair portion of the market for itself.