Interesting read. Go IPIX!!!
Novartis AG set aside $700 million to settle a long-running lawsuit alleging the drugmaker treated U.S. doctors to lavish dinners and other events in return for boosting prescriptions.
The case centers on 80,000 events Novartis held between 2002 and 2011 that federal prosecutors allege amounted to kickbacks masquerading as educational meetings. Those included fishing trips off the Florida coast, expensive meals at high-end restaurants like Nobu in Manhattan, and trips to Hooters locations across the country, according to court documents.
Novartis, which has denied wrongdoing, is currently in negotiations with prosecutors to reach a settlement. Chief Executive Vas Narasimhan said settling the matter was "consistent with our efforts to resolve legacy compliance issues."
The case is the highest-profile of a number of allegations of wrongdoing by the company in recent years, as Dr. Narasimhan, who took the helm in early 2018, seeks to overhaul the drug giant.
The company disclosed the provision as it reported a strong set of second-quarter earnings, prompting it to raise its full-year guidance for the second time this year. It now expects sales to grow by a mid- to high-single-digit percentage and for core operating income to increase by a low-double-digit to midteen percentage. Shares in Novartis gained more than 5% on the news.
Novartis attributed the gains to newer drugs like Entresto, for heart failure, and Cosentyx, which treats a range of skin and rheumatic disorders. It also highlighted Lutathera, a new kind of cancer drug that delivers a dose of radiation to a tumor at close range.
The encouraging performance of Novartis's newer drugs bolsters Dr. Narasimhan's strategy to focus the company on high-value prescription medicines. That has involved shedding eye-care business Alcon, parts of the company's generic-drug division Sandoz and exiting a consumer health-care joint venture with GlaxoSmithKline PLC. At the same time, it has spent around $15 billion to bulk up its pipeline of new medicines through acquisitions.
That strategy is currently facing a big test as Novartis seeks to persuade insurers to pay for its newest treatment, Zolgensma, which at $2.1 million is the world's most expensive drug. Zolgensma treats babies with a disease called spinal muscular atrophy, whose victims lack a gene essential for muscle control. It works by providing a working copy of that gene.
To allay concerns over the cost, Novartis said it would offer insurers the option to pay for the treatment in equal annual installments over five years. The company also pledged to issue partial refunds if the treatment doesn't work.
Dr. Narasimhan declined to provide details on how many insurers have taken up those offers but said that plans covering around 40% of Americans had so far agreed to cover Zolgensma. Novartis has defended the price tag by comparing it to a treatment already on the market, which would cost more in the long term because it is taken for the duration of a patient's life.
In the three months to June 30, Novartis said overall sales rose 4% to $11.8 billion. Core operating income, a measure that strips out certain items and is closely watched by analysts, climbed 14% to $3.6 billion. Those numbers exclude Alcon, which was spun out of the company in April.
Net income fell 73% to $2.1 billion, largely because the prior-year figure included a $5.7 billion payment from Glaxo to buy Novartis's stake in their consumer-health-care venture.
(END) Dow Jones Newswires
July 18, 2019 07:18 ET (11:18 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Novartis AG set aside $700 million to settle a long-running lawsuit alleging the drugmaker treated U.S. doctors to lavish dinners and other events in return for boosting prescriptions.
The case centers on 80,000 events Novartis held between 2002 and 2011 that federal prosecutors allege amounted to kickbacks masquerading as educational meetings. Those included fishing trips off the Florida coast, expensive meals at high-end restaurants like Nobu in Manhattan, and trips to Hooters locations across the country, according to court documents.
Novartis, which has denied wrongdoing, is currently in negotiations with prosecutors to reach a settlement. Chief Executive Vas Narasimhan said settling the matter was "consistent with our efforts to resolve legacy compliance issues."
The case is the highest-profile of a number of allegations of wrongdoing by the company in recent years, as Dr. Narasimhan, who took the helm in early 2018, seeks to overhaul the drug giant.
The company disclosed the provision as it reported a strong set of second-quarter earnings, prompting it to raise its full-year guidance for the second time this year. It now expects sales to grow by a mid- to high-single-digit percentage and for core operating income to increase by a low-double-digit to midteen percentage. Shares in Novartis gained more than 5% on the news.
Novartis attributed the gains to newer drugs like Entresto, for heart failure, and Cosentyx, which treats a range of skin and rheumatic disorders. It also highlighted Lutathera, a new kind of cancer drug that delivers a dose of radiation to a tumor at close range.
The encouraging performance of Novartis's newer drugs bolsters Dr. Narasimhan's strategy to focus the company on high-value prescription medicines. That has involved shedding eye-care business Alcon, parts of the company's generic-drug division Sandoz and exiting a consumer health-care joint venture with GlaxoSmithKline PLC. At the same time, it has spent around $15 billion to bulk up its pipeline of new medicines through acquisitions.
That strategy is currently facing a big test as Novartis seeks to persuade insurers to pay for its newest treatment, Zolgensma, which at $2.1 million is the world's most expensive drug. Zolgensma treats babies with a disease called spinal muscular atrophy, whose victims lack a gene essential for muscle control. It works by providing a working copy of that gene.
To allay concerns over the cost, Novartis said it would offer insurers the option to pay for the treatment in equal annual installments over five years. The company also pledged to issue partial refunds if the treatment doesn't work.
Dr. Narasimhan declined to provide details on how many insurers have taken up those offers but said that plans covering around 40% of Americans had so far agreed to cover Zolgensma. Novartis has defended the price tag by comparing it to a treatment already on the market, which would cost more in the long term because it is taken for the duration of a patient's life.
In the three months to June 30, Novartis said overall sales rose 4% to $11.8 billion. Core operating income, a measure that strips out certain items and is closely watched by analysts, climbed 14% to $3.6 billion. Those numbers exclude Alcon, which was spun out of the company in April.
Net income fell 73% to $2.1 billion, largely because the prior-year figure included a $5.7 billion payment from Glaxo to buy Novartis's stake in their consumer-health-care venture.
(END) Dow Jones Newswires
July 18, 2019 07:18 ET (11:18 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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