Alcon performance sees spin off plans delayed until 2019

Novartis performed above expectation when it posted 3Q sales of US$12.4 billion (AU$16.19 b), a 2% increase in constant currencies compared to the same period last year.Stock value for the company has gained 13% this year, easily surpassing rival Roche, which has only achieved a 0.5% increase for the same period.“Group sales were solid, with growth in all divisions, and Alcon delivered strong growth in both sales and core operating income. We are on track to deliver our full year guidance, and have confidence in our growth phase,” Novartis CEO Mr Joe Jimenez said following the release of the company’s Q3 results.However, even though Q3 was positive for Novartis, sales for the whole year are expected to be broadly in line with 2016, which means earnings for most its will probably rain flat or decline by a low single-digit percent. Despite this, Jimenez said he was confident the company would return to growth next year.{{quote-A:R-W:450-I:2-Q: We’d want to come to the market from a position of strength. Let’s get this thing humming with good momentum, and then a final decision will be made. -WHO:Joe Jimenez, CEO of Novartis}}Meanwhile, a breakdown of the company’s Q3 performance expanded on the company’s long term Alcon strategy, which, according to Novartis, has been influenced by its potential to grow sales at or above market while delivering profitability at least in line with the industry.“In the near-term, Alcon will benefit from focusing on completing its turnaround in performance and leveraging the infrastructure and financial strength of Novartis. The strategic review also indicates that creating a stand-alone company via a capital markets exit could create additional shareholder value,” the analysis read.“Key criteria for a final decision and timing are dependent on continued Alcon sales growth and margin improvent, which need to be donstrated for multiple quarters leading to potential action not likely before first half of 2019.“We have also made significant progress on developing a potential capital markets solution, including financial carve-outs, tax and legal entity structuring, and identifying listing and incorporation locations.”Alcon has rebounded for the first time in three years and according to Jimenez, an eventual spin off of the business could net Novartis around US$25–35 billion (AU$32.6–45.7 b).“We’d want to come to the market from a position of strength. Let’s get this thing humming with good momentum, and then a final decision will be made,” Jimenez told Bloomberg.Novartis will shift its over-the-counter ophthalmic products – which generated US$700 million (AU$913.84 m) in sales last year – to Alcon from January 1 2018.However, those won’t be the only changes occurring at Novartis, with Jimenez set to step down as CEO early next year and be succeeded by the current head of drug development Dr Vas Narasimhan.Jimenez has held the position for eight years and was responsible for restructuring and streamlining programs to keep pace with the company’s global expansions and acquisitions.