By Ludwig Burger
FRANKFURT (Reuters) -Novartis reported a 6% gain in adjusted net income on Wednesday that fell short of the market view, as corporate expenses surpassed expectations built up by a recent cost-cutting drive.
Fourth-quarter core net income for the quarter rose to $3.13 billion, helped by sales of recently launched drugs, it said in a statement, but that missed analysts' estimate of about $3.3 billion, according to LSEG data.
The Swiss drugmaker also said it was targeting growth in operating income, adjusted for one-offs, in a high single digit percentage range.
The shares dropped 4% at 0815 GMT, tempering gains of 9% so far this year, as analysts pointed to higher-than-expected costs and some disappointment over the 2024 goal.
Terence McManus, a fund manager at Switzerland's Bellevue Asset Management, said quarterly results were slightly weak, but that likely reflected money spent on drug launches.
"But the set-up remains positive over the coming years, as reflected in the mid-term guidance," McManus added.
Novartis (SIX:NOVN) also extended its mid-term guidance, saying it expected sales to grow 5% per year until 2028, when adjusting for currency swings. It had previously projected that pace of growth through 2027.
Finance chief Harry Kirsch said the group's quarterly performance was in line with internal plans, though a drop in the Argentine peso was a burden.
"Abnormally low" costs in previous quarters may have led some analysts to make overly optimistic projections, he said in a media call.
CEO Vas Narasimhan previously led a push to cut jobs and costs, part of a focus on fewer therapeutic areas and geographic markets. He also had generic drugs business Sandoz (SIX:SDZ) spun off and listed late last year.
Quarterly sales growth was driven by a better-than-expected performance of established heart failure drug Entresto, Kesimpta for multiple sclerosis, and breast cancer drug Kisqali.
However, revenue gains for Pluvicto, a precision radiotherapy against prostate cancer, and gene therapy Zolgensma against spinal muscular atrophy fell short of market expectations.