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 Combined with falling sales of leukemia treatment Gleevec, core
operating income will be "broadly in line with the prior year or
decline low-single digit" at constant currencies, it said. It had
previously said profit would be roughly the same.
The world's biggest prescription drugmaker, which reported slightly
better than expected second-quarter profit, is banking on new drugs
such as Entresto and Cosentyx for psoriasis to offset generic
competition to Gleevec.
Entresto is seen as potentially a huge product, with annual sales of
$5 billion or more, but has struggled to gain traction in the
all-important U.S. market since its launch last summer, although it
is doing better in Europe.
Entresto sales in the second quarter were $32 million, while
Cosentyx brought in $260 million. The Swiss company reiterated its
forecast that Entresto would generate around $200 million in sales
in the whole of 2016.
Prospects for Entresto were boosted in May when new medical
guidelines on the treatment of heart failure strongly endorsed it.
Chief Executive Joe Jimenez told reporters Novartis needed to
capitalize on this by spending $200 million more to market the drug
in the second half.
Industry analysts said the decision to ramp up spending on sales
representatives made sense, even with the downgrade to 2016 profit,
but it suggested past planning shortfalls.
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"We see this as a necessary spend and one that should have been made
earlier," said Deutsche Bank analyst Tim Race.
"We expect a mix of investor reactions to this downgrade, some
positive but also some highlighting management planning failures
given many investors have been telling them to increase Entresto
investment since 2015."
Novartis is also struggling with a weak performance by its Alcon
eyecare business, although Bernstein analyst Tim Anderson said there
were signs of sales turnaround here.
Second-quarter core net income, which excludes some items, fell to
$2.93 billion, compared with the $2.83 billion average of forecasts
from analysts polled by Reuters.
Core operating income fell 4 percent at constant currencies to $3.33
billion, also ahead of market expectations, while sales came in at
$12.47 billion, down a reported 2 percent and flat at constant
currencies compared with the poll average of $12.19 billion.
The shares were broadly unchanged in early trading.
(Additional reporting by Ben Hirschler and John Revill; Editing by
Mark Potter)
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