GENEVA (AP) -- Boosted by strong sales of swine flu vaccine, Novartis AG increased its net profit by 49 percent to $2.95 billion during the first quarter, the drug maker said Tuesday.
The results beat analyst expectations for a net profit of $2.49 billion. In the same quarter a year ago, the Swiss company reported net earnings of $1.98 billion.
Novartis shares rose 1.4 percent to 57.20 Swiss francs ($53.70) on the Zurich exchange Tuesday morning.
The company benefited from $1.1 billion in sales of swine flu vaccine during the January-March period, with overall sales increasing 25 percent to $12.13 billion from $9.71 billion last year.
"All of our businesses are making good progress, particularly the sustained expansion in pharmaceuticals and the strong contributions from supply contracts for A(H1N1) pandemic flu vaccines," said CEO Joseph Jimenez.
But shipments of swine flu vaccine "are now largely over," Jimenez told reporters during a conference call. Novartis began delivering the vaccines in the fourth quarter of 2009 and sales are expected to ebb away over the course of the year as the pandemic strain is included in seasonal flu vaccines.
To continue growth, Novartis is making expanding the company's product range "our number one priority," Jimenez said.
One reason for this is the upcoming expiry of patents on its best-selling hypertension drug Diovan, which loses protection in Europe at the end of 2011, followed by the United States and Japan through 2013.
Jimenez said new products will emerge from in-house development and acquisitions, but quashed rumors that Novartis is planning a major acquisition this year.
"You won't see another extremely large transaction like Alcon in the foreseeable future," he said. The $50 billion takeover of eye-care company Alcon Inc. still faces opposition from minority shareholders who claim they are receiving less than Novartis is paying for the majority stake held by Nestle SA.
"What you will see is smaller bolt-on acquisitions to some of our non-pharma businesses," Jimenez said, citing as an example Monday's announcement that generics division Sandoz has purchased U.S.-based Oriel Therapeutics for an undisclosed sum. Oriel Therapeutics' products include a dry powder asthma inhaler.
"These are small to mid-size acquisitions that increase our scale and that are strategically consistent, but they don't create a level of debt that we can't handle given that Alcon is our primary target for 2010," Jimenez said.
Novartis, which also makes Lucentis, for patients with wet age-related macular degeneration, and cancer drugs Zometa and Glivec -- known as Gleevec in the United States -- said it received U.S. and European approval for meningitis vaccine Menveo during the quarter. Afinitor for kidney cancer, Equa for type 2 diabetes and Exforge for hypertension were approved in Japan, it said.
The company expects group net sales excluding Alcon to increase by a mid-single-digit percentage this year provided exchange rates remain at current levels.
Michael Nawrath, an analyst at Zuercher Kantonalbank, praised the quarterly result as "outstanding" and predicted the new leadership under Jimenez and Chief Financial Officer Jonathan Symonds could improve profit margins to an unprecedented 25-30 percent in the coming two to three years.
This will be partly achieved through better stock management and cost-cutting measures. Novartis last week announced it is cutting 383 positions at its U.S. headquarters.
Helvea analyst Karl-Heinz Koch said share performance over the coming year will hinge on U.S. and European approval for the once-daily pill Gilenia to treat relapsing multiple sclerosis, which has shown promise in trials.