Swiss drug producer Novartis AG announced today that it will stop studies on an experimental cancer cure, as the results indicated it had little of no effects towards improving survival rate of patients.
The company will direct its efforts to more promising avenues in cancer treatment.
This decision brings a serious blow to the company’s bottom line, with potential long term effects in sales and profits over the next years. The decision to stop the tests will also make a 120 million dollars hole in the fourth quarter earnings.
Novartis might come into a rough patch soon, as many of the key drugs they developed will see their patents expire. This situation has lead to company shares slipping 2.7 percent since the beginning of the year, while the Stoxx Europe healthcare index has actually gained 3.7 percent.
Two of the company’s key-seller drugs, Diovan and Gleevec, will have their patents expire in 2011, 2012 and 2015. Both of them are responsible for approximately 20 percent of Novartis’ annual sales, which were of more than 44 billion last year.
Loss of patent might bring a 30 percent drop in sales, as cheaper similar meds would replace the Novartis version.
