BASEL, Oct 18: Swiss pharmaceutical giant Novartis on Thursday announced more than 1,200 job losses in the United States after its third quarter results weakened on sharper competition from generic drugs.

Third quarter net profits dropped 12 per cent compared to the same period last year to $1.57 billion (1.1 billion euros), the company said in a statement. Analysts had been expecting a figure around $1.7 billion.

Novartis also set aside exceptional provisions of $590 million to increase cover for possible environmental costs.

Despite the tail-off in the third quarter, Novartis claimed that earnings over the first nine months of the year still reached record levels, with a seven per cent increase to $5.61 billion.

Operating income over the same period was up nine per cent to $6.47 billion and net sales were up 13 per cent to $28.14 billion.

Commenting on the results, Novartis chairman and chief executive Daniel Vasella said: “Despite the anticipated weak quarter in pharmaceuticals, we showed a strong operational performance driven by our other businesses.” Novartis said it would cut 1,260 posts in its core branded pharmaceuticals division in the US, where competition from cheaper generics is sharpest.

The move should allow the group to save about $230 million a year, it added.

Operating profits on pharmaceuticals fell 13 per cent in the third quarter, weighed down by the loss of three key drugs in the United States.

The US Food and Drugs Administration ordered the suspension of one of those drugs, Zelnorm, a bowel treatment, in March, on concerns about side effects.

Although some other sales were lost when Novartis’ exclusive rights on some drugs expired, opening them up to generic competition, the company believes the launch of several new products should help boost growth in the second half of 2008.—AFP