* CEO confident vaccines made in Italy are safe
* Some drugs recalled in Germany, Spain halts some sales
* Q3 core EPS $1.34, in line with Reuters poll
* Sales fall 2 pct to $13.81 bln vs $14.03 bln forecast
(Adds Novartis comments, Spanish reaction)
By Caroline Copley
ZURICH, Oct 25 Swiss drugmaker Novartis
said flu vaccines that Italy has banned from sale are
safe and it does not expect other countries to take similar
Italy banned four anti-influenza vaccines produced by
Novartis on Wednesday pending tests for possible side effects
after small particles were found in some of the injections.
Chief executive Joseph Jimenez defended the vaccines on
Thursday after Novartis reported third-quarter sales that missed
forecasts, as the strong dollar and the loss of its U.S. patent
for top-selling blood pressure drug Diovan took their toll.
He said the drugs posed no risk to patients' safety, despite
the presence of small particles.
Asked whether the manufacturing glitch in Italy was the
latest in a series of quality control problems, Jimenez said: "I
do not think that is the case."
Manufacturing problems have posed a headache for Novartis
this year as it tried to resolve quality issues at U.S.
manufacturing sites for its Consumer Health and Sandoz
Jimenez, who sent a memo to staff earlier this year
stressing the need to boost quality, said he did not know how
long the Italian investigations would last and declined to
comment on its potential cost to the company.
The Swiss health watchdog suspended deliveries of two
vaccines due to "possible impurities," on Wednesday, but Jimenez
said he did not expect other countries to take action although
he could not rule it out.
Austria's health ministry recommended switching to
alternative products as a precautionary step on Thursday, but
did not ban Novartis's flu vaccines.
Later on Thursday, Germany's vaccination agency said
Novartis had agreed to recall some of its Begripal and Fluad flu
vaccines as a precautionary measure.
"The request from (German vaccination agency) PEI follows
the precautionary decision of the Italian Ministry of Health to
conduct additional investigations following a report by Novartis
of the presence of aggregated protein in a batch which was not
released to the market," Novartis said in a statement.
"Novartis confirms that these protein particles can occur in
the vaccine manufacturing process and is confident that there is
no impact on the safety or efficacy of the vaccine."
The Spanish Medicines and Health Products Agency later said
Spain would also halt the sale of two Novartis flu vaccines
produced in Italy as a precautionary measure.
Some analysts see Novartis' vaccine division as a problem
area, whose hopes hinge on the successful European approval of
Bexsero, a vaccine against meningococcal B disease.
Sales in the unit fell 11 percent in the third quarter, hit
by lower northern hemisphere flu sales.
"Vaccines were very weak, more so than our already
pessimistic forecast, and remain a drag," said Deutsche Bank
analysts in a note. "Delayed shipments and lower flu sales, are
continuing to place investor focus on this problem area for the
Shares in Novartis were 0.7 percent lower at 56.80 francs at
the close of Thursday trading, compared with a 0.3 percent
firmer European Healthcare index.
Third-quarter sales fell 7 percent to $13.81 billion,
compared with a forecast for $14.03 billion in a Reuters poll.
Sales at Sandoz fell 13 percent to $2 billion, hit by
growing competition for enoxaparin, a copycat version of blood
thinner Lovenox originally produced by Sanofi.
The consumer health division also suffered from
manufacturing problems at its Lincoln site, which has annualised
sales of $1 billion. Novartis said it was taking longer than
expected to restart commercial production.
Net income of $2.48 billion was similar to a year ago, as
sales of its newest products such as multiple sclerosis pill
Gilenya and breast cancer drug Afinitor helped offset declines
in older products.
Sales of Diovan, which went off patent in the United States
on Sept. 21, fell 32 percent in the third quarter to $969
(Additional reporting by Georgina Prodham in Vienna, Ludwig
Burger in Frankfurt, Clare Kane in Madrid and Martin de Sa'Pinto
in Zurich.; Editing by Erica Billingham and Helen