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Swiss drugmaker Novartis beat first-quarter profit forecasts on Thursday, defying the impact of a strong dollar thanks to surprisingly strong margins.
The Basel-based group confirmed its guidance for sales and operating profit growth this year.
Novartis has clinched a series of deals, including a $20 billion asset swap with GlaxoSmithKline finalised last month, that will see it focus on a smaller number of higher-margin businesses.
Together with the rollout of new products, including its potential multibillion-a-year heart failure treatment LCZ696, the overhaul should buffer the Swiss group from cheaper copycat competition to its popular blood pressure medicine Diovan.
With the US Food and Drug Administration expected to make a decision on whether to approve LCZ696 by August, expectations are building that Novartis is sitting on one of the pharmaceutical industry's most valuable assets.
Citi analyst Andrew Baum estimated the drug could achieve peak annual sales of $11 billion, assuming a price of $12 a day.
Citi noted that margin gains were driven by phasing of costs, productivity gains and strong margins from the winter cough and cold season.
The group reported a 7% year-on-year fall in first-quarter net sales from continuing operations to $11.9 billion, while sales rose 3% in constant currencies.
Core net income of $3.2 billion was down 4% in dollar terms but up 8% at constant currencies. Core operating profit of $3.65 billion also beat expectations.
Novartis shares gained more than 2% in early trade.
Zuercher Kantonalbank analyst Michael Nawrath, who rates the stock overweight, called the overall picture slightly positive.
"What is important is the impact of the new structure, with a core EBIT margin of 30.6% versus 26.1% at the old Novartis. This is where the big advantage of the restructuring is apparent," he said in a research note.
Chief Executive Joseph Jimenez said he was on the lookout for "bolt-on" acquisitions worth $2-5 billion.
Novartis said the strong dollar -- its reporting currency -- would shave 10% off 2015 sales and 13% from core operating income if April exchange rates continue for the rest of the year, slightly more negative than its January outlook.
It maintained its 2015 guidance of mid-single-digit sales growth in 2015 and high-single-digit growth in core operating income after stripping out currency fluctuations.
Cross-town rival Roche on Wednesday beat expectations for the first quarter with a 3% rise in sales on a strong showing from its cancer drugs and a recently launched treatment for a deadly lung disorder.
