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The Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recently provided two positive opinions for new indications of Novartis AG’s (NVS - Analyst Report) type II diabetes treatments - Galvus (vildagliptin) and Eucreas (vildagliptin and metformin), along with other medications.

The first positive opinion was issued for Galvus plus insulin but with or without metformin for the treatment of patients diagnosed with type II diabetes, when diet, exercise and stable insulin dosage failed to control the glycemic level.

The positive opinion was based on data from a randomized, double-blind, 24-week study which showed that the 50 mg twice daily dosage of Galvus when administered along with insulin but with or without metformin resulted in a reduction in blood sugar levels compared to placebo.

The second positive opinion was for the use of Eucreas in combination with sulphonylurea when diet, exercise and the combined therapy failed to achieve adequate glycemic control.

Data from a study revealed that the 50 mg twice daily dosage of Eucreas in combination with sulphonylurea helped in the reduction of blood sugar levels in a higher number of patients compared to placebo (28.3% versus 5.6%).

According to the International Diabetes Federation, diabetes is considered one of the world's biggest challenges in the healthcare sector. It has already affected 366 million people worldwide and results in the death of one person every seven seconds.

We note that Novartis’ Galvus, already approved in more than 100 countries, recorded sales of $224 million in the second quarter of 2012, led by solid growth in Japan and in some parts of China, Latin America and Asia Pacific. Approval of Galvus and Eucreas for the additional indications in the EU would boost Novartis’ top-line further.

Already approved treatments for type II diabetes include Merck & Co.’s (MRK - Analyst Report) Januvia and Bristol-Myers Squibb Company’s (BMY - Analyst Report) Byetta and Bydureon.

Our Recommendation

Currently, we have a Neutral recommendation on Novartis. Novartis carries a Zacks #3 Rank (Hold rating) in the short run.

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