Novartis raised its full-year outlook on Wednesday after generic competition to its best-selling blood pressure pill was delayed, granting the Swiss drugmaker a temporary reprieve from patent losses.

The Basel-based firm lost its patent rights on Diovan in the United States last year and faced competition from a copycat version of its monotherapy from Ranbaxy Laboratories. But the lab has so far failed to get a green light for production from U.S. regulators.

"This is good news, but only short term, as the sales impact is merely delayed into 2014," said analyst David Kaegi of J.Safra Sarasin bank.

He said he was cheered by quarterly growth in underlying sales and operating income of 8% and 18% respectively, excluding the impact of generics.

Novartis said it expected full-year sales to grow at a low-single digit rate in constant currencies and core earnings to decline in the low single digits. It had previously guided for a mid-single digit drop in core earnings and flat net sales.

Second-quarter core earnings per share fell 4% to $1.30, undershooting the Reuters analyst consensus of $1.34. Net sales inched up 1% to $14.488 billion, compared to the average poll forecast of $14.314 billion.

Helping to compensate for patent losses was the strong performance of new drugs which contributed to one third of group net sales. Despite competition from rival products, sales of multiple sclerosis pill Gilenya shot up 65%, while revenues from cancer drug Afinitor jumped 76%.

The group was also pinning its hopes for growth in emerging markets, where sales in China rose 25% in constant currencies in the quarter.

"I would expect that Novartis could at least grow at the market levels as the access to healthcare in China continues, maybe not at 25% but definitely double digits," Chief Executive Joe Jimenez told reporters on a conference call.

He said Novartis had not been contacted by Chinese authorities regarding the investigation into British drugmaker GlaxoSmithKline on allegations of bribery.

Transition

The imminent arrival of Novartis' new chairman Joerg Reinhardt on Aug. 1 has prompted some analysts and investors to wonder whether the company may spin off some of its smaller units or sell its stake in Roche.

Jimenez said the company viewed its one-third voting stake in its rival as a strategic investment which had value beyond the market price.

Novartis said former chairman Daniel Vasella would be paid 2.7 million Swiss francs ($2.87 million) and be given shares worth roughly 2.2 million francs for advising the company since he stepped down in February.

The drugmaker was forced to scrap plans for a $78 million payoff after news of the package was criticized by politicians and investors. Outrage over the deal fed support for a national vote in March to impose strict controls on corporate pay.

Novartis has been rumoured as a potential bidder for Onyx Pharmaceuticals but Jimenez declined to comment. People familiar with the matter have told Reuters the drugmaker has decided not to pursue a deal.

Jimenez said the company was focusing on bolt-on buys in the range of $2-$5 billion.