Novartis AG NVS reported first-quarter 2016 core earnings of $1.17 per share, missing the Zacks Consensus Estimate by a penny. Reported earnings were also down 12% from the year-ago quarter figure.Revenues declined 3% to $11.6 billion and fell short of the Zacks Consensus Estimate of $11.8 billion. At constant exchange rates, however, net sales inched up 1%.All growth rates mentioned below are on a year-on-year basis and at constant exchange rates.The Quarter in DetailNovartis operates under three divisions: Pharmaceuticals, Alcon and Generics (Sandoz).In the reported quarter, the Pharmaceuticals division recorded sales of $7.7 billion, up 1% driven by volume growth, partially offset by the impact of generic competition for Gleevec in the U.S. Moreover, generic competition faced by products transferred from Alcon, such as Patanol, hurt sales. Growth products – Gilenya, Tasigna, Tafinlar plus Mekinist, Jakavi, Revolade, Entresto, and Cosentyx – contributed $3.3 billion or 42% to the segment’s net sales. Oncology products acquired from GlaxoSmithKline GSK also boosted revenues.The Alcon division recorded sales of $1.4 billion, down 3%. This was due to lower Surgical equipments sales resulting from a slowdown in cataract equipment placement. Sales of vision care were impacted by weaker contribution from AirOptix and Dailies AquaComfort Plus in the U.S. Meanwhile, contact lens care was hit by competitive pressure as well as the continued market shift to daily disposable lenses. In a bid to revamp its beleaguered Alcon business, Novartis moved its ophthalmic pharmaceuticals business to the company’s pharmaceuticals division.Sales at the Sandoz division, Novartis’ generic arm, were $2.4 billion, up 4% as volume growth was offset by price erosion. Sales of Biopharmaceuticals surged 50% to $214 million driven by the launches of Glatopa in Jun 2015 and Zarxio in Sep 2015.2016 Outlook ReiteratedNovartis expects net sales to be broadly in line with the 2015 level. Generic competition is estimated to impact sales to the tune of $3.2 billion, higher than $2.2 billion lost in 2015. Gleevec is slated to lose patent protection in December in the EU. The drug has already lost exclusivity in Feb in the U.S. Further, unfavorable foreign exchange movement is projected to impact sales by 2% in the full year. Pharmaceutical sales are anticipated to be flat or decline slightly. Alcon is expected to grow in the low single digits, while Sandoz increases in the low-to-mid single digits.Pipeline UpdateNovartis’ pipeline progress in the first quarter was encouraging. The company received FDA approval for the use of Afinitor in advanced, progressive, nonfunctional neuroendocrine tumors of gastrointestinal or lung origin. Novartis also received approval for Revolade as first-in-class therapy for children aged one and above with chronic ITP in the EU. Another pipeline candidate, PKC412 (midostaurin), was granted Breakthrough Therapy designation by the FDA for newly diagnosed FLT3-mutated acute myeloid leukemia (AML). Novartis expects to submit marketing applications for PKC412 later in 2016.Sandoz continues to strengthen its biosimilars portfolio and pipeline. The European Medicines Agency (EMA) approved the subcutaneous administration of biosimilar Binocrit (epoetin alfa) in the nephrology indication. The EMA has also accepted Sandoz's regulatory submission for biosimilar Neulasta, marking the fifth of 10 planned biosimilar filings through 2017.Meanwhile, the company received a setback when a phase IIb/III study evaluating BYM338 (bimagrumab) in sporadic inclusion body myositis failed to meet the primary endpoint. Consequently, it is evaluating the complete dataset to determine the development of bimagrumabOur TakeNovartis’ first-quarter 2016 results were disappointing with both the top and bottom lines missing the respective Zacks Consensus Estimate. Generic competition and weakness in the Alcon business continued to impact results. However, the restructuring plan for Alcon is expected to result in savings of $1 billion through 2020. Also, the uptake of recently launched drugs such as Cosentyx was encouraging. Nevertheless, generic competition for Gleevec, Exelon Patch, Diovan and Exforge; increased spending for the launches of Entresto and Cosentyx; the restructuring plan for Alcon; and the impact of unfavorable currency fluctuations will continue to affect the company’s performance in the upcoming quarters. The company expects to continue suffering in the second quarter as well due to the integration of Glaxo’s oncology products and the full-quarter impact of generic erosion for Gleevec.Novartis currently carries a Zacks Rank #3 (Hold). Investors interested in the health care sector may consider Novo Nordisk A/S NVO and Johnson & Johnson JNJ. Both the stocks carry a Zacks Rank #2 (Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NOVO-NORDISK AS (NVO): Free Stock Analysis Report NOVARTIS AG-ADR (NVS): Free Stock Analysis Report JOHNSON & JOHNS (JNJ): Free Stock Analysis Report GLAXOSMITHKLINE (GSK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research