Depressed demand from beleaguered emerging markets would not play a central role in sales growth, he told Reuters in an interview, adding it was a strong Swiss franc above all that made group sales ease three percent in 1998's fourth quarter.

Swiss pharmaceuticals and nutrition group Novartis AG reported a below-expectation two per cent rise in 1998 sales on Thursday but reiterated its forecast for a sharply higher full-year net profit.

"Novartis is now reaping the major cost savings from merger synergies," the company said in its sales statement. "For the full year, an increase in operating margin is expected. In addition, net financial income will reflect the impressive investment performance. As a result, a marked improvement of net income is foreseen," it added.

The companyreported that sales for the full year rose to 31.7 billion francs ($22.86 billion) from 31.2 billion for 1997. The sales were two per cent higher in Swiss francs and five per cent higher in local currencies.

Equity analysts had forecast an increase of between three and five per cent.

Fourth quarter sales declined by three per cent in Swiss francs to 7.1 billion as compared to 7,3 billion during the same period of 1997.

Sales of pharmaceuticals, the company's largest business, were up three per cent currencies for the full year 1998 to overall, sales for the health care division, which includes pharmaceuticals, were up three per cent.

Novartis said the key growth drivers in pharmaceuticals were its Aredia cancer Drug, with a sales increase of 61 per cent, the acromegaly drug Sandostatin, with a 38 per cent rise, hypertension drug Cibacen, up 27 per cent, asthma medication Foradil, up 27 per cent. Agribusiness sales and consumer health was up one per cent to 5.3 billion.

But both agribusiness andconsumer health division sales declined.

Fourth quarter sales in the agribusiness division includes Crop Protection, Seeds and Animal Health, were down four per cent to 1.5 billion francs.

Consumer health sales, comprising nutrition and self-medication, were down five per cent to 1.3 billion francs. "For health care we expect that growth should continue to be dynamic because we have major product launches," he said, citing Exelon for Alzheimer's disease and Comtan for Parkinson's disease. Other existing products like Diovan, a hypertension drug, were experiencing dynamic growth.

"Based on what we have and what is coming to the market we would expect to show good growth rates in health care," Breu said.

He noted that health care sales rose seven per cent in local currencies last year. "We would expect that this growth should continue into 1999 given the pattern of product launches we have scheduled and given the performance of some key products that are already on the market."

Health care sales rosefive per cent in local currencies in the fourth quarter of 1998 but were flat in Swiss franc terms. Group sales fell three percent in francs in the quarter and were up two per cent in local currencies.

"First of all clearly you have the currency impact, which was fairly significant in the fourth quarter," Breu explained. "When you look at performance, the important number to concentrate on is really local-currency growth...and there you see that even if the fourth quarter for some of our sectors was relatively weak, the underlying growth trend is quite good.

"You always have a bit of erratic behaviour from one quarter to the next, but what we see is that the underlying growth, in particular in the health care division, is quite good."

Breu noted "a bit of a slowdown" in the United States and in Brazil late last year, but played down the overall impact of the financial crisis in emerging markets. The Americas accounted for 47 per cent of sales in 1997, and this ratio held roughly steady in 1998, hesaid.

Latin America accounted for around nine per cent of sales and southeast Asia and Russia a combined six per cent.

"So overall you have a sales exposure of roughly 15 per cent. Obviously if you have a slowdown in these countries this has an impact on your growth rates, but it is not essential because the major markets for us are North America and Europe, and there we continue to expect good growth."