Novartis (NYSE: NVS) on Wednesday raised its profit and sales forecasts as generic competition for its Diovan blood-pressure medicine failed to materialize in the U.S.

Earnings will fall by a low-single-digit percentage this year, while sales will rise by similar amount, both excluding currency swings, the Basel, Switzerland-based company said in a statement today. Novartis previously forecast a mid-single-digit percentage decline in profit this year and had predicted sales would be in line with those of 2012.

[In other news, Novartis has slashed the golden parachute of its former chairman Daniel Vasella to just under $6 million from $78 million.]

Novartis, Europe’s biggest drugmaker, said it expects to lose $2.7 billion in sales to generic competition this year, 23 percent less than it previously forecast, as it continues to benefit from Ranbaxy Laboratories Ltd.’s failure to market a copycat version of the Diovan hypertension drug. Diovan sales in the U.S. amount to about $100 million a month, the company has said.

“Management looks like it is taking advantage of the Diovan windfall to invest in marketing and R&D,” Jeffrey Holford, an analyst at Jefferies International Ltd., said in a report to clients today. He recommends buying the shares.

Second-quarter core net income, which excludes some costs, fell 2 percent to $3.23 billion. Analysts predicted profit of $3.22 billion, according to the average of 11 estimates compiled by Bloomberg. Sales increased 1 percent to $14.5 billion, compared to the average estimate of $14.4 billion.

[Novartis operates a huge vaccine production plant as well as a research facility in Holly Springs, N.C.]

Ranbaxy Lag

“There are some challenges ahead, but I’m pleased to say we are delivering on our commitments for the full year,” Chief Executive Officer Joe Jimenez told reporters on a conference call.

Ranbaxy, which had the exclusive right to sell a generic version of Diovan in the U.S. beginning Sept. 21, failed to win regulatory approval to begin marketing the product. Novartis said it expects the delay in U.S. competition for Diovan to continue in the third quarter and that the benefit from that effect will reverse in 2014.

A spokesman for Ranbaxy, which is based in Gurgaon, India, didn’t immediately respond to a phone call seeking comment on Diovan.

Novartis rose 0.1 percent to 69.15 Swiss francs at 9:20 a.m. in Zurich. The stock had returned 25 percent this year through yesterday, compared with a 20 percent return for the Bloomberg Europe Pharmaceutical Index.

Always Thinking

As drugmakers such as Novartis try to revive sales growth, there is heightened interest in acquiring biotechnology companies. Onyx Pharmaceuticals Inc. this month rejected a bid from Amgen Inc., betting that potential suitors are willing to pay more.

“We are always thinking of bolt-on acquisitions,” Jimenez said on the call, defining them as deals of between $2 billion and $5 billion. Jimenez declined to comment on whether Novartis is interested in buying Onyx.

Novartis wouldn’t shy away from a bigger acquisition, Jimenez said, underlining the company’s financial discipline.

“I’m not ruling anything out,” Jimenez said. “Any acquisition would have to be a very good deal for Novartis shareholders.”

The Swiss company hasn’t been contacted by Chinese authorities amid regulatory inquiries in that market, Jimenez said. China is investigating at least four multinational drug makers as it widens its probe of GlaxoSmithKline Plc, according to a lawyer in Hong Kong whose firm advises companies on cross- border anti-corruption.

Sales in China grew by 25 percent compared to last year, and Jimenez said Novartis will at least match the growth of the market in that country in the future.