Shares of Swiss pharmaceutical maker Novartis AG (NYSE: NVS) are lower in early morning trading after the company announced its fourth-quarter net profit fell by 45%, hurt by a restructuring charge and higher generic competition.

Novartis said net profit attributable to shareholders slipped to $904 million from $1.65 billion in the fourth quarter. Net profit from continuing operations also plunged 42% to $931 million from $1.6 billion in the same period of last year. The results were below analysts' average estimate of a profit of $1.33 billion. Included in the company's figures was a $444 million charge related to Novartis's cost-savings program pressured earnings.

However, Novartis results weren't really a surprise, as analysts had anticipated the fourth quarter would be weak for the drugmaker after the company announced in December that it would cut 2,500 jobs worldwide. Its decision came on worries over ongoing challenges from generics producers. Novartis declared that the job cuts brought the $444 million fourth-quarter charge, but it expects to save $1.6 billion in costs each year until 2010.

It looks like Novartis was right to be worried over competition, as the numbers prove that its performance was hit by weak sales in the United States, where the company's profit saw a decline of 15%. Sales in the states slipped to $3.07 billion, down from $3.62 billion last year.

The suspension of bowel drug Zelnorm over heart risks also put pressure on sales. The company did benefit from the weak U.S. dollar which helped lift net sales worldwide by 6% to $9.93 billion.

Full year figures were helped by the company's decision to sell its Gerber baby foods and Medical Nutrition units to Nestle SA for $5.2 billion. In all, the drugmaker posted a profit jump of 66% for the full year 2007, on profits of $11.95 billion.

Daniel Vasella, the company's Chief Executive, blames difficulties in the United States for Novartis weak results. Vasella believes "the weak performance is exclusively due to the U.S. market," as figures show that almost all other regions posted increased pharmaceuticals sales.

The company's stock had a pretty difficult 2007, with its shares losing more than 18%. To boost earnings per share, Novartis set in 2007 a new 10 billion Swiss franc ($9.09 billion) share-buyback program. The board also proposed to increase the dividend to 1.60 francs a share from 1.35 francs a share.

Looking ahead, the drugmaker shows a positive outlook and expects "another year of record net sales and earnings in 2008," for its continuing operations.

But for the moment the market doesn't share the same optimism as Novartis shares have been continuing its decline over the past days. About an hour into today's trading session the stock had sold off $1.67, down to $53.77.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.