Pharmaceuticals maker Novartis AG reported a 7 percent rise in first-quarter profits Monday on the back of a declining dollar and solid performance in its vaccines and diagnostics division.

Earnings rose to $2.32 billion (1.47 billion euros) in the three months ending March 31, compared with $2.17 billion in the same quarter last year.

Earnings per share increased by 11 percent to $1.02 (0.65 euros) from 92 cents in the first quarter of 2007.

Novartis benefited from the currency effect of a weakening dollar in relation to other major currencies. In local currencies, earnings appeared more modest or even declined.

Analysts said reported earnings beat expectations, a view shared by investors who pushed Novartis shares up 4.9 percent to 50.75 Swiss francs ($50.18) on the Zurich exchange.

The company has been hit by strong competition from generics, particularly in the United States. This, combined with the withdrawal of its bowel drug Zelnorm from the U.S. market, contributed to a 19 percent drop in U.S. sales.

Hypertension drug Diovan accounted for $1.4 billion (890 million euros) on overall drug sales of $6.26 billion (3.97 billion euros).

Group sales, including vaccines and diagnostics, generics and consumer health products reached $9.91 billion (6.28 billion euros) in the first quarter, a 9 percent rise in U.S. dollar terms but unchanged in local currencies compared with the previous year.

Novartis chairman and chief executive Daniel Vasella said he was pleased with the growth in vaccines and diagnostics, the company’s smallest division.

Vasella said Novartis was working on promising new treatments for cancer and multiple sclerosis, and that the $39 billion (24.7 billion euros) takeover of world-leading eye care company Alcon will help boost future growth.

“I am confident Novartis will once again achieve record sales and earnings in 2008 from continuing operations now fully focused on health care,” he said in a statement.