Regulatory News:
Novartis (SIX: NOVN) (NYSE:NVS):
Key figures
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Q3 2012
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Q3 2011
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% change
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9M 2012
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9M 2011
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% change
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USD m
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USD m
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USD
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cc
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USD m
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USD m
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USD
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cc
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Net sales
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13 807
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14 843
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-7
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-2
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41 845
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43 785
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-4
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-1
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Operating income
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3 027
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2 951
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3
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5
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9 030
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9 681
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-7
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-4
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Net income
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2 476
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2 488
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0
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2
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7 536
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8 035
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-6
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-2
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EPS (USD)
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1.01
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1.02
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-1
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2
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3.09
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3.34
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-7
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-4
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Free cash flow1
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3 503
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3 675
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-5
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7 870
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8 594
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-8
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Core1
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Operating income
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3 889
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4 112
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-5
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-3
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11 486
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12 359
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-7
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-4
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Net income
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3 260
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3 539
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-8
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-6
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9 709
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10 479
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-7
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-4
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EPS (USD)
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1.34
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1.45
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-8
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-6
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3.98
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4.34
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-8
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-5
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1 Core results and free cash flow are non-IFRS measures. An
explanation of these non-IFRS measures and reconciliation tables can be
found beginning on page 44 of the Interim Financial Report, together
with the additional data listed in the index below. These are available
on our website at http://www.novartis.com/investors/financial-results/quarterly-results-q3-2012.shtml.
All
product names appearing in italics are trademarks owned by or licensed
to Novartis Group Companies.
Commenting on the results, Joseph Jimenez, CEO of Novartis, said:
"While Novartis net sales were impacted by the patent expiration of Diovan
and a down quarter in Sandoz and Consumer Health, our launch brands
performed well and now represent 29% of Group sales. Pharmaceuticals had
another solid quarter. Our excellent record on innovation continues with
new approvals for innovative products like Afinitor in advanced
breast cancer, the recent EU filing of QVA149 in COPD and encouraging
news in heart failure. I am confident that this improves the long-term
growth prospects of the business.”
GROUP REVIEW
Third quarter
Pharmaceuticals well-positioned to defend against generic competition
Group net sales reached USD 13.8 billion (-7%, -2% cc) in the third
quarter. Currency had a negative impact of 5 percentage points as a
result of the strengthening of the dollar against most major currencies.
As the Group begins to face generic competition to Diovan in the
US, the continuing rejuvenation of our portfolio leaves us
well-positioned to emerge from its impact. Products launched since 2007,
which include Lucentis, Gilenya, Afinitor and Tasigna,
continued to perform strongly. These recently launched products
contributed USD 4.0 billion or 29% of Group net sales, up from 25% a
year ago.
Pharmaceuticals had another quarter of good underlying growth despite
the impact of generics. Net sales were USD 7.8 billion (-5%, 0% cc),
with strong volume growth of 8 percentage points absorbing the negative
effect of generics entries (-7 percentage points) and price (-1
percentage point). Products launched since 2007 generated USD 2.8
billion of net sales, 36% of total sales, growing 24% in constant
currencies over the same period last year.
On September 21, 2012, Diovan lost exclusivity in the US, and in
line with normal practice, the product returns provision was increased
to reflect limited expectations of future sales. Diovan is sold
as a mono-substance (Diovan) and a combination product (Diovan
HCT). With respect to Diovan, no generic competitor has yet
been approved by the FDA. The FDA position has been challenged, and
generic competition could come at any time. Diovan HCT is facing
competition from a single generic competitor holding 180-day exclusivity
and from Sandoz with an authorized generic. In line with normal
cost-plus intra-Group pricing policies, most of the margin from the
authorized generic is attributed to Sandoz.
Alcon net sales were USD 2.5 billion (-1%, +3% cc) in the third quarter.
The Surgical franchise (-2%, +3% cc) delivered modest sales growth in
constant currencies, impacted by slowdown in procedures and competitive
pressure in EU intraocular lens business against a strong previous-year
quarter. Ophthalmic Pharmaceuticals sales growth (-2%, +3% cc) was
suppressed by generic prostaglandin competition on Travatan in
the US and lower sales of non-promoted brands. Vision Care (0%, +4% cc)
benefitted from robust contact lens sales growth in the US and Japan, a
strong uptake of Dailies Total 1 lenses in Europe and
the recovery of the lens care solution business.
Sandoz net sales declined 13% (-6% cc) to USD 2.0 billion. Fougera, the
recently acquired dermatology business, contributed 2 percentage points
of growth from the inclusion of approximately one month of sales.
Excluding Fougera, volume declined by 2 percentage points and price had
a negative impact of 6 percentage points. The decline was primarily the
result of lower enoxaparin sales in the US from stronger price
competition, partly offset by strong double-digit sales growth in
Western Europe, Asia, Latin America, Russia and biosimilars.
Vaccines and Diagnostics net sales were down 11% (-8% cc) to USD 582
million. The sales decline was driven by lower northern hemisphere flu
sales and shipment delays from one of our manufacturing sites.
Consumer Health, which includes OTC and Animal Health, declined 22%
(-16% cc) to USD 938 million, impacted by the continuing absence of
shipments from the Lincoln, Nebraska manufacturing site. Select OTC
products (Excedrin, Lamisil and Triaminic)
are
being produced at third-party manufacturers and first shipments have
been made to
retail customers in the month of October.
Pharmaceuticals and Alcon delivered operating leverage
Group operating income was up 3% (+5% cc) to USD 3.0 billion, driven by
Pharmaceuticals and Alcon. Currency reduced growth by 2 percentage
points.
Core operating income, which excludes exceptional items and amortization
of intangible assets, decreased by 5% (-3% cc) to USD 3.9 billion. The
adjustments made to Group operating income to arrive at core operating
income amounted to a net expense of USD 862 million (2011 net expense of
USD 1.2 billion). Core operating income margin in constant currencies
decreased by 0.4 percentage points despite a positive contribution from
Pharmaceuticals of 0.9 percentage points and Alcon of 0.3 percentage
points. Together with a positive currency impact of 0.9 percentage
points, this resulted in a net increase in core operating income margin
of 0.5 percentage points to 28.2% of net sales.
Pharmaceuticals core operating income increased 3% (+6% cc) to USD 2.6
billion and delivered operating leverage in the third quarter. Core
operating income margin in constant currencies increased by 1.7
percentage points and has now increased quarter-on-quarter for the last
10 quarters. An additional positive currency impact of 1 percentage
point resulted in a core operating income margin of 33.4%.
Alcon core operating income of USD 923 million increased by 2% (+6% cc)
as a result of productivity gains and realization of post-integration
synergies. Core operating income margin in constant currencies increased
by 1.3 percentage points. An additional negative currency impact of 0.3
percentage points resulted in a core operating income margin of 37.5% of
net sales.
Sandoz core operating income declined 20% (-19% cc) to USD 358 million.
Core operating income margin in constant currencies decreased by 2.7
percentage points as a result of lower sales, higher quality and
manufacturing costs and the continued investment in our biosimilars and
respiratory pipeline. A favorable currency impact of 1.1 percentage
points resulted in a core operating income margin of 17.5% of net sales.
Vaccines and Diagnostics core operating income for the period was USD 34
million compared to USD 147 million for the same period in 2011.
Consumer Health core operating income declined to USD 77 million and
core operating income margin declined by 11 percentage points in
constant currencies, impacted by absence of shipments from the Lincoln
site.
Group net income was unchanged from 2011 at USD 2.5 billion as the
increase in operating income was offset by lower income from associated
companies and higher net financial expenses. EPS of USD 1.01 was
marginally lower than the prior-year figure of USD 1.02.
Group core net income was down 8% (-6% cc) as the core operating income
decline was increased by lower income from associated companies. Core
EPS declined 8% (-6% cc) to USD 1.34.
Free cash flow was USD 3.5 billion, declining 5% from previous year,
primarily as a result of lower cash flow from operating activities.
Nine months
Group net sales hold steady as recently launched products absorb
patent expiries
Group net sales amounted to USD 41.8 billion (-4%, -1% cc). Currency
depressed results by 3 percentage points.
Across the Group’s diversified healthcare portfolio, products launched
since 2007 continued to perform strongly. These recently launched
products now comprise USD 11.9 billion or 29% of Group net sales, up
from 24% a year ago.
Pharmaceuticals net sales were USD 23.9 billion (-1%, +2% cc), driven by
8 percentage points of volume growth partly offset by the negative
impact of generics entries (-5 percentage points) and pricing (-1
percentage point). Recently launched products contributed USD 8.3
billion of net sales and represented 35% of total net sales for the
division compared to 28% in the 2011 period.
Alcon net sales expanded 2% (+5% cc) to USD 7.6 billion in the first
nine months, driven by constant currency sales growth in Surgical (+3%,
+7% cc), Ophthalmic Pharmaceuticals (+1%, +4% cc) and Vision Care (0%,
+3% cc). For Surgical, strong growth in advanced technology intraocular
lenses, procedural volume in Emerging Growth Markets, and equipment
sales in the refractive and vitreoretinal categories were key
contributors to growth. The Ophthalmic Pharmaceuticals franchise
benefited from growth of the Systane (dry eye), Nevanac (inflammation)
and Durezol (inflammation) brands, as well as strong growth in
combination glaucoma brands DuoTrav and Azarga. Vision
Care maintained its solid sales performance with good growth in Air
Optix and a strong uptake of Dailies Total 1 lenses in
Europe, partially offset by flat sales in the lens care solution
business.
Sandoz net sales decreased in the first nine months by 12% (-7% cc) to
USD 6.3 billion, as a result of declines in retail generics and
biosimilars sales in the US (-23% cc) and Germany (-7% cc), partly
offset by double-digit sales growth in Western Europe (+10% cc), Asia
(+21% cc) and biosimilars (+42% cc). Total volume declined by 1
percentage point and price erosion was 7 percentage points mainly due to
increased competition on US sales (primarily enoxaparin, USD 366 million
in 2012 compared to USD 790 million) and lower sales in Germany. Fougera
contributed 1 additional percentage point of growth.
Vaccines and Diagnostics net sales declined 7% (-4% cc) to USD 1.2
billion, impacted by lower northern hemisphere flu sales and shipment
delays from one of our manufacturing sites. Consumer Health net sales
declined 22% (-17% cc) to USD 2.8 billion mainly due to the absence of
shipments from Lincoln.
Pharmaceuticals and Alcon delivered operating leverage
Group operating income was down 7% (-4% cc) to USD 9.0 billion, as
positive contributions from Pharmaceuticals and Alcon were more than
offset by the other divisions. Currency contributed 3 percentage points
to the decline.
Group core operating income decreased by 7% (-4% cc) to USD 11.5
billion. The adjustments made to Group operating income to arrive at
core operating income amounted to a net expense of USD 2.5 billion (2011
net expense of USD 2.7 billion). Core operating income margin in
constant currencies decreased by 1.1 percentage points. Together with a
positive currency impact of 0.3 percentage points, this resulted in a
net decrease in core operating income margin of 0.8 percentage points to
27.4% of net sales. Pharmaceuticals (+0.6 percentage points cc) and
Alcon (+0.2 percentage points cc) contributed positively to the
operating income margin.
Pharmaceuticals core operating income grew 2% (+6% cc) to USD 7.9
billion. In constant currencies, core operating income margin improved
by 0.9 percentage points. Currency movements positively impacted core
operating income margin by 0.3 percentage points resulting in a core
operating income margin of 33.2% of net sales.
Alcon core operating income of USD 2.8 billion increased by 4% (+7% cc).
Core operating income margin in constant currencies increased by 0.8
percentage points. Currency was neutral, leading to a core operating
income margin of 36.6% of net sales.
Sandoz core operating income decreased by 28% (-27% cc) to USD 1.1
billion. Core operating income margin in constant currencies decreased
by 4.6 percentage points as a result of lower sales and higher
investments in quality assurance, manufacturing and development of
biosimilars and respiratory products. A favorable currency impact of 0.7
percentage points resulted in a core operating income margin of 17.2% of
net sales.
Vaccines and Diagnostics core operating loss for the period was USD 174
million compared to an income of USD 34 million for the same period in
2011. Consumer Health core operating income declined to USD 136 million
and core operating income margin decreased by 14.4 percentage points
(cc) due to the absence of shipments from the Lincoln.
Group net income declined 6% (-2% cc) to USD 7.5 billion following the
decline in operating income and was only partially offset by the impact
of lower tax rates. EPS declined by 7% (-4% cc) to USD 3.09.
Core net income was down 7% (-4% cc) to USD 9.7 billion, in line with
the decrease in core operating income. Core EPS declined 8% (-5% cc) to
USD 3.98.
Free cash flow reached USD 7.9 billion in nine months, down 8% versus
the previous year principally due to higher capital expenditures and
lower divestment proceeds.
Executing on innovation, growth and productivity
Novartis is the only healthcare company globally with leading positions
in pharmaceuticals, eye care, generics, vaccines and diagnostics,
over-the-counter medicines and animal health. To maintain our
competitive positioning across these growing segments of the healthcare
industry, we place a strong focus on innovating to meet the evolving
needs of patients around the world, growing our presence in new and
emerging markets, and enhancing our productivity to invest for the
future and increase returns to shareholders. In each of these areas –
innovation, growth and productivity – we made solid progress this year.
Innovation: Major regulatory advances in
Oncology and Respiratory
Oncology portfolio strengthened with approvals for Afinitor
and Jakavi
Both the FDA and the EMA approved Afinitor (everolimus) in
combination with exemestane as a treatment for postmenopausal women with
hormone receptor-positive, HER2/neu negative advanced breast cancer,
which affects approximately 220,000 women globally each year. These
approvals, which represent the first major advance in the treatment of
this disease in 15 years, make Afinitor the first and so far only
treatment that can boost the effectiveness of endocrine therapy,
significantly extending the time women with advanced breast cancer can
live without tumor progression.
Everolimus also received a positive opinion from the EMA’s Committee for
Medicinal Products for Human Use (CHMP) under the brand name Votubia
for the treatment of patients with non-cancerous kidney tumors
associated with tuberous sclerosis complex (TSC). This indication, which
was approved in the US in the second quarter, was based on the Phase III
EXIST-2 trial, which found that 42% of patients on everolimus
experienced a tumor response versus 0% of patients in the placebo arm.
In addition, Jakavi (ruxolitinib) received EU approval in the
third quarter, making it the first targeted treatment of its kind for
European patients with myelofibrosis, a life-threatening blood cancer.
The approval was based on positive results from the most extensive
clinical trial program in myelofibrosis to date, which showed that Jakavi
reduces spleen size and symptoms of the disease by targeting its
underlying mechanism.
COPD portfolio advanced with QVA149 EU filing and Seebri Breezhaler
EU, Japan approvals
Seebri Breezhaler (glycopyrronium bromide) received approval in
the EU, Japan and Canada as a once-daily inhaled maintenance therapy for
chronic obstructive pulmonary disease (COPD), which affects an estimated
210 million people worldwide. Seebri Breezhaler is the second
inhaled treatment in the Novartis COPD portfolio delivered using the
low-resistance Breezhaler device.
In addition, results from the investigational QVA149 IGNITE Phase III
clinical trial program further demonstrated the potential of the
Novartis portfolio to provide a full range of innovative treatment
options in COPD. Five studies in the program – comprising 10 studies in
total with more than 7,000 patients across 42 countries – all met their
primary endpoints and showed that QVA149 significantly improved lung
function compared to other COPD therapies like tiotropium, indacaterol,
salmeterol/fluticasone and glycopyrronium bromide. Three additional
studies are expected to be completed by the end of 2012. A regulatory
filing of QVA149 has been achieved in Europe and a US filing is expected
by the end of 2014.
Heart failure portfolio progressed with new data on two pipeline
products
Results from the Phase III RELAX-AHF study showed that investigational
RLX030 (serelaxin) reduces the number of deaths in patients with acute
heart failure (AHF), which has a higher mortality rate than most other
cardiovascular diseases. The study reached statistical significance in
one of its two primary endpoints measuring the reduction in shortness of
breath, the most common symptom of AHF. RLX030 was well tolerated in the
study. The results are being discussed with health authorities
worldwide, and will be presented at the American Heart Association
congress in November.
Results from the Phase II PARAMOUNT study showed that the
investigational compound LCZ696 significantly reduces a key predictor of
morbidity and mortality in patients with heart failure with preserved
ejection fraction (HF-PEF), a condition that afflicts up to half of the
20 million Europeans and Americans diagnosed with heart failure. LCZ696
is the first in a new class of medicines that work by inhibiting an
enzyme in order to promote the body's protective mechanisms and blocking
receptors involved in the narrowing of blood vessels. With its novel
approach, LCZ696 could significantly benefit people living with HF-PEF.
Biosimilar pipeline continues to progress well, including biosimilar
rituximab Phase III program
Sandoz initiated a Phase III clinical trial in the US for epoetin alfa,
which we market under the brand name Binocrit in the EU for
oncology and nephrology indications, to support registration in the US.
It is estimated that more than 600,000 patients in the US and 550,000
patients in Europe are treated for anemia with epoetin alfa and similar
medicines that regulate the formation of red blood cells. The Sandoz
follicular lymphoma Phase III clinical trial for biosimilar monoclonal
antibody rituximab (biosimilar Rituxan®/Mabthera®) continues to progress
well.
Growth: Continued contribution from recently
launched products
Recently launched products continued to perform strongly
Products launched since 2007 continued to drive growth across the
portfolio. In the third quarter, these products contributed USD 4.0
billion or 29% of Group net sales, up from 25% a year ago. In the first
nine months, they contributed USD 11.9 billion or 29% of Group net
sales, up from 24% in the year-ago period. Highlights include:
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Gilenya, our breakthrough multiple sclerosis treatment,
continued to show strong growth, with sales of USD 316 million (+116%
cc) in the third quarter and USD 846 million (+199% cc) in the first
nine months.
-
Lucentis (USD 593 million in the third quarter, +23% cc; USD
1.8 billion in the first nine months, +24% cc), also grew strongly in
the third quarter.
-
Tasigna (USD 261 million in the third quarter, +49% cc; USD 707
million in the first nine months, +44% cc) continued to gain market
segment share in both the first-line and second-line settings. It now
represents 24% of our CML franchise, up from 22% in the previous
quarter.
-
Afinitor (USD 206 million in the third quarter, +82% cc; USD
524 million in the first nine months, +75% cc) accelerated its strong
growth trajectory following the approval in breast cancer.
Continued strong performance in Emerging Growth Markets
Net sales in our Emerging Growth Markets – which include all markets
except the US, Canada, Western Europe, Australia, New Zealand and Japan
– grew 6% (cc) in the third quarter, contributing USD 3.4 billion or 25%
to Group net sales. The key growth driver was China with 22% (cc) growth
in the third quarter. Pharmaceuticals sales in Emerging Growth Markets
grew 8% (cc) in the quarter.
Productivity: Continued focus on procurement,
manufacturing and Marketing & Sales
A consistent focus on enhancing productivity and simplifying processes
across Group operations to improve profitability and support
reinvestment in the business is critical to our long-term strategy,
helping us to sustain growth through patent expirations and continue to
deliver high quality, innovative medicines for patients in need. Ongoing
productivity initiatives relate to procurement and resource allocation
across the portfolio, the manufacturing network and supporting
infrastructure and the integration and synergy program in Alcon.
Taken together, our productivity initiatives generated gross savings
that contributed more than USD 750 million to operating income margin in
the third quarter and leaves us on track to exceed on the annual
productivity target of 3.5 to 4.0 percent of sales. These productivity
initiatives which are highlighted below enabled us to continue to invest
behind growth opportunities and absorb the impact of generic competition.
-
Procurement is an important source of savings. By leveraging our
scale, implementing global category management and creating country
Centers of Excellence in key markets, we generated savings of
approximately USD 350 million in the third quarter and USD 900 million
in the nine months.
-
We continued to optimize our manufacturing footprint in the third
quarter and successfully concluded the divestment of an Animal Health
site in UK, bringing the total number of production sites that are in
the process of being restructured or divested to 15. We recorded
charges of USD 16 million in the third quarter and USD 49 million
cumulatively in the first nine months
-
In Marketing & Sales, we continued to achieve efficiency gains by
optimizing our spend as part of a broader effort within Novartis to
reallocate resources geographically while simplifying processes across
the organization. In Pharmaceuticals, Marketing & Sales spend in
constant currencies decreased as a percentage of net sales to 26.0% in
the third quarter of 2012 from 26.4% in 2011, and to 26.0% from 26.9%
for the nine months.
-
Alcon continued to deliver operating leverage through productivity
initiatives and realization of post-integration synergies which
amounted to USD 78 million in the third quarter and USD 216 million
for the nine months
Quality: First Consumer Health products
shipped; remediation in Sandoz manufacturing sites on track
While Consumer Health continues to make progress in the remediation of
quality issues at the Lincoln facility, the restart of commercial
production is taking longer than originally anticipated.
As part of our restart plan to meet the needs of patients and customers,
select OTC products (Excedrin, Lamisil and Triaminic)
are being produced at third-party manufacturers and first shipments
have been made to
retail customers in the month of October. These
products will be available to consumers in retail stores across the US
during the fourth quarter. It is unlikely that we will begin shipments
from Lincoln in the fourth quarter of the year.
Sandoz continued to make good progress on the remediation of quality
issues at three North American sites following an FDA warning letter,
and the division is on track to meet all of its remediation commitments.
While Sandoz initially slowed down production to implement remediation
activities, delivery performance across all sites has improved, and
further improvements in service levels and output are expected as
remediation progresses. Routine audits continue to be undertaken by
health authorities across the Sandoz network without significant issue.
Free cash flow
The sustainability of our strategy lies with the generation of cash flow
that provides the resources for reinvestment and returns to
shareholders. Cash flow is driven by a continued focus on the cash
conversion cycle and operational cash flow improvements.
The free cash flow of USD 7.9 billion was USD 0.7 billion lower than in
the prior-year period mainly on account of higher investments in
property, plant and equipment and lower divestment proceeds which
amounted to USD 0.4 billion in the current period compared to USD 0.7
billion in the year-ago period.
Capital structure and net debt
Strong cash flows and a sound capital structure have allowed Novartis to
focus on driving innovation, growth and productivity across its
diversified healthcare portfolio while keeping its double-A rating as a
reflection of financial strength. Retaining a good balance between
attractive shareholder returns, investment in the business and a strong
capital structure will remain a priority in the future.
In September, a USD 2.0 billion US dollar bond offering was completed in
the US. Two tranches were issued, one 10-year bond of USD 1.5 billion
with a coupon of 2.4% and the other a USD 0.5 billion 30-year bond with
a coupon of 3.7%.
As of September 30, 2012, net debt stood at USD 15.0 billion, compared
to USD 15.2 billion at December 31, 2011. In the third quarter, net debt
was reduced by USD 1.5 billion from USD 16.5 billion at June 30, 2012.
The long-term credit rating for the company continues to be double-A
(Moody’s Aa2; Standard & Poor’s AA-; Fitch AA).
2012 Group outlook
Barring unforeseen events
Our 2012 performance is on track to deliver: Group constant currency net
sales are expected to be in line with 2011; Group core operating income
margin in constant currencies are expected to be slightly below 2011.
During the third quarter, the US dollar strengthened against most
currencies. As a result, if September average exchange rates prevail for
the remainder of the year, there would be a negative impact of
approximately 3-4% on sales and approximately 2-3% on operating income
for the full year. This is a slightly lesser impact than expected in the
second quarter.
Divisional Performance
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Pharmaceuticals
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Q3 2012
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Q3 2011
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% change
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9M 2012
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9M 2011
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USD m
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USD
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cc
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Net sales
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7 783
|
|
|
|
8 159
|
|
|
|
-5
|
|
|
|
0
|
|
|
|
23 877
|
|
|
|
24 195
|
|
|
|
-1
|
|
|
|
2
|
|
Operating income
|
|
|
|
2 531
|
|
|
|
2 219
|
|
|
|
14
|
|
|
|
17
|
|
|
|
7 674
|
|
|
|
7 471
|
|
|
|
3
|
|
|
|
6
|
|
As % of net sales
|
|
|
|
32.5
|
|
|
|
27.2
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
30.9
|
|
|
|
|
|
|
|
|
|
Core operating income
|
|
|
|
2 597
|
|
|
|
2 510
|
|
|
|
3
|
|
|
|
6
|
|
|
|
7 932
|
|
|
|
7 751
|
|
|
|
2
|
|
|
|
6
|
|
As % of net sales
|
|
|
|
33.4
|
|
|
|
30.8
|
|
|
|
|
|
|
|
|
|
|
|
33.2
|
|
|
|
32.0
|
|
|
|
|
|
|
|
|
|
|
|
Alcon
|
|
|
|
|
|
Q3 2012
|
|
|
|
Q3 2011
|
|
|
|
% change
|
|
|
|
9M 2012
|
|
|
|
9M 2011
|
|
|
|
% change
|
|
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
Net sales
|
|
|
|
2 460
|
|
|
|
2 492
|
|
|
|
-1
|
|
|
|
3
|
|
|
|
7 649
|
|
|
|
7 533
|
|
|
|
2
|
|
|
|
5
|
|
Operating income
|
|
|
|
360
|
|
|
|
341
|
|
|
|
6
|
|
|
|
17
|
|
|
|
1 142
|
|
|
|
1 236
|
|
|
|
-8
|
|
|
|
-1
|
|
As % of net sales
|
|
|
|
14.6
|
|
|
|
13.7
|
|
|
|
|
|
|
|
|
|
|
|
14.9
|
|
|
|
16.4
|
|
|
|
|
|
|
|
|
|
Core operating income
|
|
|
|
923
|
|
|
|
909
|
|
|
|
2
|
|
|
|
6
|
|
|
|
2 799
|
|
|
|
2 696
|
|
|
|
4
|
|
|
|
7
|
|
As % of net sales
|
|
|
|
37.5
|
|
|
|
36.5
|
|
|
|
|
|
|
|
|
|
|
|
36.6
|
|
|
|
35.8
|
|
|
|
|
|
|
|
|
|
|
|
Sandoz
|
|
|
|
|
|
Q3 2012
|
|
|
|
Q3 2011
|
|
|
|
% change
|
|
|
|
9M 2012
|
|
|
|
9M 2011
|
|
|
|
% change
|
|
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
Net sales
|
|
|
|
2 044
|
|
|
|
2 340
|
|
|
|
-13
|
|
|
|
-6
|
|
|
|
6 315
|
|
|
|
7 179
|
|
|
|
-12
|
|
|
|
-7
|
|
Operating income
|
|
|
|
250
|
|
|
|
333
|
|
|
|
-25
|
|
|
|
-27
|
|
|
|
807
|
|
|
|
1 028
|
|
|
|
-21
|
|
|
|
-22
|
|
As % of net sales
|
|
|
|
12.2
|
|
|
|
14.2
|
|
|
|
|
|
|
|
|
|
|
|
12.8
|
|
|
|
14.3
|
|
|
|
|
|
|
|
|
|
Core operating income
|
|
|
|
358
|
|
|
|
446
|
|
|
|
-20
|
|
|
|
-19
|
|
|
|
1 089
|
|
|
|
1 513
|
|
|
|
-28
|
|
|
|
-27
|
|
As % of net sales
|
|
|
|
17.5
|
|
|
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
17.2
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
Vaccines and Diagnostics
|
|
|
|
|
|
Q3 2012
|
|
|
|
Q3 2011
|
|
|
|
% change
|
|
|
|
9M 2012
|
|
|
|
9M 2011
|
|
|
|
% change
|
|
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
Net sales
|
|
|
|
582
|
|
|
|
655
|
|
|
|
-11
|
|
|
|
-8
|
|
|
|
1 230
|
|
|
|
1 325
|
|
|
|
-7
|
|
|
|
-4
|
|
Operating income/loss
|
|
|
|
-22
|
|
|
|
24
|
|
|
|
nm
|
|
|
|
nm
|
|
|
|
-291
|
|
|
|
-291
|
|
|
|
0
|
|
|
|
-9
|
|
As % of net sales
|
|
|
|
-3.8
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
-23.7
|
|
|
|
-22.0
|
|
|
|
|
|
|
|
|
|
Core operating income/loss
|
|
|
|
34
|
|
|
|
147
|
|
|
|
-77
|
|
|
|
-79
|
|
|
|
-174
|
|
|
|
34
|
|
|
|
nm
|
|
|
|
nm
|
|
As % of net sales
|
|
|
|
5.8
|
|
|
|
22.4
|
|
|
|
|
|
|
|
|
|
|
|
-14.1
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
nm – Not meaningful
|
|
|
|
Consumer Health
|
|
|
|
|
|
Q3 2012
|
|
|
|
Q3 2011
|
|
|
|
% change
|
|
|
|
9M 2012
|
|
|
|
9M 2011
|
|
|
|
% change
|
|
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
|
|
USD m
|
|
|
|
USD m
|
|
|
|
USD
|
|
|
|
cc
|
|
Net sales
|
|
|
|
938
|
|
|
|
1 197
|
|
|
|
-22
|
|
|
|
-16
|
|
|
|
2 774
|
|
|
|
3 553
|
|
|
|
-22
|
|
|
|
-17
|
|
Operating income
|
|
|
|
48
|
|
|
|
210
|
|
|
|
-77
|
|
|
|
-76
|
|
|
|
60
|
|
|
|
700
|
|
|
|
-91
|
|
|
|
-87
|
|
As % of net sales
|
|
|
|
5.1
|
|
|
|
17.5
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
|
19.7
|
|
|
|
|
|
|
|
|
|
Core operating income
|
|
|
|
77
|
|
|
|
228
|
|
|
|
-66
|
|
|
|
-65
|
|
|
|
136
|
|
|
|
707
|
|
|
|
-81
|
|
|
|
-77
|
|
As % of net sales
|
|
|
|
8.2
|
|
|
|
19.0
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
|
|
19.9
|
|
|
|
|
|
|
|
|
An interim financial report with the information listed in the index
below can be found on our website at http://www.novartis.com/investors/financial-results/quarterly-results-q3-2012.shtml.
Novartis Q3 and 9M 2012 Interim Financial
Report – Supplementary Data
|
INDEX
|
|
|
|
Page
|
|
|
|
|
GROUP AND DIVISIONAL OPERATING PERFORMANCE Q3 and 9M 2012
|
|
|
|
|
|
|
|
|
Group
|
|
|
|
2
|
|
|
|
|
Pharmaceuticals
|
|
|
|
6
|
|
|
|
|
Alcon
|
|
|
|
11
|
|
|
|
|
Sandoz
|
|
|
|
14
|
|
|
|
|
Vaccines and Diagnostics
|
|
|
|
16
|
|
|
|
|
Consumer Health
|
|
|
|
17
|
|
|
|
|
GROUP BALANCE SHEET AND CASH FLOW
|
|
|
|
19
|
|
|
|
|
INNOVATION REVIEW
|
|
|
|
21
|
|
|
|
|
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
Consolidated income statements
|
|
|
|
30
|
|
|
|
|
Consolidated statements of comprehensive income
|
|
|
|
32
|
|
|
|
|
Condensed consolidated balance sheets
|
|
|
|
33
|
|
|
|
|
Condensed consolidated changes in equity
|
|
|
|
34
|
|
|
|
|
Condensed consolidated cash flow statements
|
|
|
|
35
|
|
|
|
|
Notes to Condensed Interim Consolidated Financial Statements,
including update on legal proceedings
|
|
|
|
37
|
|
|
|
|
SUPPLEMENTARY INFORMATION
|
|
|
|
44
|
|
|
|
|
CORE RESULTS
|
|
|
|
|
|
|
|
|
Reconciliation from IFRS to core results
|
|
|
|
45
|
|
|
|
|
Group
|
|
|
|
47
|
|
|
|
|
Pharmaceuticals
|
|
|
|
49
|
|
|
|
|
Alcon
|
|
|
|
51
|
|
|
|
|
Sandoz
|
|
|
|
53
|
|
|
|
|
Vaccines and Diagnostics
|
|
|
|
55
|
|
|
|
|
Consumer Health
|
|
|
|
57
|
|
|
|
|
Corporate
|
|
|
|
59
|
|
|
|
|
ADDITIONAL INFORMATION
|
|
|
|
|
|
|
|
|
Condensed consolidated changes in net debt / Share information
|
|
|
|
60
|
|
|
|
|
Free cash flow
|
|
|
|
61
|
|
|
|
|
Net sales of top 20 Pharmaceuticals products
|
|
|
|
62
|
|
|
|
|
Pharmaceuticals Division by therapeutic area
|
|
|
|
64
|
|
|
|
|
Net sales by region
|
|
|
|
66
|
|
|
|
|
Income from associated companies
|
|
|
|
68
|
|
|
|
|
DISCLAIMER
|
|
|
|
69
|
|
|
|
|
|
Disclaimer
This press release contains forward-looking statements that can be
identified by terminology such as "on track,” "commitments,” "outlook,”
"unforeseen events,” "encouraging,” "confident,” "pipeline,”
"potential,” "expected,” "will,” "could,” "strategy,” "positive
opinion,” "committed,” "planned,” "filing,” "filed,” or similar
expressions, or by express or implied discussions regarding potential
new products, potential new indications for existing products, or
regarding potential future revenues from any such products; potential
outcomes of our efforts to improve the quality standards at any or all
of our manufacturing sites; or regarding potential future sales or
earnings of the Novartis Group or any of its divisions; or by
discussions of strategy, plans, expectations or intentions. You should
not place undue reliance on these statements. Such forward-looking
statements reflect the current views of the Group regarding future
events, and involve known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different from
any future results, performance or achievements expressed or implied by
such statements. There can be no guarantee that any new products will be
approved for sale in any market, or that any new indications will be
approved for any existing products in any market, or that any approvals
which are obtained will be obtained at any particular time, or that any
such products will achieve any particular revenue levels. Nor can there
be any guarantee that the Group will be successful in its efforts to
improve the quality standards at any or all of our manufacturing sites,
or that we will succeed in restoring or maintaining production at any
particular sites. Neither can there be any guarantee that the Group, or
any of its divisions, will achieve any particular financial results. In
particular, management's expectations could be affected by, among other
things, unexpected regulatory actions or delays or government regulation
generally; unexpected clinical trial results, including additional
analyses of existing clinical data or unexpected new clinical data; the
Group's ability to obtain or maintain patent or other proprietary
intellectual property protection, including the ultimate extent of the
impact on the Group of the loss of patent protection on key products
which commenced last year and will continue this year; unexpected
product manufacturing and quality issues, including the potential
outcomes of the Warning Letter issued to us with respect to three Sandoz
manufacturing facilities, and the potential outcome of efforts to
restart production of products formerly produced at the Consumer Health
manufacturing facility at Lincoln, Nebraska; government, industry, and
general public pricing pressures; uncertainties regarding actual or
potential legal proceedings, including, among others, actual or
potential product liability litigation, litigation and investigations
regarding sales and marketing practices, shareholder litigation,
government investigations and intellectual property disputes;
competition in general; uncertainties regarding the effects of the
ongoing global financial and economic crisis, including the financial
troubles in certain Eurozone countries; uncertainties regarding future
global exchange rates; uncertainties regarding future demand for our
products; uncertainties involved in the development of new healthcare
products; the impact that the foregoing factors could have on the values
attributed to the Group's assets and liabilities as recorded in the
Group's consolidated balance sheet; and other risks and factors referred
to in Novartis AG's current Form 20-F on file with the US Securities and
Exchange Commission. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated or expected. Novartis is providing the information
in this press release as of this date and does not undertake any
obligation to update any forward-looking statements as a result of new
information, future events or otherwise.
About Novartis
Novartis provides innovative healthcare solutions that address the
evolving needs of patients and societies. Headquartered in Basel,
Switzerland, Novartis offers a diversified portfolio to best meet these
needs: innovative medicines, eye care, cost-saving generic
pharmaceuticals, preventive vaccines and diagnostic tools,
over-the-counter and animal health products. Novartis is the only global
company with leading positions in these areas. In 2011, the Group’s
continuing operations achieved net sales of USD 58.6 billion, while
approximately USD 9.6 billion (USD 9.2 billion excluding impairment and
amortization charges) was invested in R&D throughout the Group. Novartis
Group companies employ approximately 127,000 full-time-equivalent
associates and operate in more than 140 countries around the world. For
more information, please visit http://www.novartis.com.
Important dates
November 8, 2012 Novartis R&D Investor Day,
Boston
January 23, 2013 Fourth quarter and full year results 2012
April
24, 2013 First quarter results 2013
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