 |
|
|
|
|
Novartis delivers sustained strong performance in first nine months
of 2008 underpinned by accelerating growth in pharmaceuticals |
|
Corporate news announcement processed and transmitted by Hugin AS.
The issuer is solely responsible for the content of this
announcement.
----------------------------------------------------------------------
--------------
* Continuing healthcare operations build momentum in the first nine
months of 2008
* Net sales advance 12% (+4% in local currencies) to USD 31.4
billion, led by Pharmaceuticals and double-digit growth in
Vaccines and Diagnostics
* Operating income up 24% to USD 7.3 billion on the solid
business expansion, enhanced productivity and currency
benefits
* Net income up 19% to USD 6.7 billion, impacted by a higher tax
rate in 2008 and the start of financing costs for 25% Alcon
investment; Basic EPS up 22% to USD 2.93
* Strong pipeline: Three submissions receive accelerated US
priority review status amid plans for more than 10 major US/EU
regulatory submissions in 2008
* New Group structure and nominations strengthen top leadership
team
* Novartis on track to achieve another year of record sales and
earnings in 2008
Key figures - Continuing operations
Nine months to September 30
YTD 2008 YTD 2007 % change
% of % of
USD m net sales USD m net sales USD lc
Net sales 31 382 28 141 12 4
Operating income[1] 7 284 23.2 5 884 20.9 24
Net income[1] 6 656 21.2 5 609 19.9 19
Basic earnings per
share USD 2.93 USD 2.40 22
Third quarter
Q3 2008 Q3 2007 % change
% of % of
USD m net sales USD m net sales USD lc
Net sales 10 747 9 613 12 7
Operating income[1] 2 335 21.7 1 452 15.1 61
Net income[1] 2 082 19.4 1 574 16.4 32
Basic earnings per
share USD 0.92 USD 0.68 35
[1] Operating income and net income for the 2007 periods includes an
exceptional pre-tax incremental environmental provision charge of USD
590 million (USD 463 million after taxes) to cover worldwide
remediation plans
Basel, October 20, 2008 - Commenting on the results, Dr. Daniel
Vasella, Chairman and CEO of Novartis said: "Led by the enhanced
performance of Pharmaceuticals in all regions as well as solid sales
growth in Vaccines and Diagnostics and productivity gains in Consumer
Health, we have achieved strong results in the third quarter of 2008
despite significant volatility in the global economic environment. We
are rejuvenating our portfolio as recently launched pharmaceutical
products provided USD 2.1 billion in sales to date in 2008 and
several novel medicines have been recognized for their benefits to
patients with priority review status at the FDA. Also, with a strong
new leadership team, Novartis is positioning itself for continued
growth and success in a demanding environment. Despite the economic
uncertainty in the world markets, Novartis is on track for another
year of record results in 2008, continuing to build momentum by
focusing on innovation and performance."
OVERVIEW
Nine months to September 30
Accelerating Pharmaceuticals growth underpins the strong results in
continuing operations now focused solely on healthcare.
Group net sales rose 12% (+4% in local currencies) to USD 31.4
billion as higher sales volumes produced five percentage points and
positive currency translation contributed eight points. Price changes
reduced sales by one percentage point. Acquisitions had no impact.
Operating income advanced 24% to USD 7.3 billion thanks to the strong
business expansion, as well as productivity gains from Forward, the
Group-wide efficiency initiative that has provided resources for
investments in strategic initiatives such as stepping up innovation
and expanding in high-growth markets. The 2007 third quarter included
an exceptional charge of USD 590 million to increase corporate
environmental provisions. The operating income margin rose to 23.2%
of net sales from 20.9% in the year-ago period. Excluding the
environmental charge, operating income was up 13% in the first nine
months of 2008.
Net income rose 19% to USD 6.7 billion in the 2008 nine-month period.
Net income growth was slower than operating income growth due to an
unusually low tax rate in 2007 that reflected various one-time
factors. Also, weighing on the performance were financing costs since
July 2008 for the acquisition of an initial 25% stake in Alcon, the
world leader in eye care, from Nestlé S.A. Basic earnings per share
(EPS) advanced 22% to USD 2.93 on fewer outstanding shares.
Third quarter
Group net sales rose 12% (+7% lc) to USD 10.7 billion as
Pharmaceuticals grew ahead of expectations and the US business
returned to growth following challenges from products lost to generic
competition in 2007 and the Zelnorm suspension, which negatively
affected results in 2007. Higher sales volumes contributed eight
percentage points of growth, while positive currency translation
provided five percentage points. Price changes reduced sales by one
percentage point.
Operating income surged 61% to USD 2.3 billion on the solid business
expansion along with productivity gains in Pharmaceuticals, Sandoz
and Consumer Health as well as from the Forward initiative. The
operating income margin rose to 21.7% of net sales from 15.1% in the
2007 period. Excluding the year-ago exceptional corporate
environmental charge, operating income rose 14%, above net sales
expansion.
Net income rose 32% to USD 2.1 billion, at a slower pace than
operating income as a result of the negative impact of a 14% tax rate
in the 2008 quarter as compared to 2.3% in the 2007 period, which was
very low due to various one-time factors, as well as higher financing
costs due to the first stage of the Alcon acquisition in the 2008
third quarter. Basic earnings per share (EPS) rose 35% to USD 0.92.
Excluding the corporate environmental charge in 2007, net income in
the 2008 third quarter rose 2%.
Taking strategic actions for sustainable growth
In a rapidly changing and increasingly challenging environment,
Novartis is implementing longer-term strategic initiatives to deliver
sustainable and profitable growth. Key actions include strengthening
the Group's healthcare portfolio, driving innovation through novel
medicines, expanding in high-growth markets and improving efficiency.
Selectively strengthening healthcare portfolio
Novartis is strengthening its healthcare portfolio through targeted
acquisitions. On July 7, Novartis purchased a 25% stake in Alcon Inc.
(NYSE: ACL), the world's largest and most profitable eye care
company, from Nestlé S.A. for USD 10.4 billion in cash as part of an
agreement providing Novartis an opportunity to take majority
ownership. In an optional second step, Novartis can acquire, and
Nestlé can sell, the remaining 52% Alcon stake held by Nestlé between
January 2010 and July 2011 for up to USD 28 billion. Alcon offers a
range of pharmaceutical, surgical and consumer products for
conditions of the eye. Also in the third quarter, Novartis acquired
Speedel Holding Ltd. (SWX: SPPN), underpinning the direct renin
inhibition program led by Tekturna/Rasilez and follow-on programs.
Novartis holds 99.8% of Speedel's outstanding shares after a
mandatory public tender offer ended in September. The acquisition
price for the 90% not previously owned is estimated at CHF 933
million (or currently USD 850 million). Some of Speedel's development
projects are being integrated into Pharmaceuticals R&D operations.
Stepping up innovation
Across the Novartis healthcare portfolio, sustained investments in
innovation are delivering benefits for patients as pipeline projects
are progressing well. A number of important US and EU submissions are
being completed in 2008. Afinitor (RAD001), a breakthrough for
advanced kidney cancer, is among three compounds accepted by the FDA
for priority review. The meningococcal meningitis vaccine Menveo,
which has the potential to become the first of its kind to protect
from infancy to adulthood against four common serogroups in this
often-fatal bacterial disease, was submitted for US approval in
August. QAB149, a once-daily bronchodilator in development and a
cornerstone for future respiratory disease therapies, will also be
filed in 2008 for use against chronic obstructive pulmonary disease.
Expanding in high-growth markets
Novartis is expanding in high-growth emerging markets around the
world, particularly the seven priority countries of Brazil, China,
India, Mexico, Russia, South Korea and Turkey. The Group's net sales
for these priority markets rose 17% lc to USD 3.3 billion in the
first nine months, with all emerging markets worldwide now at about
25% of total net sales.
Improving organizational efficiency
The Forward initiative is advancing quickly to improve speed,
flexibility and productivity. More than 150 projects are underway
following the start of Forward in December 2007 with the aim of
streamlining decision-making and freeing up resources to support
future growth. Cost savings of USD 714 million have already been
delivered in 2008, exceeding the planned target of USD 670 million. A
pre-tax annual cost savings goal of USD 1.6 billion has been set for
2010 compared to 2007.
New commercial model for US General Medicines business
As the US market continues to diversify and become more complex, an
innovative new program called "Customer Centric Initiative" is
underway to implement a new regional US business model that will
better address customer needs and differences in local market
dynamics. Five new regional units will be created that have
cross-functional responsibility for the full primary care product
portfolio, replacing the nationally managed sales forces.
This new model is designed to be more effective at driving sales
growth by better meeting the diverse needs of multiple customers as
well as a more efficient deployment of resources. About 550
full-time equivalent positions in the US sales force organization are
planned to be reduced in a socially responsible manner, with more
than half of the reductions planned from not filling already vacant
positions. The new organization will start on January 1, 2009. A
one-time charge of approximately USD 20 million is planned to be
taken in the 2008 fourth quarter, with annual cost savings of USD 80
million anticipated from 2010.
New Novartis organizational structure and management changes
Novartis announced today the appointment of Joerg Reinhardt, PhD, as
the new Chief Operating Officer, reporting to Dr. Daniel Vasella,
Chairman and CEO. Replacing Joerg Reinhardt as Head of Vaccines and
Diagnostics is Andrin Oswald, MD, currently CEO of Speedel and Global
Head of Pharmaceutical Development Franchises. Furthermore, the Board
has appointed George Gunn, MRCVS, as the new Head of Consumer Health
in addition to his current role as Head of the Animal Health business
unit. He will replace Thomas Ebeling, who has decided to pursue his
career outside the company. Andreas Rummelt, PhD, will assume the
newly created position of Group Head of Quality Assurance and
Technical Operations and will remain a member of the Executive
Committee of Novartis. Jeff George, currently Head of Emerging
Markets in the Pharmaceuticals Division, will replace him as the new
Head of Sandoz. In addition to his role as Head of the Oncology
business unit in the Pharmaceuticals Division, David Epstein will
also lead a new unit focusing on innovative molecular diagnostics.
These changes will become effective on December 1, 2008. In addition,
Thomas Werlen, PhD, who serves as General Counsel, was named a member
of the Executive Committee with immediate effect.
William George, a member of the Novartis Board of Directors, has
decided not to stand for reelection at the next annual shareholder
meeting. At the next meeting, which is scheduled for February 2009,
the Board will propose William Brody, MD, PhD, for election. He is
President of The Johns Hopkins University and designated President of
the Salk Institute. The Board of Directors and Dr. Daniel Vasella
have also reached an agreement on the terms of a new contract
extending his current position as Chairman and CEO of Novartis.
Group outlook
(Barring any unforeseen events)
Novartis reaffirms expectations for another year of record net sales
and earnings in 2008 from the Group's continuing operations now
focused solely on healthcare. Net sales from continuing operations
for the Group are expected to rise at a mid-single-digit rate in
local currencies. The strong momentum in Pharmaceuticals has
confirmed expectations for a new growth cycle in the second half of
2008, with the Division's net sales now expected to grow at a
mid-single-digit rate in 2008 in local currencies. Sandoz net sales
are now expected to grow at a low-single-digit rate for the full year
in local currencies.
BUSINESS REVIEW
Nine months to September 30
Net sales
YTD 2008 YTD 2007 % change
USD m USD m USD lc
Pharmaceuticals 19 901 17 873 11 4
Vaccines and Diagnostics 1 268 1 054 20 15
Sandoz 5 753 5 198 11 1
Consumer Health continuing operations 4 460 4 016 11 4
Net sales from continuing operations 31 382 28 141 12 4
Pharmaceuticals: +11% (+4% lc) to USD 19.9 billion
Accelerating momentum in Pharmaceuticals has been driven by ongoing
dynamic growth from Novartis Oncology, the portfolio of high blood
pressure medicines and USD 2.1 billion of contributions from recently
launched products.
Outside North America, all regions achieved strong growth, led by
Europe at USD 7.8 billion (+9% lc), Japan at USD 1.9 billion (+5%
lc), Latin America at USD 1.3 billion (+7% lc) and the rest of the
world at USD 2.0 billion (+16% lc). US net sales fell 5%, but have
been recovering from the negative impact of lower sales during 2007
from four products (Lotrel, Lamisil, Trileptal and Famvir) that face
generic competition as well as the suspension of Zelnorm.
Oncology (USD 6.2 billion, +14% lc) represented 31% of
Pharmaceuticals net sales in the first nine months of 2008, and
provided four of the five top-selling medicines with Gleevec/Glivec
(USD 2.8 billion, +16% lc) as the flagship product. Cardiovascular
strategic products (USD 5.0 billion, +8% lc) advanced on further
gains for Diovan (USD 4.3 billion, +11% lc) and increasing
contributions from the new high blood pressure medicines Exforge and
Tekturna/Rasilez.
More than 100 new product launches have been completed in the top 20
countries so far in 2008 following the 15 major US and European
regulatory approvals in 2007. Among top performers were the
once-yearly osteoporosis therapy Aclasta/Reclast (USD 169 million),
the age-related blindness medicine Lucentis (USD 658 million) and the
addition of a once-daily skin patch that has reinvigorated the Exelon
franchise (USD 606 million, +21% lc).
Vaccines and Diagnostics: +20% (+15% lc) to USD 1.3 billion
Deliveries of H5N1 pandemic influenza vaccines to the US government
in 2008 as well as a solid performance from the blood testing
diagnostics business led the double-digit expansion, with additional
growth from pediatric vaccines, the Menjugate meningitis C vaccine
and tick-borne encephalitis (TBE) vaccines.
Sandoz: +11% (+1% lc) to USD 5.8 billion
Improving performances in many key markets offset the US, where net
sales fell 9% on a lack of new product launches in 2008 and lower
prices. Central and Eastern European sales rose over 16% lc, with
Russia among the top five Sandoz countries worldwide. In Germany, net
sales were largely unchanged, but market share rose nearly three
percentage points. Canada, Turkey and Brazil were among
top-performing emerging generics markets.
Consumer Health continuing operations: +11% (+4% lc) to USD 4.5
billion
CIBA Vision delivered the strongest performance, benefiting from new
contact lens product launches in key regions in 2008. Animal Health
expanded its companion animal business, while OTC growth in key
emerging markets more than offset lower sales in the US that have
been hampered by factors that include changes in consumer spending.
Operating income
YTD 2008 YTD 2007 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 6 017 30.2 5 161 28.9 17
Vaccines and Diagnostics 52 4.1 179 17.0 -71
Sandoz 884 15.4 789 15.2 12
Consumer Health continuing operations 858 19.2 727 18.1 18
Corporate income & expense, net[1] -527 -972 -46
Operating income
from continuing operations[1] 7 284 23.2 5 884 20.9 24
[1] Operating income and Corporate income & expense, net, for 2007
periods includes an exceptional incremental environmental provision
charge of USD 590 million for worldwide remediation plans.
Pharmaceuticals: +17% to USD 6.0 billion
The strong improvement in operating income was underpinned by
productivity gains as the operating margin rose 1.3 percentage points
to 30.2% of net sales. Marketing & Sales declined 1.4 percentage
points to 30.0% of net sales as productivity gains more than offset
major investments in the rollout of new products including Exforge,
Tekturna/Rasilez, Aclasta/Reclast, Lucentis and Exelon Patch. R&D
investments rose 16%, supporting expansion in biologics and
initiatives to accelerate the Oncology pipeline. R&D expenses also
included a one-time charge of USD 223 million for full impairment of
the development project Aurograb(TM). Cost of Goods Sold improved 1.5
percentage points largely due to a one-time charge of USD 320 million
in the 2007 period for a partial impairment of Famvir after the start
of US generic competition. Other Income & Expenses were negative in
the 2008 period compared to small income in 2007 from various
one-time gains, including proceeds from the sale of shares and
product divestments.
Vaccines and Diagnostics: -71% to USD 52 million
Major investments in two meningitis vaccines in Phase III development
as well as initiatives to improve manufacturing quality and capacity,
and a strong negative financial exchange rate impact were among
reasons for the decline in operating income. Adjusted operating
income (excluding exceptional items and amortization of intangible
assets) was USD 254 million in the first nine months compared to USD
323 million in the 2007 period.
Sandoz: +12% to USD 884 million
Despite lower contributions from the US, the positive performance
supported accelerated R&D investments (+27%), particularly in
difficult-to-make generics that provide a competitive advantage, and
a 22% rise in Marketing & Sales for the expansion in emerging
markets. Costs of Goods Sold improved from a favorable product mix
and efficiency gains. The operating margin rose 0.2 percentage points
to 15.4% of net sales.
Consumer Health continuing operations: +18% to USD 858 million
Operating income achieved a much faster growth rate than net sales on
the back of the solid expansion and productivity gains in all
businesses from the Forward initiative. The operating income margin
improved 1.1 percentage points to 19.2% of net sales.
Corporate income and expense, net
The 2007 period included the exceptional charge of USD 590 million
for corporate environmental provisions. Excluding this charge, the
higher expenses came from additional investments in global IT
infrastructure and the translation impact of negative foreign
exchange movements.
Third quarter
Net sales
Q3 2008 Q3 2007 % change
USD m USD m USD lc
Pharmaceuticals 6 709 5 885 14 9
Vaccines and Diagnostics 666 572 16 14
Sandoz 1 899 1 783 7 0
Consumer Health continuing operations 1 473 1 373 7 3
Net sales from continuing operations 10 747 9 613 12 7
Pharmaceuticals: +14% (+9% lc) to USD 6.7 billion
Building on the turnaround achieved during 2008, all regions
contributed to the improving performance driven by ongoing expansion
of the flagship oncology and cardiovascular franchises as well as USD
800 million in sales from recently launched products, particularly
Lucentis, Aclasta/Reclast, Exforge, Tekturna/Rasilez, Exjade and
Exelon Patch.
Overcoming the challenges of 2007, the US returned to growth for the
first time in 2008 as net sales rose 9% on the underlying strong
expansion, particularly in Oncology. Outside of North America, all
other regions delivered growth: Europe (USD 2.6 billion, +9% lc),
Japan (USD 624 million, +3% lc), Latin America (USD 441 million, +4%
lc) and the rest of the world (USD 672 million, +11% lc).
Oncology (USD 2.1 billion, +15% lc) solidified its position as the
leading performer with one-third of total Pharmaceutical net sales
and driven by Gleevec/Glivec (USD 950 million, +15% lc), Zometa (USD
360 million, +9% lc) and Femara (USD 289 million, +16% lc). The
Cardiovascular strategic franchise rose 20% lc to USD 1.7 billion ,
gaining share in the global antihypertension market on contributions
from the new high blood pressure medicines Tekturna/Rasilez and
Exforge as well as Diovan (USD 1.4 billion, +9% lc).
Vaccines and Diagnostics: +16% (+14% lc) to USD 666 million
A sale of H5N1 pandemic vaccines to the US government and increased
sales of pediatric vaccines led the double-digit improvement. About
33 million doses of seasonal influenza vaccines have been sold so far
for the 2008/2009 season, with additional sales expected in the 2008
fourth quarter. Diagnostics maintained solid growth.
Sandoz: +7% (+0% lc) to USD 1.9 billion
Solid results in many key regions, including a 20% lc rise in Central
and Eastern Europe, were offset by a 15% decline in the US, where
there were no new product launches. Among the countries with
improving contributions were Russia, Poland and Ukraine.
Consumer Health continuing operations: +7% (+3% lc) to USD 1.5
billion
All businesses generated higher sales, particularly CIBA Vision
thanks to new contact lens product launches. Animal Health was helped
by market share gains in the US parasiticide market and expansion of
its companion animal business. OTC achieved modest growth as emerging
markets offset an ongoing decline in US sales linked to economic
conditions.
Operating income
Q3 2008 Q3 2007 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 1 743 26.0 1 541 26.2 13
Vaccines and Diagnostics 180 27.0 172 30.1 5
Sandoz 293 15.4 228 12.8 29
Consumer Health continuing operations 292 19.8 244 17.8 20
Corporate income & expense, net[1] -173 -733 -76
Operating income
from continuing operations[1] 2 335 21.7 1 452 15.1 61
[1] Operating income and Corporate income & expense, net, for 2007
periods includes an exceptional incremental environmental provision
charge of USD 590 million for worldwide remediation plans.
Pharmaceuticals: +13% to USD 1.7 billion
The double-digit improvement was largely in line with higher net
sales, with the operating income margin declining slightly by 0.2
percentage points to 26.0% of net sales. Marketing & Sales fell
sharply to 29.2% of net sales from 31.3% in the year-ago quarter on
the benefits of productivity gains amid sustained investments in new
product launches that have been providing significant sales
contributions in 2008. R&D expenses were up 2.7 percentage points,
mainly from the Aurograb(TM) charge, but partially offset by
productivity gains. Cost of Goods Sold declined 4.2 percentage points
as a percentage of net sales, mainly due to the year-ago charge of
USD 320 million for the Famvir impairment, while production costs
rose 1.3 percentage points in 2008 due to the impact of an inventory
optimization initiative and currency effects. Other Income & Expenses
swung to a net expense in the 2008 third quarter compared to income
in the 2007 period that included USD 166 million in one-time
divestment gains.
Vaccines and Diagnostics: +5% to USD 180 million
Adjusted operating income (excluding exceptional items and
amortization of intangible assets) rose to USD 258 million from USD
246 million in the 2007 quarter.
Sandoz: +29% to USD 293 million
Significant operational efficiency gains in manufacturing and
procurement underpinned strong gains that compensated for lower
contributions from the US and supported investments in product
development and emerging markets. Operating income also benefited
from lower impairment charges in 2008 compared to 2007.The operating
income margin rose 2.6 percentage points from the year-ago quarter to
15.4% of net sales.
Consumer Health continuing operations: +20% to USD 292 million
The solid business expansion, particularly in CIBA Vision and Animal
Health, and benefits of improved productivity in all businesses from
the Forward initiative led to double-digit growth. The operating
income margin rose 2.0 percentage points to 19.8% of net sales.
Corporate income and expense, net
Excluding the year-ago exceptional charge for corporate environmental
provisions, the increase in net corporate expenses came primarily
from additional investments in global IT infrastructure and the
translation impact of negative foreign exchange movements.
FINANCIAL REVIEW
Nine months to September 30 and third quarter
YTD YTD Q3 Q3
2008 2007 Change 2008 2007 Change
USD m USD m % USD m USD m %
Operating income
from continuing
operations[1] 7 284 5 884 24 2 335 1 452 61
Income from associated
companies 344 308 12 88 116 -24
Financial income 326 286 14 93 109 -15
Interest expense -214 -176 22 -96 -66 45
Taxes -1 084 -693 56 -338 -37
Net income
from continuing
operations 6 656 5 609 19 2 082 1 574 32
Net income
from discontinued
operations 28 5 446 19 5 294
Total net income[1] 6 684 11 055 -40 2 101 6 868 -69
[1] Operating income for the 2007 periods includes an exceptional
incremental environmental provision charge of USD 590 million to
cover worldwide remediation plans (USD 463 million after taxes).
Income from associated companies
Higher contributions from the Roche investment led to the rise for
the first nine months of 2008, while the decline in the 2008 third
quarter was due to negative adjustments to first- half 2008 estimates
for Roche and foreign exchange movements. The 2008 third quarter also
included for the first time results from the July acquisition of a
25% stake in Alcon, which was a net expense of USD 5 million as the
anticipated net income contribution was more than offset by the
amortization of intangible assets and other charges.
Financial income, net
Financing costs to purchase the initial 25% Alcon stake and lower
levels of average net liquidity led to net financial expenses of USD
3 million in the 2008 third quarter, a swing from USD 43 million of
net financial income in the year-ago period. For the first nine
months, however, net financial income was largely unchanged at USD
112 million as proceeds received from divestments during the second
half of 2007 provided significantly higher net financial income
during the first half of 2008.
Taxes
The unusually low tax rates in the 2007 periods (2.3% for third
quarter and 11.0% for the first nine months) included favorable
one-time benefits from the corporate environmental provision charge
as well as several other factors that occurred mainly in the 2007
third quarter. The tax rate for continuing operations was 14.0% for
the first nine months of 2008 as well as the third quarter, in line
with full-year 2008 expectations.
Net income from discontinued operations
The significant gains in 2007 discontinued operations represent the
divestments of Medical Nutrition (as of July 1, 2007) and Gerber (as
of September 1, 2007). In the 2008 periods, contributions represent
various adjustments to accruals related to these divestments.
Balance sheet
Total equity rose to USD 50.7 billion as of September 30, 2008,
compared to USD 49.4 billion at the end of 2007. This increase of USD
1.3 billion comes from USD 6.7 billion in net income that was offset
by currency translation losses of USD 0.6 billion, USD 3.3 billion
for the 2008 dividend payment (which was 29% higher than the
year-earlier payment in US dollar terms), USD 0.9 billion in
actuarial losses on defined-benefit pension plans and USD 0.6 billion
for purchase of treasury shares and other items.
The debt/equity ratio rose to 0.21:1 from 0.12:1 at the end of 2007
following the launch of significant financing programs to support
recent acquisitions, particularly the 25% Alcon stake and Speedel.
Two Swiss franc bond issues were successfully completed during the
second quarter of 2008, raising CHF 1.5 billion, while the Commercial
Paper program in the US provided USD 3.8 billion in additional
financing.
Net debt at September 30, 2008, was USD 2.7 billion compared to net
liquidity of USD 7.4 billion at the end of 2007, reflecting payments
during the 2008 third quarter of USD 11.1 billion for the Alcon,
Speedel and Protez acquisitions.
Novartis continues to have a very strong credit rating, with Standard
& Poor's rating Novartis as AA- for long-term maturities and as A-1+
for short-term maturities. Moody's has rated the Group as Aa2 and
P-1, respectively, while Fitch has given a long-term rating of AA and
a short-term rating of F1+.
Novartis suspended its share repurchase program in April 2008 after
announcing the Alcon agreement. Before the suspension, six million
shares were repurchased for USD 296 million via a second trading line
on the Swiss Stock Exchange.
Cash flow
In the first nine months of 2008, cash flow from operating activities
from continuing operations rose USD 0.3 billion to USD 6.6 billion.
Cash outflow from investing activities from continuing operations
amounted to USD 8.6 billion, mainly from the purchase of the initial
25% stake in Alcon and USD 1.4 billion in capital expenditures.
Proceeds of the Swiss franc bond offerings in the 2008 second quarter
and the ongoing US commercial paper program provided a cash inflow of
USD 5.2 billion. This was partially offset by the 2007 dividend
payment of USD 3.3 billion, treasury share repurchases of USD 0.5
billion and a decrease of USD 0.2 billion in other current and
non-current financial debts, which resulted in a net cash inflow of
USD 1.2 billion from financing activities from continuing operations.
PHARMACEUTICALS PRODUCT REVIEW
Notes: Net sales data refer to worldwide performance in local
currencies for the first nine months of 2008.
Diovan (USD 4.3 billion, +11% lc), the world's top-selling branded
medicine for high blood pressure, has grown steadily in all key
markets worldwide, with areas outside the US now accounting for about
60% of net sales and delivering 12% lc growth. US sales rose 10% as
Diovan strengthened its 40% leading share of the angiotensin receptor
blockers (ARBs) segment despite an overall slowdown in the
antihypertensive market, including ARBs. Diovan has benefited from
its status as the only medicine in the ARB class approved to treat
high blood pressure, high-risk heart attack survivors and heart
failure.
Gleevec/Glivec (USD 2.8 billion, +16% lc), a targeted therapy for
certain forms of chronic myeloid leukemia (CML) and gastrointestinal
stromal tumors (GIST), has sustained solid double-digit growth during
2008 based on its status as the leading therapy for these and other
life-threatening forms of cancer. Glivec has received priority review
status from the FDA as the first therapy to be assessed for use after
surgery for GIST (adjuvant setting). Phase III results published in
2007 showed a dramatic 89% reduction in risk of GIST returning after
surgery in patients treated with Glivec compared to placebo. A
decision by the FDA is expected by the end of 2008. Similar
submissions have been filed in the EU and Switzerland, and will be
filed in other countries.
Zometa (USD 1.0 billion, +3% lc), an intravenous bisphosphonate
therapy for patients with cancer that has spread to the bones, has
resumed growth worldwide. Sales, which rose 9% lc in the third
quarter, were supported by existing indications as well as new data
presented in May at the American Society of Clinical Oncology showing
for the first time in a large trial a significant anticancer benefit
of Zometa therapy. The study in premenopausal women with
hormone-sensitive, early-stage breast cancer showed the addition of
Zometa to hormone therapy after surgery significantly reduced the
risk of recurrence or death by 36% beyond benefits achieved with
hormone therapy alone. More studies are underway to review potential
benefits. Two studies, AZURE (pre-and post-menopausal breast cancer)
and ZEUS (prostate cancer), have completed recruitment.
Sandostatin (USD 852 million, +7% lc), for acromegaly and various
neuroendocrine and carcinoid tumors, has seen strong growth from
Sandostatin LAR, the once-monthly version that accounts for 85% of
net sales, particularly in key regions such as Latin America and in
emerging markets. New competition in the US had minimal impact on the
growth of Sandostatin LAR (less than 2% market share).
Femara (USD 850 million, +18% lc), an oral therapy for women with
hormone-sensitive breast cancer, has grown dynamically thanks to its
unique range of clinical trial data, outpacing competitors and
capturing over 30% of the aromatase inhibitor segment (IMS Health:
June 2008). The entry of generic competition in some markets,
including southern Europe, has had a modest impact on global growth.
Lucentis (USD 658 million), a biotechnology eye therapy now approved
in more than 70 countries, has delivered dynamic growth since its
first launch in early 2007. Lucentis is the only treatment proven to
maintain and improve vision in patients with "wet" age-related
macular degeneration, a leading cause of blindness in people over age
50, and has been judged as cost-effective by various government
health agencies, including the UK National Institute for Health and
Clinical Excellence (NICE). Genentech holds the US rights.
Exelon/Exelon Patch (USD 606 million, +21% lc), a therapy for mild to
moderate forms of Alzheimer's disease and dementia linked with
Parkinson's disease, exceeded the USD 500 million milestone thanks to
dynamic growth in the once-daily Exelon Patch, which provided 45% of
US sales, and led to overall market share gains.
Exjade (USD 386 million, +42% lc) is now available in over 90
countries as the first and only once-daily oral therapy for iron
overload, a potentially fatal condition linked to various blood
disorders.
Lotrel (USD 296 million, -55% lc, only in the US), a single-pill
combination therapy for high blood pressure, has fallen since
mid-2007 after an "at risk" launch by a generic competitor despite a
US patent valid until 2017. Sales come from higher-dose formulations.
Exforge (USD 288 million), a single-pill combination of the
angiotensin receptor blocker Diovan (valsartan) with the calcium
channel blocker amlodipine, has continued to set new standards for
launching high blood pressure combination therapies. The US approved
Exforge in July 2008 as a first-line therapy, providing a new growth
opportunity.
Trileptal (USD 259 million, -59% lc), for epilepsy seizures, has been
impacted by generic competition for tablet formulations in key
markets, including the US, since late 2007.
Xolair (USD 156 million, +39% lc, only Novartis sales), a
biotechnology therapy for moderate to severe allergic asthma, showed
recent positive new Phase III data for use in treating children.
Results showed children age 6 to 11 years taking Xolair for 24 weeks
suffered fewer exacerbations than children on placebo. Xolair was
generally safe and well tolerated. Novartis plans to submit these
data in the US and Europe for regulatory approvals. Xolair Liquid was
also submitted in March 2008 for EU approval. Novartis co-promotes
Xolair with Genentech in the US and shares a portion of operating
income. Genentech's Xolair sales in the US were USD 382 million for
the first nine months of 2008.
Aclasta/Reclast (USD 169 million), a once-yearly infusion therapy for
various forms of osteoporosis, has now been used in more than 250,000
patients worldwide and has outpaced benchmarks since its launch in
August 2007. New indications approved in 2008 have broadened the use
of Aclasta in Europe to include treating osteoporosis in men. Data
also shows Aclasta reduces the risk of new fractures after a hip
fracture in both men and women. The updated European product
information also includes study results showing Aclasta reduced
all-cause mortality in trial patients by 28% against placebo.
Tekturna/Rasilez (USD 98 million), a direct renin inhibitor that
represents the first new type of high blood pressure medicine in more
than a decade, continues to grow in the US and in Europe. Data from
the ALOFT (heart failure) and AVOID (kidney disease) studies, which
are part of the ASPIRE HIGHER cardio-renal outcomes trial program,
have been added to European product information. Regulatory decisions
are expected soon for Rasilez HCT, a combination with a diuretic, in
Switzerland and Europe. Data from the AGELESS study will be unveiled
at the American Heart Association meeting in November.
Tasigna (USD 57 million) is available in over 50 countries and
gaining as a new therapy for patients with a certain form of chronic
myeloid leukemia (CML) resistant or intolerant to prior therapy,
including Gleevec/Glivec. A Phase III trial comparing Tasigna and
Gleevec/Glivec in newly diagnosed CML patients completed recruitment
in the quarter.
Galvus (USD 25 million), a new oral treatment for type 2 diabetes,
and Eucreas, a single-tablet combination with metformin, have shown
promising results during the rollout in Europe following approvals in
early 2008. The majority of sales in Europe and Latin America have
been for Eucreas, the first single-pill combination in the DPP-IV
inhibitor class to be launched in Europe. A resubmission for US
approval is not planned.
R&D UPDATE
Pharmaceuticals
Afinitor (everolimus, RAD001), an oral inhibitor of the mTOR pathway
that acts by directly inhibiting tumor cell growth and metabolism as
well as the formation of new blood vessels (angiogenesis), continues
to demonstrate potential in multiple cancers. It received priority
review status from the FDA based on results from the RECORD-1 trial
showing Afinitor more than doubled the time without tumor growth in
patients with advanced kidney cancer after failure of standard
treatment. A decision in the US is expected by the end of 2008, and
regulatory submissions have also been made in the EU and Switzerland
with more filings planned in 2008. New data presented at ESMO in
September 2008 show Afinitor controls tumor growth in patients with
advanced pancreatic neuroendocrine tumors (NET) when used in
combination with Sandostatin® LAR® or as monotherapy. Registration
trials are underway in first- and second-line settings for this rare
and difficult-to-treat form of cancer as well as in progressive
advanced carcinoid tumors.
FTY720 (fingolimod) remains on track for regulatory submissions by
the end of 2009, with the potential to become the first once-daily
oral therapy for multiple sclerosis, a chronic and often disabling
autoimmune disease that attacks the central nervous system. Various
trials are underway in the largest Phase III program ever conducted
in MS. First results are expected in early 2009 from TRANSFORMS, a
head-to-head trial against Avonex® (interferon beta-1a) in patients
with relapsing remitting MS. A new Phase III trial called INFORMS
started in the third quarter of 2008 in patients with the primary
progressive form of MS for which there are no available treatments.
QAB149 (indacaterol), a once-daily long-acting beta-agonist with
24-hour bronchodilation and a fast onset of action, is set for the
first regulatory submissions by the end of 2008 as a monotherapy
treatment for chronic obstructive pulmonary disease (COPD), an
incurable and common condition in which the lungs have been damaged,
usually from smoking. QAB149 is also being developed for use in COPD
patients with other respiratory therapies, including with the
corticosteroid mometasone (QMF149) and with the anti-muscarinic
antagonist NVF239 (QVA149).
Vaccines and Diagnostics
Menveo (MenACWY-CRM) was submitted in August for US approval as a new
vaccine to protect against four common types of meningococcal
meningitis known as A,C, W-135 and Y. The first submission was made
for ages 11-55. The submission for EU approval will be made soon. The
Phase III program for use from age two months to 10 years is ongoing.
The menB vaccine has shown potential to be the first to protect
infants as young as six months from the deadly meningococcal B
serogroup. New results showed nearly all infants age six to 12 months
in a Phase II study generated a protective immune response as early
as one month after the second dose against strains representing
multiple antigens in the vaccine. Another study recently showed the
vaccine worked in infants who received it starting at two months of
age. A Phase III trial in infants and children is underway.
Sandoz
A response was submitted in September to the FDA responding to
questions from the US agency for the development project enoxaparin,
a technologically enabled generic version of Lovenox® (enoxaparin
sodium) being developed with Momenta. This medicine is a
low-molecular-weight heparin marketed by Sanofi-aventis and used for
the prevention and treatment of deep vein thrombosis and several
cardiovascular conditions. A launch of this product in the US is
expected during 2009.
Disclaimer
This release contains certain forward-looking statements relating to
the Group's business, which can be identified by terminology such as
"momentum," "pipeline," "priority review," "plans," "on track,"
"expectations," "strategic," "opportunity," "optional," "can,"
"potential," "will," "planned," "target," "goal", "designed to",
"outlook," "expected," "potentially", "set," 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, or
potential future sales or earnings of the Novartis Group or any of
its divisions or business units; 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 existing products in any market, or that such products
will achieve any particular revenue levels. Nor can there be any
guarantee that the Novartis Group, or any of its divisions or
business units, will achieve any particular financial results. In
particular, management's expectations could be affected by, among
other things, uncertainties involved in the development of new
pharmaceutical products; unexpected clinical trial results, including
additional analysis of existing clinical data or unexpected new
clinical data; unexpected regulatory actions or delays or government
regulation generally; the Group's ability to obtain or maintain
patent or other proprietary intellectual property protection,
including the uncertainties involved in the US litigation process;
competition in general; government, industry, and general public
pricing and other political pressures; 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 these
materials 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 AG provides healthcare solutions that address the evolving
needs of patients and societies. Focused solely on healthcare,
Novartis offers a diversified portfolio to best meet these needs:
innovative medicines, cost-saving generic pharmaceuticals, preventive
vaccines, diagnostic tools and consumer health products. Novartis is
the only company with leading positions in these areas. In 2007, the
Group's continuing operations (excluding divestments in 2007)
achieved net sales of USD 38.1 billion and net income of USD 6.5
billion. Approximately USD 6.4 billion was invested in R&D activities
throughout the Group. Headquartered in Basel, Switzerland, Novartis
Group companies employ approximately 98,000 full-time associates and
operate in over 140 countries around the world. For more information,
please visit http://www.novartis.com.
Important dates
November 19, 2008 Pharmaceuticals research update (Cambridge,
Massachusetts)
January 2009 Fourth quarter and full-year 2008 results
February 2009 Annual General Meeting (Basel)
April 2009 First quarter 2009 results
July 2009 Second quarter and first half 2009 results
October 2009 Third quarter and first nine months 2009
results
All product names appearing in italics are trademarks owned by or
licensed to Novartis Group Companies
Please find full media release in English attached and on the
following link:
http://hugin.info/134323/R/1260877/275982.pdf
Further language versions are available through the following links:
German version is available through the following link:
http://hugin.info/134323/R/1260875/275984.pdf
French version is available through the following link:
http://hugin.info/134323/R/1260876/275980.pdf
--- End of Message ---
Novartis International AG
Posfach Basel
WKN: 904278; ISIN:
CH0012005267; Index: SLCI, SMI, SPI, SLIFE;
Listed: Main Market in SWX Swiss Exchange, ZLS in BX Berne eXchange;
Copyright © Hugin AS 2008. All rights reserved.
|
|
|
|
| |
|
durchschnittliche Punktzahl: 0
Stimmen: 0
| |
|
|
|
| |
