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Novartis delivers strong new product momentum and operational
performance in first nine months of 2009 |
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Corporate news announcement processed and transmitted by Hugin AS.
The issuer is solely responsible for the content of this
announcement.
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* Strong underlying growth in first nine months of 2009 from
healthcare portfolio:
* Net sales of USD 31.3 billion rise 8% in local currencies
(lc), led by double-digit expansion in Pharmaceuticals
* Operating income of USD 7.3 billion up 1%, but advances 11% in
constant currencies and excluding exceptional items
* Net income of USD 6.1 billion down 8% due to negative currency
impact, Alcon-related financing costs and USD 189 million of
associated companies charges;
but net income in constant currencies rises 2%
* Basic EPS: USD 2.69 in first nine months of 2009 vs. USD 2.93
in 2008
* Free cash flow before dividends advances 20% to USD 6.1
billion
* Progress in innovation: 2009 approvals for Afinitor (US/EU),
Ilaris (US) and H1N1 pandemic flu vaccines; positive Phase III
data for QAB149 (COPD) and FTY720 (MS)
* Novartis on track for record sales and earnings in constant
currencies in 2009
Key figures - Continuing operations
Nine months to September 30
YTD 2009 YTD 2008 % change
% of % of
USD m net sales USD m net sales USD lc
Net sales 31 341 31 382 0 8
Operating income 7 345 23.4 7 284 23.2 1
Net income 6 131 19.6 6 656 21.2 -8
Basic earnings per
share USD 2.69 USD 2.93 -8
Third quarter
Q3 2009 Q3 2008 % change
% of % of
USD m net sales USD m net sales USD lc
Net sales 11 086 10 747 3 7
Operating income 2 634 23.8 2 335 21.7 13
Net income 2 112 19.1 2 082 19.4 1
Basic earnings per
share USD 0.93 USD 0.92 1
Basel, October 22, 2009 - Commenting on the results, Dr. Daniel
Vasella, Chairman and CEO of Novartis, said: "I am pleased with our
strong underlying performance, led by the momentum of our
Pharmaceuticals business, outpacing the competition and benefiting
from innovative product growth rejuvenating the portfolio. Our
investments in R&D show excellent results, with many key approvals in
2009, most notably the anti-cancer therapy Afinitor and the
biotechnology medicine Ilaris. Deliveries of H1N1 pandemic flu
vaccines are underway as Novartis works at full capacity to meet
public health demands. The Sandoz generics business also made good
progress, coupled with a turnaround in the US. We expect record
full-year underlying results based on the significant progress to
date in 2009."
OVERVIEW
Nine months to September 30
The sustained underlying business expansion in Pharmaceuticals, with
net sales rising 11% in local currencies (+4% in US dollars),
strengthened the Group's healthcare portfolio in the first nine
months of 2009.
Group net sales rose 8% in local currencies, but were steady at USD
31.3 billion in US dollars. Sandoz (+4% lc) and Consumer Health (+3%
lc) also provided contributions. Top-performing regions included
Europe (USD 12.9 billion, +7% lc) and the United States (USD 10.1
billion, +5% lc) as well as the top six emerging markets (USD 2.8
billion, +16% lc). Higher volumes provided seven percentage points of
growth, while net price changes added one percentage point. However,
the stronger US dollar compared to the 2008 period offset the
underlying business expansion by eight percentage points.
Operating income rose 1% to USD 7.3 billion, and at a faster 11% pace
when adjusted for the impact of currency movements, exceptional items
and amortization of intangible assets in both periods.
Pharmaceuticals, where operating income rose 8%, and productivity
gains in all divisions provided resources for business expansion and
led to the Group operating income margin improving 0.2 percentage
points to 23.4% of net sales.
Net income, however, fell 8% to USD 6.1 billion from the impact of
Alcon-related financing costs as well as significantly reduced income
from investments in Roche and Alcon in the third quarter of 2009 and
a higher tax rate. Basic earnings per share (EPS) fell to USD 2.69 in
the first nine months of 2009 from USD 2.93 in the 2008 period.
Third quarter
Novartis maintained the strong underlying momentum of 2009 as
third-quarter net sales grew 7% in local currencies, while reported
net sales rose 3% to USD 11.1 billion as four percentage points of
growth were lost to adverse currency movements. Pharmaceuticals (+11%
lc) led the performance, while Consumer Health (+5% lc) and Sandoz
(+4% lc) achieved local-currency gains in challenging markets.
Vaccines and Diagnostics (-16% lc) fell on sharply lower sales of
H5N1 (avian flu) pandemic vaccines in 2009.
Operating income advanced 13% to USD 2.6 billion, while the Group's
operating income margin rose 2.1 percentage points to 23.8% of net
sales on margin improvements in Pharmaceuticals, Sandoz and Consumer
Health. Operating income was up 9% when adjusted for currency
movements, exceptional items and amortization of intangible assets.
Net income rose 1% to USD 2.1 billion as the 13% increase in Group
operating income was largely offset by a loss from associated
companies due to USD 189 million of charges for Roche's restructuring
of Genentech and an Alcon-related R&D project impairment, increased
financing costs and a higher tax rate. As a result, basic earnings
per share (EPS) only climbed to USD 0.93 from USD 0.92 in the 2008
quarter.
Achieving success with long-term R&D investments
Novartis has been reaping the benefits of long-term, disciplined
investments in innovation, achieving more than 30 major regulatory
approvals and significant progress in the Group's R&D pipeline so far
in 2009.
Important approvals include the anti-cancer medicine Afinitor, the
high blood pressure combination therapy Valturna, the biotechnology
drug Ilaris and the H1N1 pandemic flu vaccines. The late-stage
pipeline is also progressing quickly: European regulatory approval
expected soon for QAB149 (COPD), while further positive Phase III
data presented in September 2009 reaffirmed the potential of FTY720
(MS).
R&D investments complement other strategic initiatives as Novartis
seeks to deliver long-term sustainable growth from a focused
portfolio addressing broad healthcare needs. In addition to
investments in innovation, Novartis is selectively strengthening its
businesses, expanding in high-growth markets and improving
organizational efficiency.
High-growth markets are increasingly contributing to the business
expansion. Net sales in the top six emerging markets rose 16% lc to
USD 2.8 billion in the first nine months of 2009, with only limited
signs to date of adverse impact from global economic conditions.
These six markets - Brazil, China, India, Russia, South Korea and
Turkey - represented 9% of the Group's net sales for the 2009 period.
New products are transforming Pharmaceuticals and positioning
Novartis as one of the industry's fastest-growing companies. Recently
launched products provided dynamic growth (+88% lc) and USD 3.3
billion of net sales in the first nine months of 2009, boosting their
share of net sales to 16% from 9% in the 2008 period. New product
approvals in 2009, such as Afinitor and Ilaris, are set to support
business expansion. In Japan, approvals of five new medicines to date
in 2009 - Tasigna, Xolair, Co-Dio, Lucentis and Rasilez - are
expected to underpin momentum in this important market.
Vaccines and Diagnostics began delivering vaccines in the last week
of September for the new H1N1 influenza strain as US and European
regulatory approvals were received. Large-scale antigen production
continues at all sites in Europe. Approximately 90 million to 120
million doses are expected to be produced by the end of 2009, with
expected fourth-quarter net sales contributions of approximately USD
400 million to USD 700 million. In early October, Novartis also
completed its shipment of 27 million seasonal influenza vaccines for
the US market, ahead of original plans, to allow for earlier
vaccination.
Sandoz completed in September the acquisition of EBEWE Pharma's
specialty generics injectables business for EUR 0.8 billion (USD 1.2
billion), creating a new global growth platform and improving access
to oncology medicines. This acquisition is set to further drive
expansion in the fast-growing injectables market and represents an
important extension of the Sandoz portfolio. In addition, the
manufacturing site in Wilson, North Carolina, has a renewed focus on
new product launches following the successful completion of an FDA
inspection in the third quarter of 2009.
Consumer Health is preparing the upcoming US launch of Prevacid 24HR,
the first OTC version of this prescription drug for frequent
heartburn pain and an important addition to the division's current
portfolio of 15 global brands with annual sales of more than USD 100
million. Novartis aims to make Prevacid 24HR a top-five OTC brand in
the US, where this proton pump inhibitor has three years of market
exclusivity.
Group outlook
(Barring any unforeseen events)
Novartis expects to deliver a strong operational performance in 2009.
Group net sales are now set to grow at a high-single-digit rate in
local currencies, even excluding anticipated H1N1 pandemic flu
vaccines sales in the fourth quarter of 2009. Pharmaceuticals net
sales in local currencies are now expected to expand at a
double-digit rate in 2009. Operating and net income are expected to
reach record levels in constant currencies for the full year, even
excluding the contribution from H1N1 pandemic flu vaccine sales.
However, currency-related losses could significantly reduce growth in
reported results.
BUSINESS REVIEW
Nine months to September 30
Net sales
YTD 2009 YTD 2008 % change
USD m USD m USD lc
Pharmaceuticals 20 765 19 901 4 11
Vaccines and Diagnostics 1 037 1 268 -18 -13
Sandoz 5 350 5 753 -7 4
Consumer Health continuing operations 4 189 4 460 -6 3
Net sales from continuing operations 31 341 31 382 0 8
Pharmaceuticals: USD 20.8 billion (+4%, +11% lc)
Sustained dynamic performance achieved in local currencies thanks to
rapid expansion of recently launched products and double-digit growth
in all regions. The global rollouts of new products, including
Lucentis, Exforge, Exjade, Exelon Patch, Reclast/Aclasta and
Tekturna/Rasilez, are transforming the portfolio and provided USD 3.3
billion of net sales in the 2009 period. These products accounted for
16% of net sales, up from 9% in 2008, and eight percentage points of
the division's 11% local currency net sales growth.
All therapeutic franchises advanced at double-digit rates in local
currencies. Oncology (USD 6.5 billion, +13% lc), the largest
franchise, grew thanks to Gleevec/Glivec (USD 2.9 billion, +12% lc),
Femara (USD 925 million, +16% lc) and Exjade (USD 469 million, +30%
lc). The strategic Cardiovascular and Metabolism franchise (USD 5.4
billion, +12% lc) was led by the new medicines Exforge (USD 475
million) and Tekturna/Rasilez (USD 202 million) as well as the
flagship product Diovan (USD 4.4 billion, +5% lc). The diabetes
medicine Galvus (USD 115 million) outpaced competition in some key
markets in Europe, Latin America and Asia. Neuroscience and
Ophthalmics (USD 3.3 billion, +13% lc) gains were led by Lucentis
(USD 858 million, +48% lc) and Exelon (USD 687 million, +24% lc).
Europe (USD 7.6 billion, +11% lc) as well as Latin America and Canada
(USD 1.8 billion, +14% lc) showed strong performances. Gains were
also seen in the US (USD 7.1 billion, +10% lc), while Japan (USD 2.2
billion, +9% lc) benefited from new product launches. The six top
emerging markets of Brazil, China, India, Russia, South Korea and
Turkey (USD 1.8 billion, +19% lc) kept up a good growth pace.
Vaccines and Diagnostics: USD 1.0 billion (-18%, -13% lc)
A sharp reduction in deliveries of H5N1 avian pandemic flu vaccines
compared to the 2008 period as well as lower sales of TBE (tick-borne
encephalitis) vaccines in Europe were among reasons for the decline.
Seasonal influenza vaccines sales were down in the 2009 period,
mainly due to price pressure in the US.
Sandoz: USD 5.4 billion (-7%, +4% lc)
Sandoz achieved three quarters of consistent 4% lc growth in 2009
compared to only 1% lc in 2008. Retail generics in Germany (+5% lc)
grew in a declining market, reaching a 29% share as launches offset
the switch to tenders by some government health insurance providers.
US retail generics and biosimilars (+1%) delivered 18 new launches so
far in 2009 (vs. 17 in all of 2008), but price erosion offset some of
the volume gains. Other regions were higher, led by Asia-Pacific
(+20% lc) on growth in China and Japan.
Consumer Health: USD 4.2 billion (-6%, +3% lc)
CIBA Vision is the industry's fastest-growing contact lens and lens
care company, driven by the expansion of new products that have
fueled solid local currency growth. Animal Health grew ahead of its
global market and gained share in the US parasiticide market, while
OTC delivered an increasingly positive underlying performance during
the year.
Operating income
YTD 2009 YTD 2008 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 6 486 31.2 6 017 30.2 8
Vaccines and Diagnostics -211 52 4.1
Sandoz 850 15.9 884 15.4 -4
Consumer Health continuing operations 809 19.3 858 19.2 -6
Corporate Income & Expense, net -589 -527
Operating income
from continuing operations 7 345 23.4 7 284 23.2 1
Pharmaceuticals: USD 6.5 billion (+8%)
Operating income grew 8%, well ahead of sales, and advanced at a
faster 16% pace when adjusted in both periods for adverse currency
movements (-10 percentage points) and exceptional items (+2
percentage points). The double-digit sales expansion and productivity
gains of more than USD 700 million in the 2009 period fueled
operating income growth and enabled significant investments in new
product launches as well as accelerated investments in Oncology
projects, particularly Afinitor, and targeted emerging markets such
as China. Marketing & Sales expenses fell to 29.0% of net sales in
2009 from 30.0% in the 2008 period while supporting the global
rollouts of a range of new products, including Galvus, Exelon Patch,
Tekturna/Rasilez and Afinitor. R&D investments were 20.3% of net
sales in 2009 while supporting ten new Phase III trials started in
2009, but declined from 21.3% in the 2008 period that included an
exceptional charge of USD 223 million for impairment of the Aurograb
development project.
Vaccines and Diagnostics: USD -211 million
Core operating income, which excludes exceptional items and
amortization of intangible assets, fell to USD 66 million from USD
254 million in the year-ago period. Investments were made in clinical
trials for H1N1 pandemic vaccines and late-stage meningitis vaccine
development projects. Results in 2009 included exceptional legal
charges of USD 45 million, while the 2008 period benefited from a USD
49 million exceptional gain for a diagnostics license.
Sandoz: USD 850 million (-4%)
Strong performance realized with 8% growth in constant currencies on
volume expansion in key markets and major productivity gains, but
these were more than offset in reported results by negative currency
movements (-12 percentage points). The Project Compete initiative led
to reduced total function costs compared to the 2008 period, with the
operating income margin rising 0.5 percentage points to 15.9% of net
sales.
Consumer Health: USD 809 million (-6%)
Increased productivity provided operating income growth of 9% in
constant currencies, well ahead of 3% lc sales growth. These gains,
however, were more than offset by adverse currency movements (-15
percentage points).
Corporate Income & Expense, net
The increase in net corporate expenses was due mainly to higher
pension expenses.
Third quarter
Net sales
Q3 2009 Q3 2008 % change
USD m USD m USD lc
Pharmaceuticals 7 217 6 709 8 11
Vaccines and Diagnostics 543 666 -18 -16
Sandoz 1 850 1 899 -3 4
Consumer Health continuing operations 1 476 1 473 0 5
Net sales from continuing operations 11 086 10 747 3 7
Pharmaceuticals: USD 7.2 billion (+8%, +11% lc)
Ongoing dynamic growth in the 2009 third quarter thanks to the rapid
expansion of new products and sustained contributions from key
markets. Recently launched products reached USD 1.3 billion of net
sales in the 2009 quarter, representing 18% of divisional net sales
compared to 11% in the 2008 quarter. These new products also provided
nine percentage points of the 11% lc net sales growth in the 2009
period.
All therapeutic franchises delivered strong underlying growth.
Initial contributions from the US launch of Afinitor supported
Oncology (USD 2.3 billion, +11% lc), while Exforge and
Tekturna/Rasilez underpinned the strategic Cardiovascular and
Metabolism franchise (USD 1.8 billion, +9% lc). The diabetes therapy
Galvus (USD 50 million) also continued its dynamic performance in
Europe, Latin America and Asia. Neuroscience and Ophthalmics (USD 1.2
billion, +18% lc) saw rapid gains for Lucentis (USD 335 million, +60%
lc ) and Exelon (USD 251 million, +23% lc).
Important growth contributions came from Europe (USD 2.6 billion, +9%
lc) as well as Latin America and Canada (USD 645 million, +17% lc)
and the US (USD 2.4 billion, +10% lc). Japan (USD 773 million, +8%
lc) advanced thanks to contributions from new product launches in
2009. The six top emerging markets (USD 639 million, +12% lc) further
advanced and were led by China and Turkey.
Vaccines and Diagnostics: USD 543 million (-18%, -16% lc)
Approximately 27 million doses of seasonal flu vaccines were
delivered for the 2009/2010 season in the US and Europe by early
October 2009, with net sales per dose down slightly from the 2008
period due mainly to price pressure in the US. Higher shipments of
rabies and pediatric vaccines helped partially offset the significant
decline in 2009 of H5N1 avian pandemic flu vaccine sales. Net sales
of approximately USD 17 million were recorded in the 2009 quarter for
H1N1 pandemic flu vaccines delivered in late September.
Sandoz: USD 1.9 billion (-3%, +4% lc)
Key markets achieved solid underlying growth from new product
launches and intensified commercialization efforts. For retail
generics, top performers included Germany (+8% lc), Western Europe
(+6% lc) and Asia-Pacific (+9% lc). US retail generics and
biosimilars (+5%) net sales had a second consecutive quarter in 2009
of year-on-year growth thanks to new product launches, including a
first-to-market launch of generic tacrolimus (Prograf®). Central and
Eastern Europe grew strongly, but results were tempered by
challenging economic conditions.
Consumer Health: USD 1.5 billion (0%, +5% lc)
All businesses contributed to the strongest underlying quarterly
performance since the first quarter of 2008. CIBA Vision continued to
gain market share from new products, while the US and Latin America
drove business expansion in Animal Health. OTC gained momentum due to
strong demand for cough and cold medicines.
Operating income
Q3 2009 Q3 2008 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 2 211 30.6 1 743 26.0 27
Vaccines and Diagnostics 23 4.2 180 27.0 -87
Sandoz 312 16.9 293 15.4 6
Consumer Health continuing operations 303 20.5 292 19.8 4
Corporate Income & Expense, net -215 -173
Operating income
from continuing operations 2 634 23.8 2 335 21.7 13
Pharmaceuticals: USD 2.2 billion (+27%)
Operating income advanced 27%, significantly ahead of sales, and
still rose 16% when adjusted in both periods for currency changes (-6
percentage points) and exceptional items (+17 percentage points). The
strong underlying business expansion, with net sales rising 11% lc,
and productivity savings led to operating income gains and enabled
significant investments in new product launches, key development
projects and geographic expansion. Marketing & Sales expenses fell
1.4 percentage points to 27.8% of net sales in the 2009 quarter,
while R&D investments declined 3.7 percentage points to 19.7% of net
sales in 2009 from the same period 2008, which included an
exceptional charge of USD 223 million for impairment of the Aurograb
development project.
Vaccines and Diagnostics: USD 23 million
Lower contributions from H5N1 and seasonal influenza vaccines in the
2009 quarter as well as investments in H1N1 pandemic vaccines and
late-stage trials for the meningitis vaccines were the main factors
for reduced operating income. Excluding exceptional items and
amortization of intangible assets, core operating income fell to USD
102 million from USD 258 million in the 2008 period.
Sandoz: USD 312 million (+6%)
In constant currencies, operating income rose 18% from productivity
improvements in marketing and purchasing while supporting strategic
R&D investments, more than offsetting the impact of adverse currency
movements (-11 percentage points) in reported results as the
operating income margin rose 1.5 percentage points to 16.9% of net
sales.
Consumer Health: USD 303 million (+4%)
Supply chain and other productivity gains helped fund R&D initiatives
and new product launches across the division. In constant currencies,
operating income grew 14%, which was well ahead of local-currency
sales growth. The operating income margin rose 0.7 percentage points
to 20.5% of net sales.
Corporate Income & Expense, net
Net corporate expenses in the 2009 third quarter rose USD 42 million
compared to the year-ago period, mainly due to higher pension and
insurance expenses.
FINANCIAL REVIEW
Nine months to September 30 and third quarter
YTD YTD Change Q3 Q3 Change
2009 2008 2009 2008
USD m USD m % USD m USD m %
Operating income
from continuing operations 7 345 7 284 1 2 634 2 335 13
Income from associated
companies 186 344 -46 -21 88 -124
Financial income 94 326 -71 51 93 -45
Interest expense -395 -214 85 -173 -96 80
Taxes -1 099 -1 084 1 -379 -338 12
Net income
from continuing operations 6 131 6 656 -8 2 112 2 082 1
Net income
from discontinued
operations 28 19
Total net income 6 131 6 684 -8 2 112 2 101 1
Income from associated companies
Exceptional charges totaling USD 189 million for actions taken by
Roche and Alcon resulted in a loss of USD 21 million from associated
companies in the third quarter of 2009 compared to an income of USD
88 million in the 2008 period. An exceptional charge of USD 97
million was taken as part of Roche's restructuring charge for the
Genentech acquisition, while a USD 92 million impairment charge was
taken after Alcon stopped a pharmaceuticals development project.
These factors also led to sharply reduced income from associated
companies in the first nine months of 2009, which fell 46% to USD 186
million from the year-ago period.
Financial expense, net
Interest expense rose 80% in the 2009 third quarter to USD 173
million following the issuance of US dollar and euro bonds in the
first half of 2009. Financial income for the 2009 third quarter fell
45% to USD 51 million due to lower financial yields and currency
losses. For the first nine months of 2009, interest expense rose 85%
to USD 395 million, reflecting the issuance of bonds after the
acquisition of a 25% stake in Alcon in mid-2008, and financial income
fell 71% to USD 94 million.
Taxes
The tax rate (taxes as a percentage of pre-tax income) for the first
nine months and third quarter of 2009 was 15.2%, in line with
full-year expectations, and higher than the 14.0% tax rate in both of
the same periods in 2008.
Net income from continuing operations
For the first nine months of 2009, operating income growth was more
than offset by increased financial charges, reduced contributions
from associated companies and a higher tax rate, which resulted in
net income falling 8% to USD 6.1 billion. However, net income in
constant currencies rose 2% over the year-ago period. In the third
quarter of 2009, net income was up 1% to USD 2.1 billion as the
double-digit business expansion was negatively impacted by these
non-operating factors.
Basic earnings per share
Basic earnings per share (EPS) were USD 2.69 in the first nine months
of 2009, down from USD 2.93 in the year-ago period. For the third
quarter, basic EPS increased to USD 0.93 in 2009 from USD 0.92 per
share in the 2008 quarter.
Balance sheet
Total assets increased to USD 90.7 billion at the end of the 2009
third quarter compared to USD 78.3 billion at the end of 2008 mainly
as a result of proceeds from recent bond issues, which are held as
cash and marketable securities, and intangible assets acquired
through the September 2009 purchase of EBEWE Pharma's specialty
generics business.
The Group's equity rose to USD 53.3 billion at the end of the 2009
third quarter from USD 50.4 billion at the end of 2008 as net income
of USD 6.1 billion and translation gains of USD 0.9 billion in the
2009 period more than offset the dividend payment in the 2009 first
quarter amounting to USD 3.9 billion and actuarial losses of USD 0.8
billion for defined benefit plans.
The Group's debt/equity ratio rose to 0.27:1 at the end of the 2009
third quarter from 0.15:1 at the end of 2008, reflecting the issuance
of the USD 5 billion bond (two tranches) in the US in the first
quarter and the issuance of a EUR 1.5 billion bond in the second
quarter. At September 30, 2009, the Group's financial debt of USD
14.4 billion consisted of USD 5.7 billion in current and USD 8.7
billion in non-current liabilities.
Overall liquidity rose to USD 14.2 billion at September 30, 2009,
more than double the end-2008 level of USD 6.1 billion, due to
improving free cash flow from continuing operations (before
dividends), which rose 20% to USD 6.1 billion in the first nine
months of 2009, and proceeds from the bond issues. Net debt
(financial debt net of liquidity) was reduced to USD 0.2 billion from
USD 1.2 billion at December 31, 2008.
Credit agencies have maintained their ratings of Novartis debt during
2009. Moody's rated the Group as Aa2 for long-term maturities and P-1
for short-term maturities and Standard & Poor's had a rating of AA-
and A-1+, for long-term and short-term maturities, respectively.
Fitch had a long-term rating of AA and a short-term rating of F1+.
These agencies maintained a "stable" outlook.
Cash flow
Cash flow from operating activities was USD 7.7 billion in the first
nine months of 2009, an 18% increase over the year-ago period that
was driven by improvements of USD 0.5 billion in net working capital
and a reduction of USD 0.4 billion in tax payments compared to the
2008 period.
Cash outflows from investing activities reached USD 10.0 billion in
the first nine months of 2009 and included USD 7.5 billion in
marketable securities investments with proceeds from bond offerings
as well as USD 0.9 billion related to the EBEWE Pharma generics
business acquisition and USD 1.3 billion for capital expenditures.
Cash inflows from financing activities were a net USD 3.0 billion in
the 2009 period, as the USD 7.1 billion of proceeds from bond issues
were partially offset by the dividend payment for 2008 of USD 3.9
billion and other items totaling USD 0.2 billion.
PHARMACEUTICALS PRODUCT REVIEW
Note: Net sales growth data refer to year-to-date 2009 performance in
local currencies.
Strategic Cardiovascular and Metabolism franchise
Rapidly growing contributions from new products provided 74% of the
incremental growth in the strategic Cardiovascular and Metabolism
franchise (USD 5.4 billion, +12% lc) in the first nine months of
2009. Seven medicines within the Exforge, Tekturna/Rasilez and Diovan
brands are available in many markets, reaffirming the position of
Novartis as the world's largest provider of branded anti-hypertension
therapies based on annual sales.
Diovan (USD 4.4 billion, +5% lc) achieved solid worldwide growth,
driven by expansion in Japan, which accounts for approximately 20% of
net sales and where the Co-Dio diuretic combination therapy was
launched in 2009. Results from the Japanese KYOTO HEART study,
presented in September at the European Society of Cardiology
Congress, demonstrated that the addition of Diovan to a non-ARB-based
treatment regimen for high blood pressure provided a significant 45%
relative risk reduction in cardiovascular events, including stroke,
over a conventional non-ARB treatment regimen. Diovan also maintained
strong growth in Europe, where the expected entry of generic versions
of losartan, another medicine in the angiotensin receptor blockers
(ARB) segment, has been delayed until the first half of 2010. In the
US, Diovan (+3%) expanded during the 2009 nine-month period despite
greater use of generic versions of high blood pressure medicines in
other classes.
Exforge (USD 475 million +81% lc), a single pill with the angiotensin
receptor blocker Diovan (valsartan) and the calcium channel blocker
amlodipine, delivered above-market growth and expanded faster than
the broader high blood pressure segment. Exforge HCT, which adds a
diuretic to this combination, was launched in the US after regulatory
approval in April 2009 as a high blood pressure therapy with three
medicines in one pill. Exforge was submitted for Japanese regulatory
approval in late 2008.
Tekturna/Rasilez (USD 202 million, +114% lc), the first new class of
high blood pressure medicine in more than a decade, is growing
consistently. Key drivers are clinical data demonstrating its
prolonged efficacy in lowering blood pressure for more than 24 hours,
and superiority in clinical trials over ramipril, a leading ACE
inhibitor (an older class of high blood pressure medicines). Rasilez
was launched in Japan in October 2009. Valturna - a single-pill
combination of Tekturna/Rasilez and Diovan (valsartan) - gained US
regulatory approval in September based on clinical data showing this
medicine offers significantly higher blood pressure reduction than
either valsartan or aliskiren alone.
Galvus/Eucreas (USD 115 million, +416% lc), oral treatments for type
2 diabetes, have been expanding rapidly in many European, Latin
American and Asia-Pacific markets, and outperforming a competitor
medicine in the DPP-IV segment in some countries. First launched in
2008, Galvus is now approved in 69 countries, while Eucreas (a
single-pill combination with the oral anti-diabetes medicine
metformin) is approved in 50 countries.
Oncology
Gleevec/Glivec (USD 2.9 billion, +12% lc), a targeted therapy for
some forms of chronic myeloid leukemia (CML) and gastrointestinal
stromal tumors (GIST), has achieved sustained double-digit growth
based on its leadership position in treating these cancers backed by
new clinical data and regulatory approvals. The latest approval was
for use in adjuvant (post-surgery) GIST patients, which is now
approved in more than 25 countries in North America, Europe and
Asia-Pacific.
Tasigna (USD 144 million, +171% lc) is approved in 65 countries as a
second-line therapy for patients with a form of chronic myeloid
leukemia (CML) resistant or intolerant to prior therapy, including
Gleevec/Glivec. New clinical data has demonstrated the potential of
Tasigna to become a leading therapy for newly diagnosed CML patients.
Independent Phase II data published in the journal "Blood" showed
molecular traces of this form of leukemia were reduced to nearly
undetectable levels in 85% of patients after 12 months. In October
2009, results from the global ENESTnd trial, the largest head-to-head
comparison of a targeted therapy against Glivec ever conducted,
showed that Tasigna produced faster and deeper responses than Glivec
in newly diagnosed CML patients. A Phase III trial of Tasigna as a
third-line therapy for GIST did not meet its primary endpoint, but
results showed a two-month improvement in median overall survival
(not statistically significant) for patients treated with Tasigna. As
a result, Novartis will not seek regulatory approval for this
indication. A first-line study in GIST began enrollment in March.
Zometa (USD 1.1 billion, +9% lc), an intravenous bisphosphonate
therapy for patients with cancer that has spread to bones, is growing
due to improved compliance and use in existing indications. Studies
are underway to review potential anti-cancer benefits in other tumor
types. US and European regulatory submissions are planned in the 2009
fourth quarter for the use of Zometa in adjuvant breast cancer in
premenopausal women based on published anti-cancer data for this
indication.
Femara (USD 925 million, +16% lc), an oral therapy for women with
hormone-sensitive breast cancer, has seen strong sales during 2009
due to growth in the initial adjuvant (post-surgery) setting. In
August, "The New England Journal of Medicine" published results from
the landmark BIG 1-98 study affirming the five-year upfront use of
Femara after surgery was an optimal treatment approach versus
tamoxifen for postmenopausal women with early-stage, hormone-receptor
positive breast cancer. These data were submitted to US and EU
authorities for inclusion in product information.
Sandostatin (USD 839 million, +6% lc), for patients with acromegaly
and neuro-endocrine tumors of the gastrointestinal tract and
pancreas, has grown from increasing use of Sandostatin LAR, the
once-monthly version that accounts for nearly 90% of net sales. Phase
III data demonstrating a significant delay in tumor progression in
patients with metastatic neuroendocrine tumors of the midgut who were
treated with Sandostatin LAR were published recently in the "Journal
of Clinical Oncology." These data formed the basis of a recent US
National Comprehensive Cancer Network (NCCN) update on treatment
guidelines for neuroendocrine tumors.
Exjade (USD 469 million, +30% lc), currently approved in more than
90 countries as the only once-daily oral therapy for transfusional
iron overload, received US and Canadian regulatory approvals in 2009
to extend the dose range to 40 mg/kg. This new dosing range, which
was also approved in Switzerland in 2009 and will apply to various
other countries, provides a new option to patients who require higher
dose titration for iron chelation. The FDA is reviewing Exjade safety
information specifically on the risk of adverse events in patients
with myelodysplastic syndrome (MDS) compared to patients without
these conditions. Novartis is working with the FDA to further review
and clarify the population of MDS patients most appropriate for
treatment with Exjade.
Afinitor (USD 38 million), an oral inhibitor of the mTOR pathway,
received European approval in August 2009 for use in patients with
advanced renal cell carcinoma (RCC, kidney cancer) whose disease
progressed on or after treatment with VEGF-targeted therapy. This
follows the US launch in March as the first therapy for patients with
RCC after failure of treatment with sunitinib or sorafenib. Afinitor
is being studied in many cancer types: Phase III studies are underway
in patients with neuroendocrine tumors (NET), breast cancer,
lymphoma, tuberous sclerosis complex (TSC) and gastric cancer. A
late-stage trial is planned to start in patients with hepatocellular
carcinoma (HCC) in early 2010. The active ingredient, everolimus, is
the same as in the transplant therapy Certican.
Other Pharmaceuticals products
Lucentis (USD 858 million, +48% lc), a biotechnology eye therapy
approved in more than 80 countries, delivered sustained growth on top
performances in France, the United Kingdom, Australia and Japan.
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. Late-stage clinical trials
are underway to assess the benefits of Lucentis in patients with
certain forms of diabetic macular edema. Genentech holds the US
rights to this medicine.
Exelon/Exelon Patch (USD 687 million, +24 % lc), a therapy for mild
to moderate forms of Alzheimer's disease dementia as well as dementia
linked with Parkinson's disease, now achieves more than half of its
sales from Exelon Patch, the novel skin patch launched in late 2007
and now available in more than 50 countries worldwide.
Reclast/Aclasta (USD 325 million, +100% lc), the first once-yearly
infusion therapy for osteoporosis, continues to expand on increasing
patient access to infusion centers and a broad range of use in
patients suffering from various types of this debilitating disease. A
growing number of patients are returning for treatment with this
medicine, which is known as Reclast in the US and Aclasta in the rest
of the world. It is approved for up to six indications involving the
treatment of osteoporosis in men and postmenopausal women, including
those who have experienced a low-trauma hip fracture.
Xolair (USD 218 million, +53% lc, Novartis sales), a biotechnology
drug for moderate to severe persistent asthma in the US and severe
persistent allergic asthma in Europe, has maintained solid growth
based on approvals in more than 60 countries, including Japan since
early 2009. European Union approval was granted in August 2009 for
use in children age 6-11 suffering from severe persistent allergic
asthma. This approval was based on data showing Xolair reduced asthma
attacks in this age group by 34% at 24 weeks and 50% at one year.
Novartis co-promotes Xolair with Genentech in the US and shares a
portion of operating income. Genentech's US sales were USD 424
million in the first nine months of 2009.
Extavia (USD 26 million), for patients with relapsing forms of
multiple sclerosis (MS), was first launched in the European Union in
early 2009 and is now available in more than 15 countries, including
the US where it was launched recently after regulatory approval was
granted in August 2009. This medicine marks the entry of Novartis
into the field of MS. Extavia is the same medicinal product as
Betaferon®/ Betaseron® from Bayer Schering, with rights gained to a
Novartis-branded version in agreements with Bayer Schering.
R&D UPDATE
Novartis ranks as having one of the industry's most competitive
pharmaceuticals development pipelines with 147 projects in clinical
development, of which 27 involve new molecular entities in late-stage
trials or under regulatory review.
More than 30 positive regulatory decisions have been achieved to date
in 2009 in the US, European Union and Japan. These include a historic
five regulatory approvals to date in Japan for Rasilez, Tasigna,
Xolair, Co-Dio and Lucentis, with regulatory decisions pending for
Exforge and Galvus in the world's second-largest pharmaceuticals
market. Other approvals include Afinitor (cancer) in the US and
European Union as well as the US approvals of the new biotechnology
drug Ilaris (CAPS) and Extavia (multiple sclerosis) as well as the
high blood pressure combination therapies Valturna, Exforge HCT and
Tekturna HCT.
Other important regulatory approvals in 2009 were received for the
H1N1 pandemic flu vaccines in the US and Europe as well as the
first-ever biosimilar in Japan and Prevacid 24HR, the first and only
OTC version of this proton pump inhibitor in the US.
Pharmaceuticals
Ilaris (canakinumab, ACZ885), a human antibody targeting IL-1 beta,
was launched in the US and Switzerland in August 2009 as a new
therapy to treat children as young as age four and adults with CAPS
(Cryopyrin-Associated Periodic Syndrome), a rare life-long and
potentially fatal auto-inflammatory disease. In July 2009, Ilaris
received a positive opinion for European Union regulatory approval.
This biotechnology drug represents an important advance in the
development of personalized medicines since it specifically targets
IL-1 beta, the major trigger of inflammation in auto-inflammatory
diseases. Studies are ongoing in other diseases in which IL-1 beta
plays an important role, such as some forms of gout - one of the most
painful types of arthritis, COPD (Chronic Obstructive Pulmonary
Disease), type 2 diabetes and systemic juvenile idiopathic arthritis.
QAB149 (indacaterol), a new and effective once-daily bronchodilator
therapy for people with COPD (Chronic Obstructive Pulmonary Disease),
received a positive opinion in September supporting European Union
regulatory approval. The extensive Phase III program for this product
has demonstrated statistically superior improvements in lung function
and COPD symptoms, especially breathlessness, compared to currently
available bronchodilators, including the market leader tiotropium. In
the US, Novartis is working with the FDA to address issues raised in
a Complete Response letter received in October 2009.
FTY720 (fingolimod), a novel oral development therapy for multiple
sclerosis, is on track for regulatory submissions in the US and
Europe by the end of 2009. Initial results released in September 2009
from the two-year Phase III FREEDOMS study showed FTY720 was
significantly superior to placebo in reducing both relapses and
disability progression in patients with relapsing-remitting MS
(RRMS). These data build on the one-year Phase III TRANSFORMS study
presented at the American Academy of Neurology meeting in April 2009
showing that FTY720 significantly reduced relapses more than
interferon beta-1a (Avonex®), a standard of care in RRMS. FTY720 has
a well-studied safety profile with more than 5,300 patient-years of
exposure, including patients now in their sixth year of treatment. MS
affects up to 2.5 million people worldwide and is a leading cause of
neurological disability in young adults.
Vaccines and Diagnostics
Menveo, a novel vaccine in clinical development to protect against
four common types of meningococcal meningitis, is making good
progress toward US and European regulatory approvals for initial use
in adolescents (from age 11) and adults. Novartis submitted in August
2009 answers to a Complete Response letter received earlier in the
year from the FDA requesting additional information on the
submission's clinical and CMC (Chemistry Manufacturing and Control)
sections. No new clinical trials were required. A European Union
regulatory decision is expected in 2010 for use in adolescents (from
age 11) and adults. Trials are underway in other age groups,
including as young as two months, to protect against serogroups A, C,
W-135 and Y found with this serious bacterial infection.
Disclaimer
This release contains certain forward-looking statements relating to
the Group's business, which can be identified by terminology such as
"momentum," "on track," "expect," "pipeline," "potential,"
"strategic," "long-term," "set," "expected," "growth platform,"
"upcoming," "aims," "outlook", "expects," "could," "will," "planned,"
"risk," "pending," "potentially," 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 regarding the potential acquisition of any
business by Novartis; 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. Neither can there be any
guarantee that the proposed acquisition of any business will be
completed in the expected form or within the expected time frame or
at all. Nor can there be any guarantee that Novartis will be able to
realize any of the potential synergies, strategic benefits or
opportunities as a result of the proposed acquisition. In particular,
management's expectations could be affected by, among other things,
the uncertain outcome and progress of the ongoing global financial
and economic crisis, including uncertainties regarding future global
exchange rates and uncertainties regarding future demand for our
products; 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;
uncertainties regarding actual or potential legal proceedings,
including, among others, product liability litigation, litigation
regarding sales and marketing practices, government investigations
and intellectual property disputes; 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 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 2008, the
Group's continuing operations achieved net sales of USD 41.5 billion
and net income of USD 8.2 billion. Approximately USD 7.2 billion was
invested in R&D activities throughout the Group. Headquartered in
Basel, Switzerland, Novartis Group companies employ approximately
99,000 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
December 9, 2009 Novartis investor event: Oncology and pipeline
update
January 26, 2010 Fourth quarter and full-year 2009 results
February 26, 2010 Annual General Meeting
April 20, 2010 First quarter 2010 results
July 15, 2010 Second quarter and first half 2010 results
October 21, 2010 Third quarter and first nine months 2010 results
Please find full media release in English attached and on the
following link:
http://hugin.info/134323/R/1349248/325064.pdf
Further language versions are available through the following links:
German version is available through the following link:
http://hugin.info/134323/R/1349244/325052.pdf
French version is available through the following link:
http://hugin.info/134323/R/1349245/325054.pdf
--- End of Message ---
Novartis International AG
Posfach Basel
WKN: 904278; ISIN:
CH0012005267; Index: SLCI, SMI, SPI, SLIFE;
Listed: Main Market in SIX Swiss Exchange, ZLS in BX Berne eXchange;
Copyright © Hugin AS 2009. All rights reserved.
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