Novartis delivers record earnings in first nine months of 2007 thanks
to strong operational performance and divestment gains
* Strong operational performance for Group continuing operations:
* Nine-month net sales up 13% to USD 28.1 billion (+9% local
currencies) driven by all divisions, particularly Vaccines
and Diagnostics and Sandoz
* Operating income rises 9% to USD 6.5 billion, excluding a
one-time incremental environmental provision of USD 590
million to cover worldwide remediation plans
* 14 positive US and EU regulatory decisions so far in 2007;
launches underway for Tekturna/Rasilez, Exforge, Lucentis,
Galvus, Exelon Patch, Aclasta/Reclast and Tasigna
* To expand management experience and provide fresh impetus, Joe
Jimenez becomes CEO of Pharmaceuticals and Thomas Ebeling named
as CEO of Consumer Health
* Group net income for first nine months doubles to USD 11.1
billion thanks to after-tax gains of USD 5.2 billion from Medical
Nutrition and Gerber divestments
* Novartis now focused solely on healthcare
* Group on track for record operating and net income from
continuing operations in 2007 (excluding environmental provision)
* Elimination of 1,260 positions in US Pharma marketing and sales
organization to adapt to new product portfolio, generating annual
savings of USD 230 million
Group key figures - Nine months to September 30
YTD 2007 YTD 2006 % change
% of % of
USD m net sales USD m net sales USD lc
Continuing operations:
- Net sales 28 141 24 995 13 9
- Operating income
excl. environmental
charge 6 474 23.0 5 917 23.7 9
- Net income 5 609 19.9 5 229 20.9 7
Net income -
Discontinued
operations 5 446 310
Net income - Total 11 055 5 539 100
Basic earnings per
share - Continuing
operations USD 2.40 USD 2.23 8
Basic earnings per USD 4.74 USD 2.36
share - Total 101
Group key figures - Third quarter
Q3 2007 Q3 2006 % change
% of % of
USD m net sales USD m net sales USD lc
Continuing operations:
- Net sales 9 613 8 821 9 5
- Operating income
excl. environmental
charge 2 042 21.2 1 979 22.4 3
- Net income 1 574 16.4 1 792 20.3 -12
Net income -
Discontinued
operations 5 294 78
Net income - Total 6 868 1 870 267
Basic earnings per
share - Continuing
operations USD 0.68 USD 0.77 -12
Basic earnings per
share - Total USD 2.97 USD 0.80 271
Basel, October 18, 2007 - Commenting on the results, Dr. Daniel
Vasella, Chairman and CEO of Novartis said: "Following the successful
divestments of the Medical Nutrition and Gerber businesses we are now
strategically focused on healthcare products. Despite the anticipated
weak quarter in Pharmaceuticals, we showed a strong operational
performance driven by our other businesses. I am especially pleased
that Vaccines and Diagnostics and Sandoz grew dynamically and
improved profitability. This demonstrates that our focused
diversification at least partially balances the risks recently seen
in the pharmaceutical industry with heightened FDA demands and a more
aggressive and risk-taking generics industry in the US. After losing
several products to generics, Pharmaceuticals succeeded in launching
many new medicines, including Lucentis, Exforge, Tekturna/Rasilez,
Exelon Patch, Tasigna, Galvus and Aclasta/Reclast, creating the
foundation for a new growth phase that will be visible starting in
the second half of 2008. Our overall objective to bring new medicines
to patients is reflected in the 14 positive US and European
regulatory decisions already received in 2007. The announced changes
at the divisional leadership level will not just broaden management
experience but also bring fresh impetus and efficiency after a long
and strong growth period."
Nine months to September 30
Net sales
+-------------------------------------------------------------------+
| | YTD 2007 | YTD 2006 | % change |
|-----------------------------+----------+----------+---------------|
| | USD m | USD m | USD | lc |
|-----------------------------+----------+----------+-------+-------|
| Pharmaceuticals | 17 873 | 16 527 | 8 | 5 |
|-----------------------------+----------+----------+-------+-------|
| Vaccines and Diagnostics | 1 054 | 501 | 110 | 108 |
|-----------------------------+----------+----------+-------+-------|
| Sandoz | 5 198 | 4 306 | 21 | 15 |
|-----------------------------+----------+----------+-------+-------|
| Consumer Health continuing | 4 016 | 3 661 | 10 | 6 |
| operations | | | | |
|-----------------------------+----------+----------+-------+-------|
| Net sales from continuing | 28 141 | 24 995 | 13 | 9 |
| operations | | | | |
+-------------------------------------------------------------------+
Group
All divisions - particularly Vaccines and Diagnostics and Sandoz -
supported the expansion in Group net sales from continuing
operations. Higher net sales volumes represented seven percentage
points of growth, while acquisitions provided two percentage points
and currency translation four percentage points. Price changes had no
impact.
Pharmaceuticals
Europe, Latin America and key emerging markets all delivered strong
growth, with the Oncology and Neuroscience franchises growing at
double-digit rates and many of the top 10 brands maintaining No.1
leadership positions in their therapeutic areas. Diovan (USD 3.7
billion, +17% lc) and Gleevec/Glivec (USD 2.2 billion, +14% lc) both
generated good growth, while the new brands Tekturna/Rasilez,
Exforge, Exjade, Lucentis, and Xolair expanded rapidly. US net sales
fell 3% as growth from many brands were offset by the Zelnorm
suspension in March as well as generic competition for Lotrel,
Lamisil and Famvir.
Vaccines and Diagnostics
Strong deliveries of vaccines for seasonal influenza to the US as
well as vaccines for tick-borne encephalitis and pediatric vaccine
components drove growth. On a comparable basis, net sales rose 49%
(including net sales from Chiron before April 2006 acquisition).
Sandoz
Dynamic performance thanks mainly to the US and supported by recent
launches of difficult-to-make generics, strong growth of the base
portfolio and the Lotrel authorized generic. Several other countries
contributed to growth, benefiting from initiatives in emerging growth
markets and Western Europe.
Consumer Health continuing operations
OTC and Animal Health each delivered double-digit gains thanks to a
focus on strategic brands, new product launches and expansion in
emerging markets and Japan. CIBA Vision net sales rose as contact
lens deliveries were resumed in 2007 following recent product
shortages.
Operating income - Nine months to September 30
+-------------------------------------------------------------------+
| | YTD 2007 | YTD 2006 | Change |
|--------------------------+---------------+---------------+--------|
| | | % of | | % of | |
| | | net | | net | |
| | USD m | sales | USD m | sales | In % |
|--------------------------+-------+-------+-------+-------+--------|
| Pharmaceuticals | 5 161 | 28.9 | 5 082 | 30.7 | 2 |
|--------------------------+-------+-------+-------+-------+--------|
| Vaccines and Diagnostics | 179 | 17.0 | -28 | -5.6 | |
|--------------------------+-------+-------+-------+-------+--------|
| Sandoz | 789 | 15.2 | 532 | 12.4 | 48 |
|--------------------------+-------+-------+-------+-------+--------|
| Consumer Health | | | 687 | | |
| continuing operations | 727 | 18.1 | | 18.8 | 6 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate income & | | | -356 | | |
| expense, net | -382 | | | | 7 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | | | | | |
| excluding | | | | | |
| environmental charge | 6 474 | 23.0 | 5 917 | 23.7 | 9 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate environmental | | | | | |
| provision increase | -590 | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | 5 884 | | 5 917 | | -1 |
+-------------------------------------------------------------------+
Group
Excluding the Corporate expense of USD 590 million to increase
environmental provisions, operating income from continuing operations
rose 9%.
Pharmaceuticals
Major investments in new product launches and late-stage clinical
trials as well as lost US operating income from Lotrel, Zelnorm and
Lamisil were among the factors leading to an only modest increase in
operating income and a decline in the operating margin to 28.9 % of
net sales. R&D investments were up 20% and represented 20.4% of net
sales, up 1.9 percentage points from the 2006 period. Marketing &
Sales expenses as a percentage of net sales rose 0.9 percentage
points to support the new brands Exjade, Lucentis, Exforge,
Tekturna/Rasilez and Aclasta/Reclast. Cost of Goods Sold was
negatively impacted by an intangible asset impairment charge of USD
320 million following the start of US generic competition for Famvir.
However, Other Income & Expense improved from one-time gains mainly
related to the sale of equity investments and a launch provision
reversal for Tekturna/Rasilez. Excluding exceptional items and the
amortization of intangible assets in both periods, adjusted operating
income rose 5% and the operating margin was 31.6%.
Vaccines and Diagnostics
The strong expansion, particularly in seasonal influenza vaccines,
led to operating income of USD 179 million. Adjusting for legal
settlement gains of USD 83 million as well as for restructuring
charges and acquisition-related amortization of intangible assets
resulted in adjusted operating income of USD 323 million.
Sandoz
Advancing sharply faster than net sales growth, operating income
benefited from ongoing improvements in sales volumes thanks to new
product launches and efficiency improvements throughout the division,
with the operating margin rising to 15.2%. Excluding exceptional
items and the amortization of intangible assets in both periods,
adjusted operating income rose 19% and the adjusted operating margin
was 20.8%.
Consumer Health continuing operations
On the back of a solid performance, significant investments were made
throughout the division in R&D and marketing to support new product
launches and geographic expansion.
Third quarter
Net sales
+-------------------------------------------------------------------+
| | Q3 2007 | Q3 2006 | % change |
|-------------------------------+---------+---------+---------------|
| | USD m | USD m | USD | lc |
|-------------------------------+---------+---------+--------+------|
| Pharmaceuticals | 5 885 | 5 776 | 2 | -2 |
|-------------------------------+---------+---------+--------+------|
| Vaccines and Diagnostics | 572 | 374 | 53 | 52 |
|-------------------------------+---------+---------+--------+------|
| Sandoz | 1 783 | 1 425 | 25 | 18 |
|-------------------------------+---------+---------+--------+------|
| Consumer Health continuing | 1 373 | 1 246 | 10 | 6 |
| operations | | | | |
|-------------------------------+---------+---------+--------+------|
| Net sales from continuing | 9 613 | 8 821 | 9 | 5 |
| operations | | | | |
+-------------------------------------------------------------------+
Group
Sandoz, Vaccines and Diagnostics and Consumer Health all delivered
strong growth, helping to offset the decline in Pharmaceuticals in
the US market. The expansion in Group net sales from continuing
operations came from five percentage points of higher sales volumes,
while acquisitions added one percentage point and currency
translation had a positive impact of four percentage points. Net
price changes led to a decline of one percentage point.
Pharmaceuticals
Strong growth in key regions - particularly in Europe, Latin America
and emerging growth markets - was offset by the loss of Zelnorm,
Lotrel, Lamisil and Famvir in the US, where net sales declined 17%.
The leading brands Diovan (USD 1.3 billion, +14% lc), Gleevec/Glivec
(USD 783 million, +14% lc), Sandostatin and Femara were supported by
increasing contributions from new products including
Tekturna/Rasilez, Exforge, Exjade, Lucentis, and Xolair, had combined
net sales of about USD 300 million in the quarter.
Vaccines and Diagnostics
Seasonal influenza vaccine deliveries occurred earlier for the
2007/2008 flu season and were sharply higher for the current season
than in the year-ago period. Diagnostics delivered growth from market
share expansion in Europe and the West Nile Virus test.
Sandoz
Dynamic expansion driven by recently launched products in the US
increasing at a fast pace. Key US contributors were authorized
versions of Lotrel and ondansetron (Zofran®)[1] as well as generics
of the difficult-to-make products metoprolol succinate ER
(Toprol-XL®)[1] and cefdinir (Omnicef®)[1]. Other top regions were
Eastern Europe, Asia and Latin America.
Consumer Health continuing operations
OTC and Animal Health both delivered robust growth, leading to the
overall double-digit expansion. The start of the "cough and cold"
season in the US underpinned OTC, while new product launches in
Europe and recent entry in Japan further supported the performance.
Animal Health benefited from the integration of Sankyo Lifetech.
Operating income - Third quarter
+-------------------------------------------------------------------+
| | Q3 2007 | Q3 2006 | Change |
|--------------------------+---------------+---------------+--------|
| | | % of | | % of | |
| | | net | | net | |
| | USD m | sales | USD m | sales | In % |
|--------------------------+-------+-------+-------+-------+--------|
| Pharmaceuticals | 1 541 | 26.2 | 1 779 | 30.8 | -13 |
|--------------------------+-------+-------+-------+-------+--------|
| Vaccines and Diagnostics | 172 | 30.1 | 10 | 2.7 | |
|--------------------------+-------+-------+-------+-------+--------|
| Sandoz | 228 | 12.8 | 87 | 6.1 | 162 |
|--------------------------+-------+-------+-------+-------+--------|
| Consumer Health | | | 241 | | |
| continuing operations | 244 | 17.8 | | 19.3 | 1 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate income & | | | -138 | | |
| expense, net | -143 | | | | 4 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | | | | | |
| excluding | | | | | |
| environmental charge | 2 042 | 21.2 | 1 979 | 22.4 | 3 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate environmental | | | | | |
| provision increase | -590 | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | 1 452 | | 1 979 | | |
+-------------------------------------------------------------------+
Group
Operating income from continuing operations rose 3% when excluding
the USD 590 million one-time increase in Corporate environmental
liability provisions.
Pharmaceuticals
Operating income was heavily impacted by the loss of contributions
from Zelnorm, Lotrel and Lamisil in the US and the USD 320 million
impairment charge for Famvir as well as investments in new launches
and late-stage development compounds. Marketing & Sales investments
rose 1.1 percentage points as a percentage of net sales over the 2006
quarter to support investments in Tekturna/Rasilez, Exforge and
Aclasta/Reclast. R&D expenses were up 1.2 percentage points as a
percentage of net sales for late-stage trials, including QAB149,
FTY720, Galvus, AGO178 and MFF258. Other Income & Expense
contributed 2.9 percentage points, thanks to USD 166 million in gains
from the sale of Tanox shares and product divestments. Excluding
exceptional items and the amortization of intangible assets in both
periods, operating income fell 3% and the operating margin was 31.4%.
Vaccines and Diagnostics
Underlying operating income of USD 246 million reflected the dynamic
increase in sales of seasonal influenza vaccines to the US and
shipments occurring earlier than in 2006. Reported operating income
includes USD 74 million in restructuring and acquisition-related
amortization charges.
Sandoz
Excellent underlying improvement thanks to ongoing volume growth and
new product launches. Operational improvements in manufacturing and
efficiencies in Marketing & Sales further supported growth. Excluding
exceptional items and amortization of intangible assets in both
periods, operating income rose 28% and the adjusted operating margin
was 19.2%.
Consumer Health continuing operations
Investments for several new product launches and expansion into
emerging markets and Japan led to operating income growing at a
slower rate than net sales.
Corporate
First nine months
YTD 2007 YTD 2006 Change
USD m USD m USD m % change
Operating income from continuing
operations
excluding environmental charge 6 474 5 917 557 9
Corporate environmental provision
increase -590 -590
Income from associated companies 308 193 115 60
Financial income 286 259 27 10
Interest expense -176 -209 33 -16
Taxes -693 -931 238 -26
Net income from continuing
operations 5 609 5 229 380 7
Net income from
discontinued Consumer Health
operations 5 446 310 5 136
Total net income 11 055 5 539 5 516 100
Third quarter
Q3 2007 Q3 2006 Change USD
USD m USD m m % change
Operating income from continuing
operations
excluding environmental charge 2 042 1 979 63 3
Corporate environmental provision
increase -590 -590
Income from associated companies 116 88 28 32
Financial income 109 72 37 51
Interest expense -66 -76 10 -13
Taxes -37 -271 234 -86
Net income from continuing
operations 1 574 1 792 -218 -12
Net income from
discontinued Consumer Health
operations 5 294 78 5 216
Total net income 6 868 1 870 4 998 267
Income from associated companies
In the third quarter, income from associated companies was USD 116
million, up 32% from USD 88 million in the year-ago period. The Roche
investment contributed USD 113 million, representing an anticipated
share of USD 144 million from Roche's 2007 third quarter net income,
which was offset by USD 31 million for amortization of intangible
assets. In the first nine months, income was USD 308 million compared
to USD 193 million in the 2006 period, which included one-time
charges for the Chiron acquisition.
Financial income, net
Net financial income in the third quarter was USD 43 million compared
to a loss of USD 4 million in the 2006 third quarter, reflecting good
currency management in challenging conditions and additional returns
from increased liquidity due to divestitures. In the first nine
months, net financial income was USD 110 million, more than double
the income from the 2006 period.
Taxes
Group continuing operations for the first nine months of 2007 had a
tax rate of 11.0%, down from 15.1% in the prior-year period due to
factors that included reduced profits in the US, the environmental
liability provision, a reduction of the German corporate tax rate
from 37.5% to 28.5% and the deferred tax impact of legal
restructurings for the Chiron acquisition. Many of these one-time
factors occurred in the 2007 third quarter, leading to a tax rate of
2.3% for the period.
Net income from discontinued operations
Net income from discontinued operations was USD 5.4 billion, which
reflects the pre-tax divestment gain of USD 5.8 billion (USD 5.2
billion after taxes) from the sale of Medical Nutrition and Gerber as
well as net income before their divestment.
Balance sheet
The Group's equity rose to USD 49.5 billion at September 30, 2007,
from USD 41.3 billion at December 31, 2006. The increase reflected
nine-month net income of USD 11.1 billion, actuarial gains from
employee benefit plans of USD 0.9 billion, share-based compensation
of USD 0.4 billion and USD 1.4 billion in currency translation gains
that more than offset the dividend payment of USD 2.6 billion and net
share repurchases of USD 3.3 billion.
Thanks to the divestment proceeds, net liquidity rose to USD 7.3
billion from net debt of USD 0.7 billion at the end of 2006. The
debt/equity ratio improved to 0.15:1 compared to 0.18:1 at the end of
2006. Utilizing these proceeds and the Group's strong free cash flow,
Novartis plans to complete the repurchase of up to USD 4 billion of
shares by the next Annual General Meeting in February 2008. Shares
worth USD 3.0 billion were repurchased in the first nine months of
2007, including USD 2.2 billion during the third quarter, via a
second trading line on the SWX Swiss Exchange.
Novartis is one of the few non-financial services companies worldwide
to have attained the highest credit ratings from Standard & Poor's,
Moody's and Fitch, the three benchmark rating agencies. S&P has rated
Novartis as AAA for long-term maturities and as A1+ for short-term
maturities. Moody's has rated the Group as Aaa and P1, respectively,
while Fitch has rated Novartis as AAA for long-term maturities and as
F1+ for short-term maturities.
Cash flow
For the first nine months, cash flow from continuing operating
activities rose USD 0.3 billion to USD 6.2 billion. Net cash used in
financing activities from continuing operating activities was USD 6.2
billion, mainly the result of the USD 2.6 billion dividend payment
and USD 3.1 billion for the net purchase of treasury shares. For
continuing operations in the first nine months, free cash flow after
dividends was USD 1.7 billion, down from USD 2.4 billion in the 2006
period mainly due to the higher dividend and higher working capital
requirements to support the business expansion.
Increase of provisions for worldwide environmental liabilities
Novartis has increased its provisions for worldwide environmental
liabilities linked mostly to previously owned businesses by USD 590
million following a review completed in the 2007 third quarter. This
increase in Corporate provisions includes the creation of a Swiss
foundation with capital of CHF 200 million to finance the
Novartis-related share of any potential remediation costs including
landfills in the Basel region (including Switzerland, France and
Germany). Assessments are expected to be completed shortly in
coordination with various governments, which are responsible for the
supervision and decision-making process for any remediation actions.
This new foundation underscores the commitment of Novartis to
sustainable and appropriate solutions.
Laying the foundation for future growth
The Pharmaceuticals division is proceeding with a reorganization of
its Development organization, aiming to strengthen project focus,
integrating decision making at the therapeutic franchise level and
simplifying the development governance.
In a second initiative, Novartis Biologics is being established as a
focused unit to accelerate and optimize the potential of research and
development of innovative biologic medicines. This unit will unify
and expand the expertise within Novartis by bringing together the key
elements necessary for fast and high-quality R&D activities and to
help attract top talent. Biologics comprise 25% of the pre-clinical
research pipeline at Novartis and are increasingly a priority in R&D
activities.
In the US, immediate actions are underway to strengthen and
streamline the pharmaceuticals organization. These include a
reduction of about 240 positions in headquarters functions, while the
US sales force will be reduced by approximately 510 Novartis and 510
third-party representatives. The majority of these reductions will be
accomplished by not filling vacant positions, while all reductions
will be handled in a socially responsible manner. This initiative
will lead to cost savings of approximately USD 230 million in 2008.
On a Group-wide level, the organization will be delayered and
simplified; decision making will be decentralized wherever
appropriate and shared functions centralized, such as in procurement
and IT infrastructure. Over a period of two years, this will result
in significant savings. These actions will enhance the Group's
competitiveness and its ability to move rapidly to best meet the
needs of patients and customers in a rapidly evolving environment.
Management changes
To expand experience at the top management level and to provide fresh
impetus, Thomas Ebeling will now lead the Consumer Health Division
and Joe Jimenez will lead the Pharmaceuticals Division. Thomas
Ebeling, who has done an excellent job in managing Pharmaceuticals to
high levels of performance, will now take over the challenge of
developing the Consumer Health business into a world-class leader and
a more significant part of the Group's broad healthcare portfolio.
Joe Jimenez will, in turn, take over responsibility of transforming
Pharmaceuticals as the business adapts to new market conditions.
These changes are effective immediately.
Group outlook
(Continuing operations, excludes exceptional divestment gains and
environmental provision increase. Barring any unforeseen events)
Novartis has made significant progress during 2007 to focus on its
strategic healthcare portfolio as well as gain regulatory approvals
and launch new medicines. Strong growth prospects for the Group's
portfolio are expected to underpin a new growth phase starting to
become visible in the second half of 2008 and positioning Novartis
for further years of record results.
The Pharmaceuticals Division's net sales are negatively impacted
during 2007 and the first half of 2008 by the suspension of Zelnorm
as well as US generic competition for Lotrel, Lamisil, Famvir and
Trileptal. Combined annual US net sales in 2006 for these products
were approximately USD 3.1 billion. As a result, Novartis expects
mid-single-digit growth in 2007 net sales for Group continuing
operations and low-single-digit growth in the Pharmaceuticals
Division, both in local currencies.
Novartis reaffirms expectations for record operating and net income
from continuing operations in 2007 (excluding exceptional divestment
gains and Corporate environmental provision increase).
Pharmaceuticals product performance and pipeline update
Novartis has a highly competitive industry position thanks to the
ongoing dynamic growth of Diovan and Gleevec/Glivec as well as
approvals for several new brands and one of the most respected
pipelines with 139 projects in clinical development.
A total of 14 positive regulatory decisions have been achieved to
date in 2007 in the US and Europe. These include US/EU approvals for
Tekturna/Rasilez and Exforge (hypertension), Exelon Patch
(Alzheimer's) and Aclasta/Reclast (osteoporosis). EU approvals were
also received for Lucentis (age-related macular degeneration) and
Tyzeka/Sebivo (hepatitis B).
During the third quarter, European regulators approved Galvus as a
new oral therapy for patients with type 2 diabetes, while European
approval is expected by the end of the year for Eucreas as a
single-tablet combination of Galvus and metformin.
Following a positive opinion in September from European regulators,
European Union approval is expected by the end of the year for
Tasigna, a new therapy for chronic myeloid leukemia patients not
responding to Gleevec/Glivec. Swiss approval was also granted this
year. A decision on the US submission is expected by the end of 2007.
Several late-stage development compounds are on target toward
regulatory submissions. These include FTY720 (multiple sclerosis),
QAB149 (respiratory diseases), AGO178 (depression), RAD001 (cancer),
ABF656 (hepatitis C) and SOM 230 (Cushing's disease).
Pharmaceuticals products
Note: All net sales growth figures refer to year-to-date worldwide
performance in local currencies
Diovan (USD 3.7 billion, +17% lc) maintained its strong growth
profile as the world's No. 1 branded high blood pressure medicine
thanks to double-digit net sales growth in the US, Japan and Latin
America. Diovan has achieved a 40% share of its market segment in the
US among angiotensin receptor blockers (ARBs) and has been growing
faster than the US anti-hypertensive market. Co-Diovan/Diovan HCT, a
single-tablet combination with a diuretic, is now the No. 1 branded
antihypertension combination therapy in the US and has benefited
worldwide from increasing use of multiple therapies to help patients
reach treatment goals.
Gleevec/Glivec (USD 2.2 billion, +14% lc), a targeted therapy for
certain forms of chronic myeloid leukemia (CML) and gastrointestinal
stromal tumors (GIST), expanded net sales based on improved survival
rates for patients, expansion of the GIST market and use in rare
diseases. Competition has also expanded the CML market, but it had
little impact on underlying demand. During the third quarter, the FDA
approved updated labeling that includes five years of data
demonstrating an estimated overall survival rate of 89.4% in CML
patients, confirming the generally well-tolerated safety profile in
these patients.
Zometa (USD 954 million, -2% lc), an intravenous bisphosphonate
therapy for patients with cancer that has spread to the bones, has
been affected by overall slowing growth for this class of medicines
due to patients receiving less frequent treatments and for a shorter
course of therapy. However, use in patients with lung and prostate
cancers continues to rise.
Sandostatin (USD 749 million, +8% lc), for patients with acromegaly
and various tumors, has delivered consistent growth amid increasing
use of the long-acting-release Sandostatin LAR version, which
accounts for about 85% of the brand's worldwide net sales. New
competition in acromegaly is expected to start in the US in the 2007
fourth quarter.
Neoral/Sandimmun (USD 700 million, -1% lc), for organ
transplantation, has maintained stable worldwide net sales despite
ongoing generic competition in the US thanks to its pharmacokinetic
profile and reliability.
Femara (USD 679 million, +27% lc), an oral treatment for women with
hormone-sensitive breast cancer, delivered ongoing dynamic growth
primarily thanks to expanded use in the early adjuvant indication in
the US and Europe as well as from the 2006 launch in Japan. Femara
has been outpacing competitors and gaining market share in the
aromatase inhibitor segment due to its unique clinical benefits. More
than 50 countries have approved Femara for the early adjuvant
treatment of women immediately following breast cancer surgery.
Lotrel (USD 660 million, -34% lc, only in US) has been negatively
affected since May 2007 following the "at risk" launch of a generic
copy by Teva Pharmaceuticals despite a valid US patent until 2017.
Sandoz has launched an authorized generic version of this high blood
pressure medicine. A trial date has not been set for the ongoing
lawsuit against Teva, which risks potentially significant damages if
Novartis prevails.
Trileptal (USD 594 million, +10% lc), a treatment for epilepsy
seizures, has continued to generate growth but is now facing US
generic competition.
Lamisil (USD 529 million, -31% lc), a treatment for fungal nail
infections, was negatively impacted by the start of US generics in
July. Generic competition also affected sales in Europe and Japan.
Exelon (USD 461 million, +14%), for mild to moderate forms of
Alzheimer's disease and dementia associated with Parkinson's disease,
maintained excellent growth. Exelon Patch was launched in the US and
approved in Europe in the third quarter. The constant delivery of
Exelon through the patch showed equivalent efficacy at the target
dose to the highest doses of capsules but with three times fewer
reports of nausea or vomiting.
Exjade (USD 255million, +167% lc) has delivered dynamic growth -
particularly in Europe and the Middle East - since its first launch
in 2005 based on its status as the first once-daily oral iron
chelator for the treatment of chronic iron overload due to blood
transfusion. Over 85 countries have approved Exjade, which is used to
treat iron overload in patients with various blood disorders that
require blood transfusion support. In June, it was submitted in Japan
for approval a year ahead of schedule.
Lucentis (USD 223 million), for the eye disease "wet" age-related
macular degeneration (AMD), was launched in the first European
markets after approval in January and has experienced rapid growth,
especially in Germany, France and Switzerland. Lucentis is the only
treatment proven in clinical trials to maintain and improve vision in
these patients, the leading cause of blindness in people over age 50.
Genentech holds the US rights.
Xolair (USD 100 million), for moderate to severe allergic asthma, did
particularly well in France, Spain and Greece. Novartis co-promotes
Xolair with Genentech in the US and shares a portion of operating
income. Xolair had nine-month US net sales of USD 352 million.
Zelnorm/Zelmac (USD 83 million, -80% lc), for irritable bowel
syndrome and chronic constipation, continued to be negatively
affected by the suspension of marketing and sales in March 2007 in
the US while complying with the FDA's request to review
cardiovascular safety data. It has also been suspended or withdrawn
in several other countries. A treatment access program was started in
the US to provide Zelnorm to appropriate patients. Novartis
continues to believe that Zelnorm/Zelmac offers important benefits to
appropriate patients, and discussions continue with health
authorities.
Prexige (USD 81 million), an oral COX-2 inhibitor for osteoarthritic
pain, is available in 30 countries. It was recently withdrawn in
Australia and Canada, and suspended in Turkey, based on
post-marketing reports of serious liver side effects associated with
long-term use of high doses. In September, a 100 mg dose received a
"not approvable" letter from the FDA despite it being one of the most
studied COX-2 inhibitors with a favorable benefit/risk profile.
Novartis believes Prexige continues to be a valuable therapy option
for appropriate patients, particularly those at risk of serious
gastrointestinal complications, and will continue discussions with
the FDA and other health authorities.
Exforge (USD 52 million), a single tablet combining the angiotensin
receptor blocker valsartan (Diovan) and the calcium channel blocker
amlodipine, has outpaced the US and European launches of other high
blood pressure combination medicines due to its unique combination
that involves two of the most prescribed high blood pressure
medicines.
Tekturna/Rasilez (USD 20 million), the first new type of high blood
pressure medicine in more than a decade, has performed well in a
competitive US marketplace following its approval and launch in
March. European Union approval was received in August, and initial
launches are underway. Known as Tekturna in the US and as Rasilez in
other markets, key drivers have been broad clinical data showing its
efficacy and safety, recognition of the need for new high blood
pressure medicines and increasing US formulary reimbursement
coverage. This medicine was discovered by Novartis and developed in
collaboration with Speedel.
Aclasta/Reclast was launched in September in the US as a 15-minute,
once-yearly infusion for women with postmenopausal osteoporosis.
Approved in the EU in October, the initial launches were started in
Germany and the UK. The New England Journal of Medicine published in
September the results of the first-ever clinical study involving more
than 2,100 men and women with osteoporosis who had suffered a hip
fracture, showing that Aclasta/Reclast reduces the risk of further
fractures and death in the studied population.
Research & Development update
Tasigna (nilotinib) received a positive opinion recommending European
approval and Swiss approval in the third quarter as a therapy for
patients with a certain form of chronic myeloid leukemia (CML)
resistant or intolerant to treatment with Gleevec/Glivec (imatinib).
A decision on the US submission is expected in 2007, while a
submission for Japanese approval was completed this year. Phase III
studies are underway in newly diagnosed CML patients and patients
responding sub-optimally to other therapies. A registration study is
also underway in gastrointestinal stromal tumors (GIST). Tasigna and
Gleevec/Glivec inhibit Bcr-Abl, the cause of Philadelphia
chromosome-positive chronic myeloid leukemia (Ph+ CML). Tasigna was
designed to be a more selective inhibitor of Bcr-Abl and its
mutations.
Galvus (vildagliptin), a new oral once-daily treatment for type 2
diabetes, received European Union approval in September, while a
single-tablet combination with the oral anti-diabetes medicine
metformin with the brand name Eucreas also received a positive
regulatory opinion in September recommending European Union approval.
In the US, Novartis is continuing discussions with the FDA on steps
needed for approval after having received an "approvable letter" in
February 2007 that included a request for additional data from
clinical trials.
FTY720 (fingolimod) has completed enrollment in the pivotal Phase III
trials for relapsing forms of multiple sclerosis (MS). These are the
FREEDOMS trial, a two-year placebo-controlled trial measuring
reductions in relapse frequency and disability progression in MS
patients and the one-year TRANFORMS trial comparing FTY720 with
interferon beta-1a (Avonex®). The extension of a Phase II trial has
shown sustained clinical benefits, indicating FTY720 could provide an
important new option for the estimated 2.5 million people worldwide
with this disabling neurological disease. Submission is on track for
2009.
RAD001 (everolimus), a once-daily oral inhibitor of the mTOR pathway
that has demonstrated broad clinical activity in multiple tumors,
achieved an important milestone in the third quarter by completing
enrollment in the metastatic renal cell carcinoma registration trial.
Registration trials are also underway in chemotherapy-refractory
pancreatic islet cell tumors (pICT) in the first- and second-line
setting and for chemo-refractory carcinoid tumors. RAD001 acts by
directly inhibiting tumor cell growth and metabolism as well as the
formation of new blood vessels (angiogenesis). First submissions
could be as early as 2008.
QAB149 (indacaterol), a once-daily long-acting beta-agonist with
24-hour bronchodilation and a fast onset of action, has completed
enrollment in a pivotal Phase III monotherapy trial in chronic
obstructive pulmonary disease (COPD). QAB149 is being developed with
other respiratory medicines and development compounds for COPD and
asthma.
ABF656 (Albuferon®) (albumin interferon alpha-2b) has completed
enrollment and initial dosing ahead of schedule in ACHIEVE 1, the
first of two pivotal Phase III trials for this long-acting interferon
for use in combination with ribavirin in treatment-naïve patients
with the liver disease chronic hepatitis C. Phase II results suggest
it may offer efficacy at least comparable to peginterferon alfa-2a,
with improved dosing convenience, comparable safety and possibly less
impairment of quality of life. Novartis and Human Genome Sciences
will co-promote Albuferon in the US, while Novartis will have
exclusive rights in the rest of the world. The first regulatory
submission is planned for 2009.
Disclaimer
This release contains certain forward-looking statements relating to
the Group's business, which can be identified by the use of
forward-looking terminology such as "outlook", "expected", "will",
"on track", "set", "intends", "prospects", "expectations",
"anticipated", "potential", "may", "planned", "potentially",
"believes", "pending", "promising", "pipeline", "approvable",
"plans", "could", "can", or similar expressions, or by express or
implied discussions regarding potential future revenues from any
particular products, or potential future sales or earnings of the
Novartis Group or any of its divisions or business units; potential
new products, or potential new indications for existing products, or
regarding potential future revenues from any such products; or by
discussions of strategy, plans, expectations or intentions. Such
statements reflect the current views of management with respect to
future events and are subject to certain known and unknown risks,
uncertainties, assumptions 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 particular products will reach any
particular sales levels. Neither can there be any guarantees that the
Novartis Group, or any of its divisions or business units, will
achieve any particular financial results. Nor can there be any
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 they will achieve any particular
revenue levels. 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; and other risks and
factors referred to in the Novartis Group's current Form 20-F on file
with the US Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or
expected. Novartis is providing the information in this press release
as of this date and does not undertake any obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
About Novartis
Novartis AG (NYSE: NVS) is a world leader in offering medicines to
protect health, cure disease and improve well-being. Our goal is to
discover, develop and successfully market innovative products to
treat patients, ease suffering and enhance the quality of life. We
are strengthening our medicine-based portfolio, which is focused on
strategic growth platforms in innovation-driven pharmaceuticals,
high-quality and low-cost generics, human vaccines and leading
self-medication OTC brands. Novartis is the only company with
leadership positions in these areas. In 2006, the Group's businesses
achieved net sales of USD 37.0 billion and net income of USD 7.2
billion. Approximately USD 5.4 billion was invested in R&D.
Headquartered in Basel, Switzerland, Novartis Group companies employ
approximately 100,000 associates and operate in over 140 countries
around the world. For more information, please visit
http://www.novartis.com.
Further important dates
January 17, 2008 Full-year and fourth quarter 2007 results
February 26, 2008 Annual General Meeting
April 21, 2008 First quarter 2008 results
July 17, 2008 Second quarter and first half 2008 results
October 20, 2008 Third quarter and first nine months 2008 results
[1] Zofran® is a registered trademark of GlaxoSmithKline, Toprol-XL®
is a registered trademark of AstraZeneca and Omnicef® is a registered
trademark of Abbott Laboratories
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/1160793/225250.pdf
Further language versions are available through the following links:
German version is available through the following link:
http://hugin.info/134323/R/1160791/225247.pdf
French version is available through the following link:
http://hugin.info/134323/R/1160792/225248.pdf
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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;
