Novartis delivers strong operational performance in the first half of
2009 driven by sustained Pharmaceuticals innovation
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* Pharmaceuticals an industry growth leader: Net sales up 12%
(local currencies) in first half of 2009 on contributions from
new products and expansion in all regions
* R&D maintains momentum: Anti-cancer therapy Afinitor introduced
in the US, awaiting EU approval; new biologic Ilaris and OTC
brand Prevacid 24HR gain US approvals; clinical trials set to
start in July for A(H1N1) pandemic flu vaccine
* H1 2009 operating results advance well, but impacted negatively
by currencies:
* Net sales of USD 20.3 billion grow 8% in local currencies
(lc), decline 2% in US dollars
* Operating income of USD 4.7 billion up 11% in constant
currencies and excluding exceptional items in both periods,
down 5% in US dollars
* Free cash flow before dividends advances 33% to USD 3.4
billion
* Net income of USD 4.0 billion falls 12%, includes negative
currency impact and Alcon financing costs
* Basic EPS: USD 1.76 in first half of 2009 vs. USD 2.01 in 2008
period
* Novartis reaffirms expectations for strong operational
performance in 2009 and record earnings in constant currencies
Key figures - Continuing operations
First half
H1 2009 H1 2008 % change
% of % of
net net
USD m sales USD m sales USD lc
Net sales 20 255 20 635 -2 8
Operating income 4 711 23.3 4 949 24.0 -5
Net income 4 019 19.8 4 574 22.2 -12
Basic earnings USD USD
per share 1.76 2.01 -12
Second quarter
Q2 2009 Q2 2008 % change
% of % of
net net
USD m sales USD m sales USD lc
Net sales 10 546 10 726 -2 8
Operating income 2 364 22.4 2 461 22.9 -4
Net income 2 044 19.4 2 266 21.1 -10
Basic earnings USD
per share 0.90 USD 0.99 -9
Basel, July 16, 2009 - Commenting on the results, Dr. Daniel Vasella,
Chairman and CEO of Novartis, said: "I am pleased that our
pharmaceuticals business continues to deliver double-digit underlying
growth, driven by the strong momentum of our recently launched
products. Our pipeline continues to deliver a steady stream of
innovative medicines. In the first six months of 2009 we have
introduced our new anti-cancer therapy Afinitor in the US and gained
first approval for llaris as a new biologic therapy for
auto-inflammatory diseases. We are advancing well in our efforts to
rapidly produce and commercialize a vaccine against the H1N1 virus,
with clinical trials set to begin in July. We continue to expect
record underlying results in constant currencies based on innovation
and productivity initiatives."
OVERVIEW
First half
Pharmaceuticals delivered strong and sustained growth to lead the
Group's healthcare portfolio. The division's net sales rose 12% in
local currencies (+3% in US dollars) thanks to rapid expansion of
recently launched products such as Lucentis, Exforge, Exjade, Exelon
Patch, Reclast/Aclasta, Tasigna, Tekturna/Rasilez and Galvus and
growth in all therapeutic franchises and regions. R&D highlights
included the US launch of the anti-cancer medicine Afinitor, which is
awaiting EU approval. US approvals were also granted for the biologic
therapy Ilaris for some auto-inflammatory conditions and the OTC
product Prevacid 24HR.
Challenging global economic conditions dampened growth in Consumer
Health (+1% lc), while Sandoz (+4% lc) achieved greatly improved
performances in many key markets outside the US.
Group net sales rose 8% in local currencies, but declined 2% in US
dollars to USD 20.3 billion. Solid operational gains were offset by
10 percentage points from the negative impact of the stronger US
dollar. Higher sales volumes contributed seven percentage points over
the 2008 period, while net price changes provided one percentage
point.
Operating income fell 5% to USD 4.7 billion, but rose 11% when
adjusted for the impact of currency movements, exceptional items and
the amortization of intangible assets in both periods. Significant
productivity gains in production, marketing and selling, and
administrative areas helped to finance R&D projects involving many
novel and potentially first-in-class compounds as well as rapid
expansion in high-growth markets.
Net income fell 12% to USD 4.0 billion, also impacted by financing
costs for the 25% Alcon stake acquired in mid-2008. Basic earnings
per share (EPS) declined to USD 1.76 in the first half of 2009 from
USD 2.01 in the year-ago period.
Second quarter
Net sales rose 8% in local currencies, but fell 2% to USD 10.5
billion from the loss of 10 percentage points of growth to currency
movements. The dynamic business expansion in Pharmaceuticals (+11%
lc) led the performance ahead of Sandoz (+4% lc) and Consumer Health
(+2% lc). Vaccines and Diagnostics (-15% lc) was hampered by
comparison to the prior year that included deliveries of H5N1
pandemic flu vaccines.
Operating income fell 4% to USD 2.4 billion, but rose 13% when
adjusted for the impact of adverse currency movements, exceptional
items and the amortization of intangible assets in both periods.
Net income fell 10% to USD 2.0 billion, affected by currency changes
and higher financing costs, which included a EUR 1.5 billion bond
issued in the second quarter of 2009. Basic earnings per share (EPS)
declined to USD 0.90 from USD 0.99 in the year-ago period.
Delivering sustainable growth by meeting broad healthcare needs
Results in the first half of 2009 confirm the Group's strong
operational performance as Novartis continues to focus on delivering
long-term sustainable growth from a portfolio that addresses broad
healthcare needs. The Group is selectively strengthening its
businesses, stepping up investments in innovation and expanding in
high-growth markets while improving organizational efficiency.
In Pharmaceuticals, ongoing dynamic growth of recently launched
products (+91% lc) provided USD 2.0 billion of net sales in the first
half of 2009, which represented 15% of net sales compared to 9% in
the first half of 2008. These contributions have made Novartis one of
the fastest-growing pharmaceutical companies in 2009 in terms of
local currency net sales. New products emerging from the R&D
pipeline, led by the anti-cancer medicine Afinitor, are expected to
further support the expansion underway in all therapeutic areas. Top
emerging markets also continue to deliver robust growth.
Vaccines and Diagnostics is making good progress in creating a
vaccine against the new strain of influenza A(H1N1). Novartis has
started large-scale antigen production at all sites in Europe, using
both traditional egg-based manufacturing as well as its faster
cell-based vaccine production capacity to maximize the potential
vaccine supply. Using cell-culture technology, first batches have
been successfully produced for both the wild virus strain and the
"reassortant seed" modified virus recommended by the WHO and health
authorities. Clinical trials will start in July for this vaccine.
Novartis has secured several orders for H1N1 vaccines amid
discussions with more than 35 governments. The US government has now
awarded Novartis two contracts totaling USD 979 million for future
purchase of H1N1 bulk vaccine and the Group's proprietary MF59
adjuvant, while contracts have also been received from other
countries.
Sandoz, a world leader in generics, is growing rapidly in selected
key markets and taking actions to broaden its product portfolio.
Sandoz agreed in May to acquire the generic oncology injectables
business of EBEWE Pharma for EUR 925 million (USD 1.3 billion), which
will create a new global growth platform and improve access to
oncology medicines. Sandoz is also addressing FDA concerns about the
Wilson manufacturing site in the US. An FDA inspection is anticipated
for the 2009 third quarter.
Consumer Health continues to focus on maximizing the value of its
trusted brands and expanding geographically, led by sustained growth
in CIBA Vision from the rollout of new contact lens products. In the
second quarter of 2009, Prevacid 24HR earned US regulatory approval
as the first OTC (over-the-counter) version of this proton pump
inhibitor for frequent heartburn; launch in the US is set for later
in 2009.
Expansion in targeted high-growth markets continues. Net sales in the
top six emerging markets rose 20% lc to USD 1.8 billion in the first
half of 2009, with only limited signs to date of an adverse impact
from global economic conditions.
Forward, an initiative for greater productivity, increased efficiency
and speed, is progressing rapidly ahead of schedule with USD 631
million of incremental savings in the first half of 2009, which are
being partially reinvested to bolster growth. Forward has now
achieved cumulative cost savings of USD 1.7 billion and exceeded the
2010 goal of USD 1.6 billion (compared to 2007) 18 months ahead of
plan.
Group outlook
(Barring any unforeseen events)
Novartis reaffirms expectations for strong underlying momentum in
2009, with Group net sales growing at a mid-single-digit rate in
local currencies. Pharmaceuticals net sales are now expected to
expand at a minimum high-single-digit rate in 2009, also in local
currencies. Underlying growth in operating and net income to record
levels in 2009, however, could be more than offset in reported
results by currency-related losses.
BUSINESS REVIEW
First half
Net sales
H1 2009 H1 2008 % change
USD m USD m USD lc
Pharmaceuticals 13 548 13 192 3 12
Vaccines and Diagnostics 494 602 -18 -9
Sandoz 3 500 3 854 -9 4
Consumer Health continuing operations 2 713 2 987 -9 1
Net sales from continuing operations 20 255 20 635 -2 8
Pharmaceuticals: USD 13.5 billion (+3%, +12% lc)
Dynamic local currency growth driven by double-digit advances in all
regions, particularly Europe (USD 4.9 billion, +12% lc) and the US
(USD 4.6 billion, +11%), and also Japan (USD 1.5 billion, +10% lc)
following the launches of four newly approved medicines in early
2009. The six targeted emerging markets of Brazil, China, India,
Russia, South Korea and Turkey (USD 1.2 billion, +22% lc) maintained
a rapid expansion pace.
New launches and the rollout of new products - led by Lucentis,
Exforge, Exjade, Exelon Patch, Reclast/Aclasta and Tekturna/Rasilez -
contributed USD 2.0 billion of net sales in the 2009 period. This
represented 15% of division net sales compared to 9% in the first
half of 2008. Product launches also contributed eight percentage
points of the division's local currency net sales growth of 12% lc.
All therapeutic franchises expanded at double-digit rates. Oncology
(USD 4.2 billion, +15% lc), the largest franchise, kept up a strong
pace thanks to Gleevec/Glivec (USD 1.9 billion, +15% lc), Femara (USD
596 million, +15% lc) and Exjade (USD 295 million, +35% lc). The
strategic Cardiovascular franchise (USD 3.6 billion, +14% lc) showed
solid growth, helped by the new high blood pressure medicines Exforge
(USD 304 million) and Tekturna/Rasilez (USD 119 million) that
contributed more than seven percentage points of incremental growth.
Diovan (USD 2.9 billion, +6% lc) showed double-digit gains in Japan
and solid advances in Europe and the US. Neuroscience and Ophthalmics
(USD 2.1 billion, +11% lc) was driven by Lucentis (USD 523 million,
+42% lc) and Exelon Patch (USD 214 million) as well as initial
contributions from Extavia (USD 12 million).
Vaccines and Diagnostics: USD 494 million (-18%, -9% lc)
Higher deliveries of seasonal flu vaccines to the Southern Hemisphere
as well as for pediatric vaccine components and rabies vaccines in
the 2009 period more than offset a decline in TBE (tick-borne
encephalitis) vaccines, which reflected markets reaching the end of
the catch-up phase in central Europe. The absence of H5N1 pandemic
flu vaccine sales weighed on the 2009 performance compared to the
2008 period.
Sandoz: USD 3.5 billion (-9%, +4% lc)
Solid sales growth in local currencies was seen in all regions
outside the US, led by Central and Eastern Europe (+12% lc) and
Asia-Pacific (+26% lc). Also contributing were the three approved
Sandoz biosimilars (+62% lc). Market share gains were seen in Germany
(+3% lc) in a declining market. Sales in the US (-1% lc) fell mostly
due to price erosion as well as limited new product launches and the
impact of ongoing lost sales from remediation of the Wilson
manufacturing site.
Consumer Health: USD 2.7 billion (-9%, +1% lc)
CIBA Vision benefited from solid expansion and market share gains for
new contact lens products. Animal Health was largely unchanged as the
farm animal business recovered from 2008, but reduced consumer
spending affected the companion animal business. Despite adverse
global market conditions, OTC net sales (lc) were in line with the
2008 period.
Operating income
H1 2009 H1 2008 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 4 275 31.6 4 274 32.4 0
Vaccines and Diagnostics -234 -128
Sandoz 538 15.4 591 15.3 -9
Consumer Health continuing
operations 506 18.7 566 18.9 -11
Corporate Income & Expense, net -374 -354
Operating income
from continuing operations 4 711 23.3 4 949 24.0 -5
Pharmaceuticals: USD 4.3 billion (+0%)
Reported operating income was affected by the negative impact of
currencies (-11 percentage points) and lower favorable exceptional
items (-4 percentage points). Excluding these effects, underlying
operating income advanced 15% thanks to the double-digit sales
expansion and productivity savings, outpacing the 12% lc net sales
expansion. Adjusted for intangible asset charges and exceptional
items, the operating margin was 33.0% in the 2009 period compared to
32.6% in 2008. Cost of Goods Sold was steady at 16.7% of net sales,
while other revenues fell 0.9 percentage points following the end of
Betaseron® royalty receipts in late 2008. R&D investments rose to
20.5% of net sales from 20.2% in the 2008 period. Marketing & Sales
expenses fell to 29.6% in 2009 from 30.4% in the first half of 2008.
Productivity gains of USD 458 million enabled both underlying margin
improvements and significant investments to support launches and
hypergrowth plans in Oncology and targeted emerging markets.
Vaccines and Diagnostics: USD -234 million
The adjusted operating loss, which excludes exceptional items and the
amortization of intangible assets, rose to USD 35 million compared to
a loss of USD 4 million in the year-ago period. Results for the 2009
period included a USD 45 million legal charge, while the 2008 first
half included a USD 49 million exceptional gain for a diagnostics
license fee.
Sandoz: USD 538 million (-9%)
Volume expansion in many key markets and ongoing productivity gains
were more than offset by lower contributions from the US and negative
currency movements of about 13 percentage points. Marketing & Sales
and R&D both fell as a percentage of net sales despite continued
expansion in growth markets and new product development. Cost of
Goods Sold rose on changes in product mix due to a lack of major US
product launches.
Consumer Health: USD 506 million (-11%)
In constant currencies, operating income improved 7% over the
year-ago period on the strength of business expansion and supply
chain productivity gains in CIBA Vision.
Corporate Income & Expense, net
The increase in net corporate expenses was due mainly to higher
pension expenses.
Second quarter
Net sales
Q2 2009 Q2 2008 % change
USD m USD m USD lc
Pharmaceuticals 7 115 6 928 3 11
Vaccines and Diagnostics 247 322 -23 -15
Sandoz 1 774 1 948 -9 4
Consumer Health continuing operations 1 410 1 528 -8 2
Net sales from continuing operations 10 546 10 726 -2 8
Pharmaceuticals: USD 7.1 billion (+3%, +11% lc)
Continuing the strong momentum of the 2009 first quarter, all regions
showed double-digit underlying net sales growth. Europe (USD 2.6
billion, +12% lc), the division's largest region, had strong
incremental growth from recently launched products. The US (USD 2.4
billion, +9%) also benefited from expansion of the rejuvenating
product portfolio. In addition, Canada and Latin America (USD 607
million, +12% lc) delivered strong performances. The six targeted
emerging markets of Brazil, China, India, Russia, South Korea and
Turkey (USD 651 million, +25% lc) all advanced rapidly and were led
by Russia, Turkey and China.
Recently launched products delivered USD 1.1 billion of net sales in
the second quarter of 2009, representing 16% of the division's net
sales compared to 10% in the 2008 quarter. These new products also
provided eight percentage points of the 11% lc net sales growth in
the 2009 period.
All therapeutic franchises delivered improvements in underlying
sales, led by Oncology (USD 2.2 billion, +17% lc) benefiting from
broad advances and the US launch of Afinitor. The strategic
Cardiovascular franchise (USD 1.9 billion, +14% lc) was helped by
Exforge and Tekturna/Rasilez. Neuroscience and Ophthalmics (USD 1.1
billion, +10% lc) saw rapid gains for Lucentis and Exelon Patch.
Vaccines and Diagnostics: USD 247 million (-23%, -15% lc)
Lower sales of TBE (tick-borne encephalitis) vaccines and the lack of
H5N1 vaccine sales led to the decline. No sales were booked in the
2009 quarter for initial orders of H1N1 pandemic flu vaccines.
Sandoz: USD 1.8 billion (-9%, +4% lc)
Maintaining the pace of the 2009 first quarter, top markets achieved
strong performances and were led by Asia-Pacific (+24% lc), Central
and Eastern Europe (+6% lc) and Germany (+4% lc). The US (+2% lc)
returned to year-on-year quarterly growth for the first time since
the fourth quarter of 2007.
Consumer Health: USD 1.4 billion (-8%, +2% lc)
New contact lens product launches underpinned local currency growth
and market share gains for CIBA Vision. The Animal Health farm
business and OTC expanded in North America ahead of their respective
markets, while the overall businesses continued to suffer from
reduced consumer spending and wholesaler destocking due to credit
pressures.
Operating income
Q2 2009 Q2 2008 Change
% of % of
net net
USD m sales USD m sales %
Pharmaceuticals 2 213 31.1 2 178 31.4 2
Vaccines and Diagnostics -167 -75
Sandoz 247 13.9 246 12.6 0
Consumer Health continuing
operations 271 19.2 304 19.9 -11
Corporate Income & Expense,
net -200 -192
Operating income
from continuing operations 2 364 22.4 2 461 22.9 -4
Pharmaceuticals: USD 2.2 billion (+2%)
Operating income improved while absorbing the negative impact of
currencies (-10 percentage points) and reduced favorable exceptional
items (-5 percentage points). Excluding these effects, underlying
operating income advanced 17% thanks to the strong business expansion
and increased productivity gains, outpacing the 11% lc net sales
growth. The adjusted operating margin rose 1.1 percentage points to
32.7% of net sales in 2009 compared to 31.6% in 2008. The end of
Betaseron® royalty receipts in late 2008 led to a decline of 0.9
percentage points in other revenues. Cost of Goods Sold improved by
0.7 percentage points to 16.6% of net sales mainly from product mix.
R&D investments rose 0.7 percentage points to 20.3% of net sales to
support late-stage projects and biologics. Marketing & Sales fell 0.8
percentage points to 29.6% of net sales. Productivity savings enabled
both underlying margin improvements and significant investments to
bolster growth.
Vaccines and Diagnostics: USD -167 million
Excluding exceptional items and amortization of intangible assets,
the adjusted operating loss was USD 46 million in the second quarter
of 2009 compared to adjusted operating income of USD 16 million in
the 2008 period.
Sandoz: USD 247 million (+0%)
The operating margin rose 1.3 percentage points to 13.9% from the
2008 quarter as focused efforts on productivity gains, including
reductions in Cost of Goods Sold and total function costs, helped
maintain profitability at the prior-year level despite negative
currency movements (-12 percentage points) and lower contributions
from the US.
Consumer Health: USD 271 million (-11%)
Significant R&D investments across all businesses were financed by
productivity gains in marketing, general and administrative expenses.
Operating income grew 5% over the year-ago period in constant
currencies.
Corporate Income & Expense, net
Net corporate expenses in the second quarter of 2009, which were
slightly higher than the year-ago period, included higher pension
expenses.
FINANCIAL REVIEW
First half and second quarter
H1 H1 Change Q2 Q2 Change
2009 2008 2009 2008
USD m USD m % USD m USD m %
Operating income
from continuing
operations 4 711 4 949 -5 2 364 2 461 -4
Income from
associated
companies 207 256 -19 124 119 4
Financial income 43 233 -82 91 85 7
Interest expense -222 -118 88 -136 -61 123
Taxes -720 -746 -3 -399 -338 18
Net income
from continuing
operations 4 019 4 574 -12 2 044 2 266 -10
Net income
from discontinued
operations 9 -6
Total net income 4 019 4 583 -12 2 044 2 260 -10
Income from associated companies
The decline in income from associated companies in the first half of
2009 resulted mainly from reduced contributions from the Roche stake,
which included a negative adjustment of USD 40 million since Roche's
reported 2008 results were lower than anticipated. However, income
from associated companies rose 4% in the second quarter of 2009 to
USD 124 million on increased contributions from both the Roche and
Alcon investments.
Financial result, net
Average net debt in the 2009 first half amounted to USD 2.3 billion
compared to average net liquidity of USD 5.9 billion in 2008,
reflecting the mid-2008 purchase of the Alcon stake. As a result, and
also due to currency losses and lower financial yields, financial
income in the first half fell by USD 190 million to USD 43 million.
Also in the first half of 2009, interest expense rose to USD 222
million, which included an additional expense of USD 136 million in
the 2009 period for the US dollar and Euro bonds issued in the first
half of 2009 and the Swiss franc bonds issued in mid-2008. In the
second quarter of 2009, financial income was up 7% over the year-ago
period, but interest expenses more than doubled due to the issuance
of debt.
Taxes
The tax rate (taxes as a percentage of pre-tax income) was 15.2% in
the first half of 2009 compared to 14.0% in the year-ago period based
on a reassessment of the Group's anticipated full-year tax rate. This
resulted in a substantial increase in the tax rate to 16.3% for the
second quarter of 2009 compared to 13.0% in the year-ago period.
Net income from continuing operations
Among factors for the 12% decline in net income to USD 4.0 billion in
the first half of 2009 were reduced contributions from the operating
businesses and associated companies as well as higher financial
charges. These same factors also weighed on net income in the second
quarter of 2009, which fell 10% to USD 2.0 billion.
Basic earnings per share
Basic earnings per share (EPS) from continuing operations were USD
1.76 per share in the first half of 2009, down from USD 2.01 in the
2008 period, in line with the decline in net income. For the second
quarter, basic EPS also fell in line with net income, declining 9% to
USD 0.90 per share from USD 0.99 in the prior-year quarter.
Balance sheet
Total assets increased to USD 84.3 billion at the end of the first
half of 2009 compared to USD 78.3 billion at the end of 2008, mainly
reflecting proceeds from recent bond issues that are held as cash and
marketable securities.
The Group's equity was largely unchanged at USD 50.5 billion at the
end of the first half of 2009 compared to USD 50.4 billion at the end
of 2008 as net income of USD 4.0 billion in the 2009 period was
largely offset by the dividend payment in the 2009 first quarter
amounting to USD 3.9 billion, an 18% increase in US dollars from the
2008 dividend payment of USD 3.3 billion.
The Group's debt/equity ratio rose to 0.27:1 at the end of the first
half of 2009 from 0.15:1 at the end of 2008, reflecting the
successful issuance of a USD 5 billion bond (two tranches) in the US
in the first quarter and the launch of a EUR 1.5 billion bond in the
second quarter. At the end of the first half of 2009, financial debt
of USD 13.9 billion consisted of USD 4.7 billion in current and USD
9.2 billion in non-current liabilities.
Overall liquidity increased to USD 11.8 billion at June 30, 2009,
from USD 6.1 billion at the end of 2008. Taking into account the debt
raised in 2009, net debt increased to USD 2.1 billion at June 30,
2009, from USD 1.2 billion at December 31, 2008, and net liquidity of
USD 5.5 billion at June 30, 2008.
Credit agencies maintained their ratings of Novartis debt during the
first half of 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 from continuing operations rose
29% to USD 4.6 billion in the first half of 2009 compared to the
year-ago period as a result of improved working capital management as
well as lower financial and tax payments in the first six months of
2009 compared to the prior-year period. Operating cash flow in the
first half of 2008 also included restructuring payments for the
Forward productivity initiative.
A substantial portion of proceeds from the US dollar and euro bond
issues in the first half of 2009 were reinvested into marketable
securities, resulting in an outflow of USD 5.6 billion in cash flow
from investing activities in the first half of 2009 compared to an
inflow of USD 4.5 billion in the year-ago period. Cash inflows from
financing activities were a net USD 2.5 billion in the 2009 first
half, composed of a combined USD 7.1 billion of proceeds from the
bond issues that were partially offset by the dividend payment for
2008 of USD 3.9 billion and other items totaling USD 0.7 billion.
PHARMACEUTICALS PRODUCT REVIEW
Note: Net sales growth data refer to year-to-date 2009 performance in
local currencies.
Strategic Cardiovascular franchise
The strategic Cardiovascular franchise (USD 3.6 billion, +14% lc)
showed solid growth on expansion of the high blood pressure medicines
Exforge and Tekturna/Rasilez, providing more than seven percentage
points of franchise net sales gains in the 2009 first half. Diovan
underpinned the franchise with rising contributions in all markets,
leading to overall gains in the US and global antihypertension market
segments.
Diovan (USD 2.9 billion, +6% lc) benefited from double-digit growth
in Japan, which now accounts for about 20% of net sales, and a solid
performance in Europe ahead of the anticipated entry of generic
versions as early as the second half of 2009 of losartan, another
medicine in the angiotensin receptor blockers (ARB) segment. In the
US, Diovan (+5%) continues to grow solidly despite generic versions
of rival high blood pressure medicines in other classes.
Exforge (USD 304 million +96% lc), a single pill containing the
angiotensin receptor blocker Diovan (valsartan) and the calcium
channel blocker amlodipine, has been steadily outpacing the high
blood pressure medicine market due to its differentiated efficacy
profile. Exforge HCT, which includes the addition of a diuretic to
this combination, received US regulatory approval in April 2009 as
the only high blood pressure therapy with three medicines in one
pill.
Tekturna/Rasilez (USD 119 million, +117% lc), the first new type of
high blood pressure medicine in more than a decade, has accelerated
its growth pace thanks to an increasing body of data affirming its
ability to reduce blood pressure for more than 24 hours, its
potential benefits for organ protection, and its consistent
superiority in clinical trials over ramipril, a leading ACE inhibitor
(another class of high blood pressure medicines). Data from the
ASPIRE HIGHER outcomes program and various single-pill combinations
with other medicines are expected to drive future growth. Rasilez
HCT, a single-pill combination with a diuretic, has been launched in
Europe after approval in January 2009. This combination is available
in the US as Tekturna HCT. A single-pill combination with valsartan
was also submitted for European approval in June 2009, matching a US
submission in late 2008. Another combination with amlodipine is on
track for US and EU submissions in 2009.
Oncology
Gleevec/Glivec (USD 1.9 billion, +15% lc), a targeted therapy for
certain 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. Glivec received European
regulatory approval in May 2009 as a post-surgery (adjuvant setting)
therapy for GIST following Swiss (February 2009) and US (December
2008) approvals.
Tasigna (USD 88 million), a second-line therapy for patients with a
form of chronic myeloid leukemia (CML) resistant or intolerant to
prior therapy, including Gleevec/Glivec, has been expanding quickly
in the US, Germany and the UK while also demonstrating potential to
become a leading therapy for newly diagnosed CML patients. Phase II
data at the European Hematology Association meeting in June
demonstrated that patients treated with Tasigna at 12 months had
rapid responses and a deep reduction in the amount of the abnormal
protein that causes CML. Results from a Phase III trial comparing
Tasigna and Gleevec/Glivec are expected in 2010. A first-line study
in GIST began enrollment in March.
Zometa (USD 701 million, +10% lc), an intravenous bisphosphonate
therapy for patients with cancer that has spread to the bones, has
been growing due to improved compliance and use in existing
indications. Also supporting the broad expansion have been landmark
data first presented in 2008, and published in early 2009 in "The New
England Journal of Medicine," that showed the significant anti-cancer
benefit of Zometa in reducing the risk of cancer recurrence or death
in premenopausal women with hormone-sensitive, early-stage breast
cancer. Studies are underway to review the potential anti-cancer
benefits of Zometa in other tumor types.
Femara (USD 596 million, +15% lc), an oral therapy for women with
hormone-sensitive breast cancer, continued with strong growth in 2009
on the back of gains in the European initial post-surgery (adjuvant
setting) segment. The entry of generic competition in some markets,
however, had a modest impact on the positive performance.
Sandostatin (USD 539 million, +6% lc), for acromegaly and
neuroendocrine tumors of the gastrointestinal tract and pancreas,
benefited from increasing use of Sandostatin LAR, the once-monthly
version that accounts for nearly 90% of net sales. Updated Phase III
data presented at the American Society of Clinical Oncology (ASCO)
meeting in May further demonstrated a significant delay in tumor
progression in patients with metastatic neuroendocrine tumors of the
midgut who were treated with Sandostatin LAR. These data formed the
basis of the recent US National Comprehensive Cancer Network (NCCN)
update on treatment guidelines for neuroendocrine tumors.
Exjade (USD 295 million, +35% lc), approved in more than 90
countries as the only once-daily oral therapy for transfusional iron
overload, recently received regulatory approvals in Brazil, the US
and Canada for a new dose of 40 mg/kg, which provides a new option
for patients who require higher dose titration for iron chelation.
This new dose was also approved in Switzerland in early 2009.
Afinitor (USD 12 million), an oral inhibitor of the mTOR pathway, was
launched in the US after regulatory approval was granted in March as
the first therapy for patients with advanced renal cell carcinoma
(kidney cancer) after failure of treatment with sunitinib or
sorafenib. European Union regulatory approval is anticipated soon,
after the Committee for Medicinal Products (CHMP) issued a positive
opinion in May supporting approval in renal cell carcinoma following
progression on VEGF-targeted therapy. Afinitor is being studied in
many cancer types: Phase III studies are underway in neuroendocrine
tumors (NET), breast cancer, lymphoma and tuberous sclerosis complex
(TSC), while Phase III trials are planned to be initiated in
hepatocellular carcinoma (HCC) and gastric cancer. A Phase III trial
in carcinoids (a type of NET) is ongoing and will continue through to
final analysis, with regulatory submissions for this indication
expected in 2010. Positive data have also recently been presented
from early clinical studies in HCC and lymphoma. This product's
active ingredient, everolimus, is the same as in the transplant
therapy Certican.
Other Pharmaceuticals products
Lucentis (USD 523 million, +42% lc), a biotechnology eye therapy
approved in more than 80 countries, generated ongoing dynamic growth
in Europe, Latin America, Japan and key emerging markets based on its
status as 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. Genentech holds the US rights to
this medicine.
Exelon/Exelon Patch (USD 436 million, +24% lc), a therapy for mild to
moderate forms of Alzheimer's disease dementia and also dementia
linked with Parkinson's disease, has seen dynamic growth in the US
and Europe since the late 2007 launch of Exelon Patch, a novel skin
patch, that accounts for about half of franchise net sales.
Reclast/Aclasta (USD 200 million, +105% lc), the first once-yearly
infusion therapy for osteoporosis, has been fueled by increasing
patient access to infusion centers in the US and Europe as well as a
growing list of approved indications for use in a broad range of
patients suffering from various types of this debilitating disease.
Reclast/Aclasta, approved for five indications, gained additional US
approval in May as the only therapy to prevent postmenopausal
osteoporosis with convenient, less-frequent dosing, while European
approval was granted in June for treatment of osteoporosis caused by
steroid treatment in men and postmenopausal women, an indication
already approved in the US.
Xolair (USD 140 million, +67% lc, Novartis sales), a biotechnology
drug for moderate to severe persistent asthma in the US and allergic
asthma in Europe, has grown strongly thanks to its approval in more
than 60 countries, including the Japan launch in early 2009. Novartis
co-promotes Xolair with Genentech in the US and shares a portion of
operating income. Genentech's US sales were USD 277 million in the
first half of 2009.
Galvus/Eucreas (USD 65 million), two oral treatments for type 2
diabetes, have grown strongly during the rollout since 2008 in many
European, Latin American and Asia-Pacific markets. Galvus is approved
in 60 countries, while Eucreas (a single-pill combination with the
oral anti-diabetes medicine metformin) is now available in 21
countries.
Extavia (USD 12 million), for patients with some forms of multiple
sclerosis (MS), has been prescribed for use by about 3,000 patients
in Europe since the early 2009 launch that marks the entry of
Novartis into this disease area. Extavia is the same medicinal
product as Betaferon®/ Betaseron®, which is marketed by Bayer
Schering. Novartis gained rights to its own branded version in
agreements with Bayer Schering after Novartis fully acquired Chiron.
Novartis expects to launch Extavia in the US in 2009.
R&D UPDATE
Pharmaceuticals
Ilaris (canakinumab, formerly ACZ885), a human antibody targeting
IL-1 beta, received US regulatory approval in June as a new therapy
to treat children as young as four years old and adults with CAPS
(Cryopyrin-Associated Periodic Syndromes), a group of serious
life-long auto-inflammatory diseases. Decisions are pending on
regulatory submissions in several countries, including Europe, Canada
and Switzerland. Data from a one-year Phase III trial published in
"The New England Journal of Medicine" in June confirmed that Ilaris
offered rapid and long-term clinical remission in CAPS patients.
Studies are underway in other disease areas believed to involve IL-1
beta, including some forms of gout, Systemic Juvenile Idiopathic
Arthritis (SJIA), Chronic Obstructive Pulmonary Disease (COPD) and
type 2 diabetes.
Coartem (artemether/lumefantrine), the leading artemisinin-based
combination treatment for malaria, received US regulatory approval in
April. Novartis has provided more than 250 million Coartem treatments
to date for public-sector use in malaria-endemic regions.
QAB149 (indacaterol), a bronchodilator in development for Chronic
Obstructive Pulmonary Disease (COPD), has been shown in Phase III
clinical trials to significantly improve lung function over the
currently available treatments formoterol and tiotropium at three
months of therapy. QAB149 also improved symptom control in COPD, a
life-threatening lung condition affecting 210 million people
worldwide. Further Phase III data will be presented at the European
Respiratory Society meeting in September 2009. QAB149, which is
expected to form the cornerstone of planned combination therapies in
development against COPD, was submitted for US and European
regulatory review in late 2008.
FTY720 (fingolimod), a novel oral development therapy for multiple
sclerosis, showed continued low relapse rates after four years in
patients with relapsing-remitting MS in an open-label Phase II
extension study. The data, presented at the American Academy of
Neurology (AAN) meeting in April, also showed no significant change
in the safety profile from three to four years. Data at AAN from
TRANSFORMS, a one-year Phase III trial against interferon beta-1a
(Avonex®), showed 80-83% of MS patients given FTY720 were
relapse-free for one year compared to 69% of patients treated with
Avonex® (p<0.001), with a safety profile for FTY720 in line with
previous experience. US and European regulatory submissions are
expected by the end of 2009. Initial results of the Phase III
placebo-controlled FREEDOMS trials are also expected in the fourth
quarter of 2009.
Certican (everolimus), an oral inhibitor of the mTOR pathway, was
submitted for US regulatory approval in June for use in kidney
transplant patients. Results of a one-year study, which was
undertaken in response to "approvable letters" from the FDA, achieved
primary efficacy and renal function targets and were also consistent
with experience seen in 70 countries - including in Europe - where
this medicine has been approved. Everolimus is also the active
ingredient in the anti-cancer therapy Afinitor, which has been
approved in the US.
AGO178 (agomelatine), a once-daily investigational treatment for
patients with major depression, will be studied in additional Phase
III trials to further explore the benefit/risk and pharmacokinetic
profile of this compound. A recent review of data from previous Phase
III trials confirmed the known efficacy and safety profile of the
drug. Submission for US regulatory approval, which had been
anticipated in 2009, is now expected in 2012. The US rights to this
compound were acquired in March 2006 from Servier.
Vaccines and Diagnostics
Menveo, which was submitted in 2008 for US regulatory approval as a
new vaccine to protect against four common types of meningococcal
meningitis in people age 11-55, has received a Complete Response
letter from the FDA requesting additional information on the
submission's clinical and CMC (Chemistry Manufacturing and Control)
sections. No new clinical trials are required, and Novartis expects
to respond to all questions fully in 2009. Menveo was also submitted
in 2008 for regulatory approval in Europe for use in adolescents
(from age 11) and adults. Clinical trials are underway in other age
groups, including as young as from two months, to protect against the
serogroups A, C, W-135 and Y found with this often-fatal bacterial
infection.
Sandoz
Omnitrope, the pioneering biosimilar of the recombinant human growth
hormone somatropin, has received regulatory approval as the
first-ever biosimilar in Japan under the brand name Somatropin BS
S.C. This approval paves the way for greater access to high-quality
biopharmaceuticals in the world's second-largest pharmaceuticals
market and comes about three months after Japanese authorities
published guidelines for a biosimilar regulatory pathway, which is
based on similar scientific principles already in place in the
European Union. Sandoz pioneered the field of biosimilars with the
approval and launch of Omnitrope in the US and Europe. Omnitrope was
also approved in Canada in 2009. Sandoz is the only company with
three approved biosimilars in Europe: Omnitrope, Binocrit (epoetin
alfa) and Zarzio (filgrastim).
OTC
Prevacid 24HR (lansoprazole delayed-release capsules 15 mg), a
once-daily proton pump inhibitor, received US regulatory approval in
May as the first and only OTC (over-the-counter) version of this
popular prescription medicine. The FDA granted three years of
marketing exclusivity for the 15 mg OTC dose, meaning that no branded
or private label competition is allowed before May 2012. Prevacid
24HR is expected to be available in the US later in 2009. Novartis
gained the rights for OTC development and commercialization of
Prevacid® from Takeda Pharmaceuticals North America, Inc.
Disclaimer
This release contains certain forward-looking statements relating to
the Group's business, which can be identified by terminology such as
"momentum," "awaiting," "set," "expectations," "pipeline," "expect,"
"potentially," "sustainable," "expected," "potential," "will,"
"planned," "outlook," "could", "anticipated," "expects," "paves the
way," "may," 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
October 22, 2009 Third quarter and first nine months
2009 results
December 9, 2009 Novartis investor event: Oncology and
pipeline update (Basel)
January 2010 Fourth quarter and full-year 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/1307495/301013.pdf
Further language versions are available through the following links:
German version is available through the following link:
http://hugin.info/134323/R/1307487/301012.pdf
French version is available through the following link:
http://hugin.info/134323/R/1307488/301011.pdf
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Novartis International AG
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