TIDM68CT
NOVARTIS FINANCE S.A. / Novartis delivered solid sales and profit growth
in the first quarter of 2014; strong innovation reinforces growth
prospects as company transforms portfolio . Processed and transmitted by
NASDAQ OMX Corporate Solutions. The issuer is solely responsible for the
content of this announcement.
-- Net sales of USD 14.0 billion up 1%[1] (+3% cc[2]) with all divisions
contributing to growth (cc); core operating leverage (cc) driven by
Pharmaceuticals and lower Corporate costs
-- Operating income of USD 3.5 billion (+22%, +31% cc), including a
USD 0.9 billion pre-tax gain from the divestment of the blood
transfusion diagnostics unit
-- Core[2] operating income of USD 3.7 billion (0%, +6% cc)
-- Core EPS of USD 1.31 (+1%, +6% cc)
-- Free cash flow[2] of USD 0.8 billion (-38%)
-- Progress in innovation, including key approvals, recommendations and
positive data
-- Xolair approved in EU and US for chronic spontaneous/idiopathic
urticaria (CSU/CIU)
-- Phase III trial of LCZ696 in chronic heart failure closes early
due to strength of interim results
-- Bexsero recommended for inclusion in UK's National Immunisation
Programme and received FDA Breakthrough Therapy designation in the
US
-- Acquired CoStim Pharmaceuticals to accelerate cancer immunotherapy
program and strengthen combination therapies
-- Portfolio rejuvenation continued, reinforcing our ability to grow through
patent expiries
-- Growth products[3] contributed USD 4.3 billion or 31% of Group net
sales (+17% USD)
-- Strong performance in Emerging Growth Markets[3] (+9% cc), led by
China (+17% cc)
-- Novartis announced portfolio transformation and shared services
organization
-- Portfolio review resulted in agreements with GSK and Lilly on
transformative transactions
-- Novartis Business Services intended to provide harmonized, quality
services at lower cost
-- 2014 Group outlook unchanged
Key figures excluding Diagnostics[1] Reported
Q1 2014 Q1 2013 % change Q1 2013
USD m USD m USD cc USD m
Net sales 14 022 13 879 1 3 14 016
Operating income 3 489[4] 2 849 22 31 2 896
Net income 2 968[4] 2 393 24 30 2 422
EPS (USD) 1.21[4] 0.97 25 30 0.98
Free cash flow 765 1 240 -38 1 298
Core
Operating income 3 657 3 651 0 6 3 714
Net income 3 212 3 209 0 6 3 248
EPS (USD) 1.31 1.30 1 6 1.32
[1] Changes from prior year based on pro forma 2013 data, excluding the
blood transfusion diagnostics unit. See page 2.
[2] Constant currencies (cc), core results, and free cash flow are
non-IFRS measures. An explanation of these non-IFRS measures and
reconciliation tables can be found beginning on page 36 of the Condensed
Interim Financial Report.
[3] Growth products are defined on page 2, and Emerging Growth Markets
are defined on page 6.
[4] Includes the USD 0.9 billion pre-tax gain from the divestment of the
blood transfusion diagnostics unit.
Basel, April 24, 2014 - Commenting on the results, Joseph Jimenez, CEO
of Novartis, said:
"Novartis delivered a solid quarter, with all divisions contributing to
growth. We made progress in innovation, including EU and US approval of
Xolair in chronic spontaneous urticaria and significant milestones for
Bexsero. The transformational deals announced on Tuesday position the
company for future success based on our sharpened focus, innovation
power and financial strength."
GROUP REVIEW
Strategy update
Subsequent to the quarter end, on April 22, Novartis announced that it
had reached definitive agreements with GlaxoSmithKline plc (GSK) and Eli
Lilly and Company (Lilly) on a set of transactions.
In an inter-conditional transaction with GSK: (1) Novartis agreed to
acquire GSK oncology products and to become GSK's preferred
commercialization partner for its oncology pipeline for a USD 14.5
billion payment and up to USD 1.5 billion contingent on a development
milestone; (2) Novartis and GSK agreed to create a world-leading
consumer healthcare business in a joint venture of which Novartis would
own 36.5%; and (3) Novartis divested its Vaccines Division (excluding
flu) to GSK for up to USD 7.1 billion plus royalties. The USD 7.1
billion consists of USD 5.25 billion upfront and up to USD 1.8 billion
in milestones. In addition, Novartis agreed to divest its Animal Health
Division to Lilly for approximately USD 5.4 billion.
These transactions are consistent with our strategy to lead through
science-based innovation and would further accelerate our future growth.
The acquisition of GSK oncology products would strengthen the
Pharmaceuticals Division and Oncology business, leveraging its
development and commercial capabilities. The creation of a world-leading
consumer healthcare business with GSK would offer scale, complementary
portfolios and complementary geographic footprint. The divestiture of
Novartis Vaccines (excluding flu) to GSK would maximize the value of the
Vaccines pipeline, including Bexsero, and create a global vaccines
leader. The divestiture of the Animal Health Division to Lilly would
recognize the full value of the business and an appropriate share of
expected synergies, while creating a global animal health leader under
Lilly's ownership.
These transactions would provide a strong financial proposition for
Novartis. From year one after closing, we expect an improvement in
growth rates of sales, core operating income and core operating income
margin, with each component of the deals creating value.
All transactions are subject to closing conditions, including anti-trust
approvals, and the GSK transaction is subject to approval by GSK
shareholders. The transaction with Lilly is expected to close by the end
of the first quarter of 2015 and the transaction with GSK is expected to
close during the first half of 2015.
First quarter
Group net sales grew on strong execution of growth products[1]
Novartis completed the divestment of the blood transfusion diagnostics
unit contained within its Vaccines and Diagnostics Division on January
9, 2014. The former Vaccines and Diagnostics unit is now called the
Vaccines Division, effective from January 1, 2014. The pro forma data
contained within this release excludes, from January 1, 2013, the
results of the blood transfusion diagnostics unit from the 2013 Novartis
Group and Vaccines and Diagnostics divisional data.[2] All comparisons
to prior year for Group and Vaccines are versus pro forma.
Group net sales increased 1% (+3% cc) to USD 14.0 billion in the first
quarter. Currency had a negative impact of 2 percentage points, mainly
due to the weakened yen and weakening emerging market currencies against
the US dollar, partly offset by a stronger euro. Growth products
contributed USD 4.3 billion or 31% of Group net sales, up 17% (USD) over
the prior-year quarter.
Group operating income increased 22% (+31% cc) to USD 3.5 billion,
mainly due to a USD 0.9 billion exceptional gain from the divestment of
the blood transfusion diagnostics unit to Grifols S.A. The negative
currency impact of 9 percentage points was mainly due to the further
strengthening of the Swiss franc and weakening of the yen and emerging
market currencies in the first quarter. Operating income margin
increased by 4.4 percentage points to 24.9% of net sales. The
adjustments made to Group operating income to arrive at core operating
income amounted to USD 0.2 billion (2013: USD 0.8 billion).
Core operating income was USD 3.7 billion (0%, +6% cc). Core operating
income margin in constant currencies increased 0.9 percentage points due
to improved core margins in Pharmaceuticals and lower corporate costs;
currency had a negative impact of 1.1 percentage points, resulting in a
net decline of 0.2 percentage points to 26.1% of net sales.
Group net income of USD 3.0 billion was up 24% in reported terms, and up
30% in constant currencies, largely due to higher operating income
driven by the exceptional divestment gain and higher income from
associated companies, offset by higher net financial expenses and higher
income tax due to the exceptional divestment gain. EPS was up 25% (+30%
cc) to USD 1.21 in line with net income.
Group core net income of USD 3.2 billion was stable in reported terms,
but up 6% in constant currencies, from core operating income performance
and higher income from associated companies, offset by higher net
financial expenses. Core EPS increased 1% (+6% cc) to USD 1.31, in line
with core net income.
The free cash flow of USD 0.8 billion was USD 0.5 billion below the
prior-year quarter, mainly due to the unfavorable timing of tax and
revenue deduction payments, as well as currency effects.
[1] "Growth products" comprise products launched in 2009 or later, or
products with exclusivity until at least 2018 in key markets (EU, US,
Japan) (except Sandoz, which includes only products launched in the last
24 months). Previously, we had defined "growth products" as products
launched in 2008 or later, or products with exclusivity until at least
2017 in key markets. The new definition is used in all comparisons to
prior year.
[2] The pro forma data does not purport to present what the actual
results of operations would have been had the transaction actually
occurred on January 1, 2013. Further details on the discontinuing
operations classification will be provided during the second quarter of
2014.
Pharmaceuticals net sales reached USD 7.8 billion (-1%, +1% cc) in the
first quarter, with volume growth of 6 percentage points and a positive
price impact of 1 percentage point mostly offset by the impact of
generic competition (-6 percentage points, mainly for Zometa/Aclasta,
which completed a full year of generic impact in the US). Quarterly
volume growth was impacted by a slowdown of Gleevec/Glivec sales in the
US. Growth products, including Gilenya, Afinitor, Tasigna, Galvus,
Lucentis, Xolair, the Q Family[1] and Jakavi, together generated USD 3.2
billion (+17% cc) or 41% of division net sales, compared to 35% in the
prior-year period.
Operating income declined 13% (-7% cc) to USD 2.2 billion, mainly due to
USD 252 million in net restructuring charges related to the US field
force, the Suffern plant closure in the US and the redeployment
initiatives announced in the first quarter, and additional restructuring
initiatives outside of the US and Switzerland. Core operating income was
USD 2.5 billion (-1%, +4% cc), mainly due to lower production costs
offsetting the impact of increased royalties, primarily for Gilenya, and
generic erosion. Core operating income margin in constant currencies
increased 1.0 percentage points; currency had a negative impact of 1.2
percentage points, resulting in a net decrease of 0.2 percentage points
to 32.5% of net sales.
Alcon net sales were USD 2.6 billion (+3%, +6% cc) in the first quarter,
with strong growth in the Surgical franchise tempered by moderate growth
in Ophthalmic Pharmaceuticals. Surgical performance (+6%, +9% cc) was
driven by equipment growth, due in part to Alcon's new cataract surgery
phacoemulsification platform, the Centurion Vision System, and demand
for other equipment platforms. Ophthalmic Pharmaceuticals (0%, +3% cc)
had a high prior-year base for allergy, which was offset by continued
growth in the dry eye category. Vision Care grew (+4%, +5% cc) as a
result of robust sales in contact lenses, led by Dailies Total1.
Alcon operating income was USD 380 million (-8%, +3% cc). Core operating
income was USD 925 million (-2%, +3% cc). Core operating income margin
in constant currencies decreased by 0.9 percentage points mainly due to
product mix; currency had a negative impact of 0.9 percentage points,
resulting in a net decrease of 1.8 percentage points to 35.0% of net
sales.
[1]The Q Family includes Onbrez Breezhaler/Arcapta Neohaler, Seebri
Breezhaler and Ultibro Breezhaler.
Sandoz net sales increased 3% (+4% cc) to USD 2.3 billion, as volume
growth of 14 percentage points more than compensated for 10 percentage
points of price erosion. Asia (excluding Japan), Latin America and Japan
delivered double-digit sales growth. Sandoz also continued to strengthen
its leading position globally in biosimilars (USD 117 million, +23% cc).
Sandoz operating income increased by 12% (+21% cc) to USD 282 million,
primarily driven by lower exceptional items. Core operating income
declined by 10% (-6% cc) to USD 387 million. Core operating income
margin in constant currencies decreased by 1.7 percentage points, mainly
due to an unfavorable sales mix. Currency had a negative impact of 0.7
percentage points, resulting in a net decrease of 2.4 percentage points
to 16.7% of net sales.
Vaccines net sales were up 13% (+12% cc) on a pro forma basis to USD 215
million for the first quarter, driven by the meningitis franchise,
particularly Menjugate shipments to Latin America, strong Menveo sales,
and the launch of Bexsero in several European private markets as well as
Australia and Canada, which more than offset the strong late season flu
sales from 2013 that were not repeated in 2014. Operating income was USD
680 million for the quarter compared to a loss of USD 204 million in
2013, driven by the USD 879 million exceptional gain from the divestment
of the blood transfusion diagnostics unit to Grifols S.A. Core operating
loss was USD 156 million compared to a loss of USD 161 million in the
same period last year, primarily as a result of higher sales and other
revenues, partially offset by continued investment in the R&D pipeline.
Consumer Health, which comprises OTC and Animal Health, saw net sales
increase 5% (+8% cc) to USD 1.0 billion in the first quarter, driven by
strong performance of key global brands and US product re-launches in
both divisions. Operating income amounted to USD 41 million compared to
USD 11 million in the prior-year quarter, as higher gross margin from
incremental sales and lower restructuring expenses at the Lincoln
manufacturing facility were partially offset by commercial investments
behind the growth of key brands and product re-launches. Core operating
income decreased 21% (+3% cc) to USD 60 million. Core operating income
margin in constant currencies decreased by 0.4 percentage points,
primarily due to small non-core brand divestments in the prior-year
period; currency had a negative impact of 1.5 percentage points, largely
driven by erosion of emerging market currencies, principally Russia,
resulting in a net decrease of 1.9 percentage points to 5.8% of net
sales.
Executing on innovation, growth and productivity
A consistent focus on three core priorities - innovation, growth and
productivity - guides every aspect of our long-term strategy. In the
first quarter, we made significant progress in each of these areas.
Innovation: Strong momentum across the portfolio continued in the first
quarter
The first quarter saw continued pipeline progress with positive
regulatory decisions and significant clinical trial data released. Key
developments are included below.
New approvals and positive opinions
-- Xolair approved in EU and US for chronic spontaneous/idiopathic urticaria
Xolair (omalizumab) was approved in the EU and US as the first and only
licensed therapy for the up to 50% of patients with chronic spontaneous
urticaria (CSU, known as chronic idiopathic urticaria or CIU in the US)
who do not respond to approved doses of antihistamines.
-- Bexsero recommended for inclusion in National Immunisation Programme in
the UK; received FDA Breakthrough Therapy designation in the USThe Joint
Committee on Vaccination and Immunisation in the UK recommended routine
vaccination of infants with Bexsero to help protect against meningitis B
(MenB). The UK will introduce a nationwide vaccine campaign with Bexsero
as soon as possible, following the public procurement process. In the US,
Bexsero received FDA Breakthrough Therapy designation in April, after
Novartis provided nearly 30,000 doses of the vaccine in response to two
MenB outbreaks on US college campuses. Novartis plans to file for US
licensure of Bexsero as early as the second quarter of 2014, subject to
guidance from the FDA.
-- Lucentis approved in Japan for fourth indicationLucentis (ranibizumab)
was approved by Japanese regulatory bodies to treat patients with
diabetic macular edema (DME), a leading cause of vision loss in diabetes
patients. Lucentis is the first anti-VEGF therapy approved for DME in
Japan.
Regulatory submissions and filings
-- Novartis submitted revised filing dossier for RLX030 in acute heart
failure to CHMPNovartis submitted the re-examination dossier for RLX030
(serelaxin) for acute heart failure (AHF) to the CHMP following a
negative opinion in January 2014. In accordance with CHMP process, a
revised opinion could be issued by the end of May 2014.
-- Novartis to work with FDA on path forward for RLX030 in acute heart
failure The FDA's Cardiovascular and Renal Drugs Advisory Committee voted
against recommending approval of RLX030 for the treatment of AHF in the
US. The FDA is expected to provide a formal response in May on whether
RLX030 will receive a US license.
Results from important clinical trials and other highlights
-- LCZ696 trial in chronic heart failure closes early based on strength of
interim results The Data Monitoring Committee unanimously recommended
early closure of the Phase III PARADIGM-HF trial, indicating LCZ696
patients with chronic heart failure with reduced ejection fraction
(HF-REF) who received LCZ696 lived longer without being hospitalized for
heart failure than those who received standard care with ACE-inhibitor
enalapril. PARADIGM-HF is the largest ever trial of a heart failure
treatment.
-- Phase III study of Jakavi in polycythemia vera met primary endpoint
Pivotal trial results of Jakavi (ruxolitinib) showed improvement in two
key measures of disease control in patients with polycythemia vera, a
rare blood cancer with limited treatment options. Data will be presented
at an upcoming medical congress and submitted to worldwide regulatory
authorities this year.
-- LDE225 pivotal study in advanced basal cell carcinoma met primary
endpointResults from the Phase II trial showed that investigational oral
compound LDE225 (sonidegib) achieved clinically significant tumor
response in advanced basal cell carcinoma, including disappearance of the
tumor in some patients within six months of treatment.
-- AIN457 (secukinumab) showed high efficacy in two Phase III psoriasis
studiesResults from two pivotal Phase III studies in moderate-to-severe
plaque psoriasis showed that AIN457 demonstrated consistent high efficacy
when administered with convenient pre-filled syringe or autoinjector/pen,
meeting primary and secondary endpoints. Additionally, a new Phase IIIB
head-to-head study of AIN457 versus Stelara(R) (ustekinumab) initiated
patient enrollment.
-- LDK378 data in ALK+ NSCLC published in NEJM Clinical trial results
published in The New England Journal of Medicine (NEJM) showed that
LDK378 (ceritinib) achieved an overall response rate of 58% and a median
progression-free survival of seven months in adults with anaplastic
lymphoma kinase positive (ALK+) metastatic non-small cell lung cancer
(NSCLC).
-- Sandoz completed patient enrollment for Phase III biosimilar etanercept
trialPatient enrollment was completed in only eight months for the Phase
III trial of biosimilar etanercept (Enbrel(R)) in patients with
moderate-to-severe chronic plaque-type psoriasis.
-- Cancer immunotherapy research program accelerated with acquisition of
CoStimNovartis strengthened its competitive position in the field of
immune-oncotherapy with the acquisition of biotechnology company CoStim
Pharmaceuticals Inc. CoStim's novel immune modulating targets and
technology complement the investigative CART cell therapy technology
Novartis is already developing in collaboration with the University of
Pennsylvania.
Growth: Strong commercial execution and global presence continued to
drive growth
In the first quarter, key growth drivers - including growth products
like Gilenya, Afinitor, Tasigna, Galvus, Lucentis and Xolair, as well as
Emerging Growth Markets and biosimilars - continued to demonstrate the
strength of our portfolio across disease areas and geographies.
Growth products
-- Growth products contributed 31% of Group net sales in the first quarter,
up 17% (USD) over the previous-year quarter. In Pharmaceuticals, growth
products contributed 41% of division net sales in the quarter, up 17% in
constant currencies over the 2013 period.
Emerging Growth Markets
-- Net sales in our Emerging Growth Markets - which comprise all markets
except the US, Canada, Western Europe, Japan, Australia and New Zealand -
grew 9% (cc) on a pro forma basis, led by China (+17% cc).
Productivity: Continued focus on efficiency to improve margins
Ongoing productivity initiatives relate to procurement and resource
allocation across the portfolio, as well as R&D, our manufacturing
network and supporting infrastructure. Improving productivity and
leveraging synergies across divisions will help us support the bottom
line.
-- Novartis today announces the creation of a shared services organization,
Novartis Business Services (NBS), to improve profitability and free up
resources that can be reinvested in growth and innovation. NBS will
consolidate a number of business support services currently spread across
divisions, including IT, Financial Reporting and Accounting, Real Estate
& Facility Services, Procurement, Payroll and Personnel Administration
and the Pharmaceuticals Global Business Services. This move will allow
the divisions to focus more on customer-facing activities. Associates who
are in the divisions to be divested (Vaccines and Animal Health) or
involved in the consumer healthcare joint venture with GSK (Novartis OTC)
will be off-scope in relation to NBS activities. However, NBS will
continue to provide some existing services to these divisions prior to
closing of the transactions. Novartis has appointed André Wyss as
Global Head of NBS, a newly created Executive Committee position
reporting directly to CEO Joe Jimenez. Wyss has had a distinguished,
30-year career with Novartis as an operating executive in Europe, the US
and emerging markets.
-- We also generated savings of approximately USD 300 million in Procurement
in the first quarter by leveraging our scale.
-- In addition, we continued to optimize our manufacturing footprint with
the announced closure of our Pharmaceuticals manufacturing site in
Suffern, NY (USA) in January 2014 and the planned divestment[1] of our
pharmaceutical manufacturing site in Taboão da Serra (Brazil). We
have also announced the partial restructuring of our sites in Vacaville,
California (USA), and Larchwood, Iowa (USA) bringing the total number of
production sites that have been or are in the process of being
restructured or divested to 23. Related to this initiative, we recorded
exceptional charges of USD 65 million in the first quarter of 2014. This
brings total exceptional charges to USD 580 million cumulatively since
the program began in the fourth quarter of 2010.
In total, our productivity initiatives generated gross savings that
contributed approximately USD 540 million in the first quarter, putting
us on track to achieve our productivity target of 3-4% of net sales in
2014.
[1] The signing of the transaction was announced on March 19, 2014.
Closure of the transaction is subject to approval by relevant
authorities.
Quality: Continued focus on quality remediation
The continued focus on quality system upgrades across the network is
resulting in significant improvements. In the first quarter, a total of
65 health authority inspections of manufacturing sites across the
network were completed, 12 of which were conducted by the FDA. All were
deemed acceptable or good. These outcomes validate the intense approach
and emphasis on driving sustainable solutions that Novartis is taking to
quality assurance.
Capital structure and net debt
Retaining a good balance between investment in the business, a strong
capital structure and attractive shareholder returns will remain a
priority in the future. Strong cash flows and a sound capital structure
have allowed Novartis to focus on driving innovation, growth and
productivity across its diversified healthcare portfolio, while keeping
its double-A credit rating as a reflection of financial strength and
discipline.
During the first quarter of 2014, 41.0 million treasury shares were
delivered as a result of options exercised related to employee
participation programs. Novartis aims to offset the dilutive impact of
these programs on an ongoing basis and has so far repurchased 21.3
million shares (USD 1.7 billion) on the SIX Swiss Exchange first trading
line in the first quarter of 2014. In addition, Novartis repurchased 5.2
million shares (USD 0.4 billion) on the second trading line in the same
period under the announced share buy-back of USD 5.0 billion spread over
two years. An additional 2.8 million shares were repurchased from
employees.
During the first quarter of 2014, Novartis issued two bonds for a total
amount of USD 4.0 billion split into maturities of 10 years (USD 2.15
billion with a coupon of 3.4%) and 30 years (USD 1.85 billion with a
coupon of 4.4%) under its debt shelf program in the US. The 4.125%
coupon USD 2.0 billion bond issued in February 2009 was repaid at
maturity in February 2014.
As of March 2014, the net debt stood at USD 13.5 billion compared to USD
8.8 billion at December 31, 2013. The increase of USD 4.7 billion was
driven by the dividend payment of USD 6.8 billion, share repurchases of
USD 2.4 billion and other net cash outflow items of USD 0.4 billion.
This was partially compensated by the free cash of USD 0.8 billion, the
proceeds from options exercised of USD 2.4 billion and USD 1.7 billion
divestment proceeds.
The long-term credit rating for the company continues to be double-A
(Moody's Aa3; Standard & Poor's AA-; Fitch AA).
2014 Group outlook
Barring unforeseen events
Our outlook for full year 2014 remains unchanged. Group net sales in
2014 are expected to grow at a low to mid-single digit rate (cc), after
absorbing the impact of generic competition, which is expected to be as
much as USD 2.7 billion compared to USD 2.2 billion in 2013[1]. Group
core operating income is expected to grow ahead of sales (cc) in 2014.
If March average exchange rates prevail for the remainder of the year,
the currency impact for the year would be negative 1% on sales and
negative 4% on core operating income.
[1] This assumes, for forecasting purposes, that a Diovan monotherapy US
generic launch will occur at the beginning of the third quarter of 2014.
Outlook excludes the blood transfusion diagnostics unit in 2013 and
2014.
Summary Financial Performance
Group Excluding Diagnostics[1] Reported
Q1 2014 Q1 2013 % change Q1 2013
USD m USD m USD cc USD m
Net sales 14 022 13 879 1 3 14 016
Operating income 3 489[2] 2 849 22 31 2 896
As % of net sales 24.9[2] 20.5 20.7
Core operating income 3 657 3 651 0 6 3 714
As % of net sales 26.1 26.3 26.5
Pharmaceuticals Q1 2014 Q1 2013 % change
USD m USD m USD cc
Net sales 7 807 7 877 -1 1
Operating income 2 221 2 539 -13 -7
As % of net sales 28.4 32.2
Core operating income 2 539 2 573 -1 4
As % of net sales 32.5 32.7
Alcon Q1 2014 Q1 2013 % change
USD m USD m USD cc
Net sales 2 642 2 566 3 6
Operating income 380 412 -8 3
As % of net sales 14.4 16.1
Core operating income 925 944 -2 3
As % of net sales 35.0 36.8
Sandoz Q1 2014 Q1 2013 % change
USD m USD m USD cc
Net sales 2 318 2 259 3 4
Operating income 282 251 12 21
As % of net sales 12.2 11.1
Core operating income 387 431 -10 -6
As % of net sales 16.7 19.1
Vaccines Excluding Diagnostics[1] Reported
Q1 2014 Q1 2013 % change Q1 2013
USD m USD m USD cc USD m
Net sales 215 190 13 12 327
Operating income 680[2] -204 nm nm -157
As % of net sales nm nm nm
Core operating income -156 -161 3 4 -98
As % of net sales nm nm nm
Consumer Health Q1 2014 Q1 2013 % change
USD m USD m USD cc
Net sales 1 040 987 5 8
Operating income 41 11 nm nm
As % of net sales 3.9 1.1
Core operating income 60 76 -21 3
As % of net sales 5.8 7.7
[1] Changes from prior year based on pro forma 2013 data, excluding the
blood transfusion diagnostics unit. See page 2.
[2] Includes the USD 879 million pre-tax gain from the divestment of the
blood transfusion diagnostics unit.
nm - not meaningful
http://hugin.info/134323/R/1779399/608031.pdf
Novartis Q1 2014 Condensed Interim Financial Report - Supplementary Data
INDEX Page
GROUP AND DIVISIONAL OPERATING PERFORMANCE Q1 2014
Group 2
Pharmaceuticals 4
Alcon 10
Sandoz 12
Vaccines 13
Consumer Health 14
CASH FLOW AND GROUP BALANCE SHEET 15
INNOVATION REVIEW 17
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Condensed consolidated income statements 24
Condensed consolidated statements of comprehensive
income 25
Condensed consolidated balance sheets 26
Condensed consolidated changes in equity 27
Condensed consolidated cash flow statements 28
Notes to condensed interim consolidated financial
statements, including update on legal proceedings 29
SUPPLEMENTARY INFORMATION 36
CORE RESULTS
Reconciliation from IFRS to core results 38
Group 39
Pharmaceuticals 40
Alcon 41
Sandoz 42
Vaccines 43
Consumer Health 44
Corporate 45
ADDITIONAL INFORMATION
Condensed consolidated changes in net debt / Share
information 46
Free cash flow 47
Net sales of the top 20 Pharmaceuticals products 48
Pharmaceuticals sales by business franchise 49
Net sales by region 50
Currency translation rates/Income from associated
companies 51
Pro forma information 52
DISCLAIMER 54
Disclaimer
The foregoing release contains forward-looking statements that can be
identified by words such as "prospects," "momentum," "pipeline,"
"outlook," "inter-conditional," "would," "subject to," "strategy,"
"expect," "ongoing," "to grow," "to work," "recommendations,"
"recommended," "breakthrough therapy," "expected," "will," "priority,"
"could," "planned," or similar terms, or by express or implied
discussions regarding potential new products, potential new indications
for existing products, or regarding potential future revenues from any
such products; potential shareholder returns or credit rating; or
regarding the potential completion of the announced transactions with
GSK and Eli Lilly, regarding potential future transactions regarding the
Novartis flu vaccines franchise, or regarding potential future sales or
earnings of any of the businesses involved in the announced transactions,
or of the Novartis Group, and regarding any potential strategic benefits,
synergies or opportunities as a result of the announced transactions; or
by discussions of strategy, plans, expectations or intentions. You
should not place undue reliance on these statements. Such
forward-looking statements are based on the current beliefs and
expectations of management regarding future events, and are subject to
significant known and unknown risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those set forth in the forward-looking statements. There can be no
guarantee that any new products will be approved for sale in any market,
or that any new indications will be approved for any existing products
in any market, or that any approvals which are obtained will be obtained
at any particular time, or that any such products will achieve any
particular revenue levels. Nor can there be any guarantee that the
proposed transactions will be completed in the expected form or within
the expected time frame or at all. Neither can there be any guarantee
that Novartis will be able to realize any of the potential strategic
benefits, synergies or opportunities as a result of the transactions.
Nor can there be any guarantee that Novartis will enter into an
agreement to divest its flu vaccines franchise in the future, or at any
particular time. Neither can there be any guarantee that Novartis or
any of the businesses involved in the transactions will achieve any
particular financial results in the future. In particular, management's
expectations could be affected by, among other things, unexpected
regulatory actions or delays or government regulation generally,
including an unexpected failure to obtain necessary government approvals
for the transactions, or unexpected delays in obtaining such approvals;
the potential that the strategic benefits, synergies or opportunities
expected from the transaction may not be realized or may take longer to
realize than expected; the potential that the strategic benefits,
synergies or opportunities expected from the divestment of our former
blood transfusion diagnostics unit may not be realized or may take
longer to realize than expected; the inherent uncertainties involved in
predicting shareholder returns or credit ratings; the uncertainties
inherent in research and development, including unexpected clinical
trial results and additional analysis of existing clinical data; the
Company's ability to obtain or maintain proprietary intellectual
property protection, including the ultimate extent of the impact on the
Company of the loss of patent protection and exclusivity on key products
which commenced in prior years and will continue this year; unexpected
manufacturing or quality issues; global trends toward health care cost
containment, including ongoing pricing pressures; uncertainties
regarding actual or potential legal proceedings, including, among others,
actual or potential product liability litigation, litigation and
investigations regarding sales and marketing practices, government
investigations and intellectual property disputes; general economic and
industry conditions; uncertainties regarding the effects of the
persistently weak global economic and financial environment, including
the financial troubles in certain Eurozone countries; uncertainties
regarding future global exchange rates; uncertainties regarding future
demand for our products; uncertainties involved in the development of
new healthcare products; and other risks and factors referred to in
Novartis AG's current Form 20-F on file with the US Securities and
Exchange Commission. Novartis is providing the information in this press
release as of this date and does not undertake any obligation to update
any forward-looking statements as a result of new information, future
events or otherwise.
All product names appearing in italics are trademarks owned by or
licensed to Novartis Group Companies. Stelara(R) and Enbrel(R) are
registered trademarks of their respective owners.
About Novartis
Novartis provides innovative healthcare solutions that address the
evolving needs of patients and societies. Headquartered in Basel,
Switzerland, Novartis offers a diversified portfolio to best meet these
needs: innovative medicines, eye care, cost-saving generic
pharmaceuticals, preventive vaccines, over-the-counter and animal health
products. Novartis is the only global company with leading positions in
these areas. In 2013, the Group achieved net sales of USD 57.9 billion,
while R&D throughout the Group amounted to approximately USD 9.9 billion
(USD 9.6 billion excluding impairment and amortization charges).
Novartis Group companies employ approximately 135,000
full-time-equivalent associates and sell products in more than 150
countries around the world. For more information, please visit
http://www.novartis.com.
Important dates
June 17-18, 2014 Meet Novartis Management event in Switzerland
July 17, 2014 Second quarter results 2014
October 28, 2014 Third quarter results 2014
Please find full media release in English attached and on the following
link:
http://hugin.info/134323/R/1779399/608104.pdf
Further language versions are available through the following links:
German version is available through the following link:
http://hugin.info/134323/R/1779401/608106.pdf
French version is available through the following link:
http://hugin.info/134323/R/1779400/608105.pdf
IFR (PDF): http://hugin.info/136453/R/1779496/608115.pdf
Media release (PDF): http://hugin.info/136453/R/1779496/608116.pdf
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: NOVARTIS FINANCE S.A. via Globenewswire
HUG#1779496
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NOVARTIS FINANCE S.A.
Posfach Basel
WKN: 904278;ISIN: XS0432810116;