Slide 1: Shearman & Sterling cover letter
S HEARMAN & S T E R L I N G F A X : ( 4 4 2 0 ) 7 6 5 5 -5 5 0 0 ABU DHABI BROADGATE WEST BEIJING 9 APPOLD STREET BRUSSELS LONDON EC2A 2AP, ENGLAND DÜSSELDORF (44-20) 7655-5000 FRANKFURT HONG KONG LONDON WRITER'S DIRECT NUMBER: MANNHEIM MENLO PARK MUNICH +44-(0)20-7655-5558 NEW YORK PARIS SAN FRANCI
Slide 2: Form 6-K Report of Foreign Private Issuer
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 Report on Form 6-K dated April 19, 2002 Novartis AG (Name of Registrant) Lichtstrasse 35 4056 Basel Switzerland (Address of Pri
Slide 3: Growth Momentum Carries On - First Quarter Results
n Growth Momentum Carries On First Quarter Results 18 April 2002
Slide 4: Forward-looking statements
This presentation contains certain "forward-looking statements" relating to the Company's business: • The statements can be identified by the use of forward-looking terminology or by discussions of strategy, plans or intentions. • The statements include descriptions and anticipated expenditures of t
Slide 5: Agenda
Agenda • Overview of sales and results • Pharmaceuticals - Key growth drivers - Outlook • Group outlook 3 n
Slide 6: Novartis Continues Dynamic Growth Path
Novartis Continues Dynamic Growth Path • Growth momentum carries on • Performance driven by double-digit growth trend in Pharmaceuticals with strong demand for Cardiovascular, Oncology and Ophthalmics franchises across all regions • Performance momentum and rise in net financial income lead to net i
Slide 7: Net Income Expansion On the Back of Strong Operational Performance
Net Income Expansion On the Back of Strong Operational Performance and Net Financial Income in CHF m Q1 2002 Q1 2001 in % CHF Sales 7 967 7 224 10 Operating income 1 822 1 545 18 as a % of sales 22.9 21.4 Net financial income 378 217 74 Net income 1 788 1 485 20 as a % of sales 22.4 20.6 EPS (CHF) 0
Slide 8: Dynamic Performance Delivered Through Pharmaceuticals and Generics
Dynamic Performance Delivered Through Pharmaceuticals and Generics Sales: CHF 8 bn, +13% in local currencies, +10% in CHF Sales growth in % (LC) Sales by region in % Pharmaceuticals 16 Europe Asia/Australia/ Africa 33% Generics 26 16% OTC -3 Rest of the Animal Health 8 Americas 8% Medical Nutrition
Slide 9: Performance Driven by Volume Increase
Performance Driven by Volume Increase 14% +1% -3% +1% 12% 11 % 10 % 10% 8% 6% 4% 2% 0% Volume Price Acq./Div. Currency CHF 7 n
Slide 10: First Quarter Operating Income up 18%
First Quarter Operating Income up 18 % Operating income growth Operating income by sector in % (CHF) Pharmaceuticals Pharmaceuticals 16 81% Generics 42 OTC -7 Animal Health -5 Medical Nutrition 28 OTC 3% 10 Generics 5% Infant & Baby Infant & Baby CIBA Vision 1 12 CIBA Vision Animal 6% 2% Health GROU
Slide 11: Improvements in COGS and Slower Increase in Marketing & Distribution
Improvements in COGS and Slower Increase in Marketing & Distribution Boost Operating Income Change in % in CHF Q1/2002 CHF m Sales 7 967 10 Cost of goods sold -1 983 6 Marketing & Distribution -2 681 7 Research & Development -1 041 12 General & Administration -440 17 Operating income 1 822 18 0% 10%
Slide 12: Highlights in Generics, OTC and Animal Health
Highlights in Generics, OTC and Animal Health Generics • Recent launches in US in Retail Generics fuel growth to 20% in LC1 - Generic Prozac (depression), July 2001 - Generic Metformin (diabetes), January 2002 - Generic Relifex (anti-inflammatory), February 2002 OTC • Sales decline of 3% in LC. Excl
Slide 13: Highlights in Medical Nutrition, Infant & Baby and CIBA Vision
Highlights in Medical Nutrition, Infant & Baby and CIBA Vision Medical Nutrition (incl. Health and Functional Food) • Supplement business in Medical Nutrition boosts sales • Health and Functional Food divestment on track Infant & Baby • Gerber Graduates and Tender Harvest underpin strong market posi
Slide 14: Agenda
Agenda • Overview of sales and results • Pharmaceuticals - Key growth drivers - Outlook • Group outlook 12 n
Slide 15: Pharmaceuticals – Key Achievements
Pharmaceuticals – Key Achievements • Continued dynamic growth trend with + 16% in LC • Strong growth across all regions with US up 23% in LC • Leadership in Cardiovascular and Oncology franchises bolstered by key growth drivers • Recent launches Zometa® and Elidel® off to a good start 13 n
Slide 16: Strong Pharmaceutical Sales Growth in Key Regions
Strong Pharmaceutical Sales Growth in Key Regions Q1 Sales 2002 Growth Market (CHF m) (in LC) Growth 1 US 2 238 23% 16% Europe 1 605 9% 9% Japan 480 12% 8% LatAm 318 22% -7%2 Asia/Pacific 407 14% n/a Total 3 5 153 +16% 1 IMS monthly YTD Feb, 16 countries 2 Argentina, Brazil and Mexico 3 Total includ
Slide 17: Key Franchises Outperforming the Market
Key Franchises Outperforming the Market 35 % 34 % 21 % 14 % Cardiovascular* Oncology Market growth, IMS 16 countries Feb YTD 2002 Novartis growth, IMS 16 countries Feb YTD 2002 Source: IMS 15 * Cardiovascular: Antihypertensives, Statins, Fibrates, OAD n
Slide 18: Strategic Products Drive Growth
Strategic Products Drive Growth Sales Growth Brand (1 to 10) Market segment (CHF m) (% LC) Diovan®/Co-Diovan® Hypertension 601 +80 Sandimmun®/Neoral® Transplantation 451 –1 Cibacen®/Lotensin® Hypertension 417 +39 of which Lotrel® 223 +55 Sandostatin® Acromegaly 250 +30 Lamisil®1 Fungal infections 23
Slide 19: Strategic Products Drive Growth (continued)
Strategic Products Drive Growth (continued) Sales Growth Brand (11 to 20) Market segment (CHF m) (% LC) Miacalcic® Osteoporosis 149 -13 HRT range1 Hormone replacement 125 +25 Leponex®/Clorazil® Schizophrenia 124 –5 Exelon® Alzheimer’s disease 121 +23 VisudyneTM Wet form of AMD 115 +47 Zometa® Hyperc
Slide 20: Sandimmun/Neoral Slow Generic Erosion in US
Sandimmun®/Neoral® Slow Generic Erosion in US Months since launch 0 6 12 18 24 30 0% • Q1 sales worldwide: Sandimmun ®/Neoral® CHF 451 m, - 1% in LC Total Prescriptions 10% 20% • Continued slow generic 30% erosion in US 40% Warfarin • Little impact in Europe 50% 60% 70% Azathioprine 18 n
Slide 21: Diovan – Leadership in US
Diovan® – Leadership in US 38% • Q1 2002 sales worldwide: Diovan, 36.8% CHF 601 m, +80% LC 37% • Continues to outpace the ARB market segment 36% • Reached 20% segment share in Japan 35% Cozaar, 34.6% 34% Sept Oct Nov Dec Jan Feb Mar 2001 2001 2001 2001 2002 2002 2002 Source: IMS, weekly March 29, 20
Slide 22: Dynamic Sales Performance of Lotrel
Dynamic Sales Performance of Lotrel® Q1 sales (US only): CHF 223 m, + 55% in LC CHF m 1 000 813 800 600 552 400 308 218 223 200 134 0 1997 1998 1999 2000 2001 Q1 2002 Amlodipine market segment share: Lotrel® 10.2% 11.5% 13.6% 17.6% 20.6% 22.7% Norvasc 89.8% 88.5% 86.4% 82.4% 79.4% 77.3% 20 Source: I
Slide 23: Lescol - Strong Performance Across All Regions
Lescol® - Strong Performance Across All Regions • Q1 2002 sales worldwide: CHF 217 m, +31% in LC • Strong performance in major countries • US, +39% in LC • Japan, +12% in LC • Germany, +114% in LC • France, +42 in LC • Italy, +259% in LC 21 n
Slide 24: Glivec/Gleevec - Strong Roll-Out Continues
Glivec®/Gleevec™ - Strong Roll-Out Continues • Sales of CHF 183m worldwide • Strong launches in Japan and Europe • Launch of GIST underway − End February launched in US − Positive opinion by CPMP in EU in February − Swiss approval received in April 2002 • 95% of patients alive after 18 months of the
Slide 25: Conversion to Zometa is Accelerating
Conversion to Zometa® is Accelerating - Key Markets on Track % Zometa® of % Zometa® of combined sales1 combined sales1 Launch date (March 2002) (YTD March 2002) US Aug 2001 79% 41% Germany Apr 2001 38% 40% Italy Feb 2002 29% 13% France Jan 2002 17% 11% 1 Aredia® and Zometa® 23 n
Slide 26: Zometa - Building a Potential Blockbuster
Zometa® - Building a Potential Blockbuster • Solid Q1 Zometa® sales of CHF 112 m worldwide • Launched for bone metastasis in a broad range of tumor types in 14 countries including the US • EU approval for bone metastasis anticipated mid 2002 • In Phase III clinical trials for Osteoporosis and Paget’
Slide 27: Elidel - Promising Start
Elidel® - Promising Start • Launched in US in March for the treatment of mild to moderate atopic dermatitis for patients of 2 years and older • US NRx share already passed Protopic end of March, 3.9% vs 3.2%1 • Approved in Denmark on March 18, for patients as young as 3 months 1 IMS, weekly NRx, Mar
Slide 28: Agenda
Agenda • Overview of sales and results • Pharmaceuticals - Key growth drivers - Outlook • Group outlook 26 n
Slide 29: Pharmaceuticals Outlook 2002
Pharmaceuticals Outlook 2002 • Sales growth anticipated in the 10% range • Continued dynamic performance of key growth drivers • Price decreases mainly in Japan • More rapid erosion of Aredia® sales expected • Elidel® roll-out to continue • Operating margin expected to be maintained at last year’s h
Slide 30: Agenda
Agenda • Overview of sales and results • Pharmaceuticals - Key growth drivers - Outlook • Group outlook 28 n
Slide 31: Group Outlook 2002
Group Outlook 2002 Growth momentum expected to continue • Mid- to high-single-digit sales growth driven by Pharmaceuticals Operating income growth in-line with top-line • Stable operating margin, assuming no unexpected product approvals Net financial income difficult to predict, expected to be lower
Slide 32: Appendix
Appendix 30 n
Slide 33: Group Operating Margin 22.9%
Group Operating Margin 22.9% Operating margins in % Q1/2001 Q1/2002 27.4 28.1 22.9 21.4 18.3 18.3 16.7 17.3 14.2 12.3 9.7 9.5 8.9 6.1 4.8 1.4 Pharma- Generics OTC Animal Medical Infant & CIBA GROUP ceuticals Health Nutrition Baby Vision1 1 Excluding exceptional integration costs in 2001 operating 31
Slide 34: First Quarter 2002 Sales Growth Components by Sector
First Quarter 2002 Sales Growth Components by Sector Volume Price Acq./Div. Currency Pharmaceuticals +15% +1% -% -2% Generics +21% -1% +6% -4% OTC -5% +1% +1% -2% Animal Health -1% +3% +6% -3% Medical Nutrition +2% +1% -% -2% Infant & Baby +2% +1% -% +1% CIBA Vision +4% -% -% -3% Group +11% +1% +1%
Slide 35: Pharmaceuticals Top Products Sales Performance First Quarter 2002
Pharmaceuticals Top 20 Products Sales Performance First Quarter 2002 33 n
Slide 36: Pharmaceuticals Top Products I - Total Sales Growth
Pharmaceuticals Top 20 Products I First Quarter 2002 Total Sales Growth Brands Q1 2002 Q1 2001 USD m CHF m CHF m % CHF % LC Diovan ®/Co-Diovan® 358 601 342 76 80 Sandimmun®/Neoral® 269 451 468 -4 -1 Cibacen®/Lotensin® 248 417 298 40 39 of which Lotrel ® 133 223 143 56 55 Sandostatin® 149 250 194 29
Slide 37: Pharmaceuticals Top Products II - Total Sales Growth
Pharmaceuticals Top 20 Products II First Quarter 2002 Total Sales Growth Brands Q1 2002 Q1 2001 USD m CHF m CHF m % CHF % LC Miacalcic® 89 149 172 -13 -13 HRT range 1 75 125 101 24 25 Leponex®/Clozaril® 74 124 133 -7 -5 Exelon® 72 121 99 22 23 Visudyne ® 69 115 80 44 47 Zometa® 66 112 1 - - Foradil®
Slide 38: Pharmaceuticals Top Products I - US Sales Growth
Pharmaceuticals Top 20 Products I First Quarter US Sales Growth Brands Q1 2002 Q1 2001 USD m CHF m CHF m % LC Diovan ®/Co-Diovan® 188 315 154 102 Sandimmun®/Neoral® 81 136 125 7 Cibacen®/Lotensin® 219 368 244 49 of which Lotrel ® 133 223 143 55 Sandostatin® 73 122 82 47 Lamisil® (group)1 58 97 164 -
Slide 39: Pharmaceuticals Top Products II - US Sales Growth
Pharmaceuticals Top 20 Products II First Quarter US Sales Growth Brands Q1 2002 Q1 2001 USD m CHF m CHF m % LC Miacalcic® 51 86 106 -19 HRT range 1 41 68 37 79 Leponex®/Clozaril® 29 49 56 -14 Exelon® 42 71 51 37 Visudyne ® 43 72 51 40 Zometa® 52 88 - - Foradil® 5 9 - - Famvir®2 46 78 59 31 Trileptal
Slide 40: Pharmaceuticals Top Products I - RoW Sales Growth
Pharmaceuticals Top 20 Products I First Quarter RoW Sales Growth Brands Q1 2002 Q1 2001 USD m CHF m CHF m % LC Diovan ®/Co-Diovan® 170 286 188 62 Sandimmun®/Neoral® 188 315 343 -4 Cibacen®/Lotensin® 29 49 54 -7 of which Lotrel ® - - - - Sandostatin® 76 128 112 18 Lamisil® (group) 1 83 140 127 16 Vol
Slide 41: Pharmaceuticals Top Products II - RoW Sales Growth
Pharmaceuticals Top 20 Products II First Quarter RoW Sales Growth Brands Q1 2002 Q1 2001 USD m CHF m CHF m % LC Miacalcic® 38 63 66 -3 HRT range 1 34 57 64 -6 Leponex®/Clozaril® 45 75 77 1 Exelon® 30 50 48 8 Visudyne ® 26 43 29 60 Zometa® 14 24 1 - Foradil® 59 99 96 6 Famvir®2 15 25 23 13 Trileptal®
Slide 42: Pharmaceuticals Top Products I
Pharmaceuticals Top 20 Products I Brands Market segment Diovan®/Co-Diovan® Hypertension Sandimmun® /Neoral® Transpl., RA, Psoriasis Cibacen®/Lotensin® Antihypertensives Sandostatin® Acromegaly Lamisil® Fungal infections Voltaren® Antirheumatics Lescol® Cholesterol reduction Aredia® Oncology (Bone) G
Slide 43: Pharmaceuticals Top Products II
Pharmaceuticals Top 20 Products II Brands Market segment Miacalcic® Osteoporosis HRT range Hormone replacement Leponex®/Clozaril® Schizophrenia Exelon® Alzheimer’s disease Visudyne® A form of wet AMD Zometa® Hypercalc. of malignancy Foradil® Asthma, Bronchitis Famvir® Antiviral Trileptal® Epilepsy F
Slide 44: Pipeline
Pipeline 42 n
Slide 45: Strong Pipeline
Strong Pipeline 2002 2003 2004 2005 2006 ZelnormTM /Zelmac® Elidel ® COX189 LAF237A ICL670A FTY720 IBS Glivec® /Gleevec™ Certican® Iloperidone PKC412A SPP100 1 NKS104 (EU) GIST Diovan® CHF Myfortic® Xolair® EPO906A PTK787A Femara® adj. Zometa® ZelnormTM /Zelmac® COX189 VisudyneTM Japan PKI166A Octre
Slide 46: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Novartis AG Date: April 19, 2002 By: /s/ RAYMUND BREU Name: Raymund Breu Title: Chief Financial Officer