Novartis AG · SIX:NOVN
Novartis — FY2008 Earnings Presentation
76 slides from Novartis's earnings presentation, Jan 28, 2009
Slide 1: Strong operational performance in 2008
Novartis Group Strong operational performance in 2008 2008 Annual Results Conference January 28, 2009 Novartis Group 2008年の業績は堅調に推移 2008年通期業績発表資料（Appendixを除く） 2009年1月28日 1
Slide 2: Forward-looking statements
These materials contain certain forward-looking statements relating to the Group's business, which can be identified by the use of forward-looking terminology such as "outlook", "expected", "will", "potential", "pipeline", or similar expressions, or by express or implied discussions regarding potent
Slide 3: Agenda
Agenda Overview D. Vasella Group performance 2008 Strategy for sustained growth Operating performance J. Reinhardt Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 2008年のグループ業績 持続的成長のための戦略 営業実績 J. ラインハルト 財務 R. ブロイ 見通し D. バセラ 3
Slide 4: Novartis sustained performance from strategic healthcare portfolio in 2008
Novartis sustained performance from strategic healthcare portfolio in 2008 Healthcare portfolio delivers dynamic sales and profit growth Portfolio strengthened with targeted acquisitions and strategic investments: • 25% stake in Alcon, Speedel, Protez, Nektar’s pulmonary business R&D with rich
Slide 5: Novartis: Sustained growth in 2008
Novartis: Sustained growth in 20081 Group key figures 12 M 2007 12 M 2008 Change Change in USD m in USD m in % USD in % LC2 Net sales 38 072 41 459 +9 +5 Operating income3 6 781 8 964 +32 Net income3 6 540 8 163 +25 EPS (USD) 2.81 3.59 +28 Number of associates 98 200 96 717 -2% 1 Continuing operatio
Slide 6: Q4 2008 results reflect business expansion and productivity gains
Q4 2008 results reflect business expansion and productivity gains1 Group key figures Q4 2007 Q4 2008 Change Change in USD m in USD m in % USD in % LC Net sales 9 931 10 077 +1 +8 Operating income2 897 1 680 +87 Net income2 931 1 507 +62 EPS (USD) 0.41 0.66 +61 1 Continuing operations, with figures f
Slide 7: All divisions contribute to successful year
All divisions contribute to successful year Sales growth in USD Op. Inc. growth in USD Actual results 12 M 2008 (USD bn) % growth 12 M 2008 vs. 12 M 2007 Sales1 Op. Inc.1 in USD in LC Pharma 26.3 7.58 Pharma 10% +5% 25% V&D 1.76 0.08 V&D 21% +20% 8% Sandoz 7.56 1.08 Sandoz 5% +1% 4% Consumer 5.81 1.
Slide 8: All regions - except US - with dynamic growth
All regions - except US - with dynamic growth Group1 12 M 2008 net sales in USD bn; growth in local currency Rest of Americas +10% Asia/Australia/Africa 3.4 +10% 7.1 Europe 18.1 +7% 12.9 US -2% 1 Continuing operations, with figures for Group excluding Medical Nutrition, Gerber 15 | 2008 Annual Resul
Slide 9: Agenda
Agenda Overview D. Vasella Group performance 2008 Strategy for sustained growth Operating performance J. Reinhardt Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 2008年のグループ業績 持続的成長のための戦略 営業実績 J. ラインハルト 財務 R. ブロイ 見通し D. バセラ 9
Slide 10: Growing demand in a resource-constrained environment
Growing demand in a resource-constrained environment Industry fundamentally attractive … but facing significant with strong growth drivers… challenges Aging population Pressure on drug prices Increasing use of generics Unhealthy lifestyles Conservative regulators Emerging growth markets Weak
Slide 11: Consistent strategy to sustain profitable growth and mitigate risk
Consistent strategy to sustain profitable growth and mitigate risk 1 Selectively strengthen existing franchises of business portfolio addressing specific customer needs Priorities 2 Step up innovation focusing on 2009 differentiated products 3 Expand in high-growth markets 4 Improve organizational e
Slide 12: Focused diversification in healthcare
Focused diversification in healthcare 1996 2002 2007 45% 80% 100% Healthcare Other 2008 targeted acquisitions and strategic investments: + 25% Alcon stake + Protez + Speedel + Nektar pulmonary business 23 | 2008 Annual Results Analyst Conference | January 28, 2009 ヘルスケアにおける重点的な多様化 1996年 2002年 2007年
Slide 13: NIBR aims to change the practice of medicine
NIBR aims to change the practice of medicine Novel therapies in Proof-of-Concept clinical trials include drugs for: RAF265 BEZ235 RSV604 BRAF Inhibitor PI3 Kinase Inhibitor Antiviral Melanoma Colon, Breast, Prostate Cancer Respiratory Syncytial Virus PI3K Pathway LCQ908 AIN457 AFQ056 DGAT1 Inhibitor
Slide 14: Novartis: highest # FDA NME approvals '00-'08
Novartis: highest # FDA NME approvals ‘00-’081 No. of FDA new molecular entity approvals, 2000-2008 Novartis 16 Pfizer 11 GSK 6 Merck 6 BMS 5 Sanofi-Aventis 5 Eli Lilly 4 AstraZeneca 3 Roche 3 Schering-Plough 3 Abbott 1 1 Jan. 2000-Dec. 2008; Top 15 pharma companies – data for J&J, Amgen, Wyeth, Bay
Slide 15: Consistent strategy to sustain profitable growth and mitigate risk
Consistent strategy to sustain profitable growth and mitigate risk Selectively strengthen existing franchises of 1 business portfolio addressing specific customer needs 2 Step up innovation focusing on differentiated products 3 Expand in high-growth markets 4 Improve organizational efficiency 29 | 2
Slide 16: Novartis has an excellent portfolio to address changing patient needs
Novartis has an excellent portfolio to address changing patient needs Environment Patient needs Novartis portfolio Innovative Medicines Pharmaceuticals Innovative medicines Vaccines and Prevention Diagnostics Full range of healthcare Reducing options economic Affordable Sandoz burden options (Generi
Slide 17: Group Emerging Markets (GEM): Implemented in 9 pilot countries
Group Emerging Markets (GEM): Implemented in 9 pilot countries, achieving 25% sales growth1 Cross-divisional setup with single country head managing entire portfolio Increased efficiency and broader product offerings aligned around channels Kazakhstan Belarus Integrated KAM2 and consolidated b
Slide 18: Consistent strategy to sustain profitable growth and mitigate risk
Consistent strategy to sustain profitable growth and mitigate risk Selectively strengthen existing franchises of 1 business portfolio addressing specific customer needs 2 Step up innovation focusing on differentiated products 3 Expand in high-growth markets 4 Improve organizational efficiency 35 | 2
Slide 19: Forward savings ahead of plan
Forward savings ahead of plan Delivered Forward savings of USD 1.1 billion, ahead of plan and exceeding 2008 target Strong procurement savings across all divisions Productivity remains a priority for 2009: Expect to surpass original Forward savings target 37 | 2008 Annual Results Analyst Confe
Slide 20: Environmental achievements 2008
Environmental achievements 2008 Voluntary Kyoto commitment Novartis Site East Hanover, NJ • CO2 emissions from operations reduced by 1% • CO2 emissions from fleet of 23,000 vehicles reduced by 6% Energy management • 5th Annual Energy Excellence Awards 46 projects submitted, which contribute: • 2
Slide 21: Access to medicine programs
Access to medicine programs – in 2008 we contributed 3.0% of net sales Coartem® subsidized: 73.7 million treatments shipped in 2008 – cumulatively delivered 216 million treatments, which helped save an estimated 550,000 lives Leprosy medication free of charge: 2008: >4.5 million patients cured s
Slide 22: Agenda
Agenda Overview D. Vasella Operating performance J. Reinhardt 2008 performance Operational priorities for 2009 Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 営業実績 J. ラインハルト 2008年の実績 2009年の優先業務 財務 R. ブロイ 見通し D. バセラ 22
Slide 23: Key messages
Key messages 2008 performance: Sustained momentum • Pharmaceuticals delivers record results • Vaccines and Diagnostics continues with rapid growth • Sandoz has challenging year – poor US performance • Consumer Health shows solid performance with CIBA Vision turnaround Operational priorities for
Slide 24: Agenda
Agenda Overview D. Vasella Operating performance J. Reinhardt 2008 performance Operational priorities for 2009 Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 営業実績 J. ラインハルト 2008年の実績 2009年の優先業務 財務 R. ブロイ 見通し D. バセラ 24
Slide 25: Pharmaceuticals shows record 2008 performance
Pharmaceuticals shows record 2008 performance Operating Net sales Growth income Growth ROS (USD in bn) USD (%) LC (%) (USD in bn) (%) (%) Pharmaceuticals 26.3 +10 +5 7.58 +25 28.8 Vaccines and Diagnostics 1.76 +21 +20 0.08 +8 4.4 Sandoz 7.56 +5 +1 1.08 +4 14.3 Consumer Health 5.81 +7 +4 1.05 +29 18.
Slide 26: Pharmaceuticals: Global strength from dynamic growth outside the US
Pharmaceuticals: Global strength from dynamic growth outside the US % of net sales by region 2008 net sales growth vs 2007 Total USD 26.3 bn In local currencies 9% 9% LatAm and Canada 9% 19% 20% Asia, Africa and Australia 9% 36% 38% Europe 10% 36% 33% US -2% 2007 2008 51 | 2008 Annual Results Analys
Slide 27: Pharmaceuticals: US shows accelerating growth in H2 2008
Pharmaceuticals: US shows accelerating growth in H2 2008 US quarterly net sales growth Overcoming 2007 challenges in local currencies Expansion of multiple brands drove performance 11% 9% -3% -19% Q1 Q2 Q3 Q4 53 | 2008 Annual Results Analyst Conference | January 28, 2009 医薬品：米国の売上高が2008年下半期に成長を加
Slide 28: Pharmaceuticals: UK – adapting commercial models to drive success
Pharmaceuticals: UK – an example of adapting commercial models to drive success UK Pharma net sales growth Field force reduced by 39%, focus on in local currencies key accounts (primary care trusts, hospitals) 25% Rolling out reimbursement schemes • Lucentis®: For patients requiring >14 11% dose
Slide 29: Pharmaceuticals: Recent launches a key sales driver in 2008
Pharmaceuticals: Recent launches a key sales driver in 2008 Cumulative net sales of launch brands 2 931 USD in m 2 078 1 285 559 2008 3M 6M 9M 12 M growth +231% +205% +176% +152% vs PY 57 | 2008 Annual Results Analyst Conference | January 28, 2009 医薬品：最近の上市が2008年の主要な売上高牽引 要因 上市ブランドの累積売上高 （単位：百万米ドル）
Slide 30: Tekturna/Rasilez: Outcomes data essential to support blockbusters
Tekturna/Rasilez: Outcomes data essential to support blockbusters in cardiovascular field Diovan® and Tekturna®/Rasilez® sales JIKEI Years after launch (CV outcomes, stroke) VAL-MARC (C-Reactive Protein) Diovan VALUE Tekturna/Rasilez (CV outcomes) VALIANT (post-MI) VAL-HEFT (heart failure) Launch +1
Slide 31: Tekturna/Rasilez: Outcomes data essential to support blockbusters
Tekturna/Rasilez: Outcomes data essential to support blockbusters in cardiovascular field Diovan® and Tekturna®/Rasilez® sales JIKEI Years after launch (CV outcomes, stroke) VAL-MARC (C-Reactive Protein) Diovan VALUE Tekturna/Rasilez (CV outcomes) VALIANT (post-MI) APOLLO VAL-HEFT (Primary preventio
Slide 32: Pharmaceuticals: All key oncology brands achieved attractive growth
Pharmaceuticals: All key oncology brands achieved attractive growth Growth in local currencies Unparalleled 86% 7-year overall survival in CML1 18%3 Expanding use in GIST2 Most potent aromatase inhibitor 17% Only oral once-daily treatment for 45% iron intoxification Most prescribed treatme
Slide 33: Strong pipeline progress in 2008
Strong pipeline progress in 2008 Late pipeline: 14 key submissions and 10 key approvals US EU Japan Submissions Glivec® Adjuvant Glivec® Adjuvant Rasilez® GIST GIST Galvus® Afinitor® Afinitor® Exforge® Menveo® QAB149 COPD QAB149 COPD1 ACZ885 CAPS Tekturna®/Diovan® Menveo® ACZ885 CAPS2 Approvals Te
Slide 34: Afinitor submitted with strong clinical data
Afinitor® submitted with strong clinical data – broad Phase III clinical program expanding in 2009 Afinitor® with blockbuster potential Kidney cancer US/EU submissions in June 2008 for advanced kidney cancer after outstanding results in Phase III Additional Phase III programs Baseline + 4 mont
Slide 35: QAB149 submitted for COPD with strong profile
QAB149 submitted for COPD with strong profile Phase III shows sustained 24 hour bronchodilation at 150 and 300 µg, sustained over one year Superior efficacy vs. bid LABAs1 & tiotropium Good safety profile, even at doses higher than needed for therapeutic effect US and EU files submitted in D
Slide 36: First Phase III results for FTY720 show superior efficacy
First Phase III results for FTY720 show superior efficacy compared to interferon beta-1a Both 0.5 and 1.25 mg doses Annualized relapse rate1 significantly reduced relapse rates vs 0.33 interferon beta-1a i.m. in one year 38% reduction TRANSFORMS study vs IFN 52% (p<0.001) reduction Safety profil
Slide 37: Vaccines and Diagnostics continues strong growth
Vaccines and Diagnostics continues strong growth Operating Net sales Growth income Growth ROS (USD in bn) USD (%) LC (%) (USD in bn) (%) (%) Pharmaceuticals 26.3 +10 +5 7.58 +25 28.8 Vaccines and Diagnostics 1.76 +21 +20 0.08 +8 4.4 Sandoz 7.56 +5 +1 1.08 +4 14.3 Consumer Health 5.81 +7 +4 1.05 +29
Slide 38: Vaccines and Diagnostics building momentum
Vaccines and Diagnostics building momentum Strong sales growth driven by pandemic influenza vaccines, pediatric vaccines and Diagnostics; challenging year for seasonal influenza vaccines Introduction of new technologies progressing well – US Department of Health and Human Services awards Novarti
Slide 39: Late-stage Vaccines pipeline making good progress
Late-stage Vaccines pipeline making good progress Meningitis US/EU adolescent submissions in 2008 FDA requires 1 500 additional infants in trials – US infant submission now 2011 US/EU submissions in 2010 MenB Potential to be first global vaccine against B serogroup Japanese encephalitis EU
Slide 40: 2008 a challenging year for Sandoz
2008 a challenging year for Sandoz Operating Net sales Growth income Growth ROS (USD in bn) USD (%) LC (%) (USD in bn) (%) (%) Pharmaceuticals 26.3 +10 +5 7.58 +25 28.8 Vaccines and Diagnostics 1.76 +21 +20 0.08 +8 4.4 Sandoz 7.56 +5 +1 1.08 +4 14.3 Consumer Health 5.81 +7 +4 1.05 +29 18.0 79 | 2008
Slide 41: Sandoz: Good sales growth in emerging countries offset by US contraction
Sandoz: Good sales growth in emerging countries offset by contraction in the US % of net sales by region 2008 net sales growth vs 2007 Total USD 7.6 bn In local currencies 6% 7% LatAm and Canada 10% 16% 10% Asia, Africa and Australia 9% 57% 59% Europe 4% US 27% 24% -10% 2007 2008 81 | 2008 Annual Re
Slide 42: Germany: Sandoz significantly strengthens position
Germany: Sandoz significantly strengthens position in a year of fundamental change Sandoz share in Germany Strengthened No. 1 position in % of generics market Germany by sales 27.7% 26.4% Leading the SHI-contract1 segment 23.9% 23.7% • Sandoz with 37% share2 • Top share in recent AOK3 tender T
Slide 43: Sandoz: Strong growth in emerging markets
Sandoz: Strong growth in emerging markets 2008 net sales growth vs 2007 In local currencies 38% 26% 24% 22% 21% Emerging Russia Brazil Turkey China 1 markets 1 Brazil, Russia, India, China, Turkey, South Korea and Mexico 85 | 2008 Annual Results Analyst Conference | January 28, 2009 サンド：新興市場における力強い成
Slide 44: Sandoz has strong and competitive pipeline
Sandoz has strong and competitive pipeline 2008 approvals >100 2008 submissions >1500 Number of projects in >880 Of which, 68 development1 Paragraph IV filings, FDA ANDAs pending 123 20 first to file Leadership in biosimilars EPO (Binocrit®, Epoetin alfa HEXAL®, Abseamed®) marketed in Austria, Ger
Slide 45: Consumer Health: Steady sales growth and strong improvement in operating income
Consumer Health: Steady sales growth and strong improvement in operating income Operating Net sales Growth income Growth ROS (USD in bn) USD (%) LC (%) (USD in bn) (%) (%) Pharmaceuticals 26.3 +10 +5 7.58 +25 28.8 Vaccines and Diagnostics 1.76 +21 +20 0.08 +8 4.4 Sandoz 7.56 +5 +1 1.08 +4 14.3 Consu
Slide 46: Consumer Health: Strong global growth offsets US decline
Consumer Health: Strong global growth offsets US decline % of net sales by region 2008 net sales growth vs 2007 Total USD 5.8 bn In local currencies 8% 9% LatAm and Canada 5% 14% 15% Asia, Africa and Australia 10% 45% Europe 47% 7% 33% US 29% -3% 2007 2008 91 | 2008 Annual Results Analyst Conference
Slide 47: Consumer Health: Developing strong market position
Consumer Health: Developing strong market position in its businesses % of net sales by business unit Growth Global Market above industry share1 market CIBA rank Vision in 2008 29% OTC #4 3.5% 9 52% OTC CIBA Vision #2 20.9% 9 19% Animal Animal Health Health #6 6.0% 9 1 Source: Internal market researc
Slide 48: Consumer Health: Focus on core brands drives 2008 performance
Consumer Health: Focus on core brands drives 2008 performance Consumer Health sales USD in m 158 51 5 812 181 1 5 426 2007 OTC growth CIBA Vision Animal Health 2008 growth growth s er iv dr ey K 1 Includes sales of Ovaltine (Gerber) not allocated to a business unit 95 | 2008 Annual Results Analyst C
Slide 49: Consumer Health: Innovation expected to be a key driver of growth
Consumer Health: Innovation expected to be a key driver of growth OTC Number of R&D projects • Increasing focus on switches and new CIBA dosage forms Vision 14 Animal Health 90 • Leveraging capabilities and assets from other Novartis divisions OTC • Focus areas are vaccines, parasiticides and th
Slide 50: Agenda
Agenda Overview D. Vasella Operating performance J. Reinhardt 2008 performance Operational priorities for 2009 Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 営業実績 J. ラインハルト 2008年の実績 2009年の優先業務 財務 R. ブロイ 見通し D. バセラ 50
Slide 51: 2009 priorities
2009 priorities Target superior growth – essential to focus on execution in turbulent times Rejuvenate portfolio – achieve key launches and submissions Drive productivity – Build on “Forward” achievements and strengthen customer focus 101 | 2008 Annual Results Analyst Conference | January 28,
Slide 52: Growth drivers for 2009
Growth drivers for 2009 Dynamic expansion of new Pharma products Successful new launches: Extavia®, Afinitor® and Menveo® Return Sandoz and Consumer Health to growth in the US Continue to strongly expand in emerging markets 103 | 2008 Annual Results Analyst Conference | January 28, 2009 2009
Slide 53: Innovative commercial models will help to drive success
Innovative commercial models will help to drive success ples Exam US/Pharma New regional approach to address market dynamics Germany/Sandoz: • AOK tenders • 1 A Pharma UK/Pharma: Outcomes-based reimbursement schemes Italy/Pharma: Partnership with AIFA1 on Rasilez® outcomes Malaysia, Vietnam, Jordan,
Slide 54: Strong progress in innovation anticipated in 2009
Strong progress in innovation anticipated in 2009 Submissions Approvals Data FTY720 MS1 Afinitor® RCC5 9Sandostatin® Phase III midgut neuroendocrine tumors MFF258 asthma Glivec® adjuvant GIST and COPD2 Afinitor® Phase III carcinoid 9Tekturna® +HCTZ tumors Tekturna®+Diovan® (EU) Femara®
Slide 55: Productivity increases are essential to improve operating performance
Productivity increases are essential to improve operating performance Most important operational initiatives Achieve “Forward” objectives ahead of schedule Improve cash flow Implement project “Customers First”: strengthen customer orientation 109 | 2008 Annual Results Analyst Conference | Janu
Slide 56: Conclusions – disciplined execution required in period of uncertainty
Conclusions – disciplined execution required in period of uncertainty Aim to achieve accelerated growth in the US Target sustained expansion in emerging markets Continue to rejuvenate the portfolio with successful new product launches Further build biotech powerhouse across Pharma, Vaccines
Slide 57: Agenda
Agenda Overview D. Vasella Operating performance J. Reinhardt Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 営業実績 J. ラインハルト 財務 R. ブロイ 見通し D. バセラ 57
Slide 58: Novartis 2008 financial takeaways
Novartis 2008 financial takeaways Record sales1 and earnings1 High growth driven by Pharmaceuticals and helped by currency Strong free cash flow before dividends enhances financial flexibility Strengthened portfolio with acquisitions • Total investment: USD 11.5 bn Very limited direct impa
Slide 59: 2008 continuing operations results reflect business expansion and productivity gains
2008 continuing operations1 results reflect business expansion and productivity gains 12 M 2008 12 M 2007 % USD % LC 2 USD m Net sales 41 459 38 072 9 5 3 Operating income 8 964 6 781 32 as % of net sales 21.6% 17.8% 3 Net income 8 163 6 540 25 as % of net sales 19.7% 17.2% 4 Free cash flow 7 646 6
Slide 60: Operating income margin improves 3.8% pts in 2008
Operating income margin improves 3.8% pts in 2008 Op. income margin 2007 1 17.8% Environmental and Forward charges 2007 +2.7% 20.5% Gross margin improvement2 +0.9% Productivity improvements project Forward +2.5% Investments in M&S, R&D and G&A2 -1.3% Other income and expenses -1.0% Op. income margin
Slide 61: Productivity gains drive margin expansion and support high R&D investments
Productivity gains drive margin expansion1 and support high R&D investments % pt change % pt due to exceptionals FY 08 vs. + 0.4 + Other Increase in Pharma royalties - 0.1 FY 07 revenues +1.1 + 1.4 + COGS Productivity gains in Pharma and + 1.1 Sandoz, 2007 Famvir impairment + 0.6 + M&S Efficiency im
Slide 62: Operating and net income growth impacted by 2007 exceptional items
Operating and net income growth impacted by 2007 exceptional items USD m 12 M 2008 12 M 2007 Change (% USD) Operating income from continuing operations 8 964 7 815 15 excluding provisions Corporate environmental provision increase - 590 Forward restructuring provision - 444 Operating income from con
Slide 63: Q4 results reflect business expansion and productivity gains, currency headwind
Q4 08 results reflect business expansion and productivity gains, but also currency headwind USD m Q4 20081 Q4 2007 1 % USD % LC Net sales 10 077 9 931 1 8 Operating income2 1 680 897 87 as % of net sales 16.7% 9.0% Net income2 1 507 931 62 as % of net sales 15.0% 9.4% Free cash flow 2 558 2 032 26 E
Slide 64: Strong Group operating performance in Q4 2008
Strong Group operating performance in Q4 2008... Accelerating growth in Pharmaceuticals (+10% LC) V&D delivers double-digit expansion (+33% LC) Steady Consumer Health results in challenging markets (+4% LC) Sandoz progress in emerging markets impacted by US (+0% LC) Investments in emerging
Slide 65: Q4 2008 reported results impacted by negative currencies and provisions
... but Q4 2008 reported results impacted by negative currencies and strengthened provisions Change Selected factors USD m Adverse currency impact on Group operating income (-5 ppt) - 91 Sandoz restructuring and US recall costs - 50 Legal provisions, litigation and settlements - 79 Increase in produ
Slide 66: Net income from continuing operations impacted by cost of Alcon financing
Net income from continuing operations impacted by cost of Alcon financing USD m 12 M 2008 12 M 2007 Change (% USD) Operating income from continuing operations 8 964 6 781 32 Income from associated companies 441 412 7 Financial income, net 94 294 -68 in % of average net liquidity1 6.8% 9.0% Income be
Slide 67: Accounting for the 25% Alcon equity stake
Accounting for the 25% Alcon equity stake Equity accounting for Alcon stake USD m Q4 2008 12 M 2008 Novartis share of Alcon net income1 100 221 Catch up Q3 recorded Q4 34 34 Amortization charges (after tax) -140 -266 Net income effect Alcon -6 -11 Carrying value of Alcon investment: USD 10.4 bn
Slide 68: Strong free cash flow in 2008 enhances financial flexibility
Strong free cash flow in 2008 enhances financial flexibility1 USD m 12 M 2009 12 M 2008 12 M 2007 Change (% USD) Free Cash Flow before dividends 7 409 6 045 23 Purchase of own shares, net - 473 -4 599 -90 Acquisition / Divestment of subsidiaries and -11 394 7 840 * Alcon stake 2 Dividends -4 294 -3
Slide 69: FCF before dividends increases 23%
FCF before dividends1 increases 23% 12 M 2008 free cash flow before dividends change vs. previous year (USD m) in USD bn Free Cash Flow before dividends 12 M 2007 6'045 Increased cash flow from operating activities 417 Lower capital expenditure 475 Lower investment in intangible and financial assets
Slide 70: Limited direct impact of financial crisis on Novartis treasury operations
Limited direct impact of financial crisis on Novartis treasury operations No equity or bond investment exposure to any insolvent financial institution; limited hedge fund exposure No counterparty exposure to any insolvent financial institution through financial contracts (swaps, options or other
Slide 71: Agenda
Agenda Overview D. Vasella Operating performance J. Reinhardt Financial results R. Breu Outlook D. Vasella 議題 概要 D. バセラ 営業実績 J. ラインハルト 財務 R. ブロイ 見通し D. バセラ 71
Slide 72: Sustained sales and profit growth
Sustained sales and profit growth Novartis group, historic performance1 Sales Operating income EPS (in USD bn) (in USD bn) (in USD) CAGR +11% CAGR +11% CAGR +13% 41.5 9.0 3.59 24.9 5.3 1.94 12 M 2003 12 M 2008 12 M 2003 12 M 2008 12 M 2003 12 M 2008 1 Continuing operations – excluding Nutrition & Sa
Slide 73: Twelfth consecutive dividend increase
Twelfth consecutive dividend increase CHF per share 2.00 CAGR 1.60 +12% 1.35 1.15 1.00 1.05 0.90 0.95 0.80 0.85 0.73 0.63 0.50 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Proposed 2008 dividend: CHF 2.00 per share, + 25% versus 2007 145 | 2008 Annual Results Analyst Conference |
Slide 74: 2008: Novartis shares demonstrate defensive character
2008: Novartis shares demonstrate defensive character Share price in CHF 70 65 60 Novartis 55 -15% MSCI World 50 Pharmaceuticals 45 -25% SMI 40 -35% 35 30 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Source: Datastream 147 | 2008 Annual Results Analyst Conferen
Slide 75: Novartis outperformed peers long-term in TSR
Novartis outperformed peers long-term in TSR1 Total shareholder return 1 January 1996 – 16 January 2009 in percentage, USD TSR1 CAGR 400 Novartis 8.1% 350 World 300 6.5% Pharma2 250 Peers3 6.4% 200 World 3.3% 150 Market2 100 50 0 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 09 1 Total Shareh
Slide 76: Novartis Group outlook for FY 2009
Novartis Group outlook for FY 2009 Barring unforeseen events Group sales for continuing operations expected to grow at mid-single digit rate (LC) Group earnings for continuing operations to reach record levels 151 | 2008 Annual Results Analyst Conference | January 28, 2009 ノバルティス グループの2009年の見通し