Novartis Ag · SIX:NOVN

Novartis — FY2013 Earnings Presentation

57 slides from Novartis's earnings presentation, Jan 29, 2014

  1. Slide 1: Q4 and Full Year 2013 Results

    Q4 and Full Year 2013 Results Investor presentation January 29, 2014 2013年第4四半期及び通期業績 投資家向け説明資料 2014年1月29日 1

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains forward-looking statements that can be identified by words such as “potential,” “expected,” “will,” “planned,” or similar terms, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding

  3. Slide 3: Agenda

    Agenda Group overview Joseph Jimenez Chief Executive Officer Financial review Harry Kirsch Chief Financial Officer Pharmaceuticals David Epstein Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez Chief Executive Officer Q&A session Executive team 5 | Novartis Q4 and FY 2013 Results | Jan

  4. Slide 4: Some observations about the industry in 2013

    Some observations about the industry in 2013  Industry entering new phase of innovation, led by new technologies  Continued cost containment  Health as a driver of economic growth 7 | Novartis Q4 and FY 2013 Results | January 29, 2014 | Novartis Investor Presentation 2013年の医薬品業界に関するいくつかの考察  新技術が

  5. Slide 5: Novartis delivers strong sales and innovation in 2013, reinforcing growth prospects

    Novartis delivers strong sales and innovation in 2013, reinforcing growth prospects  Sales of USD 57.9 billion, up +4% versus 2012 in cc1 despite impact of patent expirations  Core2 operating income of USD 14.5 billion, +3% in cc  Core EPS up +4% in cc  Dividend of CHF 2.45 per share proposed; 1

  6. Slide 6: Summary of 2013 financial results

    Summary of 2013 financial results Change vs. PY (in USD m) 2013 % USD % cc Net sales 57 920 +2 +4 Operating income Core 14 485 -2 +3 Reported 10 910 -3 +5 Net income 9 292 -1 +7 EPS (USD) Core 5.09 -1 +4 Reported 3.76 -2 +6 Free cash flow 9 945 -13 11 | Novartis Q4 and FY 2013 Results | January 29,

  7. Slide 7: We delivered on our three strategic priorities

    We delivered on our three strategic priorities 1 Innovation 2 Growth 3 Productivity  18 approvals in 20131, incl.  31% of 2013 Group sales  Procurement: Ultibro® Breezhaler® in EU from Growth Products2 USD 1.5 bn in savings  Filed AIN457, submitted  Manufacturing: LDK378 in Q4 4 sites exited /

  8. Slide 8: Outstanding innovation progress in 2013 with 13 Pharmaceuticals approvals

    Innovation Outstanding innovation progress in 2013 with 13 Pharmaceuticals approvals 2013 US / EU / Japan Selected product Indication milestones  Acute gouty arthritis EMA approval  Systemic juvenile idiopathic arthritis FDA / EMA approvals  COPD EMA, Japan PMDA approvals  Alzheimer’s disease

  9. Slide 9: We received three FDA Breakthrough Therapy designations for new molecules

    Innovation We received three FDA Breakthrough Therapy designations1 for new molecules Novartis FDA Breakthrough Therapy designations BYM338 RLX030 LDK378 Sporadic Inclusion Acute Heart Failure ALK+ non-small Body Myositis cell lung cancer Received in Q3 2013 Filed in H1 2013 Submitted in Q4 2013 1 F

  10. Slide 10: Alcon gained important approvals in 2013

    Innovation Alcon gained important approvals in 2013 Select approvals Simbrinza® Jetrea® Cataract Refractive Suite  Glaucoma  Vitreo-macular traction with  Launches of Verion® and macular hole Centurion® 19 | Novartis Q4 and FY 2013 Results | January 29, 2014 | Novartis Investor Presentation イノベーシ

  11. Slide 11: Sandoz initiated 8th Phase III biosimilar trial; AirFluSal Forspiro approvals

    Innovation Sandoz initiated its 8th Phase III clinical trial in biosimilars and AirFluSal® Forspiro® received first approvals in Europe 8 Phase III biosimilar trials, across 6 molecules1  Initiated Phase III trial for adalimumab  Innovative new device (AbbVie’s Humira®2)  First EU approval in Den

  12. Slide 12: We launched an innovative vaccine for meningococcal disease

    Innovation We launched an innovative vaccine for meningococcal disease  First broad coverage meningococcal serogroup B vaccine  Launched in several European private markets 23 | Novartis Q4 and FY 2013 Results | January 29, 2014 | Novartis Investor Presentation イノベーション 髄膜炎菌性疾患の画期的ワクチンを上市  髄膜炎菌性疾患

  13. Slide 13: In 2013, sales grew across all of our divisions in cc

    Growth In 2013, sales grew across all of our divisions in cc 2013 Share of Group net sales by Division Net sales Full Year Growth cc 7% (in USD m) (in % vs. PY) 3% Novartis Group 57 920 +4% 16% Pharmaceuticals 32 214 +3% Alcon 10 496 +5% 56% Sandoz 9 159 +5% 18% Vaccines and Diagnostics 1 987 +6% Co

  14. Slide 14: We continued our strong track record in Emerging Markets

    Growth We continued our strong track record in Emerging Markets Total Emerging Markets1 growth vs. PY (in % cc2) +12% +11% +9% +9% +7% +6% +6% +5% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 1 All markets except the US, Canada, Western Europe, Japan, Australia and New Zealand 2 C

  15. Slide 15: Our Pharmaceuticals growth products maintained strong momentum in 2013

    Growth - Pharmaceuticals Our Pharmaceuticals growth products1 maintained strong momentum in 2013 Net sales2 (in USD m at period rates) 2012 +1% 2013 2 383 +62% 1 934 +66% +31% +40% 1 309 1 266 1 200 +24% +90% nm3 613 256 163 4 1 Growth products are defined as products launched in 2008 or later, or w

  16. Slide 16: Alcon grew at +5% in cc in 2013

    Growth - Alcon Alcon grew at +5% in cc in 2013 2013 FY sales by franchise Growth vs. PY Comment (in USD m) (in cc)  Share gains in base IOLs Surgical 3 897 +7%  Increase in procedure volume growth  Adoption of LenSx® and Centurion® Ophthalmic  Gains in DuoTrav® and Azarga® offsetting Pharma- 4 1

  17. Slide 17: Sandoz continues to grow its differentiated generic portfolio

    Growth - Sandoz Sandoz continues to grow its differentiated generic portfolio Portfolio split between standard generics and differentiated products Percentage of total sales CAGR 2008-2013 (% in USD) Differentiated products1 32% 45% +11.9% Standard generics 68% 55% +0.4% 2008 2013 1 Sandoz’ differen

  18. Slide 18: 2013 was a strong year for Consumer Health

    Growth – Consumer Health 2013 was a strong year for Consumer Health Double-digit growth Key drivers Net sales  Strong growth priority brands (in USD m) +10% in cc 4 064 3 735  Successful US re-launches  Strong performance in selected key emerging markets OTC Fastest-growing China Poland growth OT

  19. Slide 19: Vaccines and Diagnostics returned to solid growth

    Growth – Vaccines and Diagnostics Vaccines and Diagnostics returned to solid growth Net sales Drivers (in USD m)  Seasonal influenza +6%  Pre-pandemic sales including H7N9 in US in cc 1 987  Menveo® growth 1 858  First Bexsero® sales to several EU private markets Key event (January 2014)  Compl

  20. Slide 20: We continued to enhance productivity and simplify operations

    Productivity We continued to enhance productivity and simplify operations Procurement Marketing and sales Manufacturing footprint Savings Group M&S spend (in USD bn) (% of sales) 1.5 1.3 25.3% 25.1% 20 manufacturing sites1 restructured or divested since program start 2012 2013 2012 2013 1 19 sites a

  21. Slide 21: We also progressed our Quality agenda

    Quality We also progressed our Quality agenda  Upgraded systems, processes, talent across network  Completed successful FDA inspections: • Lincoln plant, zero observations • Broomfield and Boucherville plants now FDA compliant Lincoln, USA 41 | Novartis Q4 and FY 2013 Results | January 29, 2014 |

  22. Slide 22: Agenda

    Agenda Group overview Joseph Jimenez Chief Executive Officer Financial review Harry Kirsch Chief Financial Officer Pharmaceuticals David Epstein Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez Chief Executive Officer Q&A session Executive team 43 | Novartis Q4 and FY 2013 Results | Ja

  23. Slide 23: Sales and earnings up in cc, in line with guidance

    Sales and earnings up in constant currencies year-on-year in-line with guidance, underlying performance strong 2013 - Full Year Guidance1 (cc)2 FY 2013 (cc) Group net sales to grow low- to mid-single digit +4%  Group core operating income in-line or better than in 2012 +3%  Net sales growth: Pharm

  24. Slide 24: Novartis grew sales and core operating income in cc despite generics impact

    Novartis grew sales and core operating income in constant currencies despite generics impact Q4 Growth vs. PY in cc FY Growth vs. PY in cc (in USD m) 2013 Reported Core 2013 Reported Core Net sales 15 078 +4% 57 920 +4% Core operating income 3 395 +2% 14 485 +3% Operating income 2 373 +10% 10 910 +5

  25. Slide 25: Group margin decreased 0.3 percentage points in constant currencies

    Group margin decreased 0.3 percentage points in constant currencies FY 2013 vs. PY Core operating Net sales income Core margin growth growth Core ROS change in cc (in % cc) (in % cc) (%) (% pts) Pharmaceuticals 3 -1 29.6 -1.3 Alcon 5 6 35.2 0.1 Sandoz 5 4 16.8 -0.1 Consumer Health 10 95 7.3 3.4 Vacc

  26. Slide 26: Strong underlying growth of sales and core operating income

    Growth Strong underlying growth1 of sales and core operating income Group (FY 2013) (in % growth vs. PY) Net sales Core operating income Underlying volume 9 18 Price -1 -3 Underlying growth 8 15 Generics impact -4 USD 2.2 bn -12 CC growth 4 3 FX -2 -5 USD growth 2 -2 1 Underlying growth is the growt

  27. Slide 27: Increasing negative currency impact on core operating income

    Increasing negative currency impact on core operating income due to weakening of yen and key Emerging Market currencies Currency impact vs. PY (in % points) Net sales Core operating income -1 -2 -2 -2 -2 -2 -2 -3 -4 -3 -6 -8 Q4 Q1 Q2 Q3 Q4 FY Q4 Q1 Q2 Q3 Q4 FY 2012 2013 20141 2012 2013 20141 FY impa

  28. Slide 28: Continued strong performance driven by growth products

    Continued strong performance driven by growth products1 Group growth products (in USD bn) % of sales 30% 31% 32% 32% 31% 4.6 4.8 18.1 4.5 4.2 15% 15% vs. PY vs. PY Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY 2013 1 Growth products are defined as products launched in 2008 or later, or with exclusivity until a

  29. Slide 29: Higher free cash flow in H2 2013

    Higher free cash flow in H2 2013 FY free cash flow (in USD bn) Key components vs. prior year 11.4 9.9  Negative currency impact  Higher capital investments in H2 7.0 Manufacturing and R&D 6.8  Higher working capital Historical cash flow pattern between H1 and H1 4.4 3.1 H2 expected to be repeated

  30. Slide 30: Net debt decreased by USD 2.8 billion to USD 8.8 billion in 2013

    Net debt decreased by USD 2.8 billion to USD 8.8 billion in 2013 (in USD bn) +2.8 -11.6 +9.9 -6.1 +1.7 -2.9 +0.2 -8.8 December Free cash flow Dividends Disposal of Share Others December 2012 treasury shares repurchases1 2013 1 Including USD 2.6 billion share repurchases on the first and second tradi

  31. Slide 31: 17th consecutive dividend growth proposed

    17th Consecutive Dividend growth proposed1, increasing payout ratio to 74%2 from 66%3 in 2012 3.00 ,2.75 2.50 ,2.45 ,2.44 ,2.30 2.00 CHF USD 1.50 1.00 Proposed1 dividend growth 2013 vs. 2012: 7% in CHF, 13% in USD 0.50 0.00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2

  32. Slide 32: Guidance 2014 unchanged when excluding Diovan mono Gx delay

    Guidance 20141 unchanged when excluding Diovan® mono Gx delay Barring unforeseen events (illustrative) Net sales growth expectation Core operating income growth expectation (vs. PY in % cc) (vs. PY in % cc) Jan 2013 guidance At least mid-single digit Ahead of sales growth on 2014 growth Diovan® mono

  33. Slide 33: Outlook for 2014

    Outlook for 2014 Barring unforeseen events  Group net sales expected to grow low- to mid-single digit (cc)1: • Pharmaceuticals: in-line with 2013 • Alcon: mid-to high-single digit • Sandoz: mid-to high-single digit  Group core operating income expected to grow ahead of sales (cc)  Consistent with

  34. Slide 34: Agenda

    Agenda Group overview Joseph Jimenez Chief Executive Officer Financial review Harry Kirsch Chief Financial Officer Pharmaceuticals David Epstein Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez Chief Executive Officer Q&A session Executive team 67 | Novartis Q4 and FY 2013 Results | Ja

  35. Slide 35: Pharmaceuticals delivered 3% cc sales growth

    Pharmaceuticals delivered 3% cc sales growth Growth (in USD m) 2013 FY 2012 FY (% USD) (% cc) Net sales 32 214 32 153 0 3 Core operating income 9 523 10 213 -7 -1 Operating income 9 376 9 598 -2 3 Core operating income margin 29.6% 31.8% Operating income margin 29.1% 29.9% Free cash flow 8 332 9 491

  36. Slide 36: Significant growth from Emerging Growth Markets in 2013

    Significant growth from Emerging Growth Markets1 in 2013 Growth 2013 vs. PY (in % cc) Net sales 2013 Emerging Growth Markets1 9% USD 7.7 bn Established Markets 1% USD 24.5 bn 1 All markets except the US, Canada, Western Europe, Japan, Australia and New Zealand 71 | Novartis Q4 and FY 2013 Results |

  37. Slide 37: Growth products grew 25% in constant currencies

    Growth products1 grew 25% in constant currencies and now represent 38% of sales Growth product1 sales (in USD bn) +25% cc 12.3 9.9 2012 2013 % of total sales 31% 38% 1 Growth products are defined as products launched in 2008 or later, or with exclusivity until at least 2017 in key markets (EU, US, J

  38. Slide 38: Unparalleled growth platform with exclusivity expected until 2017 and beyond

    Unparalleled growth platform1 with exclusivity expected until 2017 and beyond Q4 Q4 Growth 2013 2013 Indication Sales vs. PY Sales Growth vs. PY (USD m) (% cc) (USD m) (% cc)  Wet age-related macular degeneration, DME2, 630 1% 2 383 1% RVO3, mCNV4  Multiple sclerosis 527 51% 1 934 62%  Metastatic

  39. Slide 39: Gilenya strong growth fuelled by steady new patient flow

    Gilenya® strong growth fuelled by steady new patient flow Gilenya® sales and growth (in USD m, growth in % cc) US RoW +41%  84 500 patients treated with Gilenya® WW1 1 023 +94% to date 911 727  US: USD 1 bn sales milestone reached in December. Gilenya® share remaining stable while MS2 oral demand

  40. Slide 40: New indications continue to contribute to Lucentis growth

    New indications continue to make a significant contribution to Lucentis® growth Lucentis® ex US sales and growth (in USD m, growth in % cc) +1% cc 2 398 2 383 11% 24%  Lucentis® double-digit volume growth vs. PY is offset by one-time price reductions required to secure reimbursement for new indicat

  41. Slide 41: Ultibro Breezhaler positive launch in EU and Japan

    Ultibro® Breezhaler® positive launch in EU and Japan Cumulative USD sales since launch Ultibro® Exforge® Group  1st launched Dual Bronchodilator and the only Seebri® Galvus® Group LABA/LAMA to demonstrate benefits beyond Onbrez® both Spiriva® and Seretide®1-5  Launched in 6 countries since Novembe

  42. Slide 42: Galvus Group reached blockbuster status in 2013

    Galvus® Group reached blockbuster status in 2013 Galvus® Group sales and growth (in USD m, growth in % cc) +40% 1 200 +43% 910  Solid growth driven by strong performance and new indications (2nd line monotherapy, 677 add-on to insulin & triple therapy)  #1 DPP41 in >11 countries despite 2nd to mar

  43. Slide 43: Increasingly confident in potential of Tasigna in newly diagnosed Ph+ CML

    Increasingly confident in potential of Tasigna® to become a best-in-class treatment for newly diagnosed Ph+ CML patients ENESTnd 5 yr follow up vs. imatinib (Molecular response, in percent) 100 Nilotinib 300 mg BID (n = 282) Nilotinib 400 mg BID (n = 281)  Rates of event-free survival, Patients wit

  44. Slide 44: Tasigna driving the growth of bcr/abl franchise

    Tasigna® driving the growth of bcr/abl franchise WW Tasigna®/Glivec® bcr/abl1 sales (in USD m) 1 400 35% Tasigna® revenues Glivec® revenues 1 200 30% Tasigna® share 1 000 25%  Tasigna® grew 31% (cc) in 800 20% 2013 FY vs. PY and reached USD 352 m in Q4 2013 600 15%  Treatment-Free Remission pivota

  45. Slide 45: Afinitor has seen strong uptake in advanced breast cancer

    Afinitor® has seen strong uptake since launch in HR+/HER2-1 advanced breast cancer2 Afinitor® global quarterly sales (in USD m) 400 Launch in Breast Cancer 350  Afinitor® grew 66% (cc) in 2013 vs. PY 300  Launched in breast cancer in the US, 250 Germany, Austria, Argentina, UK, Italy, Spain, and C

  46. Slide 46: RLX030 (serelaxin): planning re-examination in acute heart failure

    RLX030 (serelaxin): planning to ask for re-examination seeking conditional approval in acute heart failure in Europe Submit re- CHMP Negative EU CHMP opinion examination expected dossier opinion Jan 24 Feb 13 March April May US FDA advisory FDA action committee 91 | Novartis Q4 and FY 2013 Results |

  47. Slide 47: Early positive CHMP opinion for Xolair in Chronic Spontaneous Urticaria

    Early positive opinion from CHMP for use of Xolair® in Chronic Spontaneous Urticaria (CSU)  Indication: add-on therapy for the treatment of CSU in adult and adolescent (12 years and above) patients with inadequate response to H1-antihistamine treatment  First new therapy for CSU in more than 10 ye

  48. Slide 48: Oncology pipeline is as robust as ever

    Oncology pipeline is as robust as ever LDK378 Received Breakthrough Therapy designation by FDA in March 2013 FDA action Marked clinical response in patients with ALK+ non-small cell lung cancer expected in 2014 LBH589 Significantly extended time without disease progression in Phase III multiple WW s

  49. Slide 49: Currently expected Pharmaceuticals newsflow highlights

    Currently expected Pharmaceuticals newsflow highlights Afinitor® Japan action in HR+ Breast cancer LDK378 FDA action in NSCLC1 Lucentis® Japan action in Diabetic Macular Edema H1 2014 RLX030 FDA action in Acute Heart Failure RLX030 CHMP opinion in Acute Heart Failure Xolair® CHMP opinion in Chronic

  50. Slide 50: Solid full year performance for Pharmaceuticals Division

    Solid full year performance for Pharmaceuticals Division  2013 Full Year Results • Pipeline delivered several major approvals in 2013 in US and EU further rejuvenating the portfolio • 9% underlying volume growth more than offsetting generic competition • Strong growth platform1 with protection unti

  51. Slide 51: Agenda

    Agenda Group overview Joseph Jimenez Chief Executive Officer Financial review Harry Kirsch Chief Financial Officer Pharmaceuticals David Epstein Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez Chief Executive Officer Q&A session Executive team 101 | Novartis Q4 and FY 2013 Results | J

  52. Slide 52: Our three main strategic priorities will remain the same

    Our three main strategic priorities will remain the same 2014 objectives Extend lead in Accelerate Growth Drive Productivity Innovation  Continue to invest in  Maintain launch  Drive our ongoing pipeline, e.g., CTL019 trajectories of major aggressive brands productivity agenda  Secure regulatory

  53. Slide 53: We will emphasize how we deliver the strategy: high performance with integrity

    In addition, we will emphasize ‘how’ we deliver the strategy: high performance with integrity Quality People Beyond Compliance Ethical Corporate Business Responsi- Practices bility 105 | Novartis Q4 and FY 2013 Results | January 29, 2014 | Novartis Investor Presentation さらに、私たちは戦略達成の方法を重視: 優れた業績と誠実さ

  54. Slide 54: Three key elements cut across our strategic priorities

    Three key elements cut across our strategic priorities 1 Actively manage our portfolio 2 Deliver greater synergies between our Divisions 3 Deliver superior shareholder returns 107 | Novartis Q4 and FY 2013 Results | January 29, 2014 | Novartis Investor Presentation 戦略的優先課題を横断する3つの重要な要素 1 ポートフォリオの積極的

  55. Slide 55: Outlook for 2014

    Outlook for 2014 Barring unforeseen events  Group net sales expected to grow low- to mid-single digit (cc)1 : • Pharmaceuticals: in-line with 2013 • Alcon: mid-to high-single digit • Sandoz: mid-to high-single digit  Group core operating income expected to grow ahead of sales (cc)  Consistent wit

  56. Slide 56: Appendix

    Appendix Pharmaceuticals 付録 医薬品事業部門 56

  57. Slide 57: Planned filings 2014 to 2018

    Planned filings 2014 to  2018 2014 2015 2016 2017  2018 LBH589 AFQ056 BYM338 DEB025 AUY922 QAX576 Multiple Myeloma Fragile X syndrome sIBM9 HCV infection Solid tumors Allergic diseases LCQ908 BKM120 CTL019 KAE609 BAF312 QGE031 FCS1 Breast cancer Leukemia Malaria Multiple sclerosis Allergic disease

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