Sandoz Group Ltd · SIX:SDZ
Sandoz — FY2023 Earnings Presentation
37 slides from Sandoz's earnings presentation, Mar 13, 2024
Slide 1: Q4 2023 sales and FY 2023 results
March 13, 2024 Q4 2023 sales and FY 2023 results
Slide 2: Disclaimer
Disclaimer This presentation contains forward‐looking statements that reflect the current views of management, which are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Sandoz Group to differ materially from those
Slide 3: Agenda
Agenda 1. Highlights 2. Business review 3. Financial performance 4. Guidance & outlook 5. Wrap-up 3
Slide 4: Highlights
Highlights
Slide 5: 2023: A year of many achievements
2023: A year of many achievements Successful Delivered on Continued topline completion of full-year 2023 momentum with spin-off with financial guidance growth in all three ensured business regions continuity Advanced on our Enhanced portfolio Secured long-term biosimilar pipeline, through bolt-on fi
Slide 6: Ninth consecutive quarter of topline growth
Ninth consecutive quarter of topline growth Net sales1 • Q4 is the highest growth quarter of the year 10% 9% • North America returning to 8% growth, driven by the launch of Hyrimoz® • Solid generics performance 4% from volume demand and price erosion below prior year • Strong double-digit biosimilar
Slide 7: Strong business performance in a transition year
Strong business performance in a transition year FY 2023 in USD Net sales Core EBITDA Free Cash Flow margin 9.6bn 18.1% -0.2bn +7% cc1 -3.2ppts -1.1bn Growth across all regions In line with guidance Investments to enable and double-digit ahead of margin sustained growth as a biosimilar growth expans
Slide 8: Business review
Business review
Slide 9: Solid 5% generics growth for FY 2023
Solid 5% generics growth for FY 2023 Growth drivers Portfolio development • Strong volume • Enhanced portfolio through bolt-on demand acquisitions • Exceptional cough • Astellas: Acquisition of and cold season Mycamine® antifungal agent in H1 • Aspen: Divestment of China business in exchange for • R
Slide 10: Strong 15% biosimilars growth for FY 2023
Strong 15% biosimilars growth for FY 2023 Growth drivers Pipeline development • Continued demand for • Tyruko® available in several Omnitrope®1 European markets • Launch of Hyrimoz® • Biosimilar denosumab HCF2 in US and receives FDA approval Europe • Agreement with Samsung • Positive mix impact Bioe
Slide 11: Continued demand for Omnitrope
Continued demand for Omnitrope® Designed to help patients with growth-hormone-related disorders Omnitrope® share evolution1 Sandoz 40% 34% 30% 28% • Overtook originator as market leader with 34% market share1 20% • Strong double-digit growth, 18 years after launch 14% • Strong customer demand 10% 10
Slide 12: Launched Hyrimoz HCF in the US and Europe
Launched Hyrimoz® HCF1 in the US and Europe Positioned for success in various inflammatory conditions Broadest coverage among adalimumab biosimilars in the US4 40% Recent milestones Key competitive advantages 17% • In US, started supplying product to Cordavis • #1 ex-US with >200 million patient • A
Slide 13: Ongoing launch of Tyruko
Ongoing launch of Tyruko® First and only biosimilar for multiple sclerosis Best coverage Strengthens well-established among adalimumab biosimilar portfolio biosimilars in the US2 Trusted partner in multiple sclerosis • Launched in Norway, Germany and Finland Seamless patient • First and only biosimi
Slide 14: CIMERLI strengthens ophthalmology portfolio
CIMERLI® strengthens ophthalmology portfolio Acquisition of ranibizumab-eqrn in the US closed early March 2024 Best coverage Key highlights among adalimumab biosrs in the US2 USD 170 million upfront cash payment • Tenth commercial biosimilar Robust ophthalmic • Strengthens existing ophthalmology fra
Slide 15: Partner of choice across the value chain
Partner of choice across the value chain Securing long-term biosimilars manufacturing capacity Accessing development capabilities, expertise and innovative technologies Adding new pipeline and commercial assets Leveraging commercial, development and regulatory capabilities Efficient use of capital 1
Slide 16: Broad and deep pipeline and investing to expand
Broad and deep pipeline and investing to expand D&R1 Generics Biosimilars D&R as a % of net sales2 >400 24 9.2% 9.6% products products ~$170bn >$200bn originator sales targeted3 originator sales targeted3 FY 2022 FY 2023 30% 30% • 2/3 pipeline expansion with are complex generics3 net sales by 20284
Slide 17: ESG Highlights 2023
ESG Highlights 2023 Sandoz purpose is to pioneer access for patients Access & People Environment • >800m1 patient treatments provided • Committed to Science Based Targets initiative (SBTi) to limit global warming to 1.5 degrees Celsius • USD >18bn2 in savings delivered by our key products to EU and
Slide 18: Financial performance
Financial performance
Slide 19: European champion and global leader in biosimilars
European champion and global leader in biosimilars Ongoing mix shift toward higher value products Business mix Regional mix FY 2023 in USD Biosimilars International 23% 2.2bn 2.5bn 26% 9.6bn 9.6bn 52% +7%1 +7%1 Generics North America 22% Europe 77% 7.4bn 2.1bn 5.0bn 19 Note: Net sales in this docume
Slide 20: Q4 and FY 2023 net sales by business
Q4 and FY 2023 net sales by business Strong double-digit growth of biosimilars and solid generics performance in USD billion Q4 FY +10%1 +7%1 9.1 9.6 Biosimilars 2.5 2.3 1.9 2.2 +15% Generics 0.6 0.5 +26% 7.4 +5% 1.9 +6% 7.1 1.8 2022 2023 2022 2023 • Contribution from recent launches, including • St
Slide 21: Q4 and FY 2023 net sales by region
Q4 and FY 2023 net sales by region Strong Europe and International, North America returning to growth Q4 FY in USD billion +10%1 +7%1 9.1 9.6 2.5 2.3 2.5 +9% 0.7 +14% 2.5 0.6 International 0.6 2.1 2.1 +3% 0.5 +20% North America Europe 1.2 1.3 +4% 4.5 5.0 +9% 2022 2023 2022 2023 • Solid generic volum
Slide 22: P&L Summary
P&L Summary Core gross profit margin decrease as expected due to higher input costs and FX headwinds Gross profit core adjustments of USD 349m due to: 2023 Core 2023 Change Change in USD million • Amortization of intangible assets Reported Adjustments Core results % USD1 % cc1 and impairments of USD
Slide 23: Core EBITDA margin in line with guidance
Core EBITDA margin in line with guidance Favorable volume/price due to strong volume demand and lower price erosion Mix impact from strong biosimilar growth Core EBITDA margin % of net sales Anticipated inflation of 10% on input 3.2%pts costs impacting margin in H2 21.3% 1.3%pts -2.4%pts -2.3%pts 18
Slide 24: Strong balance sheet supporting near-term capital investments
Strong balance sheet supporting near-term capital investments FY 2023 Financial policy Gross proceeds Average coupon Inaugural bond issuances in CHF 750m 2.3% Net debt to core Q4 2023 EUR 2.0bn 4.2% EBITDA ratio from 1.7x to 2.0x Cash and cash USD 1.1 billion Despite significant equivalents as of De
Slide 25: Guidance & outlook
Guidance & outlook
Slide 26: Full-year 2024 guidance
Full-year 2024 guidance Sales growth1 % Mid-single digit Core EBITDA margin % of net sales to third parties Around 20% 26 1. Net sales to third parties, in constant currencies Assumptions: Price erosion of mid-single digits, FX rate in line with 2023
Slide 27: Reiterating mid-term guidance
Reiterating mid-term guidance 2028E Sales growth1 % Mid-single digit Core EBITDA margin % of net sales to third parties 24 to 26% Dividend policy % of core net income 30 to 40% 1. Net sales to third parties, in constant currencies Note: Unless the context requires otherwise, the expression "mid-term
Slide 28: Outlook
Outlook Commercial Corporate milestones calendar • Tyruko® launch in additional European • Annual General Meeting on April 30, 2024 markets and US as of H1 2024 • Q1 sales update on May 7, 2024 • Ustekinumab expected launch in Europe from 2024 onwards • Half-year results on August 8, 2024 • Q3 sales
Slide 29: Wrap-up
Wrap-up
Slide 30: Everything in our hands to execute on topline growth and margin expansion
Everything in our hands to execute on topline growth and margin expansion Compelling market dynamics European leader and growing in all three regions Significant biosimilar launches in mid-term Comprehensive and expanding pipeline Partner of choice across value chain Multiple levers to deliver margi
Slide 31: Q&A
Q&A
Slide 32: Appendix
Appendix
Slide 33: Maximizing near-term biosimilars launches
Maximizing near-term biosimilars launches Originator net sales Targeted brand Therapeutic areas targeted (USD bn)1 Current status Proposed launch dates Humira® adalimumab2 Immunology 21 Launched in US and Europe Tysabri® Neurology / FDA approved US: H1 20243 natalizumab Immunology 2 Launched in Euro
Slide 34: Non-IFRS financial definitions included in this presentation (1/2)
Non-IFRS financial definitions included in this presentation (1/2) Core results Constant currencies Sandoz core results – including core EBITDA, core operating income, core net income and core earnings per share – Changes in the relative values of non-US currencies to the US dollar can affect Sandoz
Slide 35: Non-IFRS financial definitions included in this presentation (2/2)
Non-IFRS financial definitions included in this presentation (2/2) Free cash flow Rounding Sandoz defines free cash flow as net cash flows from operating activities and cash flows from investing activities Certain figures contained in the press release, including financial information presented in m
Slide 36: Glossary
Glossary Abbreviation Definition API Active pharmaceutical ingredient ATC Anatomical therapeutic chemical CAGR Compound annual growth rate EMA European Medicines Agency FDA Food and Drug Administration IP Intellectual property MAT Moving annual total (refers to rolling 12 months average) NFC New for
Slide 37: Thank you
Thank you SANDOZ