Novartis AG · SIX:NOVN
Novartis — Merger or Acquisition (January 2006)
14 slides from Novartis's merger presentation, Jan 19, 2006
Slide 1: Novartis Vaccines and Diagnostics: A Growth Opportunity for Novartis
Novartis Vaccines and Diagnostics A Growth Opportunity for Novartis Joerg Reinhardt The following information contains certain forward-looking statements relating to the Company’s business, which can be identified by the use of forward-looking terminology such as “will” or “expected”, or similar exp
Slide 2: Agenda
Agenda • The vaccine opportunity • Current business and opportunities for growth • Next steps 3 FRESCO 2005 /Joerg Reinhardt/ 2006-01-19 / Analyst Vaccines Offer Tremendous Benefits Through Disease Prevention Diphtheria incidence in the US Tetanus incidence in the US (mortality 5/10 000 cases) (mort
Slide 3: Vaccines Offer Tremendous Benefits Through Disease Prevention
Vaccines Offer Tremendous Benefits Through Disease Prevention H. Influenzae type b incidence in Hepatitis B incidence in the US the US (mortality 2-3/100 cases) 300 000 20 000 363 136 Peak Incidence Peak Incidence incidence today incidence today (1984) (1981) Source: Ehreth Vaccine 21: 4105-4117 (20
Slide 4: Vaccines Offer a New Attractive Growth Platform for Novartis
Vaccines Offer a New Attractive Growth Platform for Novartis … Why is the vaccine market Worldwide market segment size attractive? USD bn ~20 • Innovative vaccines for established and novel targets, including therapeutic vaccines CAGR ~20% • Break-through technologies opening new opportunities (e.g.
Slide 5: The Vaccine Market Is Changing – Private Markets Are Growing Rapidly
The Vaccine Market Is Changing – Private Markets Are Growing Rapidly Global vaccine sales 2003 Private vaccine sales USD in m 6 000 5 000 85 Latin America Public 780 AsiaPac + Africa 4 000 CAGR USD 16% 1.7 bn 1 500 EU 3 000 70 450 2 000 USD 1 050 5.1 bn 2 700 North America 1 000 Private 1 200 0 1999
Slide 6: Chiron – Key Facts and Figures
Chiron – Key Facts and Figures Q3 2005 YTD revenues % of total Vaccines 32% • Founded in 1981 • Headquarters in Emeryville, CA Blood 21% • USD 1 306 m in revenue testing Q3 2005 YTD 10% 37% • USD 81.5 m in operating income1 Other royalties • 5 800 employees BioPharmaceuticals 1 Adjusted for amortisa
Slide 7: The Three Chiron Businesses Offer Mid- and Long-Term Opportunities
The Three Chiron Businesses Offer Mid- and Long-Term Opportunities Marketed products Pipeline Long-term opportunities Vaccines Blood testing BioPharmaceuticals Flu NAT: HIV, HCV, Cystic fibrosis HBV, WNV Meningococcus C Skin / renal Immunoassays: cancer Travel HIV, HCV Multiple sclerosis Pediatrics
Slide 8: Blood Testing Offers Growth and Attractive Margins
Blood Testing Offers Growth and Attractive Margins 1999-2004 Revenue USD m Key Figures In % of FY 2004 revenue 600 494 500 Revenues 494 CAGR=34% 422 400 Gross profit 332 67% 316 300 R&D 29 6% 185 200 139 SG&A 42 8% 113 100 Operating 260 53% income 0 1999 2000 2001 2002 2003 2004 15 FRESCO 2005 /Joer
Slide 9: The Flu Franchise Has Good Potential But Requires Investment For Success
The Flu Franchise Has Good Potential But Requires Investment For Success • Fluvirin remediation can return the business to profitability in 2006 − However, Liverpool facility will operate below maximum capacity in 2006 • Cell culture manufacturing will enhance the reliability of supply and reduce de
Slide 10: Chiron Vaccines Business Requires Significant Management Attention and Investment
Chiron Vaccines Business Requires Significant Management Attention and Investment • Top priority to ensure reliable vaccines supply − Complete remediation of flu production lines in Liverpool and Marburg − Update aging production lines to avoid potential supply issues − Invest in new technologies to
Slide 11: Vaccines Offer Potential for Geographic Expansion
Vaccines Offer Potential for Geographic Expansion Rest of World EU US 8 6 31 33 67 87 14 100 92 45 69 8 33 22 11 2 Merck Wyeth Sanofi- Chiron GSK Others SPMSD Aventis Source: Company filings, analyst reports 21 FRESCO 2005 /Joerg Reinhardt/ 2006-01-19 / Analyst The Chiron Vaccines Business Is a Grow
Slide 12: Different Integration Approach for Each Chiron Business
Different Integration Approach for Each Chiron Business 1 1 2 2 3 3 Vaccines Blood testing BioPharmaceuticals • High growth • Strong position • Few but interesting potential in consolidated assets • Increasing market • Recognized research synergies with • Attractive margins expertise therapeutics Bu
Slide 13: On Track to Complete Chiron Acquisition in H1 2006
Agenda • The vaccine opportunity • Current business and opportunities for growth • Next steps 25 FRESCO 2005 /Joerg Reinhardt/ 2006-01-19 / Analyst On Track to Complete Chiron Acquisition in H1 2006 • Anticipate all necessary regulatory and shareholder approvals in H1 2006 − Rapid and accelerated US
Slide 14: Conclusion
Conclusion • Entry into the vaccine market is an opportunity for growth in an attractive segment of the health care market • However, success will depend on significant investment of time and money • Blood testing business offers good profitability and a potential for expansion • Biopharmaceuticals