Sandoz Group Ltd · SIX:SDZ
Sandoz — H1 2024 Earnings Presentation
33 slides from Sandoz's earnings presentation, Aug 8, 2024
Slide 1: Half-year results 2024
August 8, 2024 Half-year results 2024
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 Sandoz to differ materially from those expressed
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: Executing on our strategy with momentum in biosimilars
Executing on our strategy with momentum in biosimilars 1 Advanced on our Approval for Wyost®3 Transformation biosimilar launches, and Jubbonti®3 in program well underway including Hyrimoz®1 Europe, approval of with initial savings and Tyruko®2 Pyzchiva®4 in the US expected in H2 Strong topline 210bp
Slide 6: Eleventh quarter of topline growth with improved price erosion
Eleventh quarter of topline growth with improved price erosion 1 Net sales growth and price erosion 6% 9% 1% 8% 4% 10% 4% 4% 9% 8% 0% 9.4 9.1 9.6 9.9 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 -1% 0% -2% -2% -5% -4% -6% -6% -7% -9% -8% LTM net sales (in USDm) Price erosion (in
Slide 7: Business review
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Slide 8: Generics
Generics growth of 1%1; in line with strong prior year sales 2 H1 2024 business update • Strong demand in International region • Stable sales in Europe despite strong sales of apixaban in H1 2023 and the subsequent withdrawal in the Netherlands in Q3 2023, and an exceptional cough and cold season in
Slide 9: Biosimilars
Strong biosimilars growth of 29%1; launching successful 2 products and de-risking pipeline assets H1 2024 business update • Hyrimoz ® (adalimumab): US launch winning share with Cordavis, Sandoz branded Hyrimoz and unbranded adalimumab-adaz • Omnitrope® (somatropin): continuous strong customer demand
Slide 10: Strong uptake of Hyrimoz scripts in the US
Strong uptake of Hyrimoz® scripts in the US 2 Large immunology products in the pharmacy benefit space US market share1,2 • Preferred access to ~65% of CVS Caremark's commercial templated business 81% • Broadest payer coverage of the biosimilars, with coverage by all 9% three major PBMs 19% 81% • Con
Slide 11: Continued demand for Omnitrope
Continued demand for Omnitrope® 2 Designed to help patients with growth-hormone-related disorders Omnitrope® share evolution1 Sandoz 40% 38% 30% • Overtook originator as market 28% leader with 38% market share1 • Strong double-digit growth, 18 20% years after launch 14% • Generally constrained suppl
Slide 12: Increasing market share of Tyruko in Europe
Increasing market share of Tyruko® in Europe 2 First and only biosimilar for multiple sclerosis Market share1 Best coverage Strengthens well-established among adalimumab biosimilar portfolio 10% biosimilars in the US2 8% Trusted partner in multiple sclerosis 6% Seamless patient 4% experience through
Slide 13: Transforming to improve organizational efficiencies
Transforming to improve organizational efficiencies 2 • Multi-year transformation program launched in H1 2024 to simplify organizational structure • Expect to incur program costs of around USD 350m • Savings of USD 50m expected in H2 2024, and expected annualized run-rate savings in the range of USD
Slide 14: Financial performance
Financial performance
Slide 15: Delivered net sales with strong volume growth and price erosion below prior year
Delivered net sales with strong volume growth and price 3 erosion below prior year Q2 2024 H1 2024 In USD billion % cc1 +9% +7% +9%pts +9%pts 0%pt 2.6 -2%pts 5.0 -2%pts -1%pt 2.4 4.8 Q2 2023 Volume Price erosion FX Q2 2024 H1 2023 Volume Price erosion FX H1 2024 15 Note: Net sales in this document r
Slide 16: Net sales by business
Net sales by business 3 Strong double-digit growth of biosimilars Q2 2024 In USD billion % cc1 +9% Biosimilars 2.4 2.6 Strong double-digit growth from recent launch of 0.5 0.7 +37% Hyrimoz® in the US, full quarter contribution from 1.9 1.8 +1% Cimerli®, continued strong demand for Omnitrope® and rec
Slide 17: Net sales by region
Net sales by region 3 All three regions contributing to strong sales performance Q2 2024 In USD billion International % cc1 +9% Contribution from acquisition of Mycamine® and 2.4 2.6 favorable pricing dynamics partly offset by 0.6 0.6 +9% negative impact from divestment of Chinese 0.5 0.6 +23% busin
Slide 18: Shifting towards high-value biosimilar products
Shifting towards high-value biosimilar products 3 H1 2024 In USD billion % cc1 Business mix Regional mix H1 2023 H1 2024 International 1.3bn 78% 73% 25% 4.8bn 22% 27% 5.0bn 5.0bn 52% +7% 23% North Europe Biosimilars America 2.6bn Generics 1.1bn 18 Note: Net sales in this document refer systematicall
Slide 19: Sequential improvement in margins
Sequential improvement in margins 3 170bps core gross profit margin improvement from H2 2023 driven in USD million H1 2023 H2 2023 H1 2024 primarily by favorable product mix Net sales 4 767 4 880 5 047 210bps core EBITDA margin improvement from H2 2023 driven Core gross profit 2 537 2 376 2 544 by f
Slide 20: Positive mix from strong biosimilars growth
Positive mix from strong biosimilars growth 3 Core EBITDA margin % of net sales -1.3%pts H1 2023 core EBITDA margin 5.8%pts adjusted 2.0 percentage points for 20.8% spin related items -0.6%pt 18.8% -1.4%pts -3.8%pts 17.5% -1.0%pts Positive mix from strong -1.5%pts -0.8%pt biosimilar growth Increase
Slide 21: Management free cash flow driven by other working capital stabilization
Management free cash flow driven 3 by other working capital stabilization Other working capital (WC) and Management free cash flow (FCF) operating items stable despite H1 2024, in USD million strong topline growth 885 Inventory increase below prior year and in line with topline growth, -273 catering
Slide 22: Maintaining robust balance sheet to support future growth
Maintaining robust balance sheet to support 3 future growth December 31, June 30, Change in in USD million 2023 2024 USD Gross financial debt 4 259 4 146 113 Well balanced maturity profile with fixed/floating rate of total financial debt of 71% and 29%, respectively Liquidity 1 144 710 (434) Total l
Slide 23: Guidance & outlook
Guidance & outlook
Slide 24: Raised top line and confirmed margin guidance
Raised top line and confirmed margin guidance 4 Full-year 2024 guidance As of August 8, 2024 As of May 7, 2024 Sales growth1 Mid- to high-single digit Mid-single digit % in constant currencies Core EBITDA Around 20% Around 20% % margin on net sales 24 1. Net sales to third parties, in constant curre
Slide 25: Mix, leverage and transformation driving second half margin expansion
Mix, leverage and transformation driving 4 second half margin expansion Core EBITDA margin FY 2024 % of net sales around 20% Continued favorable mix from strong biosimilar growth, including ongoing launches of Hyrimoz®, 17.5% Pyzchiva® and Tyruko®, and manufacturing efficiencies Leveraging SG&A and
Slide 26: H2 2024 Outlook
H2 2024 Outlook 4 Commercial Corporate milestones calendar • Pyzchiva® launch in Europe in Q3 2024 • Strategic review on September 3, 2024 • Tyruko® launch in the US late in the year, • Q3 sales update on October 30, 2024 pending FDA approval of JCV assay 26
Slide 27: Wrap-up
Wrap-up
Slide 28: Everything in our hands to execute on topline growth and margin expansion
Everything in our hands to execute on topline 5 growth and margin expansion Short-term Long-term European leader with presence in over Compelling market dynamics with 40 markets more than $400 billion1 of LoE opportunities to tackle beyond 2028 Significant biosimilar launches with increasing percent
Slide 29: Q&A
Q&A
Slide 30: Appendix
Appendix
Slide 31: Maximizing near-term biosimilars launches
Maximizing near-term biosimilars launches Own or targeted Originator net sales brand Therapeutic areas targeted (USD bn)1 Current status Proposed launch dates Tyruko® Neurology / Approved in US US: Late 20242 natalizumab Immunology 2 Launched in Europe Wyost®/Jubbonti® Bone diseases / Approved in US
Slide 32: Glossary
Glossary Abbreviation Definition CHMP Committee for Medicinal Products for Human Use FDA Food and Drug Administration JCV John Cunningham virus LoE Loss of exclusivity NL The Netherlands PBMs Pharmacy benefit managers 32
Slide 33: Thank you
Thank you SANDOZ