Novartis AG · SIX:NOVN
Novartis — FY2003 Earnings Presentation
17 slides from Novartis's earnings presentation, Jan 22, 2004
Slide 1: Pharmaceuticals: Outperforming the Competition
Pharmaceuticals Outperforming the Competition Thomas Ebeling CEO, Novartis Pharma AG Summary • Fastest organic growth among top 10 companies • Operating Income margin slightly reduced − Significant R&D investments − Challenging pricing environment • Industry leading pipeline • Strong short- and mid-
Slide 2: Agenda
Agenda • 2003 performance • Driving growth in 2004 • Outlook 3 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts Strong Pharma Sales and Operating Income Growth in 2003 Growth in % USD m USD LC Sales 16 020 18 11 Operating income 4 423 14 Employees at end 2003 44 640 1 4 FRESCO 2003 / Thomas Ebel
Slide 3: Improvement in COGS and M&S
Improvement in COGS and M&S YTD December Change in % pts Key ratios1 2002 2003 Full year 2003 3rd Party Sales 100% 100% Cost of Goods Sold 14.9% 14.7% + 0.2 R&D 17.4% 19.2% - 1.8 Marketing & Sales 33.8% 33.2% + 0.6 G&A2 5.9% 6.0% - 0.1 Operating income 28.8% 27.6% - 1.2 1 As % of 3rd Party Sales, nu
Slide 4: Novartis Has Fastest Organic Growth of Top Pharmaceutical Companies
Novartis Has Fastest Organic Growth of Top 10 Pharmaceutical Companies USD bn Sales Change in % Top 10 YTD Nov 2003 YTD Nov 2003 Pfizer 38.8 8.4 GlaxoSmithKline 23.9 3.4 Merck & Co 18.6 5.5 Johnson & Johnson 18.4 12.7 Novartis 15.6 17.0 AstraZeneca 15.2 -1.7 Aventis 12.5 7.7 BMS 12.4 3.8 Roche 11.2
Slide 5: Increased Market Share; Cardiovascular and Oncology Key Growth Drivers
… And Increased Market Share Market share in % Change in % pts YTD Nov 2003 YTD Nov 2003 North America 4.3 0.4 Europe 5.0 0.1 Japan 3.4 0.3 Global 4.4 0.3 Source: IMS Healthcare 17 countries, YTD November 2003 9 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts Cardiovascular and Oncology Are Key
Slide 6: Increased Market Share; Strong Performance of Top 10 Products
... Leading to Increased Market Share Rank 2003 Market Share 2003 ∆ MS 03-02 (#) (%) (%-points) Cardiovascular 4 7.4 1.1 Nervous System 6 4.5 -0.1 Resp./Derm. 2 21.5 3.6 A/B/G/H1 5 7.1 0.2 Infect. Diseases2 2 16.4 -2.5 Oncology 3 8.2 0.9 Transplantation 1 29.7 -6.5 Ophthalmics 6 8.4 0.1 Pharma Total
Slide 7: Ensuring Top Ranking and Market Shares
... Ensuring Top Ranking and Market Shares Rank 2003 Market Share 2003 ∆ MS 03-02 (#) (%) (%-points) Diovan® 1 30 2 Glivec®/Gleevec® 1 > 80 N.A. Neoral® 1 27 -6 Lamisil® 1 58 3 Zometa® 1 69 22 Lotrel® 1 35 3 Lescol® 4 3 0 Sandostatin® 1 92 -1 Voltaren® 5 4 -1 Cibacen® 6 6 0 Source: IMS 17 countries
Slide 8: Key Brands Performing Well (2/2)
Key Brands Performing Well (2/2) • Achieved blockbuster status • Becomes bone metastases standard of care • 97% NRx growth post MA-17 study in the US • Low generic erosion • Continued growth in Europe 15 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts VALIANT Opens Broader Opportunity to Drive
Slide 9: #1 Combination Brand for Hypertension in US
#1 Combination Brand for Hypertension in US US sales IMS YTD Nov 2003 in USD m + 28% + 48% + 16% + 38% 803 508 396 169 Lotrel® Co-Diovan® Hyzaar Avalide Source: IMS 17 countries, YTD November 2003 17 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts DTC Supports Sales Growth NRx/TRx uptake suppor
Slide 10: Novartis Oncology Now #3 by Share and Second Fastest Growing
Novartis Oncology Now #3 by Share and Second Fastest Growing Oncology market segment share top 5 companies, MAT Sep 2003 Growth rate Amgen 13.8% + 55% Roche/Genent. 13.1% + 29% Novartis 8.2% + 39% AstraZeneca 8.0% + 32% Aventis 6.0% + 23% Source: IMS MIDAS Worldwide oncology sales MIDAS Data adjustm
Slide 11: Strong Development Track Record
Strong Development Track Record • 7 major approvals in 2003 • 79 projects in clinical development • Highest R&D productivity1 • Leading pipeline2 • #1 in a survey for use of new technologies3 1 Goldman Sachs 2003 2 Lehman Brothers 2003 3 CenterWatch 2003 21 FRESCO 2003 / Thomas Ebeling / 2004-01-22
Slide 12: Estimated Market Growth 2003 and 2004
Agenda • 2003 performance • Driving growth in 2004 • Outlook 23 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts Estimated Market Growth 2003 and 2004 Market growth in % 2003E 2004E US 10.6 10.6 Europe 6.4 6.4 Japan 2.7 -1.4 Global 8.6 8.3 Source: IMS Global Pharma Forecast October 2003, interna
Slide 13: Growth Drivers 2004
Growth Drivers 2004 Actual and Expected Blockbusters1 General practice Specialty market 1 All seven brands expected to reach blockbuster status by 2008 25 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts Key Expected Growth Drivers 2004 In-market Launches/roll-outs 26 FRESCO 2003 / Thomas Ebelin
Slide 14: Marketing & Sales Investments 2004
Marketing & Sales Investments 2004 • In line with top line growth • Areas for investment growth − DTC − Phase IV studies − Pre-launch activities for key phase III projects − Specialty field force expansion − Launches of Enablex®, myfortic®, Certican®, Xolair® and Stalevo™ 27 FRESCO 2003 / Thomas Ebe
Slide 15: Key Anticipated Brand Activity Highlights 2004
Key Anticipated Brand Activity Highlights 2004 Specialty • Fully penetrate CML1 and GIST2 at right dose • Make it a blockbuster in 2004 • Leverage MA-17 data • Approval/launch in US and major European countries • Launch in major European countries and US approval 1 Chronic Myeloid Leukemia 2 Gastroi
Slide 16: Seven Blockbusters by 2008
Agenda • 2003 performance • Driving growth in 2004 • Outlook 31 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts Seven Blockbusters by 2008 % of total pharma sales 50% Diovan® Lotrel® • Effective positioning and messaging Glivec®/Gleevec® • Strong field force Zometa® 20% execution • Powerful LCM
Slide 17: Expectations for 2004
Expectations for 2004 • Growth ahead of market continues • Competitive M&D investments in line with sales growth • R&D investments ahead of top line growth • Industry leading pipeline • Operating income expansion continues 33 FRESCO 2003 / Thomas Ebeling / 2004-01-22 / Analysts 17