Novartis Ag · SIX:NOVN
Novartis — Investor Presentation (October 2002)
54 slides from Novartis's investor presentation, Oct 18, 2002
Slide 1: Pharmaceuticals
Pharmaceuticals Generics oTc Animal Health Medical Nutrition Infant & Baby CIBA Vision GROUP
Slide 2: Sales by region
Asia/Australia/ Africa 16% Rest of the / Americas imam 8% {tts SS
Slide 3: Sales growth drivers
Volume Price Acq./Div. Currency CHF
Slide 4: Divisional sales
Pharmaceuticals Generics oTCc -8 Animal Health Medical Nutrition Infant & Baby CIBA Vision GROUP
Slide 5: Operating income by division
Generics 5% 'C 5% Animal Health Medical Nutrition Infant & Baby 1% 5%
Slide 6: 9M 2002 income statement
9 M 2002 CHF m Sales 24 247 Cost of goods sold -5 816 Marketing & Distribution -8 271 Research & Development -3 168 General & Administration -1073 Operating income 5919 Change in % in CHF
Slide 7: Operating income growth
• Operating income growth driven by volume increases and operating improvements
Slide 8: Currency impact
• Impact on sales of CHF -1.82 bn • Operating income impact of CHF -522 m is partially offset by currency hedging gains of CHF 151 m in operating income
Slide 9: Cash flow
Change vs 9 M 2001, CHF m Cash Flow Increase in net current assets Cash Flow from operating activities Investment in tangible fixed assets Net change of other operating assets Dividends paid to third parties Free Cash Flow -600 -300 0 300 600
Slide 10: Currency hedging
• Transactional risk in USD and JPY 2002 hedged at USD 1.59 and at Yen 1.33 • Euro not hedged
Slide 11: Sales by division 9M 2001 vs 9M 2002
0 9mM/2001 0 9M/2002 149 145 11.4 116 Pharma- Generics OTC Animal Medical Health —Nutriti | Infant& CIBA GROUP ceuticals in Baby Vision
Slide 12: World population trends
Source: UN Population Division, World Population Prospects Population Database, The 2001 Revision
Slide 13: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Slide 14: Global pharmaceutical market
1982 = 100% 1600 Global Pharmaceutical 1200, 0 1982 1992 2002 2005
Slide 15: Pharmaceutical market growth estimates
Source: CFSB estimates, IMS Health, WEFA
Slide 16: Value of new drugs
Source: Lichtenberg FR 2001 / American Economic Review 1996
Slide 17: Decline in disease mortality
Early infancy diseases Rheumatic fever and rheumatic heart disease Atherosclerosis Hypertensive heart disease Ulcer of stomach and duodenum Ischemic heart disease Emphysema -B80% [ -75% | -68% 67% -61% -41% 31%
Slide 18: Healthcare spending
Source: US Department of Commerce, Bureau of Economic Analysis, 2001
Slide 19: FDA approvals
Source: Credit Suisse/First Boston, FDA
Slide 20: FDA approvals and R&D
Source: Credit Suisse/First Boston, FDA
Slide 21: Pharmaceutical pipeline trends
Source: Pharmaprojects and UBS Warburg
Slide 22: Industry R&D spending
Source: IMS Health 2000, and Pharmaceutical Research and Manufacturers of America 2001. Data from annual member survey
Slide 23: Worldwide sales in constant USD
1 Worldwide sales based on constant USD Source: IMS HEALTH: MIDAS, Dec 2001
Slide 24: New drug application
1 New drug application Source: FDA; Novartis database
Slide 25: Products launched
Products launched ~~ 1999-02 1995-98 ~ 1991-94 1 2 3 4 5 6 7 8 9 10 — Years after launch
Slide 26: New molecular entity performance
1 New molecular entity, indexed to Industry Average 1991-94 = 100 Source: Credit Suisse/First Boston; Novartis database
Slide 27: IMS Health market data
Source: IMS Health MAT June 2002, 41 countries
Slide 28: Group divisions
© Pharmaceuticals © Generics ooTc Animal Health Nutrition Ciba Vision Crop Prot. & Seeds
Slide 29: Strategic Plan May 2002
Source: Strategic Plan May 2002
Slide 30: Pharmaceuticals sales by region
80 60 40 20 Rest of the world Rest of @ the Americas Europe us 1997 YTD 2002
Slide 31: Divisional results
Pharmaceuticals Generics otc Animal Health Medical Nutrition Infant & Baby CIBA Vision GROUP 13
Slide 32: Sales by region
Asia/Australia Europe 33% frica 6' Rest of the Americas
Slide 33: Sales growth drivers
Volume Price ‘Acq./Div. Currency CHF
Slide 34: Divisional sales growth
Pharmaceuticals 9 Generics 40 oTCc “8 Animal Health [jae Medical Nutrition [~]14 Infant & Baby 1 CIBA Vision 0 GROUP 4 %
Slide 35: Divisional operating income
Generics 5% Infant & Baby
Slide 36: 9M 2002 income statement
9 M 2002 CHF m Sales 24 247 Cost of goods sold -5 816 Marketing & Distribution 8271 Research & Development -3 168 General & Administration -1073 Operating income 5919 Change in % in CHF 15-10 -5 0 % 5 10 15 20
Slide 37: Novartis vs market
10 O Market ONovartis
Slide 38: Market share trend
20 hea OMarket “ ONovartis o Jan Feb. Mar Apr May Jun Jul Aug
Slide 39: Key cardiovascular and oncology products
• Diovan® 28.3% segment share • Lotrel® inroads vs Norvasc • Lescol® XL gains • Glivec®/Gleevec™ patient penetration > 50% in CML 1 • Fast switch from Aredia® to Zometa® 1 Chronic myeloid leukemia Source: IMS Aug YTD
Slide 40: Diovan
• CHF 920 m sales (+48%) in US • Continues to outpace the ARB 1 segment • Co-Diovan® 160/25 launched in US • Approved for HF in US • Reached 25% segment share in Japan (September) 1 Angiotensin II receptor blocker Source: IMS weekly, US TRx share in ARB segment, incl. combinations
Slide 41: Elidel
• Number 1 branded topical in atopic dermatitis • NRx share 7.8% vs Protopic 2.5% • Approved 1 in EU • Launched in US, Brazil, Mexico, Denmark, New Zealand 1 Mutually agreed summary of product characteristics. Local marketing authorizations planned Q4 2002 Source: IMS weekly
Slide 42: Zelnorm launch
• Strong label • Conservative adoption expected • High intent to prescribe • Gastroenterologists 98% • Primary care physicians 84% • 900 000 details planned in 2002 in US • Launched in 23 countries Source: IMS weekly
Slide 43: Glivec/Gleevec
• First 12 months sales > CHF 500 m • Launched in > 70 countries • Expanding in GIST 1 and first line CML 2 • First line and pediatric CML • US: Priority review • EU: Positive opinion • Model patient assistance program (> 2 500 patients) 1 Gastrointestinal stromal tumor 2 Chronic myeloid leukemia
Slide 44: Glivec studies
1 sNDA submitted June 2002 Source: Studies 106 (IRIS), 110 (Late chronic), 109 (Accelerated), 102 (Blast crisis)
Slide 45: Development pipeline timeline 2002-2006
2002 2003 2004 2005 > 2006 Elidel® ‘myfortic® (EU) Prexige™ EPOSO6 ‘SPP100 FTY720 Zeinorm™ (US) S = TCH346 18S Visudyne® (J) Xol ICL670 lkaieiel algrcate! NKS104 ==] ———S [ameeTGreever™| [EMCEE | [/_caricont ||| ooveotner= ][ Femara? aa LAF2S7 = [Clozari™ (Us) ] = Zelmac™ (EU) Prexige Diovan® CHF my
Slide 46: Prexige safety vs NSAIDs
1 PUB, all Phase III studies in OA and RA 2 p < 0.05 compared with NSAIDs
Slide 47: Prexige efficacy in osteoarthritis
* All active treatment groups p < 0.001 vs placebo † p < 0.05 Prexige™ 400 mg vs celcoxib 1 Visual-analogue scale
Slide 48: Prexige efficacy studies
* p < 0.01 vs placebo all active treatment groups † p < 0.05 Prexige™ 200 mg and 400 mg vs celecoxib ‡ p < 0.05 Prexige™ 400 mg vs celecoxib Study 109
Slide 49: Prexige postoperative dental pain
* p < 0.001 vs placebo ‡ p < 0.05 vs rofecoxib 1 Postoperative dental pain study 115
Slide 50: Submission and launch timeline
Submit parenteral fo i ission | [ Launch | | | Initiate TARGET study
Slide 51: GLP-1-based therapies
Preclinical/clinical observations make GLP-1-based therapies very attractive with potential to: • Restore beta cell function • Increase insulin biosynthesis • Promote beta cell differentiation 1 Dipeptidyl-peptidase IV 2 Glucagon-like-peptide 1
Slide 52: GLP-1 study results
* p < 0.001 vs placebo Source: Ahrenet al. Diabetes Care 25(5): 869-875; 2002
Slide 53: Symptom scores versus placebo
Early satiety Postprandial fulness = -™- Placebo (n=53) -~ 6 mg bid (n=42) Mean daily score o? B24 4-point Bre discomfort scale: S20 0s S18 2 o12945678 012345678 Week Week 3 = severe Postprandial bloating Epigastric / stomach pain 325 8 23 Bat Bis S17 2 o1234567 8 o12345 678
Slide 54: Responder definition
Responder: Increase of ³ 1 complete spontaneous bowel movement / week during the first 4 weeks of treatment compared with last 2 weeks of baseline and at least 7 days of treatment