Novartis Ag · SIX:NOVN
Novartis — Q3 2003 Earnings Presentation
32 slides from Novartis's earnings presentation, Oct 20, 2003
Slide 1: Form 20-F cover, 2003 nine-month results
n 1 9 2003 10 20 Form20-F 2003 10 20 1
Slide 2: Highlights of the first nine months 2003
• R. − − • T. • R. 3 2003 1-9 2 - • 2 • • +18% +11% • 67% ( 54%), Lek 39% ( 37% ) • 15% • (Novartis Institute for Biomedical Research, Inc.) 31% • 3% , 11% 4 2003 1-9 2
Slide 3: Group key figures 2003 vs 2002
2 2003 2002 1–9 1 9 % % 18,134 15,308 18 11 4,283 3,738 15 % 23.6 24.4 2,184 1,324 65 3,656 3,538 31 % 20.2 23.1 1 ( ) 1.48 1.40 6 78,537 74,236 6 1 Roche 2002 +11% 5 2003 1-9 % 20 +7% +18% 15 +2% +11% 10 +1% +8% 5 0 / 6 2003 1-9 3
Slide 4: OTC division sales
86 91 1 % % 14 9 51 3 7 8 OTC 12 64 77 1 2003 1-9 7 2003 1-9 42% % % 16 16 9 42% 28 +7% / 5 35% 16% 13 / / 10 3 8 2003 1-9 4
Slide 5: Division sales and IMS market data
2003 1-9 18% 2003 1-9 : 181 3 4 1-9 % 3 % 11 12 18 17 16 10 24 16 11 11 18 16 9 2003 1-9 2003 1-9 % ( ) 17 11 11 8 1 2 1 : 2003 1-8 IMS 16 ; 2003 1-8 IMS 16% 2 : 2003 9 ; 10 2003 1-9 5
Slide 6: Augmentin and AmoxC sales trends
9 AmoxC – AmoxC % 100 80 60 AmoxC1 AmoxC 40 20 Augmentin® AmoxC 0 7 8 9 10 11 12 1 2 3 4 5 6 7 8 2002 2003 1 ® : IMS 11 2003 1-9 7% % 20 +16% +15% 15 +7% 10 -8% 5 -1% 0 -5 1 1 +3% 12 2003 1-9 6
Slide 7: Operating income and margin development
2003 1-9 15% 1-9 : 42 8 3 1-9 3 %( ) %( ) 14 15 36 14 15 11 13 2003 1-9 2003 1-9 23.6% % 2002 2003 1-9 1-9 28.8 27.9 24.4 23.6 15.2 13.9 14 2003 1-9 7
Slide 8: Income statement and cost breakdown
2003 2002 1-9 1-9 % 100% 100% +18% 23.6% 24.4% +15% 31.3% 32.5% +14% 14.7% 13.3% +31% 6.8% 5.4% +49% 23.6% 24.4% +15% -5 5 15 25 35 45 55 15 2003 1-9 • R. − − • T. • R. 16 2003 1-9 8
Slide 9: Net income and financial results
• 37 +3% • : 229 • +11% • 8% 2002 1-9 25% 3 9 5 • 17% 17 2003 1-9 2003 1-9 2002 1-9 % 4,283 3,738 15 -212 17 * 1 1 57 395 527 -25 -760 -728 4 % 17.0 17.0 -50 -16 213 3,656 3,538 3 2002 3,943 11 1 2002 –2 6 9 –2 8 7 18 2003 1-9 9
Slide 10: Cash flow and operating results
2003 1-9 2002 1-9 % 499 620 -20 % 1 5.5% 7.1% -176 -154 -14 % 1 4.2% 4.1% / 72 61 +18 395 527 -25 %1 8.0% 10.5% 1 19 2003 1-9 22 2003 1-9 2002 1-9 % 21 4,692 75 111 4,767 50 -826 -42 -33 -133 -1,724 -26 2,184 65 -150 20 2003 1-9 10
Slide 11: Sales by region and division
• R. − − • T. • R. 21 2003 1-9 2003 1-9 % 11,641 18 11 3,249 14 3 44,833 1 22 2003 1-9 11
Slide 12: Pharmaceuticals market positions and key products
• +8 +16% IMS 1 • 1 3.99% 4.35% • 1 6.3% 7.3% • Diovan Co-Diovan No.1 ARB • Lotrel No.1 • No.4 No.3 2 7.2% 8.0% • Elidel No.1 • Zelnorm DTC 1 2003 1-8 2002 1-8 2 2003 2 2002 2 12 : IMS 16 23 2003 1-9 • 1 • 64 II /III 2 • 2003 7 • 3 CS-526 1 2 24 2003 1-9 12
Slide 13: Cost structure as percent of sales
1-9 ( %) 2003 2002 % 100% 100% 14.5% 15.6% + 1.1 18.8% 17.2% - 1.6 32.7% 33.8% + 1.1 6.1% 4.6% - 1.5 27.9% 28.8% - 0.9 25 2003 1-9 / • • • • IT • 26 2003 1-9 13
Slide 14: IMS market share trends
IMS % 2003 1 2002 1 4.32 3.77 5.00 4.95 3.38 3.06 4.35 3.99 1 IMS 16 , 2003/2002 1-8 27 2003 1-9 % 16.2 15.6 14.8 13.2 12.8 12.0 12.2 10.7 8.4 8.7 7.9 7.4 7.4 7.3 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2002 2003 1 7 / : IMS 16 28 2003 1-9 14
Slide 15: Top 10 products and market share
% 22.6 22.4 20.9 18.8 17.2 16.7 16.5 15.5 13.0 12.9 11.5 10.4 10.0 9.3 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2002 2003 1 7 /8 : IMS National Sales Perspective 29 2003 1-9 10 10 ( )1 Diovan 1’757 41% Glivec 795 75% Neoral 744 -13% Lamisil 709 7% Zometa 652 95% Lotrel 593 24% Lescol 522 19% Sandostatin 511 5% Voltar
Slide 16: Cardiovascular franchise: Diovan and Lotrel
• • − Diovan – No.1 ARB No.2 − Lotrel – No.1 • − Diovan / Lotrel − SPP 100, LAF 237 • − − − … SOV 31 2003 1-9 5 2003 1-8 2002 1-8 ( ) 21 27.1% 19 15.9% / 63 7.6% 36 -5.5% 11 -26.0% : IMS Health, Retail and Provider Perspective 32 2003 1-9 16
Slide 17: Diovan and Lotrel US market rankings
Diovan Lotrel 5 IMS 1-8 % 1. Norvasc 14 4.2% 2. Diovan®/Diovan ® 8 3 9 9 41.4% 3. Cozaar/Hyzaar 7 2 5 6 15.6% 4. Toprol- 6 2 7 40.1% 5. Lotrel ® 5 9 6 6 28.8% 6. Altace 4 3 7 9 42.3% 7. Accupril/Accuretic 4 9 7 -0.2% 8. Coreg 3 8 7 8 31.5% 9. Avapro/Avalide 3 5 8 3 26.5% 10.Lotensin/ 2 7 4 4 4.2% 33
Slide 18: Lotrel and Diovan growth drivers
• VALIANT ( Diovan® ACE ) • • • − Co-Diovan® 160 − − − Diovan® • 35 2003 1-9 Lotrel® - No.1 IMS 1-8 + 29% + 51% + 16% + 39% 573 357 284 119 Lotrel® Co-Diovan® Hyzaar Avalide IMS 2002 1-8 2003 1-8 36 2003 1-9 18
Slide 19: Lotrel and Lescol positioning
69% – Lotrel • - 58.4 Æ 24.5 , 40 • JNC 7 - - • Lotrel - Lotrel – No.1 - (5/40) (10/40) 37 2003 1-9 Lescol ® - IMS (%) Lescol®/ 15.4 Lescol® Lipitor 13.4 Pravachol 11.7 Zocor 0.4 • 26 • Crestor IMS 16 2002/2003 1 8 38 2003 1-9 19
Slide 20: Elidel and Zelnorm DTC campaigns
Elidel® (NRx) 14% Elidel® 12% • 4 DTC 10% No.1 8% Elocon • 6% 2 ( ) 4% Protopic 2% 0% 3 6 9 12 3 6 9 Source: IMS weekly 39 2003 1-9 DTC Zelnorm 61% 67% Zelnorm / DTC 35'000 30'000 25'000 + 61% 20'000 15'000 + 67% 10'000 5'000 ) ) ) 2) 8) ) ) ) ) ) ) ) 7) 4) 5) 18 11 25 ) 21 16 30 13 27 22 19 /03 (5/
Slide 21: Glivec oncology market share
5 2003 6 12 1 1 13.03% + 55% / 13.00% + 32% 7.97% + 37% 7.91% + 33% 6.05% + 29% 1 : IMS MIDAS Worldwide oncology sales MIDAS Data adjustments include 35% of epoetin alfa as oncology sales Roche books non-US rituximab and trastuzumab sales 41 2003 1-9 Glivec Glivec (mg) 8 7 6 * 5 4 3 2 1 0 0 1 2 3 4
Slide 22: Zometa and Femara oncology data
Zometa - Aredia 2003 120,000 + 18% 100,000 80,000 Zometa + 72% 60,000 40,000 Aredia + pamidronate - 29% 20,000 0 02 1 02 3 02 5 02 7 02 9 02 11 03 1 03 3 03 5 03 7 : IMS Drug Distribution Data 43 2003 1-9 Femara - • MA-17 – 5 5,200 • Femara − 2.4 Femara • 43% • 46% − 4 6% (93% 87%) p = 0.00008) • Fe
Slide 23: Femara and regulatory approvals
Femara 2003 1 /2 9% • Femara 63% 25% ( ) • 22% • • 2004 FDA 44% > 6 45 2003 1-9 3 Prexige Ÿ 9 23 FDA 1 Ÿ 9 16 Enablex Ÿ 10 6 FDA Trileptal Ÿ 8 7 FDA Certican Ÿ 7 18 2 Glivec Ÿ 7 17 1 Medicines and Healthcare products Regulatory Agency 2 GastroIntestinal Stromal Tumors 46 2003 1-9 23
Slide 24: Development pipeline updates
CS-526 • Phase CS-526- ( ) • (GERD) • CS-526 − • • − Zelnorm • • 2003 10 Phase 47 2003 1-9 2002 % 19.3 2003 1-9 18.8 18.1 17.9 17.2 2002 16.9 16.8 15.7 14.8 14.5 13.8 12.5 * 12.5 : SEC * OTN 48 2003 1-9 24
Slide 25: Products and launches 2003-2004
/ 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 : 2003 10 49 2003 1-9 • Diovan ® • Femara® • Exelon ® • Trileptal® • Lotrel ® • Lescol ® XL • Visudyne® 2003 • Zometa® • Gleevec™/Glivec ® • Elidel ® • Zelnorm™ /Zelmac ® • Xolair® ... 2004 • myfortic® • Certican™ • Enablex ® ( ) • Prexige® • ICL 670 • FTY720 • LAF23
Slide 26: Division highlights
• R. − − • T. • R. 51 2003 1-9 • • : 1 2 • • -2003 2004 52 2003 1-9 26
Slide 27: OTC sales by region
53 2003 1-9 2003 9 / / 9% 2% 0% 7% 17% 0% 37% 13% OTC 5% 1% 0% 9% 1% 0% 0% 6% 6% 0% -5% 12% 2% 1% 0% -2% 6% 0% 0% 7% 8% 1% 2% 7% 54 2003 1-9 27
Slide 28: OTC results and growth
9 : 181 3 4 18 11% 9 %( ) 3 %( ) 11 12 / 54 28 OTC 6 5 1 -1 1 2 3 5 6 6 11 11 % % 0 20 40 60 -5 5 15 25 35 55 2003 1-9 2003 1 9 15% 9 : 42 8 3 15% 9 % 3 % ( ( ) 14 15 / 87 25 OTC 34 -2 -21 -9 184 500 3 11 38 30 15 11 % -40 10 60 110 160 210 -50 0 50 100 150 56 2003 1-9 28
Slide 29: OTC margins and market position
1 23.6% % 2002 /1-9 2003 /1-9 28.8 27.9 24.4 23.6 18.2 18.6 16.4 17.0 16.4 14.7 14.5 14.3 12.2 11.7 8.9 3.5 OTC 57 2003 1-9 • • % 42 31 26 27 20 19 17 8 5 5 58 2003 1-9 29
Slide 30: Currency impact and outlook 2003
2003 % 17 6 20 9 10 0 5 10 15 20 25 59 2003 1-9 1 10% : • : 2.5% • : 0.5% • : 0.8% • : 2.0% 10% 2: • : 2.4% • : -4.5% • : 1.4% • : 3.0% 1 2002 2003 2 60 2003 1-9 30
Slide 31: Outlook and summary
2% 53% 45% 2003 9 1 1 2003 10 20 61 2003 1-9 1 +3.4% +9.6% +10.6% +6.3% +3.3% +0.4% +5.5% +3.1% 1 2003 10 20 62 2003 1-9 31
Slide 32: Neoral/Sandimmune and Phase III submissions
Neoral/Sandimmune 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 3 5 7 9 11 13 17 19 23 29 35 1 15 21 25 27 31 33 37 39 63 2003 1-9 Phase Xolair Ÿ Phase Enablex Ÿ 2004 Prexige Ÿ TARGET1 2004 3 Certican Ÿ 2004 myfortic Ÿ 2004 Zelnorm Ÿ 2003 Zelmac Ÿ Phase 1 Therapeutic COX189 Arthritis Research and