Novartis AG · SIX:NOVN
Novartis — Q1 2009 Earnings Presentation
50 slides from Novartis's earnings presentation, Apr 23, 2009
Slide 1: Novartis Group Q1 2009 results
Novartis Group Novartis Group Q1 2009 results 23 April 2009 Novartis Group ノバルティス・グループ 2009年第1四半期業績発表資料（Appendixを除く） 2009年4月23日 1
Slide 2: Disclaimer
Disclaimer These materials contain certain forward-looking statements relating to the Group's business, which can be identified by terminology such as "outlook", "expected", "will", "potential", "pipeline", or similar expressions, or by express or implied discussions regarding potential new products
Slide 3: Agenda
Agenda Q1 2009 performance highlights J Reinhardt Financial review R Breu Pharma highlights J Jimenez Building a strong future, outlook 2009 J Reinhardt 議題 2009年第1四半期業績ハイライト J. ラインハルト 財務概要 R. ブロイ 医薬品事業ハイライト J. ジメネス 2009年見通し J. ラインハルト 3
Slide 4: Strong underlying growth, Pharma portfolio rejuvenation progressing in Q1 2009
Novartis delivers strong underlying growth, Pharma portfolio rejuvenation progressing in Q1 2009 Strong underlying Group performance offset by negative currency impact • Net sales of USD 9.7 billion (+8% in local currencies, -2% in USD) • Operating income of USD 2.3 billion, -6% in USD, +7% exclud
Slide 5: Q1 2009 results reflect strong local currency growth but negative currency movements
Q1 2009 results reflect strong growth in local currencies but significant negative currency movements Group key figures Q1 2009 Q1 2008 % change % of % of USD m net sales USD m net sales USD lc1 Net sales 9 709 9 909 -2 8 Operating income 2 347 24.2 2 488 25.1 -6 Net income 1 975 20.3 2 308 23.3 -14
Slide 6: Performance in Q1 led by Pharmaceuticals
Performance in Q1 led by Pharmaceuticals Actual results Q1 2009 % growth Q1 2009 (USD m) vs. Q1 2008 Sales OpInc Sales OpInc 12 8 Pharma 6 433 2 062 3 -2 -2 -42 V&D 247 -67 -12 -26 4 -4 Sandoz 1 726 291 -9 -16 Consumer 1 9 1 303 235 -11 Health -10 Local currency Currency corrected USD 11 | Novartis
Slide 7: Operational performance in Q1 driven by portfolio rejuvenation in Pharma
Operational performance in Q1 driven by portfolio rejuvenation in Pharma Pharma – recently launched products and good country performance drove 12% local currency growth Vaccines and Diagnostics – modest sales decline due to lower sales of Encepur®1 in Europe Sandoz – solid growth outside the
Slide 8: Dynamic growth in emerging markets, strong growth also in the US
Dynamic growth in emerging markets, strong growth also in the US % of net sales Growth vs PY in % of net sales Growth vs PY in by region local currencies by country type local currencies 8% 9% LatAm and Top 6 15% Canada emerging 23% 18% 25% markets1 Asia/Africa/ 10% Australasia 33% ROW 6% US 9% 66%
Slide 9: Agenda
Agenda Q1 2009 performance highlights J Reinhardt Financial review R Breu Pharma highlights J Jimenez Building a strong future, outlook 2009 J Reinhardt 議題 2009年第1四半期業績ハイライト J. ラインハルト 財務概要 R. ブロイ 医薬品事業ハイライト J. ジメネス 2009年見通し J. ラインハルト 9
Slide 10: Q1 2009 results reflect currency impact
Q1 2009 results reflect currency impact USD m Q1 2009 Q1 2008 % USD % lc2 Net sales 9 709 9 909 -2 8 Operating income 2 347 2 488 -6 as % of net sales 24.2% 25.1% Net income 1 975 2 308 -14 as % of net sales 20.3% 23.3% Free cash flow1 1 506 1 355 11 EPS (USD) 0.87 1.02 -15 Number of associates 97 9
Slide 11: Q1 2009 strong underlying growth offset by currency
Q1 2009 strong underlying growth offset by currency Net sales growth (%) Operating income growth (%) 8 8 5 0 -7 -10 -2 -4 -2 -6 Volume Price/Acq. Total LC FX USD Curr. Transact. LC Transl. USD corrected growth growth growth 21 | Novartis Q1 2009 results | 23 April 2009 2009年第1四半期の力強い成長基調も、 為替により相殺 売
Slide 12: Continued high investment in R&D leads to slight margin contraction
Continued high investment in R&D leads to slight margin contraction % pt change Q1 2009 vs. - 0.9 Other Betaseron royalties discontinued as of October 2008 Q1 2008 revenues - 0.9 + 0.1 COGS Productivity improvements driven by Consumer Health and V&D offset price erosion at Sandoz + 0.4 M&S Pharma pr
Slide 13: Q1 2009 also impacted by exceptional items
Q1 2009 also impacted by exceptional items Operating income growth (%), Selected exceptional items adjusted for exceptional items 7 Pharmaceuticals: USD 100 m higher 2 divestment gains and USD 45 m 5 more release of provisions in Q1 2008 Vaccines & Diagnostics: USD 49 m settlement income in Q1 2
Slide 14: Net income reflects cost of Alcon financing and reduced net liquidity
Net income reflects cost of Alcon financing and reduced average net liquidity USD m Q1 2009 Q1 2008 Change (% USD) Operating income from continuing operations 2 347 2 488 -6 Income from associated companies 83 137 -39 Financial result, net - 134 91 nm in % of average net liquidity 1 na 6.5% Income b
Slide 15: Net financial result declines on lower liquidity, finance costs and currency
Net financial result declines on lower liquidity, finance costs and currency impact 91 -45 -50 -130 -134 Q1/08 Fin. result, Lower liquidity Bond interest FX losses Q1/09 Fin. result, net (Alcon) net All figures in USD m 29 | Novartis Q1 2009 results | 23 April 2009 手元流動性減少、資金調達コスト及び為替の影響によ り、財務収支が落ち
Slide 16: Strong free cash flow in Q1 2009 enhances financial flexibility
Strong free cash flow in Q1 2009 enhances financial flexibility USD m Q1 2009 Q1 2008 Change (% USD) Cash flow from operations 1 953 1 689 16 Purchase of property, plant & equipment - 368 - 403 -9 Purchase of intangible and financial assets - 136 - 78 74 Sale of property, plant & equipment, intangib
Slide 17: Financial flexibility remains high
Financial flexibility remains high Ratings Recent Novartis debt issues Long-term Bond (size) Coupon Date of issue Maturities USD 2 bn 4.125% 5 Feb 2009 5 yr S&P AA- Moody‘s Aa2 USD 3 bn 5.125% 5 Feb 2009 10 yr Fitch AA Short-term CHF 700 m 3.5% 10 June 2008 4 yr S&P A-1+ CHF 800 m 3.625% 10 June 200
Slide 18: Access debt capital markets to seize funding opportunities
Access debt capital markets to seize funding opportunities Rates at historical lows Potential financing requirements (Alcon put) Inflation hedge 35 | Novartis Q1 2009 results | 23 April 2009 資本（債券発行）市場で資金調達の機会を捉える 歴史的に低い金利水準 資金調達の潜在的な必要性(ネスレ社によるAlcon株式のプット オプション行使) インフレヘッジ 36 | Novartis
Slide 19: Agenda
Agenda Q1 2009 performance highlights J Reinhardt Financial review R Breu Pharma highlights J Jimenez Building a strong future, outlook 2009 J Reinhardt 議題 2009年第1四半期業績ハイライト J. ラインハルト 財務概要 R. ブロイ 医薬品事業ハイライト J. ジメネス 2009年見通し J. ラインハルト 19
Slide 20: Strong operating performance in Q1 2009
Strong operating performance in Q1 2009 Sales USD 6.4 billion, +12% vs 2008 in local currency • Double-digit growth in all regions • All key therapeutic areas growing double digits Operating income USD 2.1 billion, -2% vs prior year in USD • Foreign exchange rates had negative impact of -10.0 pp
Slide 21: Q1 2009 shows strong sales growth in Pharma
Q1 2009 shows strong sales growth in Pharma Q1 2009 Growth USD m Q1 2009 vs Q1 2008 Net sales 6 433 +12% in LC1 Operating income 2 062 -2% in USD2 Return on net sales (ROS) 32.1% -1.4 ppts3 1 Local currencies 2 Foreign exchange negative impact -10.0 ppts vs PY, one-time items negative impact -3.0 pp
Slide 22: Strong performance across regions
Strong performance across regions % of net sales by region Q1 2009 net sales growth Total USD 6.4 bn +12% vs PY in local currency 8% 8% LatAm and Canada 15% 20% 21% Asia/Africa/ Australasia 11% 32% 35% US 13% 40% 36% Europe 11% Q1 2008 Q1 2009 43 | Novartis Q1 2009 results | 23 April 2009 全ての地域で好調な業
Slide 23: Unprecedented four approvals on one day in Japan
Unprecedented four approvals on one day in Japan Four approvals on January 21 – a new record in Japan • Co-DIO® for hypertension • Xolair® for severe asthma • Lucentis® for wet age-related macular degeneration (AMD) • Tasigna® for certain forms of chronic myeloid leukemia (CML) Launches have alr
Slide 24: Hypergrowth investments gaining traction: emerging markets growing double digits
Hypergrowth investments gaining traction: Most emerging markets growing double digits Pharma Division sales growth Q1 2009 vs Q1 2008 local currencies, in % China >40% Turkey >20% Russia >20% India >15% South Korea >10% Brazil * >5% * Brazil growth is >10% vs PY excluding Prexige 47 | Novartis Q1 20
Slide 25: Key therapeutic areas growing double digits
Key therapeutic areas growing double digits Sales by therapeutic area Growth vs PY USD m in lc% Oncology 1 997 13% Cardiovascular and 1 699 14% Metabolism Neuroscience and 996 12% Ophthlalmics Immunology and 447 21% Infectious Diseases Respiratory 250 18% Other Products* 1 044 4% Pharma Total 46000
Slide 26: Lucentis driving Pharma growth
Lucentis® driving Pharma growth Q1 2009 total sales: USD 229 million Lucentis® Q1 sales, 2009 vs 2008 Clear patient benefit: USD m improves vision 229 Driving sales growth and portfolio transformation in many countries Laboratory for commercial 195 innovation, e.g.: • Innovative reimbursement
Slide 27: Rasilez/Tekturna uptake growing
Rasilez®/Tekturna® uptake growing Q1 2009 total sales: USD 52 million Rasilez® launched in 35 countries Rasilez®/Tekturna® share in total antihypertension market segment (%) • Rasilez® HCT expected to launch 0.5 in 30 countries in 2009 Positive data and news flow 0.4 from outcomes trials will 0.
Slide 28: Multiple launches will transform portfolio through Diovan loss of exclusivity
Multiple launches will transform portfolio through Diovan® loss of market exclusivity 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Rollout of launch brands will continue in major markets through 2009-2010 55 | Novartis Q1 2009 results | 23 April 2009 多くの上市により製品ポートフォリオが変換し、 Diovan® のシェアが低下 2007 2008 200
Slide 29: Recently launched products contributed nearly USD 900 million in Q1
Recently launched products contributed nearly USD 900 million in Q1, accounting for 14% of Pharma sales Launch product sales1 USD m 872 508 Q1 2008 Q1 2009 % of total Pharma sales 8% 14% 1 Products in first 2 years of first launch in a major market 57 | Novartis Q1 2009 results | 23 April 2009 最近上市さ
Slide 30: Significant investment in pipeline continues, good results in Q1
Significant investment in pipeline continues, and yielded good results in Q1 Pipeline Highlights Afinitor® (advanced kidney cancer): US FDA approval received March 30 PRT128 (elinogrel for thrombosis): In-licensed from Portola Ilaris® (canakinumab for CAPS1): Received priority FDA review, expe
Slide 31: PRT128 (Phase II): reversible P2Y12 receptor antagonist from Portola
PRT128 (Phase II): Reversible P2Y12 ADP1 receptor antagonist in-licensed from Portola Elinogrel is a direct fast acting, intravenous and oral, anti-clotting agent New chemical class of P2Y12 inhibitor Competitive and reversible • Manageable half-life, no metabolism required • Fast bleeding res
Slide 32: Continued progress anticipated in 2009
Continued progress anticipated in 2009 Submissions Approvals Data FTY720 MS1 (US/EU) 9 Afinitor® RCC5 (US) 9Sandostatin® Phase III midgut neuroendocrine tumors MFF258 asthma (US/ EU) 9Tekturna® +HCTZ Afinitor® Phase III carcinoid and COPD2 (US) (EU) tumors Tekturna®+Diovan® (EU) Glivec® ad
Slide 33: Productivity savings continue to fund strategic investments
Productivity savings continue to fund strategic investments Pharma Division achieved more than USD 210 million in savings during Q1 2009 • Confident to exceed 2010 Forward savings target • Savings delivered through sourcing, LEAN, offshoring, and field force optimization Savings contributing to
Slide 34: Strong start to 2009 affirms mid to high single digit growth outlook
Strong start to 2009 affirms mid to high single digit growth outlook for 2009 Barring unforeseen events: Confidently maintaining mid to high single digit local currency sales growth outlook Closely monitoring challenges linked to the financial crisis Launches transforming our portfolio Excel
Slide 35: Agenda
Agenda Q1 2009 performance highlights J Reinhardt Financial review R Breu Pharma highlights J Jimenez Building a strong future, outlook 2009 J Reinhardt 議題 2009年第1四半期業績ハイライト J. ラインハルト 財務概要 R. ブロイ 医薬品事業ハイライト J. ジメネス 2009年見通し J. ラインハルト 35
Slide 36: Delivering on priorities for 2009
Delivering on priorities for 2009 Dynamic expansion of new Pharma products • Newly launched products reaching 14% of sales vs 8% in Q1 2008 Successful new launches: Extavia®, Afinitor® and Menveo® • Extavia approved in EU, Afinitor® approved in US, Menveo® on track Return Sandoz and Consumer H
Slide 37: Pharmaceuticals executing globally – double digit growth in all regions
Pharmaceuticals executing globally – double digit growth in all regions % of net sales Growth vs PY in % of net sales Growth vs PY in by region local currencies by country type local currencies 8% 9% LatAm and Top 6 15% Canada emerging 20% 21% 23% markets1 Asia/Africa/ 11% Australasia 35% ROW 10% US
Slide 38: Pharmaceuticals innovation rejuvenating the portfolio
Pharmaceuticals innovation rejuvenating the portfolio % of sales1 Feb 2008 - Feb 2009 from products launched in 2007 and 2008 Novartis Pharma 12% GSK 5% Johnson & Johnson 5% Bayer 4% Sanofi-Aventis 3% Merck/Schering Plough 3% Pfizer/Wyeth 3% Abbott 3% AstraZeneca 3% Eli Lilly 1% Roche 1% Source: IMS
Slide 39: Strong pipeline expected to accelerate portfolio renewal
NME Strong pipeline expected to accelerate LCM portfolio renewal 2009 2010 2011 ≥ 2012 AGO178 EPO906 ASA404 LCI699 AEB071 Depression Ovarian cancer Non small cell lung can. Heart failure Kidney & heart transpl. FTY720 SOM230 PKC412 CAD106 NIC002 Multiple sclerosis Cushing’s disease ASM8 Alzheimer’s
Slide 40: Significant progress in innovation anticipated in 2009
Significant progress in innovation anticipated in 2009 Achieved Planned for 2009 Approvals Approvals Submissions 9 Afinitor® RCC5 (US) • Glivec® adjuvant • FTY720 MS1 9 Tekturna® +HCTZ (EU) GIST (EU) • MFF258 asthma and 9 Ixiaro® (Vaccines) • Tekturna®+Diovan® COPD2 (US) • Tekturna®+Diovan® (E
Slide 41: Sandoz delivering solid sales growth in most regions, improving in the US
Sandoz delivering solid sales growth in most regions, and improving in the US % of net sales by region Q1 2009 net sales growth 2008 FY net sales growth Local currencies Local currencies 7% LatAm and 17% 16% 10% Canada 26% Asia/Africa/ 17% 9% Australasia US -3% -10% 57% Europe 4% 4% Q1 2009 81 | Nov
Slide 42: Sandoz Q1 2009 performance showed improvement
Sandoz Q1 2009 performance showed improvement compared to recent quarters Growth of net sales vs previous year in local currencies in % 4.2 1.8 2.0 0.5 0.0 Q1 Q2 Q3 Q4 Q1 Return on net sales in % 18.1 16.9 15.4 12.6 11.1 Q1 Q2 Q3 Q4 Q1 2008 2009 83 | Novartis Q1 2009 results | 23 April 2009 サンドの2009
Slide 43: Key steps taken to improve performance of Sandoz US
Key steps taken to improve performance of Sandoz US Management team strengthened 5 submissions and 9 approvals in the US during Q1 2009 Returning to sales growth in March 2009 US operation aiming to return to growth for full year 2009 Christine Mundkur CEO of Sandoz US 85 | Novartis Q1 2009
Slide 44: Sandoz – Wilson plant remediation on track
Sandoz – Wilson plant remediation on track New management team in place at Wilson plant since late 2008 Interactions with the FDA are positive with communications on-going Wilson facility continues to operate during remediation with >30 products being shipped from the Wilson plant (only 5 prod
Slide 45: Consumer Health performance driven by CIBA Vision
Consumer Health performance driven by CIBA Vision, with OTC and AH impacted by economy OTC • Consumption slowdown and wholesaler de-stocking • Voltaren® and Fenistil®/Savlon® perform strongly. Driven by launches and strong performance in emerging markets Animal Health • Farm Animal Business perf
Slide 46: Animal Health launches Zolvix
Animal Health launches Zolvix®, the first new anthelmintic class in more than 25 years Gastrointestinal worms in sheep are becoming resistant to conventional worm treatments Zolvix® launched by Novartis in March in New Zealand Unparalleled efficacy (99.9%), even against resistant parasites I
Slide 47: Consumer Health – innovation driving growth in CIBA Vision
Consumer Health – innovation driving growth in CIBA Vision 2008 launches of new silicone hydrogel lenses AirOptixTM Aqua – improved comfort and quality AirOptixTM brands AirOptixTM for Astigmatism – showed full parameter toric version of strong AirOptix growth AirOptixTM – Japan launch of week
Slide 48: Vaccines and Diagnostics – approval of Ixiaro
Vaccines and Diagnostics – pipeline making good progress with approval of Ixiaro® Ixiaro® approved by FDA on 30 March 2009 and in Europe on 2 April 2009 Ixiaro® is the only vaccine available in many countries for Japanese Encephalitis Initially targeting travelers to endemic regions (South and
Slide 49: Broad productivity efforts driving performance in all divisions
Broad productivity efforts driving performance in all divisions Forward continuing to deliver savings ahead of plan (USD 329 m in Q1 2009), with procurement the strongest contributor Further productivity initiatives launched across the business • “Global Emerging Markets” (GEM), unifying divisio
Slide 50: Novartis Group outlook for FY 2009
Novartis Group outlook for FY 2009 Barring unforeseen events Group net sales growing at a mid-single-digit rate and Pharmaceuticals net sales growing at a mid- to high-single-digit rate, both in local currencies Aim in 2009 remains to again deliver record underlying net sales and earnings exclud