Novartis AG · SIX:NOVN
Novartis — Lombard Odier Conference 2004
25 slides from Novartis's conference presentation, May 5, 2004
Slide 1: Lombard Odier Conference, 5 May 2004
Raymund Breu CFO, Novartis AG Lombard Odier Conference 5 May, 2004 The following information contains certain "Forward-looking Statements" relating to the Company's business, which can be identified by the use of forward-looking terminology such as "will" or "expect", or by discussions of strategy,
Slide 2: Agenda; Novartis Strategic Intent
Agenda • Strategy • Business Performance • Pharmaceuticals − Performance − Pipeline • Outlook 3 5 May 2004 – Lombard Odier Conference, London Novartis Strategic Intent Continuously offer to patients worldwide: • Innovative medicines with improved efficacy and / or side-effect profiles • New best cos
Slide 3: Meeting Patients' Needs; Continuous Progress on All Strategic Fronts
Meeting Patient’s Needs New innovative medicines Patent Generics free up funds expiration for innovative medicines High quality generics Innovation offers Generic improved treatment obsolescence options rendering generics obsolete 5 5 May 2004 – Lombard Odier Conference, London Continuous Progress o
Slide 4: Focus on Medicines; Strategic Investments for Building World Class Key Functions
Focus on Medicines 1996 2001 2002 Q1/2004 % of Group 42% 18% 16% 14% Non-drug sales 86% Drugs 84% 82% 58% Source: Annual reports 7 5 May 2004 – Lombard Odier Conference, London Strategic Investments for Building World Class Key Functions and Sustainable Growth Phase 3 Phase 2 Innovation Best-in-clas
Slide 5: Continuing to Outpace the Industry in Q1 2004
Agenda • Strategy • Business Performance • Pharmaceuticals − Performance − Pipeline • Outlook 9 5 May 2004 – Lombard Odier Conference, London Continuing to Outpace the Industry in Q1 2004 • Double-digit sales and operating income growth • Vibrant product portfolio fuels 19% sales expansion in USD in
Slide 6: Double-Digit Sales and Operating Income Expansion
Double-Digit Sales and Operating Income Expansion in USD m 3 M 2004 3 M 2003 in % USD in % LC Sales 6 639 5 721 16 8 Operating income 1 494 1 351 11 as % of sales 22.5 23.6 Free Cash Flow -1 0641 - 66 Net income 1 293 1 063 22 as % of sales 19.5 18.6 EPS (USD) 0.52 0.43 22 Number of employees 79 137
Slide 7: Strong Performance in USD by Both Divisions; Operating Income up 11%
Strong Performance in USD by Both Divisions 3 M 2004 sales: USD 6 639 million 3 M % sales growth LC 11 Pharmaceuticals USD 19 LC 2 Consumer Health USD 10 LC 8 Group USD 16 13 5 May 2004 – Lombard Odier Conference, London 3 Month 2004 Group Operating Income up 11% in USD 3 M 2004 operating income: US
Slide 8: Consumer Health Continues on its Growth Path
Consumer Health Continues on its Growth Path • Double-digit sales growth of OTC, Medical Nutrition and Infant & Baby • Sandoz performance affected by strong comparative effect with AmoxC performance in 2003 • Operating income increased by 21% in USD • Operating margin up 1.3 percentage points to 14.
Slide 9: Market Share Gains in Pharmaceuticals
Agenda • Strategy • Business Performance • Pharmaceuticals − Performance − Pipeline • Outlook 17 5 May 2004 – Lombard Odier Conference, London Market Share Gains In Pharmaceuticals • +11% sales growth ahead of market (+5%) in Q1 2004 • Market share up to 4.45% from 4.35% • Strong Cardiovascular perf
Slide 10: Novartis Continues to Outgrow the Market, Especially in the US
Novartis Continues to Outgrow the Market ... Market Global quarterly value growth rates, in % Novartis 18.1 16.4 16.5 15.6 13.2 12.8 12.0 12.2 10.7 10.6 11.0 9.6 7.9 8.4 7.4 7.4 7.3 5.0 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2002 2003 2004 1 January and Frebruary only Source: IMS 16 Countries 19 5 May 2004 –
Slide 11: Strong Double Digit Growth in Key Disease Categories
Strong Double Digit Growth in Key Disease Categories ... Sales YTD March 2004 in USD m Change in % (LC) YTD Mar 2004 Cardiovascular 1 143 16 Nervous System 483 22 Resp./Derm. 389 25 A/B/G/H/I1 68 235 Infect. Diseases 63 11 Oncology 952 17 Transplantation 269 -4 Ophthalmics 178 11 Mature Products 763
Slide 12: Fastest Growing Top Anti-Hypertensive Segment
Fastest Growing Top Anti-Hypertensive Segment Sales in USD million Growth in % Brand Class YTD Feb 2004 YTD Feb 2004 Norvasc CCB 659 5 Diovan Group ARB 442 27 Cozaar/Hyzaar ARB 378 8 Atacand ARB 248 14 Triatec/Altace ACE 215 6 Source: IMS Healthcare 16 countries YTD Feb 2004 vs YTD Feb 2003 23 5 May
Slide 13: #1 and #2 Positions in Fastest Growing US Hypertension Segment
#1 and #2 positions in Fastest Growing Segment of US Hypertension Segment US sales IMS YTD Feb 2004 in USD m + 19% + 38% + 19% + 42% 155 Market growth vs PY 104 Combo 25% 75 Mono 4% 36 Lotrel® Co- Hyzaar Avalide1 Diovan® 1 Irbesartan-HCT Source: IMS YTD Feb 2004 25 5 May 2004 – Lombard Odier Confere
Slide 14: Going For Category Leadership in US
Going For Category Leadership in US Integrated marketing campaign for Healthy BP • ~USD 25 m DTC/DTP spending planned in Q2 • Establishing treatment goals • 3 400 Reps detailing with >450 000 calls in Q2 alone • Compliance momentum goals - “5 for 5” - BP monitoring equipment - Compliance calls • Mon
Slide 15: Physicians Are Using Higher Doses
Physicians Are Using Higher Doses Average Glivec® / Gleevec® dose by CML phase Q3 2002 mg per patient per day, US Q1 2004 705 608 613 544 430 394 Chronic Accelerated Blast Source: Cancer eSearch 29 5 May 2004 – Lombard Odier Conference, London Latest Data Further Supports Trend % of patients achievi
Slide 16: Strong Rx Lift Post MA-17; Key Anticipated Events 2004
Strong Rx Lift Post MA-17 Publication Weekly Femara® TRx in ’000s 11 10 MA-17 published 9 8 TRx 7 + 79% 6 5 4 3 03-Jan 07-Feb 14-Mar 18-Apr 23-May 27-Jun 01-Aug 05-Sep 10-Oct 14-Nov 19-Dec 23-Jan 27-Feb Source: IMS NPA Weekly 31 5 May 2004 – Lombard Odier Conference, London Key Anticipated Events 20
Slide 17: Seven Blockbusters by 2008
Seven Blockbusters by 2008 % of total pharma sales 50% Diovan® Lotrel® • Effective positioning and messaging Glivec® / Gleevec® • Strong field force Zometa® 30% execution • Powerful LCM1 Zelmac®/Zelnorm® Diovan® • Effective DTC Elidel® Glivec® / Gleevec® • M&S “Science” Neoral® Femara® 2003 2008 1 L
Slide 18: A Focused Portfolio in Attractive Market Segments
A Focused Portfolio in Attractive Market Segments Phase Business unit / Business franchise I II III & Reg Total Nervous system 2 6 5 13 Cardiovascular, metabolism 1 1 9 11 Primary Arthritis, bone, GI1, HRT2 3 5 7 15 care Infectious Diseases 1 1 1 3 Respiratory, dermatology 5 4 4 13 Oncology 5 7 5 17
Slide 19: Development Pipeline; Planned Filings 2004 to 2007
Development Pipeline Productivity, Innovation and Focus Key development projects Major products Major additions in registration LAF237 Major approvals to pipeline in SPP100 in 2003 2003 Diovan® ICL670 Xolair® (VALIANT) AKU517 PTK787 Certican® Enablex™ LDT600 FTY720 myfortic® Foradil® LDC300 LDT600 S
Slide 20: Financial Outlook 2004
Agenda • Strategy • Business Performance • Pharmaceuticals − Performance − Pipeline • Outlook 39 5 May 2004 – Lombard Odier Conference, London Financial Outlook 2004 • Growth driven by continued strong performance of operating units • Net Financial income expected to continue at first quarter perfor
Slide 21: Outlook 2004; Appendix
Outlook 2004 (barring unforeseen events) • High single-digit sales growth, ahead of market • Bold R&D investments to ensure innovation lead • Sustain industry leading pipeline • Planned launches of Certican®, myfortic® and Enablex® • Continued strong growth of core brands • Operating income and net
Slide 22: 3 Months 2004 Sales Growth Components by Division
3 Months 2004 Sales Growth Components by Division/Business Unit Volume Price Acq./Div. Currency Pharmaceuticals 9% 2% 0% 8% Sandoz -17% 3% 0% 8% OTC 14% 0% 0% 10% Animal Health 5% -2% -5% 9% Medical Nutrition 5% 0% 20% 11% Infant & Baby 13% 0% 0% 1% CIBA Vision 4% 1% 0% 9% Group 5% 2% 1% 8% 43 5 May
Slide 23: Pharmaceuticals and OTC Drive Operating Income Growth
Pharmaceuticals and OTC Drive 11% Operating Income Growth in USD 3 M Operating income: USD 1 494 m, +11% in USD 3M Operating income growth in % (USD) Pharmaceuticals 13 Sandoz -25 OTC 102 Animal Health -17 Medical Nutrition 0 Infant & Baby 33 CIBA Vision 76 GROUP 11 -40 45 5 May 2004 – Lombard Odier
Slide 24: USD is The Predominant Currency
USD is The Predominant Currency • Products are imported for sale into US Sales • High cost level in CHF Costs In % 43 41 26 23 19 17 15 8 4 4 USD JPY EUR CHF Other 47 5 May 2004 – Lombard Odier Conference, London Major Currencies Appreciated vs. USD in 3M 2004 Change vs USD in % CHF 9 JPY 11 EUR 17
Slide 25: Full Year Impact of Currency Movements vs USD
Full Year Impact1 of Currency Movements vs USD on Sales and on Operating Income Impact of a 10% currency appreciation vs USD on group sales: • EUR: 2.6% • CHF: 0.4% • JPY: 0.8% • Others: 1.9% Impact of a 10% currency appreciation vs USD on group operating income2: • EUR: 3.6% • CHF: -3.8% • JPY: 2.1