Novartis delivers strong innovation in 2012, offsetting patent expirations; next growth phase expected to begin in 2013
-
- Group net sales up 2% in constant currencies[1] (cc) in fourth quarter despite patent expirations; flat (cc) over full year
- Strong momentum from innovation, growth and productivity continues
- Strong progress in quality remediation
- Proposed changes to Novartis Board of Directors
- Outlook
- Novartis expects 2013 sales to be in line with 2012 in constant currencies, after absorbing impact of generic competition which could amount to as much as USD 3.5 billion
- 2013 core operating income (cc) expected to decline in mid-single digits
- Next growth phase expected to begin in 2013, resulting in 2014 and 2015 expected reported sales growth of at least mid-single digits, with core operating income growing ahead of sales
- Having served in leadership positions as CEO and Chairman of Novartis for 17 years, Dr. Daniel Vasella has decided not to stand for re-election to the Novartis Board of Directors at the company's Annual General Meeting (AGM) on February 22, 2013. Dr. Jörg Reinhardt is proposed as the new Director of Novartis AG and designated non-executive Chairman of the Board of Directors, effective as of August 1, 2013. During the transition period, current Vice-Chairman Prof.? Dr. Ulrich Lehner will lead the Board on an ad interim basis?
- Dr. Verena Briner, Dr. Charles Sawyers, and Mr. William Winters are also proposed to become members of the Novartis Board of Directors for election at the AGM. As previously announced, Ms. Marjorie Yang has taken the decision not to stand for re-election
; Sandoz site in Broomfield, Colorado achieved upgraded compliance status from FDA in fourth quarter- 17 major approvals in 2012, including Afinitor in advanced breast cancer in the US and EU, Jakavi for myelofibrosis in the EU and Dailies Total1 in the US; Bexsero, our breakthrough meningococcal serogroup B vaccine, received a positive CHMP opinion in the fourth quarter
- Recently launched products grew 13% to USD 16.3 billion or 29% of Group net sales for the full year; Gilenya attained blockbuster status with USD 1.2 billion in full-year sales
- Industry-leading pipeline with over 200 projects in clinical development, including 138 in Pharmaceuticals; over next 2 years, Novartis anticipates 24 pivotal study readouts and up to 20 filings and 18 potential approvals in Pharmaceuticals alone
- Fourth quarter net sales reached USD 14.8 billion (0%, +2% cc); full year net sales were USD 56.7 billion (-3%, 0% cc)
-
- Core[1] operating income rose 3% (+5% cc) to USD 3.7 billion in the fourth quarter; for full year, core operating income was USD 15.2 billion (-5%, -2% cc)
-
- Core EPS was USD 1.27 (+3%, +4% cc) in fourth quarter, USD 5.25 (-6%, -3% cc) in full year
-
- Free cash flow[1] reached USD 3.5 billion for fourth quarter, USD 11.4 billion for full year
-
- Dividend of CHF 2.30 per share proposed for 2012; 16th consecutive increase
-
Key figures
|
? ? |
Q4 2012 |
Q4 2011 |
% change |
? |
FY 2012 |
FY 2011 |
% change |
||
|
? |
USD m |
USD m |
USD |
cc |
? |
USD m |
USD m |
USD |
cc |
|
Net sales |
14 828 |
14 781 |
0 |
2 |
? |
56 673 |
58 566 |
-3 |
0 |
|
Operating income[1] |
2 481 |
1 317 |
88 |
94 |
? |
11 511 |
10 998 |
5 |
8 |
|
Net income |
2 082 |
1 210 |
72 |
77 |
? |
9 618 |
9 245 |
4 |
7 |
|
EPS (USD) |
0.84 |
0.49 |
71 |
79 |
? |
3.93 |
3.83 |
3 |
6 |
|
Free cash flow[2] |
3 513 |
3 909 |
-10 |
? |
? |
11 383 |
12 503 |
-9 |
? |
|
Core[2] |
? |
? |
? |
? |
? |
? |
? |
? |
? |
|
Operating income |
3 674 |
3 550 |
3 |
5 |
? |
15 160 |
15 909 |
-5 |
-2 |
|
Net income |
3 102 |
3 011 |
3 |
5 |
? |
12 811 |
13 490 |
-5 |
-3 |
|
EPS (USD) |
1.27 |
1.23 |
3 |
4 |
? |
5.25 |
5.57 |
-6 |
-3 |
- Pharmaceuticals: low-single digit decline (mid-to-high single digit growth excluding generic competition);
- Alcon, Sandoz, Vaccines and Diagnostics: mid-to-high single digit increase;
- Consumer Health:?high-single digit increase.
The outlook takes into account required 2012 restatement as a result of adopting from January 1, 2013 the new IFRS change in pension accounting which results in approximately USD 80 million per quarter increase in pre-tax Corporate costs (USD 310 million for 2012).
Annual General Meeting
The Board proposes a dividend payment of CHF 2.30 per share for 2012, up 2% from CHF 2.25 per share in 2011, representing the 16th consecutive dividend increase since the creation of Novartis in December 1996. Shareholders will vote on this proposal at the 2012 Annual General Meeting (AGM) scheduled for February 22, 2013. The payout ratio as a percentage of net income is expected to decrease from 66 % to 65%.Election of members to the Novartis Board of Directors
Dr. Jörg Reinhardt is nominated to become a member of the Novartis Board of Directors for election at the upcoming AGM, and once elected to become Chairman of the Board, effective August 1, 2013. During the transition period, current Vice-Chairman Prof. Dr. Ulrich Lehner will lead the Board on an ad interim basis.
Dr. Verena Briner, Dr. Charles Sawyers and William Winters are also proposed to become members of the Novartis Board of Directors for election at the AGM. Marjorie Yang has taken the decision not to stand for re-election as announced last year. Ms. Yang joined the Novartis Board in 2007.
Dr. Jörg Reinhardt
Dr. Verena A. Briner
Dr. Charles L. Sawyers
William T. Winters
Consultative vote on the Novartis compensation system
Summary Financial Performance
Group
?
Pharmaceuticals
?
Alcon
?
Sandoz
?
Vaccines and Diagnostics
nm - not meaningful
Consumer Health
nm - not meaningful
Our 2012 Annual Report as well as a condensed financial report with the information listed in the index below can be found on our website at
Novartis Q4 and FY 2012 Condensed Financial Report - Supplementary Data
?
Disclaimer
About Novartis
Novartis has issued its Annual Report today, and it is available on its website at
Important dates
?
Novartis provides innovative healthcare solutions that address the evolving needs of patients and societies. Headquartered in Basel, Switzerland, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines and diagnostic tools, over-the-counter and animal health products. Novartis is the only global company with leading positions in these areas. In 2012, the Group achieved net sales of USD 56.7 billion, while R&D throughout the Group amounted to approximately USD 9.3 billion (USD 9.1 billion excluding impairment and amortization charges). Novartis Group companies employ approximately 128,000 full-time-equivalent associates and operate in more than 140 countries around the world. For more information, please visit
This press release contains forward-looking statements that can be identified by terminology such as "expected", "proposed", "momentum", "positive CHMP opinion", "pipeline", "anticipates", "potential", "outlook", "expects", "could", "anticipate", "priorities", "will", "recommended", "positive opinion", "submission", "submitted", "plans", "due to initiate", "promise", "strategy", "future", "on track", "expect", "committed," "unforeseen events", "would", "should", "filing," "filed," or similar expressions, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products; potential outcomes of our efforts to improve the quality standards at any or all of our manufacturing sites; or regarding potential future sales or earnings of the Group or any of its divisions in the near- and long-term; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward-looking statements reflect the current views of the Group regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that any new products will be approved for sale in any market, or that any new indications will be approved for any existing products in any market, or that any approvals which are obtained will be obtained at any particular time, or that any such products will achieve any particular revenue levels. Nor can there be any guarantee that the Group will be successful in its efforts to improve the quality standards at any or all of our manufacturing sites, or that we will succeed in restoring or maintaining production at any particular sites. Neither can there be any guarantee that the Group, or any of its divisions, will achieve any particular financial results, either in the near-term or in the long-term. In particular, management's expectations could be affected by, among other things, unexpected regulatory actions or delays or government regulation generally; unexpected clinical trial results, including additional analyses of existing clinical data or unexpected new clinical data; the Group's ability to obtain or maintain patent or other proprietary intellectual property protection, including the ultimate extent of the impact on the Group of the loss of patent protection on key products which commenced last year and will continue this year; unexpected product manufacturing and quality issues, including the potential outcomes of our efforts at the Sandoz and Alcon sites that are subject to Warning Letters, and with respect to our efforts to restart production of products formerly produced at the Consumer Health manufacturing facility at Lincoln, Nebraska; government, industry, and general public pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, shareholder litigation, government investigations and intellectual property disputes; competition in general; uncertainties regarding the effects of the ongoing global financial and economic crisis, including the financial troubles in certain Eurozone countries; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; uncertainties necessarily involved in long-term financial projections; uncertainties involved in the development of new healthcare products; the impact that the foregoing factors could have on the values attributed to the Group's assets and liabilities as recorded in the Group's consolidated balance sheet; and other risks and factors referred to in Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.
In order to further align with the interests of shareholders and to foster long-term value creation, the Board of Directors proposes to introduce changes to the compensation system for the CEO and the other members of the Executive Committee as from January 1, 2014. Consistent with the Articles of Incorporation of Novartis AG, the upcoming Annual General Meeting 2013 will thus provide shareholders an opportunity to express their views on the compensation system of Novartis through a consultative vote. is CEO and Chairman of Renshaw Bay, London, an alternative asset management and advisory company founded in partnership with Mr. Johann Rupert's Reinet Investments and Lord Jacob Rothschild's RIT Capital Partners. He was a member of the UK Independent Commission on Banking which made its recommendations to the Government on the structure of the UK financial industry in September 2011. He recently completed a review which was presented to the Court of the Bank of England in October 2012, covering the Bank's framework for providing liquidity to the banking system as a whole. Mr. Winters left JPMorgan in 2010, having served as the Co-CEO of the JPMorgan Investment Bank since 2003. He had joint responsibility for the firm's global businesses across sales, trading, research, capital raising, lending and associated risk management. Having joined JPMorgan in 1983, he held management roles across several market areas and in corporate finance. He moved from New York to London in 1992. Mr. Winters received an MBA from the Wharton School at the University of Pennsylvania and a Bachelor's degree in International Relations from Colgate University. He is a member of the Boards of the International Rescue Committee, Colgate University, the Young Vic Theatre and The Print Room. Mr. Winters was born in 1961. He is a dual UK/US citizen. is Chair of the Human Oncology and Pathogenesis Program at Memorial Sloan-Kettering Cancer Center in New York, US, and Professor of Medicine and of Cell and Developmental Biology at the Graduate School of Medical Sciences at Weill-Cornell University, US. He is also an Investigator of the Howard Hughes Medical Institute, Maryland, US. He obtained his M.D. degree at the Johns Hopkins School of Medicine, completed his residency in Internal Medicine at the University of California in San Francisco, US, and his hematology-oncology fellowship training at the University of California in Los Angeles, US. Dr. Sawyers is an internationally acclaimed cancer researcher. His research has focused on characterizing signal transduction pathway abnormalities in various cancers, including chronic myeloid leukemia and prostate cancer, and developing molecularly targeted cancer drugs for both diseases. In particular, he co-developed Novartis' targeted cancer drug, Gleevec/Glivec. Prior to joining Memorial Sloan-Kettering Cancer Center in 2006, he worked at Jonsson Comprehensive Cancer Center of the University of California, Los Angeles, US, for nearly 18 years. Dr. Sawyers has received numerous honors and awards, including the Lasker-DeBakey Clinical Medical Research Award, often considered America's Nobel Prize, in 2009. He is past President of the American Society for Clinical Investigation, President-Elect of the American Association of Cancer Research and serves on President Obama's National Cancer Advisory Board.? He is a member of the US National Academy of Sciences and Institute of Medicine. Dr. Sawyers was born in 1959. He is a US citizen. is Professor of Internal Medicine at the University of Basel and Chief Medical Officer and Head of the Department of Medicine of the Lucerne Cantonal Hospital, Switzerland. She obtained her M.D. degree at the Medical School of the University of Basel in 1978 and completed residencies in several Swiss hospitals as well as at the Health Sciences Center of the University of Colorado, Denver, US. She holds a specialized degree of the Swiss Medical Association in Internal Medicine and in Nephrology and is a member and a past president of the Swiss Society of Internal Medicine. She has received several prestigious scholarships and scientific grants, including the President's Grant of the Society of General Internal Medicine in 2011. Dr. Briner is an internationally recognized specialist in internal medicine and a prolific researcher. She is member of several medical and ethical institutions and commissions, including the Board of the Foundation for the Development of Internal Medicine in Europe, the Senate and the Board of the Swiss Academy of Medical Sciences and the sounding group of the Centre for Technology Assessment TA-SWISS for personalized medicine. She is an honorary fellow of the American College of Physicians, the European Federation of Internal Medicine, the Polish Association of Internal Medicine and the Swiss Society of General Internal Medicine. Dr. Briner was born in 1951. She is a Swiss citizen. graduated with a Ph.D. in pharmaceutical sciences from Saarland University, Saarbruecken, Germany. He joined Sandoz Pharma Ltd in 1982 and held positions of increasing responsibility in R&D for the company in Switzerland. In 1994, he was named Head of Development for Sandoz Pharma Ltd. After the merger that created Novartis in 1996, Dr. Reinhardt became Head of Preclinical Development and Project Management for Novartis, and assumed the position of Head of Pharmaceutical Development in 1999. From 2006 to 2008, he served as Head of the Vaccines and Diagnostics Division. In 2008, he became Chief Operating Officer of the Novartis Group, a position he held until January 31, 2010. From 2000 to 2010, Dr. Reinhardt also served as Chairman of the Board of the Genomics Institute of the Novartis Foundation in the US. Since August 15, 2010, Dr. Reinhardt has been Chairman of the Board of Management of Bayer HealthCare AG and Chairman of the Bayer HealthCare Executive Committee. If elected, he would step down from these positions at Bayer prior to August 1, 2013. Since April 2012, Dr. Reinhardt has also been a member of the Board of Directors of Lonza Group Ltd, Basel. Furthermore, he is a member of the Council of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA). Dr. Reinhardt was born in 1956. He is a German citizen.
|
? |
Q4 2012 |
Q4 2011 |
% change |
? |
?FY 2012 |
FY 2011 |
% change |
||
|
? |
USD m |
USD m |
USD |
cc |
? |
USD m |
USD m |
USD |
cc |
|
Net sales |
14 828 |
14 781 |
0 |
2 |
? |
56 673 |
58 566 |
-3 |
0 |
|
Operating income |
2 481 |
1 317 |
88 |
94 |
? |
11 511 |
10 998 |
5 |
8 |
|
? As % of net sales |
|||||||||
Posted: January 2013
