Novartis Reports Higher Sales and Earnings in First Quarter of 2008 Showing Healthcare Portfolio Well on the Way to New Growth Cycle

  • Novartis on track in 2008:
    • Net sales from continuing operations up 9% (+0% in local currencies) to USD 9.9 billion with double-digit contributions from Sandoz, Vaccines and Diagnostics and Consumer Health
    • Operating income rises 7% to USD 2.5 billion, supporting major investments in new product launches, pipeline and emerging markets
    • Net income up 10% to USD 2.3 billion; EPS advances 15% to USD 1.02
  • Pharmaceuticals net sales up 6% (-3% lc) as flagship brands and key regions help offset 19% decline in US from ongoing impact of generics and Zelnorm marketing suspension:
    • New products – including Tekturna/Rasilez, Exforge, Aclasta/Reclast, Exelon Patch, Exjade, Xolair, Lucentis and Tasigna – contribute more than USD 500 million of net sales in 2008 first quarter
    • Late-stage pipeline progressing well – particularly RAD001 (metastatic renal cancer), FTY720 (multiple sclerosis) and SOM230 (Cushing’s disease) –
    • amid plans for many regulatory submissions by end of 2010
  • Sandoz benefits from fast-growing markets, particularly in Eastern Europe, as net sales rise 12% (+2% lc) and offset soft first-quarter sales in the US
  • Consumer Health with solid performance as net sales rise 14% (+5% lc) driven by growth in Animal Health, OTC and CIBA Vision
  • Vaccines and Diagnostics achieves dynamic net sales growth of 21% (+10% lc) while boosting investments in new meningitis vaccines and product portfolio
  • Novartis expects record sales and earnings in 2008 from continuing operations
    • Reaffirming outlook for Group net sales growth at a mid-single-digit rate and Pharmaceuticals at a low-single-digit rate, both in local currencies

For charts see attachement.

BASEL, Switzerland, April 21, 2008 — Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis said: "Our solid first quarter results show that Novartis is on track. I am especially pleased with the dynamic growth of Vaccines and Diagnostics and the new products in Pharmaceuticals. Our pipeline is also progressing well with promising results in innovative treatments in several areas, including cancer (e.g. RAD001) and multiple sclerosis (e.g. FTY720). Project Forward is beginning to deliver the desired improvements in efficiency, allowing for continuous high level investments in R&D. Our recently announced plans to acquire majority ownership of Alcon will create a new growth platform with the world leader in eye care, further strengthening our healthcare portfolio in a fast-changing healthcare environment. I am confident Novartis will once again achieve record sales and earnings in 2008 from continuing operations now fully focused on healthcare."  

Overview
On track for solid growth in 2008, Novartis reported higher net sales and double-digit earnings growth in the first quarter of 2008 from the Group's continuing operations now entirely focused on healthcare and reaffirmed its outlook for record sales and earnings for the full year.  

Net sales rose 9% to USD 9.9 billion, which were unchanged in local currencies (lc), thanks to the contributions from Sandoz, Consumer Health and Vaccines and Diagnostics. In Pharmaceuticals, net sales fell 3% lc to USD 6.3 billion as strong growth of key brands in all regions outside the US helped offset a 19% US decline from the negative impact of generic competition and the loss of Zelnorm that continued from 2007.  

Operating income climbed at a slightly slower pace than net sales, rising 7% to USD 2.5 billion after taking into account significant investments in all Divisions in new product launches, late-stage development projects, and expansion in emerging markets. Currency movements had a net positive impact of approximately USD 185 million. The operating margin reached 25.1% of net sales after 25.6% in the year-ago period.  

On the back of the solid operating performance, net income rose 10% to USD 2.3 billion, benefitting from business growth, productivity programs, higher levels of income from associated companies and net financial income. Basic earnings per share (EPS) advanced 15% to USD 1.02 from USD 0.89 in the 2007 first quarter, helped by a reduced level of outstanding shares.  

For full report, see attachment.

Posted: April 2008


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