Novartis Strategic Healthcare Portfolio Drives Sustained Strong Performance with Record Full-year Results in 2006

  • Dynamic 2006 Group performance:
o Net sales rise 15% (+14% in local currencies) to USD 37.0 billion
o Operating income advances 18% as productivity initiatives more than offset acquisition costs and investments in new pharmaceutical product launches
o Net income up 17% to USD 7.2 billion
o EPS rise 16% to USD 3.06 per share in the fifth consecutive year of
double-digit profit expansion
  • Excluding Chiron acquisition-related charges, Group operating income climbs 28% and net income up 25%
  • Dividend proposed to shareholders for 2006 of CHF 1.35 per share, a 17% increase from 2005 and representing the tenth consecutive year of a higher payment
  • Recent acquisitions and plans to divest Medical Nutrition strengthen strategic focus on healthcare portfolio
  • Novartis preparing for multiple new product launches in 2007-2008, led by Exforge and Tekturna/Rasilez (hypertension), Galvus (diabetes) and Lucentis (blindness)

    Full report is attached
Key Group figures
 
Full year
 
 
2006
2005
         % Change
 
USD m
% of
net sales
USD m
% of
net sales
USD
lc
Net sales
37 020
 
32 212
 
15
14
Operating income
8 174
22.1
6 905
21.4
18
 
Net income
7 202
19.5
6 141
19.1
17
 
Basic earnings per share/ADS
USD
3.06
 
USD
2.63
 
16
 
 
 
Fourth quarter
 
 
Q4 2006
Q4 2005
         % Change
 
USD m
% of
net sales
USD m
% of
net sales
USD
lc
Net sales
10 053
 
8 657
 
16
12
Operating income
1 824
18.1
1 488
17.2
23
 
Net income
1 663
16.5
1 352
15.6
23
 
Basic earnings per share/ADS
USD
0.70
 
USD
0.58
 

21
 

 
BASEL, Switzerland, January 18, 2007 - Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis, said, "The strong performance in 2006 stems from our commitment to innovation and reflects the impact of strengthening our healthcare portfolio. All divisions, particularly Pharmaceuticals, performed very well. I also have high expectations for further dynamic growth in our new Vaccines and Diagnostics Division.  Launches are planned for several innovative medicines in 2007 and 2008, and we will keep investing aggressively in Research & Development to sustain our performance. I am confident of another year of record sales and earnings in 2007."
 
 
2006 net sales
 
 
2006
2005
% Change
 
USD m
USD m
USD
lc
Pharmaceuticals
22 576
20 262
11
11
Vaccines and Diagnostics
956
 
 
 
Sandoz
5 959
4 694
27
25
Consumer Health continuing operations
6 540
6 049
8
8
Net sales from continuing operations
36 031
31 005
16
16
Consumer Health discontinuing operations
989
1 207
-18
-18
Total
37 020
32 212
15
14
 
Group net sales advance 15% (+14% lc) to USD 37.0 billion
Dynamic 2006 Group performance with 15% net sales growth from the strong business expansion in all divisions as well as contributions from recent acquisitions. Higher sales volumes added six percentage points to Group net sales growth and acquisitions seven percentage points, while net price changes and currency translations each led to an increase of one percentage point.
 
Pharmaceuticals net sales up 11% (+11% lc) to USD 22.6 billion
Pharmaceuticals delivered its sixth consecutive year of market share gains and double-digit net sales growth, reaching 11%. The Cardiovascular and Oncology franchises provided dynamic performances as Diovan (+15% lc) exceeded USD 4 billion and Gleevec/Glivec (+17% lc) topped USD 2.5 billion. New product launches, particularly Xolair, Exjade and Prexige, supported the performance. US net sales were up 17%, outpacing the market.
 
Vaccines and Diagnostics net sales of USD 956 million
The turnaround of the influenza vaccine business led the performance. This new division, created from the Chiron acquisition in April 2006, increased net sales 42% in the eight-month period compared to the same period in 2005 reported by Chiron. Diagnostics products, primarily used for testing blood donations, showed continued good growth.
 
Sandoz net sales rise 27% (+25% lc) to USD 6.0 billion
Net sales advanced 27% thanks to strengthening positions in fast-growing generics markets, especially in Europe, as well as successful new product launches, many of which are difficult-to-make products. Also supporting growth were the Hexal and Eon Labs acquisitions.
 
Consumer Health continuing operations net sales up 8% (+8% lc) to USD 6.5 billion
Net sales were driven by double-digit expansions in the OTC and Animal Health businesses, which improved their global rankings thanks to their focus on strategic brands.
 
Consumer Health discontinuing operations net sales of USD 989 million
Consumer Health discontinuing operations reflects net sales of the Medical Nutrition business, which is being sold to Nestlé, as well as the contribution of the Nutrition & Santé business before its divestment in February 2006.

 
2006 operating income
 
 
2006
2005
Change
 
USD m
% of
net sales
USD m
% of
net sales
In %
Pharmaceuticals
6 703
29.7
6 014
29.7
11
Vaccines and Diagnostics
-26
 
 
 
 
Sandoz
736
12.4
342
7.3
115
Consumer Health continuing operations
1 068
16.3
952
15.7
12
Corporate income & expense, net
-532
 
-506
 
 
Operating income from continuing operations
7 949
22.1
6 802
21.9
17
Consumer Health discontinuing operations
225
22.8
103
8.5
118
Total
8 174
22.1
6 905
21.4
18
 
Group operating income rises 18% to USD 8.2 billion
Operating income rose at a faster rate than net sales as the operating margin rose 0.7 percentage points to 22.1%. The organic expansion in Pharmaceuticals, Sandoz and Consumer Health (continuing operations) more than offset the impact of the Chiron acquisition costs of USD 642 million. Excluding these costs, operating income was up 28%.
 
Pharmaceuticals operating income rises 11% to USD 6.7 billion
Organic operating income (excluding Chiron acquisition costs of USD 309 million) advanced 17% and the corresponding operating margin reached 30.4%. The strong business expansion and productivity gains from good cost management more than offset marketing investments to support planned multiple new product launches, particularly in the US, as well as lower divestment income compared to 2005. On a reported basis, operating income grew roughly in line with net sales.
 
Vaccines and Diagnostics operating loss of USD 26 million
The new division had organic operating income of USD 307 million, underpinned by the dynamic increase in net sales of influenza vaccines in the US. This strong performance was more than offset by acquisition-related costs totaling USD 333 million for a reported operating loss of USD 26 million.
 
Sandoz operating income up 115% to USD 736 million
Operating income more than doubled thanks to new product launches, strengthening positions in leading markets and contributions from the Hexal and Eon Labs acquisitions. Operational improvements were made in both the retail generics and anti-infectives businesses. The year-ago period also included acquisition-related costs.
 
Operating income from Consumer Health continuing operations up 12% at USD 1.1 billion
OTC and Animal Health drove the improvement in Consumer Health continuing operations, with both business units delivering strong performances and benefits from high volume gains. However, CIBA Vision had a weak performance due to product supply issues.
 
Consumer Health discontinuing operations operating income of USD 225 million
The reported operating income of USD 225 million for Consumer Health discontinuing operations was supported by a one-time gain of USD 129 million from the divestment of Nutrition & Santé in February 2006.

 
Fourth quarter 2006 net sales
 
 
Q4 2006
Q4 2005
           % Change
 
USD m
USD m
USD
lc
Pharmaceuticals
6 049
5 248
15
12
Vaccines and Diagnostics
455
 
 
 
Sandoz
1 653
1 573
5
0
Consumer Health continuing operations
1 644
1 551
6
3
Net sales from continuing operations
9 801
8 372
17
13
Consumer Health discontinuing operations
252
285
-12
-14
Total
10 053
8 657
16
12
 
 
Group net sales rise 16% (+12% lc) to USD 10.1 billion
All divisions underpinned the strong expansion, particularly Pharmaceuticals as net sales of many top-selling products grew at double-digit rates. Higher sales volumes generated eight percentage points of net sales growth, while acquisitions added five and currency translation provided four. Net price changes led to a decline of one percentage point.
 
Pharmaceuticals net sales grow 15% (+12% lc) to USD 6.0 billion
The top selling brands Diovan, Gleevec/Glivec and Lotrel all advanced at double-digit rates. US sales expanded 17% as several products benefited from new clinical data, disease awareness programs and strong positions in Medicare government formularies. Diovan (+13% lc) and Lotrel (+19% lc) led the 13% rise in Cardiovascular strategic brand sales to USD 1.7 billion. Oncology net sales advanced 20% to USD 1.6 billion underpinned by Gleevec/Glivec (+14% lc) and Femara (+35% lc). Russia and Turkey supported the performance in Europe, where net sales rose 18% (+10% lc) and helped to offset weaker performances in France and Germany. In Latin America, net sales were up 16% (+14% lc) thanks to operations in Brazil and Mexico, supported by successful launches of Prexige.
 
Vaccines and Diagnostics net sales of USD 455 million
The ongoing improvement in seasonal influenza vaccine deliveries to the US was the primary growth driver, with net sales up 71% on a comparable basis to the 2005 period reported by Chiron. The diagnostics business improved thanks to continued geographic expansion of nucleic blood testing products and higher sales of West Nile Virus tests in the US.
 
Sandoz net sales up 5% (+0% lc) to USD 1.7 billion
The 2005 fourth quarter included four months of net sales from the Eon Labs acquisition. On a comparable basis, net sales grew 8% (+3% lc) thanks to leading performances in Eastern Europe, Scandinavia, Canada, Switzerland and Australia. Volume gains were seen in Germany from recently launched products that more than offset price cuts. Several new products were launched in the US late in the fourth quarter.
 
Consumer Health continuing operations net sales up 6% (+3% lc) to USD 1.6 billion
The continuing operations of Consumer Health performed well thanks to double-digit growth in Animal Health and OTC that offset a weak performance in CIBA Vision related to a contact lens product recall.

 
Fourth quarter 2006 operating income
 
 
   Q4 2006
    Q4 2005
Change
 
USD m
% of
net sales
USD m
% of
net sales
In %
Pharmaceuticals
1 621
26.8
1 358
25.9
19
Vaccines and Diagnostics
2
0.4
 
 
 
Sandoz
204
12.3
119
7.6
71
Consumer Health continuing operations
143
8.7
173
11.2
-17
Corporate income & expense, net
-176
 
-179
 
 
Operating income from continuing operations
1 794
18.3
1 471
17.6
22
Consumer Health discontinuing operations
30
11.9
17
6.0
76
Total
1 824
18.1
1 488
17.2
23
 
 
Group operating income advances 23% to USD 1.8 billion
Operating income rose at a strong pace as Pharmaceuticals and Sandoz delivered excellent performances that included operational improvements and contributions from new product launches.
 
Pharmaceuticals operating income up 19% to USD 1.6 billion
Operating income expanded faster than net sales, even including acquisition-related charges of USD 73 million, thanks to strong performance of leading brands. Marketing & Sales expenses rose 19%, supporting pre-launch investments for anticipated US approvals in 2007 for Galvus (diabetes) and Tekturna/Rasilez, and also the launch of Exforge (hypertension). Other Operating Income & Expenses was higher due to Chiron acquisition costs as well as lower divestment gains compared to 2005. Excluding these acquisition costs, operating income advanced 25% and the operating margin was 28%.
 
Vaccines and Diagnostics generates operating income of USD 2 million
The positive performance reflected organic operating income of USD 109 million that more than offset acquisition-related costs of USD 107 million thanks to the ongoing turnaround in seasonal influenza vaccine deliveries to the US.
 
Sandoz operating income rises 71% to USD 204 million
Operating income expanded strongly as the retail generics business benefited particularly  from new product launches in key markets and synergies from recent acquisitions. The anti-infectives business delivered strong, double-digit growth in difficult market conditions from cost containment efforts and production efficiency.
 
Operating income from Consumer Health continuing operations down 17% to USD 143 million
OTC led the Division with a strong contribution tied mainly to further market share gains. The Division's overall performance, however, was negatively impacted by costs related to a contact lens product recall in CIBA Vision.

 
Corporate
 
Financial income, net
Net financial income fell to USD 88 million in 2006 compared to USD 167 million in 2005, reflecting the drop of USD 3.8 billion in average net liquidity to fund recent acquisitions. Net liquidity was USD 0.7 billion at December 31, 2006, down from USD 2.5 billion at the end of 2005. Net financial income in the fourth quarter was USD 38 million, reflecting good currency and interest rate management.
 
Income from associated companies
For the full year, income from associated companies rose to USD 264 million from USD 193 million, mainly from the Roche investment. The group's interest in Roche generated income of USD 290 million compared to USD 166 million in 2005, comprised of an estimated 2006 income contribution to Novartis of USD 404 million that was offset by USD 114 million for the amortization of intangible assets. In the fourth quarter, associated companies contributed USD 71 million in income, up from USD 67 million in the year-ago period.
 
Group net income advances 17% to USD 7.2 billion
Group net income grew at a double-digit rate in 2006 as the return on net sales advanced to 19.5% from 19.1% in the year-ago period. The strong underlying business expansion lifted operating income at a faster pace than net sales, even including the impact of Chiron acquisition costs. However, non-operating profits were impacted by lower net financial income. Excluding one-time charges of USD 541 million related to the Chiron acquisition, Group net income for the year was up 25%.
 
Balance sheet
The Group's equity increased by USD 8.1 billion to USD 41.3 billion at December 31, 2006, compared with USD 33.2 billion at the end of 2005. The increase was due to the higher net income of USD 7.2 billion, an upward net revaluation of USD 0.6 billion for the initial Chiron minority stake, increased equity from share-based compensation of USD 0.5 billion, translation gains of USD 1.5 billion, and a contribution of USD 0.3 billion from other factors. This increase was partially offset by the dividend payment of USD 2.0 billion.
 
Total liquidity amounted to USD 8.0 billion at December 31, 2006, down from USD 10.3 billion at the beginning of the year. The debt/equity ratio at December 31, 2006, was 0.18:1 compared to 0.25:1 a year ago.
 
Total non-current assets rose by USD 10.3 billion to USD 46.7 billion, reflecting the impact of the Chiron and NeuTec acquisitions and the related goodwill, other intangible assets and property, plant & equipment contributions.
 
Novartis did not repurchase any shares in 2006 through its share repurchase program via a second trading line on the SWX Swiss Exchange but sold shares amounting to USD 0.2 billion mainly due to the exercise of share-based compensation to associates.
 
Novartis is one of the few non-financial services companies worldwide to have attained the highest credit ratings from Standard & Poor's, Moody's and Fitch, the three benchmark rating agencies. S&P has rated Novartis as AAA for long-term maturities and as A1+ for short-term maturities. Moody's has rated the Group as Aaa and P1, respectively, while Fitch has rated Novartis as AAA for long-term maturities and as F1+ for short-term maturities.
 
 
Cash flow
Cash flow from operating activities from continuing operations increased by USD 0.7 billion to USD 8.7 billion, reflecting the business expansion and strict management of working capital. Cash flow used for investing activities from continuing operations included net investment of USD 4.5 billion to acquire Chiron and NeuTec and USD 0.3 billion for the acquisition of other net assets as well as capital expenditures of USD 1.8 billion. Free cash flow after dividends was USD 4.3 billion, a decline of USD 0.3 billion from the year-ago period as lower net proceeds from asset disposals as well as higher net purchases of intangible assets and capital expenditures offset the improvement in operating cash flow.
 
 
Proposed 2006 dividend
The Board of Directors has proposed for approval at the next Annual General Meeting on March 6, 2007, a dividend payment of CHF 1.35 per share for 2006, an increase of 17% from the dividend of CHF 1.15 per share paid for 2005. This proposed increase marks the tenth consecutive higher payout per share since the creation of Novartis in December 1996. If approved by shareholders, dividends paid for 2006 on outstanding shares are expected to total USD 2.6 billion. The dividend payout ratio for 2006 will be 36% of Group net income. Based on the year-end 2006 share price of CHF 70.25, the dividend yield is 1.9% compared to 1.7% for 2005. The payment date for the 2006 dividend has been set for March 9, 2007. All issued shares are dividend bearing, with the exception of 224.8 million treasury shares.
 
 
Strategic healthcare portfolio driving sustained strong performance
Novartis is sharpening its focus on medicines and vaccines, taking steps to strengthen strategic growth platforms aimed at best meeting the needs of patients, physicians and society in a dynamically changing healthcare environment.
 
These activities include innovative pharmaceuticals for human and animal health, vaccines, generics and over-the-counter (OTC) products. Novartis is the only pharmaceutical company with strong positions in these areas.
 
The acquisition of the remaining stake of Chiron Corporation in April 2006 not already held by Novartis led to the creation of the new strategic growth platform in vaccines and molecular diagnostics. Chiron's pharmaceutical products expanded the offering of products for oncology, respiratory and infectious diseases, while early-stage development compounds strengthened the oncology pipeline.
 
Novartis also announced the signing of an agreement in December 2006 to divest the Medical Nutrition business for USD 2.5 billion to Nestlé after having earlier in 2006 completed the sale of the Nutrition & Santé business for USD 211 million. The divestment of Medical Nutrition is expected to be completed in the second half of 2007. Results of these two businesses, which had comprised the Medical Nutrition Business Unit, have been treated as "discontinuing operations" for 2005 and 2006.
 
 
Group outlook
(For continuing operations, barring any unforeseen events)
Novartis expects in 2007 another year of record net sales and earnings, preparing for a wave of many new product launches during the next two years. Group net sales are expected to rise in 2007 at a mid- to high-single-digit rate in local currencies and net sales in the Pharmaceuticals Division at a mid-single-digit rate for the year.

 
Pharmaceutical business and key product highlights
Note: All growth figures refer to full-year 2006 worldwide sales growth in local currencies.
 
Diovan (USD 4.2 billion, +15% lc), the leading angiotensin-receptor blocker by sales worldwide, generated further excellent growth and achieved a record market share in its segment based on new indications, higher-strength doses and strong new efficacy data. In the US, Diovan has benefited from a leading formulary position with healthcare payors. Co-Diovan (combination with a diuretic) was up 19% lc in Europe, reflecting the increased use of combination therapies.
 
Gleevec/Glivec (USD 2.6 billion, +17% lc), a targeted treatment for patients with certain forms of chronic myeloid leukemia (CML) and gastro-intestinal stromal tumors (GIST), expanded at an rapid rate through ongoing penetration of the CML and GIST markets. New landmark data showed nearly 90% of CML patients in a five-year study taking Gleevec/Glivec were still alive after five years. Gleevec/Glivec also received four EU and five US approvals for treating various rare diseases during 2006.
 
Lotrel (USD 1.4 billion, +26% only in US), the leading fixed-dose combination treatment for hypertension in the US since 2002, has delivered strong growth based on new dosing strengths as well as increasing use of multiple therapies to treat hypertension, demographic factors and the impact of US disease awareness campaigns.
 
Zometa (USD 1.3 billion, +4% lc), an intravenous bisphosphonate for patients with bone cancer, was impacted by an overall slowing of the market segment in the US and Europe. However, Zometa has gained market segment share in treating patients with lung and prostate cancer and also benefited from a launch in Japan.
 
Lamisil (USD 978 million, -13% lc), an oral treatment for fungal nail infections, generated higher sales in the US, but this was offset by falling sales in Europe following the entry of generic competition in late 2005. In December 2006, the FDA confirmed the granting of a pediatric extension for Lamisil extending its marketing exclusivity through to June 2007.
 
Femara (USD 719 million, +33% lc), a leading oral treatment for women with hormone-related breast cancer, was a key growth driver due to ongoing market segment share gains. Clinical data has confirmed the benefits of use in women after surgery (adjuvant) as well as after completion of tamoxifen therapy (extended adjuvant). Recent four-year data from a major trial confirmed Femara significantly reduces the risk of breast cancer returning.
 
Zelnorm/Zelmac (USD 561 million, +34% lc), for treatment of irritable bowel syndrome with constipation and chronic idiopathic constipation, has benefited from outstanding US growth due to broader use of the product and ongoing disease awareness programs.
 
Visudyne (USD 354 million, -27% lc), a treatment for the eye disease "wet" age-related macular degeneration, reported a sharp decline in net sales linked to off-label competition in the US and in other key markets, but sales in Japan were higher.
 
Exjade (USD 143 million), the first once-daily oral iron chelator for chronic iron overload, has performed well since its approval in the US and over 70 countries in 2006 as a new treatment for iron overload associated with various blood disorders.
 
Xolair (USD 102 million), for severe allergic asthma, has been launched in over 20 countries following EU approval in October 2005, with approvals now received in over 50 countries. In the US, Novartis co-promotes Xolair with Genentech and shares a portion of operating income. Xolair had 2006 net sales of USD 425 million in the US, resulting in a contribution to Novartis of USD 140 million reported as Other Revenues.
 
 
Novartis pipeline and regulatory update
With 138 projects in pharmaceutical development, Novartis has one of the industry's most promising pipelines amid plans for multiple new product approvals and launches over the next two years. Several of these anticipated approvals are for potentially best-in-class medicines that would advance treatment standards for patients with hypertension, diabetes, cancer and other diseases.
 
Beyond these new launches, a number of key compounds are already in or are moving into pivotal late-stage trials, including FTY720 (multiple sclerosis), QAB149 (chronic obstructive pulmonary disease and asthma), AGO178 (depression), RAD001 (cancer), ABF656 (hepatitis C) and SOM230 (Cushing's disease).
 
Among the recent developments:
 
  • Exforge[1], a single tablet with the two most prescribed branded anti-hypertension medicines - the angiotensin receptor blocker valsartan and the calcium channel blocker amlodipine - received European Commission approval in January 2007 as well as tentative US and Swiss approvals in December 2006. Exforge is expected to be available in Europe during the first half of 2007 and in the US in late September 2007 after the expiry of market exclusivity and patent protection for amlodipine (Norvasc®).[2]
 
  • Galvus (vildagliptin), seeking approval as a new oral once-daily therapy for patients with type 2 diabetes, was issued a three-month review process extension in November 2006 by the FDA. Results from recent clinical trials were submitted to the FDA involving an additional 1,000 patient-years of treatment experience. The data further supports the proposed once-daily dosing regimen and indications as well as complements the drug's risk/benefit profile. Galvus has been shown to be as effective as a TZD (thiazolidinedione), another oral anti-diabetic class of medicines, in reducing blood sugar but without the side effects of weight gain, edema or heart failure. Over 7,000 patients have been involved in Galvus clinical trials to date.
 
  • Tekturna/Rasilez[1] (aliskiren), seeking to be first in a new class of antihypertensive agents called direct renin inhibitors, received a three-month FDA regulatory review process extension. This will provide the FDA with time to consider additional data submitted by Novartis in early December. These data come from a study involving 30 healthy volunteers who received Tekturna/Rasilez at the proposed 300 mg once-daily dose for eight weeks to study potential changes of the colonic mucosa. Analysis of the data indicated that Tekturna/Rasilez, which was developed in collaboration with Speedel Pharma AG, did not induce any changes in the mucosal lining of the colon, as evaluated by colonoscopy and biopsies.
 
  • Tasigna[1] (nilotinib) was accepted in late 2006 for both US and EU regulatory review as a new option for patients with resistance and/or intolerance to treatment in certain forms of chronic myeloid leukemia. Phase II registration data, presented in December at the American Society of Hematology annual meeting, showed that Tasigna had impressive efficacy and a manageable safety profile, with patients intolerant to Gleevec/Glivec rarely experiencing the same side-effects on Tasigna. About half of patients treated with Tasigna had significantly reduced or no presence of cells with the defective chromosome that causes this blood cancer. Both Tasigna and Gleevec/Glivec, another Novartis medicine, inhibit Bcr-Abl, the definitive cause of Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML). Tasigna was designed to be a more selective inhibitor of Bcr-Abl and its mutations.
 
  • Lucentis (ranibizumab) is anticipated to receive European Union approval in the coming weeks as a new treatment option for patients with "wet" age-related macular degeneration, a leading cause of blindness in people over age 50. Lucentis was approved in June 2006 in the United States and in August 2006 in Switzerland. Genentech retains the rights to Lucentis in the US.
 
  • Aclasta/Reclast[3] (zoledronic acid) was submitted in late 2006 for approval in the US and EU as a once-yearly bisphosphonate infusion for women with postmenopausal osteoporosis. Phase III data demonstrated high efficacy in reducing the incidence of bone fracture at all common fracture sites in women with this debilitating condition. Aclasta/Reclast has also been submitted for US approval as a treatment of patients with Paget's disease of the bone, an indication already approved in over 50 countries, including key European markets.
 
  • Prexige[4] (lumiracoxib) is on track for launch in European markets in 2007 and 2008 following the successful completion of the Mutual Recognition Procedure (MRP) in October 2006. Prexige received this important regulatory approval as a new treatment option for patients suffering from osteoarthritic pain of the knee and hip. Resubmission to the FDA for US approval is planned for 2007.
 
  • AGO178 (agomelatine) began Phase III trials in the US at the end of 2006 as a once-daily treatment for patients with major depression. AGO178, which was licensed from Servier and for which Novartis has the US rights, has shown efficacy comparable to current standard antidepressant therapies. This compound potentially offers improved tolerability, including a low propensity to cause sexual dysfunction and weight gain as well as an improvement in the quality of sleep. Servier's submission for European Union approval was not supported by regulators due to insufficient data. This decision is not expected to have any effect on the development strategy and regulatory process in the US, with submission planned for 2008.
 
  • RAD001 (everolimus), a novel oral inhibitor of the mTOR pathway considered a key target in oncology, has demonstrated broad clinical activity in multiple tumor types at well-tolerated and efficacious doses. A registration program is underway that includes the RADIANT-1 study in chemotherapy-refractory pancreatic islet cell tumors (pICT) and the RECORD-1 study in metastatic renal cell carcinoma. This program will be expanded in 2007 to include registration trials for refractory carcinoid tumors as well as first- and second-line pICT. RAD001 acts by directly inhibiting tumor cell growth as well as by inhibiting the formation of new blood vessels (angiogenesis). The first regulatory submission could be as early as 2008.
 
 
Disclaimer
This release contains certain forward-looking statements relating to the Group's business, which can be identified by the use of forward-looking terminology such as "proposed", "plans", "expectations", "planned", "will", "confident", "anticipated", "expected", "sharpening its focus", "aimed at", "outlook", "expects", "preparing", "pipeline", "development", "plans" "potentially", "would", "seeking", "on track", "could", or similar expressions, or by express or implied discussions regarding potential future financial results or sales of new or existing products; potential new products, or potential new indications for existing products, or regarding potential future revenues from such products; or by discussions of strategy, plans, expectations or intentions. Such statements reflect the current views of management with respect to future events and are subject to certain known and unknown risks, uncertainties, assumptions 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 the Group will achieve any particular financial results, or that any particular products will reach any particular sales levels. Neither can there be any guarantee that any new products will be approved for sale in any market, or that any new indications will be approved for existing products in any market, or that they will achieve any particular revenue levels. In particular, management's expectations could be affected by, among other things, uncertainties involved in the development of new pharmaceutical products, including unexpected clinical trial results; unexpected regulatory actions or delays or government regulation generally; the Group's ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and genera

Posted: January 2007


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