NOVARTIS AG CHF0.50(REGD) Novartis Delivered Another Strong Quarter With Double Digit Sales Growth And Core1 Margin Expansion...

Date : 10/22/2019 @ 5:30AM
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NOVARTIS AG CHF0.50(REGD) Novartis Delivered Another Strong Quarter With Double Digit Sales Growth And Core1 Margin Expansion...

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   -- Continuing operations2 net sales up 13% (cc1, +10% USD) driven by: 
 
          -- Cosentyx sales of USD 937 million (+27% cc), with strong demand 
             across indications and regions 
 
          -- Entresto USD 430 million (+61% cc), with increased demand in 
             hospital and ambulatory settings 
 
          -- Zolgensma sales of USD 160 million, strong launch including broad 
             access 
 
          -- Lutathera sales grew to USD 119 million, total AAA sales were USD 
             177 million 
 
          -- Piqray sales were USD 43 million, off to a strong start in the US 
 
          -- Sandoz sales grew 5% (cc, +3% USD), mainly driven by 
             Biopharmaceuticals 
 
   -- Core operating income grew 18% (cc, +15% USD) and Innovative Medicines 
      core margin improved to 34.1% of sales, mainly driven by sales momentum 
      and productivity, while funding growth investments 
 
   -- Net income from continuing operations was USD 2.0 billion, up 12% (cc, 
      +8% USD) 
 
   -- Free cash flow1 grew 26% to USD 4.0 billion, mainly driven by higher cash 
      flows from operating activities 
 
   -- Significant innovation milestones: 
 
          -- Beovu (brolucizumab) launched in the US in October for treatment 
             of neovascular (wet) AMD, differentiated based on greater fluid 
             reduction and potential for fewer injections 
 
          -- Ofatumumab treatment for RMS showed compelling efficacy across all 
             major clinical endpoints in two pivotal Phase III trials. Rolling 
             regulatory submissions planned to start in Q4 
 
          -- Cosentyx met primary endpoints in nr-axSpA at weeks 16 and 52 
             (PREVENT study); submitted to EMA, FDA submission planned for Q4 
 
          -- Kisqali showed overall survival (OS) benefit in postmenopausal 
             women (MONALEESA-3), and is now the only CDK4/6 to show an OS 
             benefit in two trials and in pre and post-menopausal women 
 
          -- Entresto PARAGON showed clinically important benefit in HFpEF 
             subpopulations, planned to submit to FDA in Q4 for inclusion of 
             data in the label 
 
   -- 2019 guidance increased for new focused medicines company3 - sales 
      expected to grow high single digit (cc), core operating income expected 
      to grow mid to high teens (cc) 
 
 
   Basel, October 22, 2019 -- Commenting on the results, Vas Narasimhan, 
CEO of Novartis, said: 
 
   "Novartis continued its excellent performance this quarter with double 
digit increases in sales and core operating income with growing margins. 
We increased our full year sales and core operating income guidance with 
growth continuing in both Innovative Medicines and Sandoz. Zolgensma and 
Piqray launched with strong momentum and Beovu just launched with a 
clearly differentiated label. We also continue our innovation 
performance with a number of positive milestones highlighted by 
Ofatumumab's remarkable efficacy in RMS with the potential to be the 
first self-administered, subcutaneous, B-cell therapy." 
 
 
 
 
                                  Continuing operations(2) 
                 --------------------------------------------------------- 
                     Q3      Q3 
Key figures(1)     2019    2018  % change       9M 2019  9M 2018  % change 
                  USD m   USD m       USD  cc     USD m    USD m       USD   cc 
                 ------  ------  --------       -------  -------  --------  --- 
Net sales        12 172  11 016        10  13    35 042   33 270         5    9 
Operating 
 income           2 358   2 239         5   9     7 263    7 041         3   10 
Net income        2 041   1 882         8  12     6 018   11 580       -48  -45 
EPS (USD)          0.90    0.81        11  14      2.62     4.99       -47  -44 
Free cash flow    3 968   3 156        26         9 449    8 343        13 
Core operating 
 income           3 748   3 258        15  18    10 650    9 445        13   18 
Core net income   3 212   2 820        14  17     9 119    8 239        11   16 
Core EPS (USD)     1.41    1.22        16  19      3.97     3.55        12   17 
                 ------  ------  --------       -------  -------  --------  --- 
 
 
   (1) Constant currencies (cc), core results and free cash flow are 
non-IFRS measures. An explanation of non-IFRS measures can be found on 
page 56 of the Condensed Interim Financial Report. Unless otherwise 
noted, all growth rates in this Release refer to same period in prior 
year. (2) Refers to continuing operations as defined on page 44 of the 
Condensed Interim Financial Report, excludes Alcon, includes the 
businesses of Innovative Medicines and Sandoz (including the US generic 
oral solids and dermatology portfolio), as well as the continuing 
corporate functions. (3) Removes Alcon and the Sandoz US dermatology and 
oral solids portfolio from both 2019 and 2018. Forecast assumption that 
no Gilenya generics enter in 2019 in the US. 
 
   Financials 
 
   In order to comply with International Financial Reporting Standards 
(IFRS), Novartis has separated the Group's reported financial data for 
the current and prior years into "continuing" and "discontinued" 
operations. The results of the Alcon business are reported as 
discontinued operations. See page 44 and Notes 2, 3 and 11 in the 
Condensed Interim Financial Report for a full explanation. 
 
 
 
   The commentary below focuses on continuing operations including the 
businesses of Innovative Medicines and Sandoz (including the US generic 
oral solids and dermatology portfolio), as well as the continuing 
Corporate functions. We also provide information on discontinued 
operations. 
 
   Continuing operations third quarter 
 
   Net sales were USD 12.2 billion (+10%, +13% cc) in the third quarter 
driven by volume growth of 16 percentage points (cc), mainly from 
Cosentyx, Entresto, Zolgensma and the Xiidra acquisition. Strong volume 
growth was partly offset by the negative impacts of pricing (-2 
percentage points cc) and generic competition (-1 percentage point cc). 
 
   Operating income was USD 2.4 billion (+5%, +9% cc) mainly driven by 
higher sales and productivity, partly offset by growth investments, 
lower divestments and higher amortization. 
 
   Net income was USD 2.0 billion (+8%, +12% cc) driven by higher operating 
income and higher income from associated companies. EPS was USD 0.90 
(+11%, +14% cc), growing faster than net income driven by lower weighted 
average number of shares outstanding. 
 
   Core operating income was USD 3.7 billion (+15%, +18% cc) mainly driven 
by higher sales and productivity programs, partly offset by growth 
investments. Core operating income margin was 30.8% of net sales, 
increasing by 1.2 percentage points (+1.4 percentage points cc). 
 
   Core net income was USD 3.2 billion (+14%, +17% cc) driven by growth in 
core operating income. Core EPS was USD 1.41 (+16%, +19% cc) growing 
faster than core net income driven by lower weighted average number of 
shares outstanding. 
 
   Free cash flow from continuing operations amounted to USD 4.0 billion 
(+26% USD) compared to USD 3.2 billion in prior year, mainly driven by 
higher net cash flows from operating activities. 
 
   Innovative Medicines net sales were USD 9.7 billion (+13%, +15% cc) in 
the third quarter. Pharmaceuticals BU sales grew 15% (cc), driven by 
continuing momentum on Cosentyx and Entresto and the benefit from the 
first full quarter of sales from Zolgensma and Xiidra. Oncology BU grew 
14% (cc) driven by continuing momentum on Promacta/Revolade, Tafinlar + 
Mekinist and Kisqali and the benefit from launches including, Lutathera, 
Kymriah and Piqray. Volume contributed 17 percentage points to sales 
growth. Generic competition had a negative impact of 1 percentage point. 
Net pricing had a negative impact of 1 percentage point. 
 
   Sandoz net sales were USD 2.5 billion (+3%, +5% cc) driven by volume 
growth of 9 percentage points (cc) partially offset by 4 percentage 
points (cc) of price erosion. Excluding the US, net sales grew 7% (cc) 
driven by Biopharmaceuticals in Europe. US sales were broadly in line 
with prior year as the continued industry-wide pricing pressure was 
mostly offset by first-to-market retail launches. 
 
   Novartis continues to expect the previously-announced divestment of the 
Sandoz US oral solids and dermatology portfolio to be completed in the 
coming months, pending regulatory approval. Novartis remains fully 
committed to this business until it is divested to Aurobindo. The 
results of this business are included in continuing operations. 
 
   Continuing operations nine months 
 
   Net sales were USD 35.0 billion (+5%, +9% cc) in the first nine months 
driven by volume growth of 12 percentage points (cc), mainly from 
Cosentyx, Entresto and Lutathera. Strong volume growth was partly offset 
by the negative impacts of pricing (-2 percentage points cc) and generic 
competition (-1 percentage point cc). 
 
   Operating income was USD 7.3 billion (+3%, +10% cc) mainly driven by 
higher sales, improved gross margin and productivity programs, partly 
offset by growth investments, legal provisions and higher restructuring 
charges. 
 
   Net income was USD 6.0 billion (-48%, -45% cc) as prior year benefited 
from a USD 5.7 billion net gain recognized from the sale of our stake in 
the GSK consumer healthcare joint venture. EPS was USD 2.62 (-47%, -44% 
cc) benefitting from lower weighted average number of shares 
outstanding. 
 
   Core operating income was USD 10.7 billion (+13%, +18% cc) mainly driven 
by higher sales, improved gross margin and productivity programs, partly 
offset by growth investments. Core operating income margin was 30.4% of 
net sales, increasing by 2.0 percentage points (+2.4 percentage points 
cc). 
 
   Core net income was USD 9.1 billion (+11%, +16% cc) driven by growth in 
core operating income partly offset by the discontinuation of core 
income from the GSK consumer healthcare joint venture. Core EPS was USD 
3.97 (+12%, +17% cc) growing faster than core net income driven by lower 
weighted average number of shares outstanding. 
 
   Free cash flow from continuing operations amounted to USD 9.4 billion 
(+13% USD) compared to USD 8.3 billion in prior year. The increase is 
mainly driven by higher operating income adjusted for non-cash items and 
higher real estate divestment proceeds, partly offset by higher working 
capital, which in prior year included the receipt of a GSK sales 
milestone from the divested Vaccines business of USD 0.4 billion, and 
lower dividends received from associated companies, as prior year 
included the GSK consumer healthcare joint venture which was divested in 
Q2 2018. 
 
   Innovative Medicines delivered net sales of USD 27.8 billion (+7%, +11% 
cc) in the first nine months. Pharmaceuticals BU grew 12% (cc) driven by 
Cosentyx reaching USD 2.6 billion and Entresto USD 1.2 billion. Oncology 
BU grew 11% (cc) driven by AAA including Lutathera, as well as 
Promacta/Revolade, Tafinlar + Mekinist and Kisqali. Volume contributed 
13 percentage points to sales growth. Generic competition had a negative 
impact of 1 percentage point. Net pricing had a negative impact of 1 
percentage point. 
 
   Sandoz net sales were USD 7.2 billion (-2%, +2% cc) driven by volume 
growth of 9 percentage points (cc) partially offset by 7 percentage 
points (cc) of price erosion, mainly in the US. Excluding the US, net 
sales grew 6% (cc). Global sales of Biopharmaceuticals grew 18% (cc), 
driven by continued strong double-digit growth in Europe from Hyrimoz 
(adalimumab), Rixathon (rituximab), and Erelzi (etanercept). 
 
   Discontinued operations 
 
   Discontinued operations include the business of Alcon and certain 
Corporate costs directly attributable to Alcon up to the spin-off date. 
As the Alcon spin-off was completed on April 9, 2019, there were no 
operating results in the third quarter of 2019. 
 
   Discontinued operations net sales in the first nine months of 2019 were 
USD 1.8 billion compared to USD 5.4 billion in 2018 and operating income 
amounted to USD 71 million compared to an operating loss of USD 171 
million in 2018. Net income from discontinued operations in the first 
nine months of 2019 amounted to USD 4.6 billion compared to a net loss 
of USD 160 million in 2018 driven by the non-taxable non-cash net gain 
on distribution of Alcon Inc. to Novartis AG shareholders which amounted 
to USD 4.7 billion. For further details see Note 3 of the Condensed 
Interim Financial Report, "Significant transactions -- Completion of the 
spin-off of the Alcon business through a dividend in kind distribution 
to Novartis AG shareholders". 
 
   Total Group third quarter 
 
   For the total Group, net income amounted to USD 2.0 billion compared to 
USD 1.6 billion in prior year, and basic earnings per share was USD 0.90 
compared to USD 0.70 in prior year. Cash flow from operating activities 
for the total Group amounted to USD 4.6 billion and free cash flow to 
USD 4.0 billion. 
 
   Total Group nine months 
 
   For the total Group, net income amounted to USD 10.6 billion compared to 
USD 11.4 billion in prior year, and basic earnings per share was USD 
4.62 compared to USD 4.92 in prior year. Cash flow from operating 
activities for the total Group amounted to USD 10.1 billion and free 
cash flow to USD 9.4 billion. 
 
   Key growth drivers (Q3 performance) 
 
   Underpinning our financial results in the third quarter is a continued 
focus on key growth drivers including: 
 
 
   -- Cosentyx (USD 937 million, +27% cc) continued momentum in the US (+31%) 
      and in the rest of the world (+20% cc), driven by strong demand across 
      indications and regions and strong first line access in all three 
      indications. 
 
   -- Entresto (USD 430 million, +61% cc) continued strong momentum fueled by 
      increased demand in both hospital and ambulatory settings across regions. 
 
   -- Zolgensma (USD 160 million) since its US launch, Zolgensma has been used 
      to treat patients ranging in age from less than one month to two years 
      old including all types of SMA. To date plans are in place covering 90% 
      of commercial patients and 30% of Medicaid patients. 
 
   -- Lutathera (USD 119 million, +116% cc) continued to grow led by the US, 
      with over 160 centers actively treating patients, and ongoing launches in 
      EU. Sales from all AAA brands were USD 177 million. 
 
   -- Promacta/Revolade (USD 380 million, +31% cc) continued to grow at a 
      strong double-digit rate across all regions driven by increased use in 
      chronic immune thrombocytopenia (ITP) and further uptake as first-line 
      treatment for severe aplastic anemia (SAA) in the US and Japan. 
 
   -- Tafinlar + Mekinist (USD 345 million, +22% cc) continued strong 
      double-digit growth due to demand in metastatic and adjuvant melanoma as 
      well as NSCLC, with ongoing uptake of the adjuvant melanoma indication in 
      Europe. 
 
   -- Jakavi (USD 279 million, +17% cc) continued double-digit growth across 
      all regions driven by demand in the myelofibrosis and polycythemia vera 
      indications. 
 
   -- Kisqali (USD 123 million, +76% cc) showed strong growth driven by use in 
      metastatic breast cancer patients, independent of menopausal status or 
      combination partner. 
 
   -- Piqray (USD 43 million) US launch progressed well. Piqray is the first 
      and only treatment for patients with a PIK3CA mutation in HR+/HER2- 
      advanced breast cancer. 
 
   -- Kymriah (USD 79 million) strong demand continued and sales increased 
      primarily driven by ongoing uptake in the US and Europe. There are over 
      160 qualified treatment centers and more than 20 countries worldwide that 
      have coverage for at least one indication. 
 
   -- Mayzent (USD 4 million) launch is progressing and efforts are ongoing to 
      improve patient on-boarding which was slower due to the special needs of 
      this population. 
 
   -- Biopharmaceuticals (biosimilars, biopharmaceutical contract manufacturing 
      and Glatopa) Global sales of Biopharmaceuticals grew 27% (cc), driven by 
      continued strong double-digit growth in Europe from Rixathon (rituximab), 
      Hyrimoz (adalimumab) and Erelzi (etanercept). 
 
   -- Emerging Growth Markets, which comprise all markets except the US, Canada, 
      Western Europe, Japan, Australia and New Zealand, sales grew 10% in cc 
      (+7% in USD), mainly driven by double digit growth (cc) in China. 
 
 
   Net sales of the top 20 Innovative Medicines products in 9M 2019 
 
 
 
 
                                   % change             % change 
                        -------               ------- 
                        Q3 2019               9M 2019 
                         USD m    USD    cc    USD m    USD    cc 
                        -------  -----  ----  -------  -----  ---- 
Cosentyx                    937     25    27    2 586     27    30 
Gilenya                     829      1     3    2 420     -3     0 
Lucentis                    500      2     5    1 569      3     8 
Tasigna                     487     10    11    1 389     -1     2 
Entresto                    430     59    61    1 208     70    75 
Sandostatin                 388      0     1    1 183      0     2 
Afinitor/Votubia            400      7     8    1 174      1     4 
Promacta/Revolade           380     29    31    1 036     23    26 
Tafinlar + Mekinist         345     19    22      982     17    22 
Galvus Group                320      4     5      955      0     5 
Gleevec/Glivec              320    -16   -14      950    -20   -17 
Xolair                      299     17    22      870     13    20 
Jakavi                      279     13    17      821     14    21 
Diovan Group                254      0     3      798      5    11 
Exforge Group               249     -2     2      780      4    10 
Exjade/Jadenu               253     -4    -2      744     -8    -6 
Votrient                    198      1     2      578     -8    -5 
Ilaris                      177     26    27      493     24    28 
Zortress/Certican           122      2     5      362      5    10 
Lutathera                   119    113   116      334    288   287 
Top 20 products total     7 286     10    13   21 232      8    12 
 
 
   Strengthen R&D - Key developments from the third quarter 
 
   New approvals and regulatory update 
 
 
   -- Beovu (brolucizumab, formerly RTH258) was launched in the US following 
      FDA approval in October, offering neovascular (wet) AMD patients vision 
      gains and greater fluid reductions vs aflibercept. Beovu demonstrated 
      greater reductions in central subfield thickness, a key indicator of 
      fluid in the retina. Beovu is the only anti-VEGF in wet AMD recommended 
      to maintain eligible patients on up to three-month dosing intervals 
      immediately after the loading phase with no compromise in efficacy. 
 
   -- Entresto was approved by FDA for the treatment of symptomatic heart 
      failure with systemic left ventricular systolic dysfunction in children 
      aged 1 year and older. 
 
   -- Gilenya was approved in China for relapsing forms of multiple sclerosis 
      (RMS) for adults and children 10 years and older. MS is categorized as 
      rare disease in China with an estimated 30,000 patients. 
 
 
   Regulatory submissions and filings 
 
   --Capmatinib (INC280) was granted FDA Breakthrough Therapy Designation 
as a first-line treatment for patients with metastatic MET exon14 
skipping-mutated non-small cell lung cancer (NSCLC). Novartis plans to 
file with FDA in Q4. 
 
   Results from ongoing trials and other highlights 
 
 
   -- Ofatumumab (OMB157) is a subcutaneous, potent, fully-human monoclonal 
      antibody targeting CD20 positive B-cells, delivering remarkable efficacy 
      with a favorable safety profile. RMS patients on ofatumumab had a 
      reduction in annualized relapse rate of 50.5% (0.11 vs. 0.22) and 58.5% 
      (0.10 vs. 0.25) compared to teriflunomide in two head-to-head Phase III 
      RMS studies (ASCLEPIOS I and II). Ofatumumab also showed significant 
      reductions in 3 and 6 month confirmed disability worsening and acute 
      focal MRI activity versus teriflunomide. These data will form the bases 
      of rolling submissions planned to start in Q4. 
 
   -- Cosentyx PREVENT trial in patients with active non-radiographic axial 
      spondyloarthritis (nr-axSpA) met both 16-week and 52-week primary 
      endpoints of ASAS40. Novartis has submitted the data to EMA and plans to 
      submit to the FDA. If approved, Nr-axSpA would be the fourth indication 
      for Cosentyx. 
 
   -- Kisqali MONALEESA-3 overall survival data were presented at ESMO in 
      postmenopausal women with HR+/HER2- advanced breast cancer. This follows 
      positive OS data from MONALEESA-7 in pre-menopausal women presented at 
      ASCO in June. OS benefit proven with multiple combination partners and 
      the largest number of patients, including post-, pre- and peri-menopausal 
      patients. 
 
   -- QVM149 and QMF149 positive Phase III results announced showing 
      statistically significant improvement in lung function. Filed with EMA in 
      Q2 2019 and in Japan in Q3 2019. 
 
   -- Entresto data from PARAGON-HF trial in HFpEF patients showed Entresto 
      reduced the composite primary endpoint of total (first and recurrent) 
      heart failure hospitalizations and CV death by 13% versus valsartan, 
      although narrowly missed statistical significance. The full body of 
      evidence from the trial suggests that treatment with Entresto may result 
      in clinically important benefits in particular subgroups. We plan to 
      submit to FDA in Q4 for inclusion of data in the label. Results from 
      PROVE-HF trial show significant improvements in measures of cardiac 
      remodeling at six months and one year in HFrEF patients; EVALUATE-HF 
      results complement findings. 
 
   -- Zolgensma new data were presented at EPNS continuing to show significant 
      therapeutic benefit in prolonging event-free survival now up to 5 years 
      of age in patients with SMA type I. Data from the STRONG trial in SMA 
      type II patients was presented at WMS showing a mean increase of 5.9 
      points from baseline in HFMSE scores in patients 2 to 5 years of age 
      following treatment with AVXS-101 IT, nearly double the clinically 
      meaningful threshold. Zolgensma is currently under regulatory review in 
      Europe with an anticipated CHMP decision in Q1 2020 and in Japan with 
      anticipated decision in H1 2020. 
 
   -- Fevipiprant (QAW039) ZEAL 1 and 2 trials did not meet the primary 
      efficacy endpoint of FEV1 improvement in moderate asthmatic patients. The 
      safety profile was confirmed as clean and placebo like. LUSTER 1 and 
      2 exacerbation trials in moderate to severe asthmatic patients are the 
      core registration trials and are on track to read out in Q1 2020. 
 
   -- Mayzent new post hoc statistical analysis of the pivotal EXPAND study at 
      ECTRIMS showed that Mayzent can help patients keep their mobility (i.e. 
      reduced time to wheel-chair) for over four years longer on 
      average. Further analyses demonstrate Mayzent significantly reduced grey 
      matter volume loss at one and two years, a key driver of disability 
      progression and cognitive decline in patients with SPMS. 
 
   -- Aimovig data confirmed long-term efficacy and safety for majority of 
      patients with episodic migraine. 4.5-year data show 77% of patients who 
      continued on treatment experienced at least a 50% reduction in monthly 
      migraine days. Moreover, 33% of patients who continued on treatment 
      achieved a 100% reduction, and 56% achieved a 75% decrease. 
 
   -- Sandoz biosimilar natalizumab worldwide agreement with Polpharma 
      Biologics gives Sandoz commercialization rights for RRMS. Natalizumab is 
      the fifth proposed biosimilar in-licensed by Sandoz in the last year, 
      underscoring commitment to further grow pipeline through collaborations. 
 
   Capital structure and net debt 
 
   Retaining a good balance between investment in the business, a strong 
capital structure and attractive shareholder returns remains a priority. 
 
   In Q3 2019, the up to USD 5 billion share buyback was completed with a 
total of 55.8 million shares for USD 5.0 billion repurchased since the 
announcement in June 2018. 
 
   During the first nine months of 2019, Novartis repurchased a total of 
60.3 million shares for USD 5.4 billion on the SIX Swiss Exchange second 
trading line, including 46.5 million shares (USD 4.2 billion) bought 
back under the up to USD 5 billion share buyback and 13.8 million shares 
(USD 1.1 billion) to mitigate dilution related to participation plans of 
associates. In addition, 1.7 million shares (USD 0.2 billion) were 
repurchased from associates. In the same period, 15.4 million shares 
(for an equity value of USD 0.9 billion) were delivered as a result of 
options exercised and share deliveries related to participation plans of 
associates. Consequently, the total number of shares outstanding 
decreased by 46.6 million versus December 31, 2018. These treasury share 
transactions resulted in a decrease in equity of USD 4.6 billion and a 
net cash outflow of USD 5.3 billion. 
 
   As of September 30, 2019, net debt increased by USD 3.2 billion to USD 
19.4 billion versus December 31, 2018. The increase was mainly driven by 
the USD 6.6 billion annual dividend payment, net cash outflow for 
treasury share transactions of USD 5.3 billion and M&A transactions of 
USD 3.8 billion (mainly the Xiidra acquisition), partly offset by USD 
9.4 billion free cash flow from continuing operations during the nine 
months of 2019 and USD 2.9 billion net inflows related to the Alcon 
spin-off. 
 
   As of Q3 2019, the long-term credit rating for the company is A1 with 
Moody's Investors Service and AA- with S&P Global Ratings. 
 
   2019 Outlook 
 
   Barring unforeseen events 
 
   New focused medicines company guidance 
 
   Excluding Alcon and the Sandoz US oral solids and dermatology business 
from both 2018 and 2019 
 
 
   -- Net sales revised upwards: expected to grow high-single digit (cc). 
 
   -- From a divisional perspective, we expect net sales performance (cc) in 
      2019 to be as follows: 
 
          -- Innovative Medicines revised upwards: grow high-single digit to 
             low double digit 
 
          -- Sandoz revised upwards: grow low-single digit 
 
   -- Core operating income revised upwards: expected to grow mid to high-teens 
      (cc). 
 
 
   The guidance above includes the forecast assumption that no Gilenya 
generics enter in 2019 in the US. 
 
   Foreign Exchange impact 
 
   If mid-October exchange rates prevail for the remainder of 2019, the 
currency impact for the year would be negative 3 percentage points on 
net sales and negative 5 percentage points on core operating income. The 
estimated impact of exchange rates on our results is provided monthly on 
our website. 
 
   Nomination for election to the Board of Directors 
 
   The Novartis Board of Directors announced today that it is nominating 
Dr. Simon Moroney, for election to the Board at the  Annual General 
Meeting on February 28, 2020. Dr. Moroney is one of the co-founders of 
the Germany-based biotechnology company Morphosys and served as it's CEO 
until September 1, 2019. Prior to founding Morphosys, Dr.Moroney held 
several senior academic positions at the University of Cambridge, U.K., 
University of British Columbia, Canada and ETH in Switzerland.  He also 
worked at the Harvard Medical School in the United States and was part 
of the team at US-based ImmunoGen Inc that pioneered the first 
generation of anti-cancer antibody conjugates. Dr. Moroney's deep 
scientific knowledge as well as his experience leading and building a 
biotechnology company will strengthen the Board's scientific leadership 
expertise. 
 
 
 
 
Continuing operations           Q3      Q3 
 (1)                          2019    2018    % change  9M 2019  9M 2018    % change 
                             USD m   USD m   USD    cc    USD m    USD m   USD    cc 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
Net sales                   12 172  11 016    10    13   35 042   33 270     5     9 
Operating income             2 358   2 239     5     9    7 263    7 041     3    10 
    As a % of sales           19.4    20.3                 20.7     21.2 
Core operating income        3 748   3 258    15    18   10 650    9 445    13    18 
    As a % of sales           30.8    29.6                 30.4     28.4 
Net income                   2 041   1 882     8    12    6 018   11 580   -48   -45 
EPS (USD)                     0.90    0.81    11    14     2.62     4.99   -47   -44 
Core net income              3 212   2 820    14    17    9 119    8 239    11    16 
Core EPS (USD)                1.41    1.22    16    19     3.97     3.55    12    17 
Cash flows from operating 
 activities                  4 562   3 720    23         10 007    9 613     4 
Free cash flow               3 968   3 156    26          9 449    8 343    13 
                            ------  ------  ----        -------  -------  ---- 
                                Q3      Q3 
  Innovative Medicines        2019    2018    % change  9M 2019  9M 2018    % change 
                             USD m   USD m   USD    cc    USD m    USD m   USD    cc 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
Net sales                    9 688   8 596    13    15   27 794   25 870     7    11 
Operating income             2 404   2 184    10    13    7 077    6 571     8    14 
    As a % of sales           24.8    25.4                 25.5     25.4 
Core operating income        3 300   2 897    14    16    9 528    8 382    14    19 
    As a % of sales           34.1    33.7                 34.3     32.4 
--------------------------  ------  ------              -------  ------- 
                                Q3      Q3 
  Sandoz                      2019    2018    % change  9M 2019  9M 2018    % change 
                             USD m   USD m   USD    cc    USD m    USD m   USD    cc 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
Net sales                    2 484   2 420     3     5    7 248    7 400    -2     2 
Operating income               191     358   -47   -42      746    1 095   -32   -25 
    As a % of sales            7.7    14.8                 10.3     14.8 
Core operating income          615     541    14    18    1 577    1 520     4    10 
    As a % of sales           24.8    22.4                 21.8     20.5 
--------------------------  ------  ------              -------  ------- 
                                Q3      Q3 
  Corporate                   2019    2018    % change  9M 2019  9M 2018    % change 
                             USD m   USD m   USD    cc    USD m    USD m   USD    cc 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
Operating loss                -237    -303    22    21     -560     -625    10     8 
Core operating loss           -167    -180     7     6     -455     -457     0    -2 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
 
Discontinued operations         Q3      Q3 
 (2)                          2019    2018    % change  9M 2019  9M 2018    % change 
                             USD m   USD m   USD    cc    USD m    USD m   USD    cc 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
Net sales                            1 763                1 777    5 361    nm    nm 
Operating income / 
 loss                                - 300                   71    - 171    nm    nm 
    As a % of sales                  -17.0                  4.0     -3.2 
Core operating income                  297                  350      991    nm    nm 
    As a % of sales                   16.8                 19.7     18.5 
Net income / loss                    - 258                4 590    - 160    nm    nm 
                                    ------              -------  -------  ----  ---- 
                                Q3      Q3 
  Total Group                 2019    2018    % change  9M 2019  9M 2018    % change 
                             USD m   USD m   USD    cc    USD m    USD m   USD    cc 
                            ------  ------  ----  ----  -------  -------  ----  ---- 
Net income                   2 041   1 624    26    30   10 608   11 420    -7    -3 
EPS (USD)                     0.90    0.70    29    32     4.62     4.92    -6    -2 
Core net income              3 212   3 064     5     7    9 397    9 057     4     9 
Core EPS (USD)                1.41    1.32     7     9     4.09     3.90     5    10 
Cash flows from operating 
 activities                  4 562   4 050    13         10 085   10 506    -4 
Free cash flow               3 968   3 301    20          9 387    8 778     7 
                            ------  ------  ----        -------  -------  ---- 
nm = not meaningful 
(1) Continuing operations include the businesses of Innovative 
 Medicines and Sandoz Division including the US generic oral solids 
 and dermatology portfolio and Corporate activities. See page 
 44 of the Condensed Interim Financial Report for full explanation 
(2) Discontinued operations include the business of Alcon. Net 
 income of discontinued operations for 9M 2019 includes a USD 
 4.7 billion gain on distribution of Alcon Inc. to Novartis AG 
 shareholders. See page 44 and Notes 2, 3 and 11 of the Condensed 
 Interim Financial Report for full explanation 
 
   Detailed financial results accompanying this press release are included 
in the Condensed Interim Financial Report at the link below: 
 
   https://ml-eu.globenewswire.com/Resource/download/54b44cbc-188b-48a6-bf59-7a844c1bcd87/ 
 
 
   Disclaimer 
 
   This press release contains forward-looking statements within the 
meaning of the United States Private Securities Litigation Reform Act of 
1995, that can generally be identified by words such as "guidance," 
"launched," "launching," "strong start," "momentum," "growth investments, 
" "compelling," "submissions," "starting," "submitted," "submission," 
"planned," "focused," "expected," "to grow," "continued," "continuing," 
"continue," "potential," "growing," "launches," "continues," "expect," 
"to be completed," "pending," "closing conditions," "committed," "growth 
drivers," "launch," "to date," "ongoing," "filings," "Breakthrough 
Therapy Designation," "delivering," "will," "plans," "to submit," 
"suggests," "may," "would," "proposed," "commitment," "pipeline," 
"priority," "outlook," "unforeseen," "forecast," "enter," "to deliver," 
"priority review," "enrollment," "filed," "transformative," "Orphan Drug 
designation," "upcoming," "on track," "future," "strategy," "Fast Track 
designation," "Orphan designation," "Orphan status," "resubmitted," 
"potentially," "anticipated," "as early as possible," "PRIME designation, 
" "Sakigake designation," "underway," "increasing," "in the coming 
months," or similar expressions, or by express or implied discussions 
regarding potential new products, potential new indications for existing 
products, potential product launches, or regarding potential future 
revenues from any such products; or regarding the potential outcome, or 
financial or other impact on Novartis, of the proposed divestiture of 
certain portions of our Sandoz Division business in the US; or regarding 
the potential impact of the completion of the up to USD 5 billion share 
buyback; or regarding potential future sales or earnings of the Group or 
any of its divisions or potential shareholder returns; or by discussions 
of strategy, plans, expectations or intentions. Such forward-looking 
statements are based on the current beliefs and expectations of 
management regarding future events, and are subject to significant known 
and unknown risks and uncertainties. Should one or more of these risks 
or uncertainties materialize, or should underlying assumptions prove 
incorrect, actual results may vary materially from those set forth in 
the forward-looking statements. You should not place undue reliance on 
these statements. In particular, our expectations could be affected by, 
among other things: global trends toward healthcare cost containment, 
including ongoing government, payor and general public pricing and 
reimbursement pressures and requirements for increased pricing 
transparency; regulatory actions or delays or government regulation 
generally, including potential regulatory actions or delays with respect 
to the proposed transactions or the development of the products 
described in this press release; the potential that the proposed 
divestiture of certain portions of our Sandoz Division business in the 
US may not be completed in the expected time frame, or at all; the 
potential that the strategic benefits, synergies or opportunities 
expected from the proposed divestiture of certain portions of our Sandoz 
Division business in the US, and other transactions described, may not 
be realized or may be more difficult or take longer to realize than 
expected; the inherent uncertainties involved in predicting shareholder 
returns; the uncertainties inherent in the research and development of 
new healthcare products, including clinical trial results and additional 
analysis of existing clinical data; our ability to obtain or maintain 
proprietary intellectual property protection, including the ultimate 
extent of the impact on Novartis of the loss of patent protection and 
exclusivity on key products that commenced in prior years and will 
continue this year; safety, quality or manufacturing issues; 
uncertainties involved in the development or adoption of potentially 
transformational technologies and business models; uncertainties 
regarding actual or potential legal proceedings, including, among others, 
product liability litigation, disputes and litigation with business 
partners or business collaborators, government investigations generally, 
litigation and investigations regarding sales and marketing practices, 
and intellectual property disputes; our performance on environmental, 
social and governance measures; general political, economic and trade 
conditions, including uncertainties regarding the effects of ongoing 
instability in various parts of the world; uncertainties regarding 
future global exchange rates; uncertainties regarding future demand for 
our products; uncertainties regarding potential significant breaches of 
data security or data privacy, or disruptions of our information 
technology systems; and other risks and factors referred to in Novartis 
AG's current Form 20-F on file with the US Securities and Exchange 
Commission. 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. 
 
   All product names appearing in italics are trademarks owned by or 
licensed to Novartis Group companies. 
 
   About Novartis 
 
   Novartis is reimagining medicine to improve and extend people's lives. 
As a leading global medicines company, we use innovative science and 
digital technologies to create transformative treatments in areas of 
great medical need. In our quest to find new medicines, we consistently 
rank among the world's top companies investing in research and 
development. Novartis products reach more than 750 million people 
globally and we are finding innovative ways to expand access to our 
latest treatments. About 109,000 people of more than 140 nationalities 
work at Novartis around the world. Find out more at. 
http://www.novartis.com www.novartis.com 
 
   Novartis will conduct a conference call with investors to discuss this 
news release today at 14:00 Central European time and 8:00 Eastern Time. 
A simultaneous webcast of the call for investors and other interested 
parties may be accessed by visiting the Novartis website. A replay will 
be available after the live webcast by visiting. 
 
   https://www.novartis.com/investors/event-calendar 
https://www.novartis.com/investors/event-calendar 
 
   Detailed financial results accompanying this press release are included 
in the condensed interim financial report at the link below. Additional 
information is provided on Novartis divisions and pipeline of selected 
compounds in late stage development and a copy of today's earnings call 
presentation can be found at. 
 
   https://www.novartis.com/investors/event-calendar 
https://www.novartis.com/investors/event-calendar 
 
   Important dates 
 
   December 5, 2019         R&D update 2019 -- London 
 
   January 29, 2020           Fourth quarter and Full Year results 2019 
 
   April 28, 2020                First quarter results 2020 
 
   July 21, 2020                 Second quarter results 2020 
 
   October 27, 2020           Third quarter results 2020 
 
   Please find full media release in English attached and on the following 
link: Media release (PDF) 
https://ml-eu.globenewswire.com/Resource/download/7ec3eab1-368b-406e-8329-df89c192ef52/ 
 
 
   Further language versions are available through the following links: 
 
   German version is available through the following link: Medienmitteilung 
(PDF) 
https://ml-eu.globenewswire.com/Resource/download/9508f4aa-9ba3-4570-b3ca-72491fbc38fa/ 
 
 
   French version is available through the following link: Communiqué 
aux médias (PDF) 
https://ml-eu.globenewswire.com/Resource/download/0b5a76c0-3891-4b30-9257-4f813d35eea2/ 
 
 
 
 
 

(END) Dow Jones Newswires

October 22, 2019 01:15 ET (05:15 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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