Ad hoc announcement pursuant to Art. 53 LR
FINANCIAL RESULTS | RÉSULTATS FINANCIERS | FINANZERGEBNISSE
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Novartis International AG
Novartis Global Communications
CH-4002 Basel
Switzerland
https://www.novartis.com
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Novartis delivers 12% sales and 21% core operating income growth from continuing operations (in cc1). Executes
Sandoz spin-off, achieves important innovation milestones, and raises FY 2023 guidance
•
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Transformation into a “pure-play” innovative medicines business is complete, with the spin-off of Sandoz; commentary below is on continuing operations2
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•
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Q3 sales grew +12% (cc, +12% USD) with core operating income growing +21% (cc, +17% USD)
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o
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Growth driven by continued strong performance from Kesimpta (+124% cc), Entresto (+31% cc), Kisqali (+76% cc), Pluvicto (+217% cc) and Scemblix (+157% cc)
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•
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Q3 operating income grew +13% (cc, -4% USD) driven
by higher sales and lower restructuring charges, partly offset by higher impairments through discontinuation of early stage development projects
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•
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Q3 net income grew +37% (cc, +14% USD)
mainly due to higher operating income
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•
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Q3 free cash flow3 was USD 5.0 billion (+24% USD) driven by higher net cash flows from operating activities
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•
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Q3 core EPS grew +29% (cc, +24% USD) to USD 1.74
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•
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Strong nine months performance with sales growing +10% (cc, +8% USD) and core operating income growing +19% (cc, +13% USD)
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•
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Q3 key innovation milestones, including positive Ph3 data for multiple pipeline assets with blockbuster potential:
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o
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Cosentyx – FDA approval
for intravenous formulation in three indications (PsA, AS, nr-axSpA)
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o
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Demonstrated clinically meaningful and statistically significant Ph3 data for: 1) Pluvicto (mCRPC pre-taxane), 2) iptacopan (IgAN), 3) remibrutinib (CSU), 4) Lutathera
(GEP-NETs)
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o
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Kisqali – Ph3
NATALEE iDFS 500 event analysis complete; file submitted in EU, US submission planned for Q4 2023
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•
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Initiated previously announced, up-to USD 15
billion share buyback to be completed by year-end 2025
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•
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Full-year 2023 guidance raised for core
operating income based on strong momentum4
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o
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Net sales expected to grow high single digit
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o
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Core operating income expected to grow mid to high teens (from low double digit to mid teens)
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Basel, October 24, 2023 – commenting
on the quarter, Vas Narasimhan MD, CEO of Novartis, said: “Novartis delivered a very strong quarter, with double-digit sales and core operating
income growth leading to a further upgrade to 2023 guidance. We have successfully executed the spin-off of Sandoz, allowing us to fully focus on high-value innovative medicines. Our growth drivers, including Kesimpta, Entresto, Kisqali and Pluvicto, continue to perform well in the market. Our robust
pipeline also continues to deliver, and we have achieved important innovation milestones for Pluvicto, iptacopan, remibrutinib and Lutathera. We are confident in our mid-term growth outlook and remain committed to creating value for our shareholders.”
Key figures1
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Continuing operations2
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Q3 2023
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Q3 2022
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% change
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9M 2023
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9M 2022
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
11 782
|
10 492
|
12
|
12
|
|
34 017
|
31 630
|
8
|
10
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Operating income
|
1 762
|
1 826
|
-4
|
13
|
|
7 187
|
6 191
|
16
|
31
|
Net income
|
1 513
|
1 330
|
14
|
37
|
|
5 934
|
4 734
|
25
|
41
|
EPS (USD)
|
0.73
|
0.61
|
20
|
45
|
|
2.84
|
2.16
|
31
|
49
|
Free cash flow
|
5 043
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4 054
|
24
|
|
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11 019
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8 661
|
27
|
|
Core operating income
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4 405
|
3 772
|
17
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21
|
|
12 551
|
11 149
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13
|
19
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Core net income
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3 585
|
3 035
|
18
|
23
|
|
10 320
|
8 983
|
15
|
22
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Core EPS (USD)
|
1.74
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1.40
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24
|
29
|
|
4.95
|
4.09
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21
|
28
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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 48 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2 As defined on page 37 of the Condensed Interim
Financial Report, Continuing operations include the retained business activities of Novartis, comprising the Innovative Medicines Division and the continuing Corporate activities and Discontinued operations include operational results from
the Sandoz business. 3 Effective January 1, 2023, Novartis revised its definition of free cash flow, to define free cash flow as net cash flows from operating activities less purchases of property, plant and equipment. To aid in
comparability, the prior year free cash flow amounts have been revised to conform with the new free cash flow definition. See page 48 of the Condensed Interim Financial Report. 4 Please see detailed guidance assumptions on page
8.
Strategy update
Our focus
Novartis has completed its transformation into a “pure-play” innovative medicines business, with the successful spin-off of
Sandoz. Our focus is now centered on four core therapeutic areas (cardiovascular, renal and metabolic; immunology; neuroscience, and
oncology). In each of these areas, we have multiple significant in-market and pipeline assets, all of which address diseases with a high burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy, and xRNA) are being prioritized for
continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies
– the US, China, Germany and Japan.
Financials
Following the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz business the Company
reported its consolidated financial statements for the current and prior years as “continuing operations” and “discontinued operations.”
Continuing operations include the retained business activities of Novartis, comprising the Innovative Medicines
Division and the continuing corporate activities. Discontinued operations include the Sandoz Division and selected portions of corporate activities attributable to Sandoz’s business, as well as certain expenses related to the spin-off.
With the spin-off of the Sandoz business, Novartis operates as a single global operating segment, being a
focused innovative medicines company.
The commentary below focuses on continuing operations. We also provide information on discontinued operations,
which mainly includes Sandoz and allocated corporate activities.
Continuing operations
Third quarter
Net sales were USD
11.8 billion (+12%, +12% cc) driven by volume growth of 17 percentage points. Pricing had a negative impact of 1 percentage point and generic competition had a negative impact of 4 percentage points.
Operating income was USD 1.8 billion (-4%, +13% cc), mainly driven by higher sales and lower
restructuring charges, partly offset by higher impairments through discontinuation of early stage development projects.
Net income was USD 1.5 billion (+14%, +37% cc), mainly due to higher operating income and lower tax rate driven
by non-recurring items. EPS was USD 0.73 (+20%, +45% cc), growing faster than net income, benefiting from lower weighted average number of shares outstanding.
Core operating income was USD 4.4 billion (+17%, +21% cc), mainly driven by higher sales. Core operating income
margin was 37.4% of net sales, increasing by 1.4 percentage points (+2.7 percentage points cc).
Core net income was USD 3.6 billion (+18%, +23% cc), mainly due to higher core operating income. Core EPS was USD 1.74 (+24%, +29%
cc), growing faster than core net income, benefiting from lower weighted average number of shares outstanding.
Free cash flow amounted to USD 5.0 billion (+24% USD), compared with USD 4.1 billion in the prior year quarter driven by higher
net cash flows from operating activities.
Nine months
Net sales were USD
34.0 billion (+8%, +10% cc) driven by volume growth of 16 percentage points. Pricing had a negative impact of 2 percentage points and generic competition had a negative impact of 4 percentage points.
Operating income was USD 7.2 billion (+16%, +31% cc), mainly driven by higher sales, other
income from legal matters, lower restructuring charges, partly offset by higher impairments through discontinuation of early stage development projects.
Net income was USD 5.9 billion (+25%, +41% cc), mainly due to higher operating income. EPS was USD 2.84 (+31%,
+49% cc), growing faster than net income, benefiting from lower weighted average number of shares outstanding.
Core operating income was USD 12.6 billion (+13%, +19% cc), mainly driven by higher sales. Core operating income
margin was 36.9% of net sales, increasing by 1.7 percentage points (+2.9 percentage points cc).
Core net income was USD 10.3 billion (+15%, +22% cc), mainly due to higher core operating income. Core EPS was USD 4.95 (+21%,
+28% cc), growing faster than core net income, benefiting from lower weighted average number of shares outstanding.
Free cash flow amounted to USD 11.0 billion (+27% USD), compared with USD 8.7 billion in the prior year period
driven by higher net cash flows from operating activities.
Discontinued operations
Results for discontinued operations in the third quarter and nine-months 2023 include the results of the Sandoz Division and
selected portions of corporate activities attributable to Sandoz business, as well as certain expenses related to the spin-off.
In connection with the Sandoz spin-off on October 4, 2023, the Company will report as part of its Q4 discontinued operations
results a one-time non-cash non-taxable IFRS gain of approximately USD 5.9 billion. This IFRS gain represents mainly the excess amount of the IFRS distribution liability, which is the estimated fair value of the Sandoz business distributed to
Novartis AG shareholders, over the then carrying value of Sandoz business net assets.
Third quarter
Discontinued operations net sales were USD 2.5 billion (+8%, +6% cc), mainly driven by ex-US growth.
Operating loss amounted to USD 86 million, compared to an operating income of USD 342 million in the previous year. The operating
loss in third quarter was driven by the discontinued corporate transaction cost related to spin-off of the Sandoz business, which were core adjustments.
Core operating income was USD 250 million (-51%, -38% cc), mainly driven by lower gross margin and higher SG&A expenses.
Net income from discontinued operations amounted to USD 250 million, compared to USD 245 million in the previous year.
Nine months
Discontinued operations net sales were USD 7.4 billion (+6%, +8% cc), mainly driven by ex-US growth.
Operating income amounted to USD 265 million, compared to USD 1.1 billion in the previous year. The current year period includes
the discontinued corporate transaction cost related to spin-off of the Sandoz business, which were core adjustments.
Core operating income was USD 1.2 billion (-20%, -11% cc), mainly driven by higher SG&A expenses and R&D investments.
Net income from discontinued operations amounted to USD 440 million, compared to USD 755 million in the previous year.
Total company
Third quarter
Total company net income was USD 1.8 billion, mainly due to higher operating income and lower tax rate driven by non-recurring
items compared to USD 1.6 billion in the prior year. EPS increased to USD 0.85 from USD 0.73 in prior year.
Cash flows from operating activities amounted to USD 5.4 billion compared to USD 4.7 billion in the prior year. Free cash flow
amounted to USD 5.0 billion compared to USD 4.4 billion in the prior year.
Nine months
Total company net income was USD 6.4 billion, mainly due to higher operating income compared to USD 5.5 billion in the prior year.
EPS increased to USD 3.05 from USD 2.50 in prior year.
Cash flows from operating activities amounted to USD 11.9 billion compared to USD 10.1 billion in the prior year. Free cash flow
amounted to USD 11.0 billion compared to USD 9.3 billion in the prior year.
Q3 key growth drivers
Underpinning our financial results in the quarter is a continued focus on key growth drivers including:
Kesimpta
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(USD 657 million, +124% cc) sales growth was driven by increased demand, strong access and benefitting from a one-time revenue deduction
adjustment in Europe
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Entresto
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(USD 1 485 million, +31% cc) sustained robust demand-led growth, benefitting from the adoption of guideline-directed medical therapy across
regions
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Kisqali
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(USD 562 million, +76% cc) sales grew strongly across all regions, based on increasing recognition of consistent overall survival and quality
of life benefits
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Pluvicto
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(USD 256 million, +217% cc) continued sales growth in the US. Supply now unconstrained, focusing on initiating new patients
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Ilaris
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(USD 335 million, +24% cc) sales grew across all regions
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Scemblix
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(USD 106 million, +157% cc) sales grew across all regions, demonstrating the high unmet need in CML
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Leqvio
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(USD 90 million, +165% cc) launch in the US and other markets ongoing, with focus on patient on-boarding, removing access hurdles and
enhancing medical education
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Cosentyx
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(USD 1 329 million, +4% cc) continued demand growth across key regions, partly offset by US revenue deduction fluctuations across periods.
Ex-US sales grew +15% (cc)
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Promacta/Revolade
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(USD 576 million, +10% cc) grew across all regions, driven by increased use in chronic ITP and severe aplastic anemia
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Xolair
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(USD 369 million, +13% cc) sales grew across most regions
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Jakavi
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(USD 427 million, +9% cc) sales grew in Emerging Growth Markets, Europe and Japan, driven by strong demand in both myelofibrosis and
polycythemia vera
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Tafinlar + Mekinist
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(USD 482 million, +8% cc) sales grew in the US and Emerging Growth Markets, driven by demand in BRAF+ adjuvant melanoma and NSCLC indications
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Lutathera
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(USD 159 million, +19% cc) sales grew mainly in the US, Japan and Europe due to increased demand
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Emerging Growth Markets*
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Overall, grew +17% (cc). Growth in China (+14% cc, USD 848 million)
*All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand
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Net sales of the top 20 products in 2023
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Q3 2023
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% change
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9M 2023
|
% change
|
|
USD m
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USD
|
cc
|
USD m
|
USD
|
cc
|
Entresto
|
1 485
|
31
|
31
|
4 400
|
31
|
33
|
Cosentyx
|
1 329
|
4
|
4
|
3 677
|
-1
|
1
|
Promacta/Revolade
|
576
|
10
|
10
|
1 706
|
10
|
12
|
Kesimpta
- excl. revenue deduction adjust.*
|
657
|
127
87
|
124
86
|
1 530
|
112
95
|
112
96
|
Kisqali
|
562
|
72
|
76
|
1 470
|
68
|
74
|
Tafinlar + Mekinist
|
482
|
7
|
8
|
1 436
|
10
|
13
|
Tasigna
|
464
|
-5
|
-5
|
1 402
|
-3
|
-1
|
Jakavi
|
427
|
11
|
9
|
1 276
|
9
|
11
|
Lucentis
|
363
|
-20
|
-22
|
1 174
|
-20
|
-19
|
Xolair
|
369
|
15
|
13
|
1 085
|
4
|
6
|
Sandostatin
|
338
|
15
|
15
|
998
|
7
|
8
|
Ilaris
|
335
|
23
|
24
|
979
|
18
|
20
|
Zolgensma
|
308
|
-3
|
-2
|
928
|
-13
|
-11
|
Gilenya
|
270
|
-47
|
-48
|
771
|
-54
|
-53
|
Pluvicto
|
256
|
220
|
217
|
707
|
nm
|
nm
|
Exforge Group
|
187
|
1
|
3
|
557
|
-5
|
-1
|
Galvus Group
|
181
|
-15
|
-4
|
539
|
-17
|
-10
|
Diovan Group
|
153
|
-4
|
-1
|
466
|
-9
|
-4
|
Lutathera
|
159
|
20
|
19
|
458
|
34
|
34
|
Gleevec/Glivec
|
144
|
-19
|
-17
|
433
|
-24
|
-21
|
Top 20 brands total
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9 045
|
13
|
13
|
25 992
|
9
|
11
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nm= not meaningful
* Sales growth benefiting from a one-time revenue deduction adjustment in Europe
R&D update - key developments from the third quarter
New approvals
Leqvio
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Approved in China and Japan as the first and only small interfering RNA (siRNA) therapy for LDL-C reduction
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Cosentyx
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In October, FDA approved the intravenous formulation in three indications: Psoriatic Arthritis, Ankylosing Spondylitis, and non-radiographic
axial SpA
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Regulatory updates
Kisqali
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EU file submission in adjuvant early breast cancer setting; US submission planned for Q4 2023
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Adakveo
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EC adopts decision endorsing CHMP recommendation to revoke conditional marketing authorization
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Results from ongoing trials and other highlights
iptacopan
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In October, Ph3 APPLAUSE-IgAN study interim analysis demonstrated clinically meaningful and highly statistically significant proteinuria
reduction in patients with IgA nephropathy. The trial met its pre-specified interim analysis (9 months) primary endpoint, demonstrating superiority vs. placebo in proteinuria reduction, with safety consistent with previously reported
data.
Novartis plans to review interim data with regulatory authorities for accelerated approval; study continues with final readout at 24 months
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remibrutinib
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Ph3 REMIX-1 and REMIX-2 studies met all primary and secondary endpoints, showing fast, clinically meaningful improvements across urticaria
disease activity scores. Remibrutinib demonstrated a favorable safety profile with rates of adverse events comparable to placebo and balanced liver function tests across both studies.
Final (52 weeks) readout and submissions to health authorities are expected in 2024. Full data will be presented at upcoming medical meetings
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Pluvicto
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Ph3 PSMAfore study demonstrated clinically meaningful and statistically significant rPFS benefit in patients with PSMA+ mCRPC in the
pre-taxane setting. Per updated analysis presented at ESMO, median rPFS more than doubled compared to ARPI switch. Patients on Pluvicto
showed improved quality of life compared to daily oral ARPI, along with improvements in other clinically meaningful efficacy endpoints including PSA response, ORR, DOR and time to symptomatic skeletal event, with favorable
safety. Pre-specified crossover-adjusted OS analysis demonstrated a HR of 0.80 (0.48, 1.33); the unadjusted ITT OS analysis was confounded by a high rate of crossover.
Novartis is continuing to collect OS data, regulatory filings are anticipated in 2024
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Lutathera
|
Ph3 NETTER-2 study demonstrated clinically meaningful and statistically significant improvement in PFS (primary endpoint) in patients with
newly diagnosed somatostatin receptor (SSTR)-positive, Grade 2 and 3, advanced gastroenteropancreatic neuroendocrine tumors (GEP-NETs) vs. high-dose long-acting octreotide alone. The trial also met its key secondary endpoint of ORR.
No new or unexpected safety findings were observed and data are consistent with the already well-established safety profile of Lutathera.
Data to be presented at an upcoming medical meeting and discussed with regulatory authorities, with submissions to follow
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Kisqali
|
Ph3 NATALEE iDFS 500 event analysis complete. Updated data is consistent with the interim analysis results announced in
March 2023 and will be communicated at an upcoming medical meeting.
|
|
Health-related quality of life (HRQoL) analyses from Ph3 NATALEE trial demonstrated that patients with early breast cancer receiving
adjuvant Kisqali plus ET for up to 3 years maintained physical and social functioning; psychological well-being; and overall
health scores, compared to baseline. Data was presented at the ESMO Virtual Plenary 2023
|
Leqvio
|
Long-term data from Ph3 ORION-8 demonstrated that Leqvio, in addition to statin therapy, provides consistent low-density lipoprotein cholesterol (LDL-C) reduction beyond six years of treatment in patients with atherosclerotic cardiovascular disease (ASCVD),
increased risk of ASCVD or heterozygous familial hypercholesterolemia. Efficacy and safety were consistent with previously reported Ph3 results. Data was presented at ESC 2023
|
GT005
(PPY988)
|
Development in Geographic Atrophy secondary to dry-Age-related Macular Degeneration discontinued based on benefit-risk assessment. No new
safety signals identified. Patients treated will be provided with long term safety follow up
|
Tislelizumab
|
Novartis and BeiGene mutually agreed to terminate the collaboration and license agreement for tislelizumab for certain markets. With the
termination, BeiGene will re-assume all development and commercialization rights for tislelizumab, and Novartis will manufacture tislelizumab for certain markets. BeiGene will also provide Novartis with ongoing clinical supply of
tislelizumab to support its clinical trials
|
‘Front of Eye’ Assets
|
Divestment completed of ‘front of eye’ ophthalmology assets to Bausch + Lomb
|
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.
During the first nine months of 2023, Novartis repurchased a total of 74.9 million shares for USD 7.2 billion on
the SIX Swiss Exchange second trading line. These repurchases included 52.8 million shares (USD 4.9 billion) under the USD 15 billion share buyback (announced in December 2021 and completed in June 2023) and 10.4 million shares (USD 1.1
billion) under the new up-to USD 15 billion share buyback announced in July 2023. In addition, 11.7 million shares (USD 1.2 billion) were repurchased to mitigate dilution related to participation plans of associates. Furthermore, 1.4 million
shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 12.2 million shares (for an equity value of USD 0.8 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 64.1 million versus December 31, 2022. These treasury share transactions resulted in an equity decrease of USD 6.5 billion and a net cash
outflow of USD 7.3 billion.
As of September 30, 2023, net debt excluding net debt related to discontinued operations increased to USD 10.8
billion compared to USD 7.2 billion total net debt at December 31, 2022. The increase was mainly due to the USD 7.3 billion annual dividend payment, net cash outflow for treasury share transactions of USD 7.3 billion and net M&A /
intangible assets transactions of USD 2.9 billion. This increase in net debt was partially offset by USD 11.0 billion free cash flow.
As part of the spin-off, Sandoz incurred total bank debt of approximately USD 3.7 billion and paid approximately
USD 3.0 billion in cash, including payment in satisfaction of certain intercompany indebtedness owed by Sandoz and its subsidiaries to Novartis and its affiliates as of September 30, 2023. This reduced the net debt position of Novartis by USD
3.0 billion.
As of Q3 2023, the long-term credit rating for the company is A1 with Moody’s Investors Service and AA- with
S&P Global Ratings.
2023 outlook raised due to
strong momentum
Barring unforeseen events; growth vs prior year in cc |
Previous Guidance |
Net sales
|
Expected to grow high single digit
|
Unchanged
|
Core operating income
|
Expected to grow mid to high teens
|
(from low double digit to mid
teens)
|
Key assumptions:
•
|
No US Entresto Gx at risk launch in
2023
|
•
|
No Sandostatin LAR generics enter in
the US in 2023
|
Entresto
patent update
Novartis has appealed to reverse the negative US District Court decision and to uphold the validity of its combination patent
covering Entresto and other combinations of sacubitril and valsartan, which expires in 2025 (with pediatric exclusivity). No generics have
tentative or final approval in the US. Any US commercial launch of a generic Entresto product prior to the final outcome of Novartis
combination patent appeal, or ongoing litigations involving other patents, may be at risk of later litigation developments.
Foreign exchange impact
If late-October exchange rates prevail for the remainder of 2023, the foreign exchange impact for the year would be negative 2 percentage point on net sales and negative 6 percentage points on core
operating income. The estimated impact of exchange rates on our results is provided monthly on our website.
Key figures1
Continuing operations2
|
Q3 2023
|
Q3 2022
|
% change
|
|
|
9M 2023
|
9M 2022
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
11 782
|
10 492
|
12
|
12
|
|
Net sales
|
34 017
|
31 630
|
8
|
10
|
Operating income
|
1 762
|
1 826
|
-4
|
13
|
|
Operating income
|
7 187
|
6 191
|
16
|
31
|
As a % of sales
|
15.0
|
17.4
|
|
|
|
As a % of sales
|
21.1
|
19.6
|
|
|
Net income
|
1 513
|
1 330
|
14
|
37
|
|
Net income
|
5 934
|
4 734
|
25
|
41
|
EPS (USD)
|
0.73
|
0.61
|
20
|
45
|
|
EPS (USD)
|
2.84
|
2.16
|
31
|
49
|
Cash flows from
operating activities
|
5 304
|
4 275
|
24
|
|
|
Cash flows from
operating activities
|
11 673
|
9 271
|
26
|
|
Non-IFRS measures
|
|
|
|
|
|
Non-IFRS measures
|
|
|
|
|
Free cash flow
|
5 043
|
4 054
|
24
|
|
|
Free cash flow
|
11 019
|
8 661
|
27
|
|
Core operating income
|
4 405
|
3 772
|
17
|
21
|
|
Core operating income
|
12 551
|
11 149
|
13
|
19
|
As a % of sales
|
37.4
|
36.0
|
|
|
|
As a % of sales
|
36.9
|
35.2
|
|
|
Core net income
|
3 585
|
3 035
|
18
|
23
|
|
Core net income
|
10 320
|
8 983
|
15
|
22
|
Core EPS (USD)
|
1.74
|
1.40
|
24
|
29
|
|
Core EPS (USD)
|
4.95
|
4.09
|
21
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations2
|
Q3 2023
|
Q3 2022
|
% change
|
|
|
9M 2023
|
9M 2022
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
2 476
|
2 286
|
8
|
6
|
|
Net sales
|
7 428
|
6 998
|
6
|
8
|
Operating (loss)/income
|
-86
|
342
|
nm
|
nm
|
|
Operating income
|
265
|
1 057
|
-75
|
-60
|
As a % of sales
|
nm
|
15.0
|
|
|
|
As a % of sales
|
3.6
|
15.1
|
|
|
Net income
|
250
|
245
|
2
|
79
|
|
Net income
|
440
|
755
|
-42
|
-18
|
Non-IFRS measures
|
|
|
|
|
|
Non-IFRS measures
|
|
|
|
|
Core operating income
|
250
|
510
|
-51
|
-38
|
|
Core operating income
|
1 185
|
1 486
|
-20
|
-11
|
As a % of sales
|
10.1
|
22.3
|
|
|
|
As a % of sales
|
16.0
|
21.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total company
|
Q3 2023
|
Q3 2022
|
% change
|
|
|
9M 2023
|
9M 2022
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
|
USD m
|
USD m
|
USD
|
cc
|
Net income
|
1 763
|
1 575
|
12
|
44
|
|
Net income
|
6 374
|
5 489
|
16
|
33
|
EPS (USD)
|
0.85
|
0.73
|
16
|
51
|
|
EPS (USD)
|
3.05
|
2.50
|
22
|
40
|
Cash flows from
operating activities
|
5 378
|
4 721
|
14
|
|
|
Cash flows from
operating activities
|
11 911
|
10 125
|
18
|
|
Non-IFRS measures
|
|
|
|
|
|
Non-IFRS measures
|
|
|
|
|
Free cash flow
|
5 043
|
4 435
|
14
|
|
|
Free cash flow
|
11 038
|
9 325
|
18
|
|
Core net income
|
3 784
|
3 419
|
11
|
16
|
|
Core net income
|
11 209
|
10 101
|
11
|
18
|
Core EPS (USD)
|
1.83
|
1.58
|
16
|
22
|
|
Core EPS (USD)
|
5.37
|
4.60
|
17
|
24
|
nm= not meaningful
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 48 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.
2 As defined on page 37 of the Condensed Interim Financial Report, Continuing operations include
the retained business activities of Novartis, comprising the Innovative Medicines Division and the continuing Corporate activities and Discontinued operations include operational results from the Sandoz business.
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/1a97fd38-edbc-49ea-9350-8042dc006c1c/
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,” “expected,” “momentum,” “continue,” “drivers,” “confident,” “outlook,” “remain,” “committed,” “prioritized,” “prioritizing,” “continued,”
“growing,” “growth,” “plans,” “on-track,” “continuing,” “anticipated,” “to follow,” “will,” “outlook,” “may,” “upcoming,” “ongoing,” “focus,” “pipeline,” “potential,” “estimated,” “launch,” “to deliver,” “transformation,” “transformative,”
“address,” “planned,” “focusing,” “accelerated,” “long-term,” “innovation,” “priority,” “can,” “awaiting,” 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 potential future, pending or announced transactions; or regarding potential future sales or earnings of Novartis; or regarding
discussions of strategy, priorities, plans, expectations or intentions, including our transformation into a “pure-play” innovative medicines business; or regarding our liquidity or cash flow positions and our ability to meet our ongoing
financial obligations and operational needs; or regarding our USD 15 billion share buyback; or regarding our appeal of the negative decision of the US District Court for the District of Delaware on the validity of our patent covering Entresto
and combinations of sacubitril and valsartan. 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. There can be no guarantee that the investigational or approved products described in this press release will be submitted or approved for sale or for any additional indications or labeling in any market, or at any
particular time. Nor can there be any guarantee that such products will be commercially successful in the future. Neither can there be any guarantee expected benefits or synergies from the transactions described in this press release will be
achieved in the expected timeframe, or at all. In particular, our expectations could be affected by, among other things: liquidity or cash flow disruptions affecting our ability to meet our ongoing financial obligations and to support our
ongoing business activities; the impact of a partial or complete failure of the return to normal global healthcare systems including prescription dynamics; global trends toward healthcare cost containment, including ongoing government, payer
and general public pricing and reimbursement pressures and requirements for increased pricing transparency; uncertainties regarding potential significant breaches of data security or data privacy, or disruptions of our information technology
systems; regulatory actions or delays or government regulation generally, including potential regulatory actions or delays with respect to the development of the products described in this press release; the potential that the benefits and
opportunities expected from our planned spin-off of Sandoz may not be realized or may be more difficult or take longer to realize than expected; the uncertainties 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; safety, quality, data integrity, or manufacturing issues; uncertainties involved in the development or adoption of potentially transformational technologies and business models; uncertainties regarding actual or
potential legal proceedings, investigations or disputes; our performance on environmental, social and governance measures; general political, economic and business conditions, including the effects of and efforts to mitigate pandemic diseases
such as COVID-19; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; 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 AG and its subsidiaries.
BAUSCH + LOMB is a registered trademark of Bausch & Lomb Incorporated.
About Novartis
Novartis is a focused innovative medicines company. Every day, we work to reimagine medicine to improve and
extend people’s lives so that patients, healthcare professionals and societies are empowered in the face of serious disease. Our medicines reach more than 250 million people worldwide.
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with us on LinkedIn, Facebook, X/Twitter and Instagram.
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.
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.
Important dates
November 13, 2023 Impact and Health Equity Annual Event
November 28, 2023 R&D Day
Novartis Third Quarter and Nine Months 2023 Condensed Interim Financial Report – Supplementary Data
COMPANY OPERATING PERFORMANCE REVIEW
Discontinued operations
11
COMPANY CASH FLOW AND BALANCE SHEET
12
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements
19
Consolidated statements of comprehensive income
21
Consolidated balance sheets
22
Consolidated statements of changes in equity
23
Consolidated statements of cash flows
25
Notes to condensed interim consolidated financial statements, including update on
legal proceedings
27
SUPPLEMENTARY INFORMATION
48
CORE RESULTS
Reconciliation from IFRS results to core results
50
Discontinued operations
53
ADDITIONAL INFORMATION
Effects of currency fluctuations
58
Company
Key Figures
Third quarter and nine months
(USD millions unless indicated otherwise)
|
|
Q3 2023 USD m
|
|
Q3 2022 USD m
|
|
% change USD
|
|
% change cc 1
|
|
9M 2023 USD m
|
|
9M 2022 USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Net sales from continuing operations
|
|
11 782
|
|
10 492
|
|
12
|
|
12
|
|
34 017
|
|
31 630
|
|
8
|
|
10
|
|
|
Other revenues
|
|
310
|
|
291
|
|
7
|
|
6
|
|
867
|
|
865
|
|
0
|
|
0
|
|
|
Cost of goods sold
|
|
-3 117
|
|
-2 874
|
|
-8
|
|
-4
|
|
-9 450
|
|
-8 541
|
|
-11
|
|
-9
|
|
|
Gross profit from continuing operations
|
|
8 975
|
|
7 909
|
|
13
|
|
15
|
|
25 434
|
|
23 954
|
|
6
|
|
10
|
|
|
Selling, general and administration
|
|
-3 091
|
|
-2 936
|
|
-5
|
|
-4
|
|
-9 073
|
|
-9 010
|
|
-1
|
|
-1
|
|
|
Research and development
|
|
-3 925
|
|
-2 542
|
|
-54
|
|
-48
|
|
-8 804
|
|
-6 956
|
|
-27
|
|
-25
|
|
|
Other income
|
|
224
|
|
87
|
|
157
|
|
143
|
|
1 322
|
|
541
|
|
144
|
|
141
|
|
|
Other expense
|
|
-421
|
|
-692
|
|
39
|
|
42
|
|
-1 692
|
|
-2 338
|
|
28
|
|
29
|
|
|
Operating income from continuing operations
|
|
1 762
|
|
1 826
|
|
-4
|
|
13
|
|
7 187
|
|
6 191
|
|
16
|
|
31
|
|
|
% of net sales
|
|
15.0
|
|
17.4
|
|
|
|
|
|
21.1
|
|
19.6
|
|
|
|
|
|
|
Loss from associated companies
|
|
-3
|
|
-5
|
|
40
|
|
46
|
|
-7
|
|
-8
|
|
13
|
|
26
|
|
|
Interest expense
|
|
-222
|
|
-206
|
|
-8
|
|
-11
|
|
-638
|
|
-593
|
|
-8
|
|
-11
|
|
|
Other financial income and expense
|
|
15
|
|
-28
|
|
nm
|
|
nm
|
|
204
|
|
18
|
|
nm
|
|
nm
|
|
|
Income before taxes from continuing operations
|
|
1 552
|
|
1 587
|
|
-2
|
|
18
|
|
6 746
|
|
5 608
|
|
20
|
|
36
|
|
|
Income taxes
|
|
-39
|
|
-257
|
|
85
|
|
82
|
|
-812
|
|
-874
|
|
7
|
|
-5
|
|
|
Net income from continuing operations
|
|
1 513
|
|
1 330
|
|
14
|
|
37
|
|
5 934
|
|
4 734
|
|
25
|
|
41
|
|
|
Net income from discontinued operations
|
|
250
|
|
245
|
|
2
|
|
79
|
|
440
|
|
755
|
|
-42
|
|
-18
|
|
|
Net income
|
|
1 763
|
|
1 575
|
|
12
|
|
44
|
|
6 374
|
|
5 489
|
|
16
|
|
33
|
|
|
Basic earnings per share from continuing operations (USD)
|
|
0.73
|
|
0.61
|
|
20
|
|
45
|
|
2.84
|
|
2.16
|
|
31
|
|
49
|
|
|
Basic earnings per share from discontinued operations (USD)
|
|
0.12
|
|
0.12
|
|
0
|
|
88
|
|
0.21
|
|
0.34
|
|
-38
|
|
-13
|
|
|
Total basic earnings per share (USD)
|
|
0.85
|
|
0.73
|
|
16
|
|
51
|
|
3.05
|
|
2.50
|
|
22
|
|
40
|
|
|
Net cash flows from operating activities from continuing operations
|
|
5 304
|
|
4 275
|
|
24
|
|
|
|
11 673
|
|
9 271
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS measures 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash-flow from continuing operations 2
|
|
5 043
|
|
4 054
|
|
24
|
|
|
|
11 019
|
|
8 661
|
|
27
|
|
|
|
|
Core operating income from continuing operations
|
|
4 405
|
|
3 772
|
|
17
|
|
21
|
|
12 551
|
|
11 149
|
|
13
|
|
19
|
|
|
% of net sales
|
|
37.4
|
|
36.0
|
|
|
|
|
|
36.9
|
|
35.2
|
|
|
|
|
|
|
Core net income from continuing operations
|
|
3 585
|
|
3 035
|
|
18
|
|
23
|
|
10 320
|
|
8 983
|
|
15
|
|
22
|
|
|
Core basic earnings per share (USD) from continuing operations
|
|
1.74
|
|
1.40
|
|
24
|
|
29
|
|
4.95
|
|
4.09
|
|
21
|
|
28
|
|
|
|
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 48. Unless otherwise noted,
all growth rates in this release refer to same period in prior year.
|
2 Effective January 1, 2023, Novartis revised its definition of free cash flow, to define
free cash flow as net cash flows from operating activities less purchases of property,
plant and equipment. To aid in comparability, the prior year free cash flow amounts
have been revised to conform with the new free cash flow definition. See page 48 of
the Condensed Interim Financial Report.
|
nm = not meaningful
|
Strategy update
Our focus
Novartis has completed its transformation into a “pure-play” innovative medicines
business, with the successful spin-off of Sandoz. Our focus is now centered on four core therapeutic areas (cardiovascular, renal and metabolic; immunology; neuroscience and oncology). In
each of these areas, we have multiple significant in-market and pipeline assets, all
of which address diseases with a high burden and have substantial growth potential.
In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand
therapy, and xRNA) are being prioritized for continued investment into new R&D capabilities
and manufacturing scale. Geographically, we are focused on growing in our priority geographies– the US, China, Germany and Japan.
Financials
Following the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz
business the Company reported its consolidated financial statements for the current
and prior years as “continuing operations” and “discontinued operations.”
Continuing operations include the retained business activities of Novartis, comprising
the Innovative Medicines Division and the continuing corporate activities. Discontinued
operations include the Sandoz Division and selected portions of corporate activities
attributable to Sandoz’s business, as well as certain expenses related to the spin-off.
With the spin-off of the Sandoz business, Novartis operates as a single global operating
segment, being a focused innovative medicines company.
The commentary below focuses on continuing operations. We also provide information
on discontinued operations, which mainly includes Sandoz and allocated corporate activities.
Third quarter
Net sales
Net sales were USD 11.8 billion (+12%, +12% cc) driven by volume growth of 17 percentage
points. Pricing had a negative impact of 1 percentage point and generic competition
had a negative impact of 4 percentage points. Sales in the US were USD 4.7 billion
(+13%) and in the rest of the world USD 7.1 billion (+12%, +11% cc).
Sales growth was mainly driven by continued strong performance from Kesimpta (USD 657 million, +127%, +124% cc), Entresto (USD 1.5 billion, +31%, +31% cc), Kisqali (USD 562 million, +72%, +76% cc), Pluvicto (USD 256 million, +220%, +217% cc) and Scemblix (USD 106 million, +159%, +157% cc), partly offset by generic competition mainly for
Gilenya.
In the US (USD 4.7 billion, +13%), sales growth was mainly driven by Kesimpta, Pluvicto, Kisqali and Entresto, partly offset by the impact of generic competition on Gilenya. In Europe (USD 3.9 billion, +17%, +11% cc), sales growth was driven by Kesimpta, Entresto and Kisqali, partly offset by increased generic competition for Lucentis and Gilenya. Emerging Growth Markets grew +11% (+17% cc), which includes China sales of USD 0.8
billion (+8%, +14% cc).
Operating income
Operating income was USD 1.8 billion (-4%, +13% cc), mainly driven by higher sales
and lower restructuring charges, partly offset by higher impairments through discontinuation
of early stage development projects. Operating income margin was 15.0% of net sales,
decreasing 2.4 percentage points (+0.1 percentage points in cc).
Core adjustments were USD 2.6 billion, mainly due to impairments and amortization
compared to USD 1.9 billion in prior year. Core adjustments increased compared to
prior year, mainly due to higher impairments, partly offset by lower restructuring
charges.
Core operating income was USD 4.4 billion (+17%, +21% cc), mainly driven by higher
sales. Core operating income margin was 37.4% of net sales, increasing 1.4 percentage
points (+2.7 percentage points cc). Other revenue as a percentage of sales decreased
by 0.2 percentage points (cc). Core cost of goods sold as a percentage of sales increased
by 0.8 percentage points (cc). Core R&D expenses as a percentage of net sales decreased
by 1.7
percentage points (cc). Core SG&A expenses as a percentage of net sales decreased
by 1.9 percentage points (cc). Core other income and expense as a percentage of net
sales increased the margin by 0.1 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 222 million broadly in line with prior year at USD
206 million.
Other financial income and expense amounted to an income of USD 15 million compared
to an expense USD 28 million in the prior year, as higher interest income was only
partly offset by higher currency losses.
Core other financial income and expense amounted to an income of USD 46 million compared
to an expense USD 6 million in the prior year, as higher interest income was only
partly offset by higher currency losses.
Income taxes
The tax rate for continuing operations in the third quarter was 2.5% compared to 16.2%
in the prior year. The current year rate was favorably impacted by tax benefits from
the write-down of investments in subsidiaries, net decreases in uncertain tax positions
and the effect of adjusting to the estimated full year tax rate, which was lower than
previously estimated. The prior year third quarter tax rate was impacted by the effect
of adjusting to the estimated full year tax rate, which was higher than previously
estimated. Excluding these impacts the current and prior year quarter rate would have
been 14.9% and 15.5% respectively. The decrease from the prior year was mainly the
result of a change in profit mix.
The core tax rate for continuing operations (core taxes as a percentage of core income
before tax) in the third quarter was 15.2% compared to 14.6% in the prior year. The
current and prior year third quarter core tax rate was impacted by the effect of adjusting
to the estimated full year core tax rate, which was lower than previously estimated.
Excluding these impacts the current and prior year quarter tax rate would have been
15.4%.
Net income, EPS and free cash flow
Net income was USD 1.5 billion (+14%, +37% cc), mainly due to higher operating income
and lower tax rate driven by non-recurring items. EPS was USD 0.73 (+20%, +45% cc),
growing faster than net income, benefiting from lower weighted average number of shares
outstanding.
Core net income was USD 3.6 billion (+18%, +23% cc), mainly due to higher core operating
income. Core EPS was USD 1.74 (+24%, +29% cc), growing faster than core net income,
benefiting from lower weighted average number of shares outstanding.
Free cash flow amounted to USD 5.0 billion (+24% USD), compared with USD 4.1 billion
in the prior year quarter driven by higher net cash flows from operating activities.
Nine months
Net sales
Net sales were USD 34.0 billion (+8%, +10% cc) driven by volume growth of 16 percentage
points. Pricing had a negative impact of 2 percentage points and generic competition
had a negative impact of 4 percentage points. Sales in the US were USD 13.2 billion
(+13%) and in the rest of the world USD 20.8 billion (+5%, +8% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 4.4 billion, +31%, +33% cc), Kesimpta (USD 1.5 billion, +112%, +112% cc), Kisqali (USD 1.5 billion, +68%, +74% cc), Pluvicto (USD 707 million) and Scemblix (USD 288 million, +197%, +198% cc), partly offset by generic competition mainly for
Gilenya.
In the US (USD 13.2 billion, +13%), sales growth was mainly driven by Pluvicto, Entresto, Kesimpta, Kisqali and Scemblix, partly offset by the impact of generic competition on Gilenya. In Europe (USD 11.3 billion, +5%, +5% cc), sales growth was driven by Kesimpta, Entresto, Kisqali, and Leqvio, partly offset by increased generic competition for Gilenya and Lucentis. Emerging Growth Markets grew +9% (+17% cc), which includes China sales of USD 2.5
billion (+5%, +12% cc).
Operating income
Operating income was USD 7.2 billion (+16%, +31% cc), mainly driven by higher sales,
other income from legal matters, lower restructuring charges, partly offset by higher
impairments through discontinuation of early stage
development projects. Operating income margin was 21.1% of net sales, increasing 1.5
percentage points (+3.6 percentage points in cc).
Core adjustments were USD 5.4 billion, mainly due to amortization and impairments,
compared to USD 5.0 billion in prior year. Core adjustments increased compared to
prior year, mainly due to higher impairments, partly offset by other income from legal
matters and lower restructuring charges.
Core operating income was USD 12.6 billion (+13%, +19% cc), mainly driven by higher
sales. Core operating income margin was 36.9% of net sales, increasing 1.7 percentage
points (+2.9 percentage points cc). Other revenue as a percentage of sales decreased
by 0.2 percentage points (cc). Core cost of goods sold as a percentage of sales increased
by 0.3 percentage points (cc). Core R&D expenses as a percentage of net sales decreased
by 1.4 percentage points (cc). Core SG&A expenses as a percentage of net sales decreased
by 2.2 percentage points (cc). Core other income and expense as a percentage of net
sales decreased the margin by 0.2 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 638 million broadly in line with prior year at USD
593 million.
Other financial income and expense amounted to an income of USD 204 million compared
to USD 18 million in the prior year, as higher interest income was only partly offset
by higher currency losses.
Core other financial income and expense amounted to an income of USD 293 million compared
to USD 90 million in the prior year, as higher interest income was only partly offset
by higher currency losses.
Income taxes
The tax rate in the first nine months was 12.0% compared to 15.6% in the prior year
period. The current year rate was favorably impacted by the effect of non-taxable
income recognized related to a legal matter, tax benefits from the write-down of investments
in subsidiaries and net decreases in uncertain tax positions. Excluding these impacts,
the current year tax rate would have been 15.3% compared to 15.6% in the prior year
period. The decrease from the prior year was mainly the result of a change in profit
mix.
The core tax rate (core taxes as a percentage of core income before tax) was 15.4%
in the first nine months compared to 15.6% in the prior year period. The decrease
from the prior year was mainly the result of a change in profit mix.
Net income, EPS and free cash flow
Net income was USD 5.9 billion (+25%, +41% cc), mainly due to higher operating income.
EPS was USD 2.84 (+31%, +49% cc), growing faster than net income, benefiting from
lower weighted average number of shares outstanding.
Core net income was USD 10.3 billion (+15%, +22% cc), mainly due to higher core operating
income. Core EPS was USD 4.95 (+21%, +28% cc), growing faster than core net income,
benefiting from lower weighted average number of shares outstanding.
Free cash flow amounted to USD 11.0 billion (+27% USD), compared with USD 8.7 billion
in the prior year period driven by higher net cash flows from operating activities.
Product commentary (relating to Q3 performance)
Cardiovascular, RENAL and METABOLIC
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Cardiovascular, Renal and Metabolic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
1 485
|
|
1 135
|
|
31
|
|
31
|
|
4 400
|
|
3 353
|
|
31
|
|
33
|
|
|
Leqvio
|
|
90
|
|
34
|
|
165
|
|
165
|
|
232
|
|
70
|
|
231
|
|
231
|
|
|
Total Cardiovascular, Renal and Metabolic
|
|
1 575
|
|
1 169
|
|
35
|
|
34
|
|
4 632
|
|
3 423
|
|
35
|
|
37
|
|
|
|
Entresto (USD 1 485 million, +31%, +31% cc) sustained robust demand-led growth. In the US and
Europe, Entresto penetration grew through the adoption of guideline-directed medical therapy in heart
failure. In China and Japan, Entresto volume growth is fueled by heart failure as well as increased penetration in hypertension.
In the US, Novartis is in ANDA litigation with generic manufacturers. Novartis has
appealed to reverse the negative US District Court decision and to uphold the validity
of its combination patent covering Entresto and other combinations of sacubitril and valsartan, which expires in 2025 (with pediatric
exclusivity). No generics have tentative or final approval in the US. Any US commercial
launch of a generic Entresto product prior to the final outcome of Novartis combination patent appeal, or ongoing
litigations involving other patents, may be at risk of later litigation developments.
Leqvio (USD 90 million, +165%, +165% cc) launch in the US and other markets is ongoing, with
focus on patient on-boarding, removing access hurdles and enhancing medical education.
In the US, Leqvio is covered at or near label for 76% of patients. More than 55% of Leqvio source of business in the US is now through “Buy and Bill” acquisition mode. FDA
expanded the label to include primary hyperlipidemia (patients at increased risk of
ASCVD) and removed four adverse reactions from the safety section as well as Limitations
of Use. In Q3 2023, Leqvio was approved in China and in Japan and is now approved in 93 countries. Novartis
obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals.
Immunology
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
1 329
|
|
1 274
|
|
4
|
|
4
|
|
3 677
|
|
3 708
|
|
-1
|
|
1
|
|
|
Xolair 1
|
|
369
|
|
322
|
|
15
|
|
13
|
|
1 085
|
|
1 042
|
|
4
|
|
6
|
|
|
Ilaris
|
|
335
|
|
272
|
|
23
|
|
24
|
|
979
|
|
832
|
|
18
|
|
20
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total Immunology
|
|
2 033
|
|
1 868
|
|
9
|
|
9
|
|
5 741
|
|
5 583
|
|
3
|
|
4
|
|
|
|
1 Net sales reflect Xolair sales for all indications.
|
nm = not meaningful
|
Cosentyx (USD 1 329 million, +4%, +4% cc) continued demand growth across key regions, partly
offset by US revenue deduction fluctuations across periods. Ex-US sales grew +15%
(cc). Since initial approval in 2015, Cosentyx has shown sustained efficacy and a consistent safety profile treating patients across
six systemic inflammatory conditions. In October 2023, FDA has approved Cosentyx intravenous formulation for the treatment of adults with psoriatic arthritis, ankylosing
spondylitis, and non-radiographic axial spondyloarthritis. Cosentyx hidradenitis suppurativa is now approved in more than 45 countries worldwide, with
an FDA decision expected in Q4 2023.
Xolair (USD 369 million, ex-US +15%, +13% cc) sales grew across most regions. Novartis co-promotes
Xolair with Genentech in the US and shares a portion of revenue as operating income but
does not record any US sales. In September 2023, Novartis received CHMP positive opinion
for the six new Xolair product configurations, including auto injectors.
Ilaris (USD 335 million, +23%, +24% cc) sales grew across all regions. Contributors to growth
include the Still’s disease indications (SJIA/AOSD) in the US and Europe, as well
as strong performance for the Familial Mediterranean Fever (FMF) indication in key
markets worldwide.
Neuroscience
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
657
|
|
289
|
|
127
|
|
124
|
|
1 530
|
|
723
|
|
112
|
|
112
|
|
|
Zolgensma
|
|
308
|
|
319
|
|
-3
|
|
-2
|
|
928
|
|
1 061
|
|
-13
|
|
-11
|
|
|
Mayzent
|
|
103
|
|
94
|
|
10
|
|
9
|
|
286
|
|
258
|
|
11
|
|
12
|
|
|
Aimovig
|
|
69
|
|
50
|
|
38
|
|
32
|
|
197
|
|
159
|
|
24
|
|
24
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total Neuroscience
|
|
1 137
|
|
752
|
|
51
|
|
50
|
|
2 941
|
|
2 202
|
|
34
|
|
35
|
|
|
|
nm = not meaningful
|
Kesimpta (USD 657 million, +127%, +124% cc) sales growth was driven by increased demand, strong
access, and benefiting from a one-time revenue deduction adjustment in Europe. Kesimpta is a targeted B-cell therapy that can deliver powerful and sustained high efficacy,
with a favorable safety and tolerability profile and the flexibility of an at home
self-administration for a broad population of RMS patients. Kesimpta is now approved in 87 countries with more than 55,000 patients treated.
Zolgensma (USD 308 million, -3%, -2% cc) sales were broadly in line with previous year. Established
markets are treating mainly incident patients. Zolgensma is now approved in 51 countries with more than 3500 patients treated globally through
clinical trials, early access programs and in the commercial setting.
Mayzent (USD 103 million, +10%, +9% cc) sales grew mainly in Europe. Sales continued to grow
in patients with multiple sclerosis showing signs of progression despite being on
other treatments.
Aimovig (USD 69 million, ex-US, ex-Japan +38%, +32% cc) sales grew mainly in Europe. Aimovig is reimbursed in 32 markets and has been prescribed to more than 834,000 patients
worldwide. Novartis commercializes Aimovig ex-US, ex-Japan, while Amgen retains all rights in the US and in Japan.
ONCOLOGY
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Promacta/Revolade
|
|
576
|
|
523
|
|
10
|
|
10
|
|
1 706
|
|
1 548
|
|
10
|
|
12
|
|
|
Kisqali
|
|
562
|
|
327
|
|
72
|
|
76
|
|
1 470
|
|
874
|
|
68
|
|
74
|
|
|
Tafinlar + Mekinist 1
|
|
482
|
|
450
|
|
7
|
|
8
|
|
1 436
|
|
1 305
|
|
10
|
|
13
|
|
|
Tasigna
|
|
464
|
|
489
|
|
-5
|
|
-5
|
|
1 402
|
|
1 448
|
|
-3
|
|
-1
|
|
|
Jakavi
|
|
427
|
|
386
|
|
11
|
|
9
|
|
1 276
|
|
1 173
|
|
9
|
|
11
|
|
|
Pluvicto
|
|
256
|
|
80
|
|
220
|
|
217
|
|
707
|
|
92
|
|
nm
|
|
nm
|
|
|
Lutathera
|
|
159
|
|
132
|
|
20
|
|
19
|
|
458
|
|
343
|
|
34
|
|
34
|
|
|
Kymriah
|
|
124
|
|
134
|
|
-7
|
|
-9
|
|
388
|
|
397
|
|
-2
|
|
-1
|
|
|
Piqray/Vijoice
|
|
128
|
|
103
|
|
24
|
|
24
|
|
374
|
|
261
|
|
43
|
|
44
|
|
|
Votrient
|
|
102
|
|
118
|
|
-14
|
|
-14
|
|
313
|
|
371
|
|
-16
|
|
-14
|
|
|
Scemblix
|
|
106
|
|
41
|
|
159
|
|
157
|
|
288
|
|
97
|
|
197
|
|
198
|
|
|
Adakveo
|
|
45
|
|
50
|
|
-10
|
|
-11
|
|
150
|
|
143
|
|
5
|
|
5
|
|
|
Tabrecta
|
|
36
|
|
36
|
|
0
|
|
1
|
|
113
|
|
97
|
|
16
|
|
17
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
1
|
|
2
|
|
nm
|
|
nm
|
|
|
Total Oncology
|
|
3 467
|
|
2 869
|
|
21
|
|
21
|
|
10 082
|
|
8 151
|
|
24
|
|
26
|
|
|
|
1 Majority of sales for Mekinist and Tafinlar are combination, but both
can be used as monotherapy.
|
nm = not meaningful
|
Promacta/Revolade (USD 576 million, +10%, +10% cc) sales grew across all regions driven by increased
use in second-line persistent and chronic immune thrombocytopenia and as first-line
and/or second-line treatment for severe aplastic anemia, according to the respective
label in the countries.
Kisqali (USD 562 million, +72%, +76% cc) sales grew strongly across all regions, based on
increasing recognition of its consistently reported overall survival and quality of
life benefits in HR+/HER2- advanced breast cancer. Interim iDFS data from the NATALEE
trial in early HR+/HER2- breast cancer, were presented at ASCO and submitted to EMA
in August 2023. QOL information from this data was recently presented at a virtual
ESMO session demonstrating that the addition of Kisqali did not compromise the quality of life of patients with early breast cancer. Submissions
to other regulatory authorities are ongoing with major markets expected to be submitted
by the end of this year. Novartis is in US ANDA litigation with a generic manufacturer.
Tafinlar + Mekinist (USD 482 million, +7%, +8% cc) sales grew in the US and Emerging Growth Markets,
partly offset by decline in Europe, driven by demand in BRAF+ adjuvant melanoma and
NSCLC indications, while maintaining demand in the highly competitive BRAF+ metastatic
melanoma market. In addition, growth in the US came from the tumor agnostic indication.
Tasigna (USD 464 million, -5%, -5% cc) sales declined across all regions due to various factors
including competition.
Jakavi (USD 427 million, ex-US +11%, +9% cc) sales grew in Emerging Growth Markets, Europe
and Japan, driven by strong demand in both myelofibrosis and polycythemia vera indications.
Incyte retains all rights to ruxolitinib (Jakafi®) in the US.
Pluvicto (USD 256 million, +220%, +217% cc) saw continued sales growth in the US. Pluvicto is the first and only radioligand therapy approved by the FDA for the treatment of
adult patients with progressive, PSMA-positive metastatic castration-resistant prostate
cancer, who have already been treated with other anticancer treatments (ARPI and taxane-based
chemotherapy).
Lutathera (USD 159 million, +20%, +19% cc) sales grew mainly in the US, Japan and Europe due
to increased demand. Novartis announced the Phase III NETTER-2 trial with Lutathera met its primary endpoint, showing Lutathera is the first radioligand therapy (RLT) to demonstrate clinically meaningful benefit
in a first line setting.
Kymriah (USD 124 million, -7%, -9% cc) sales declined in the US, Emerging Growth Markets and
Europe, partly offset by growth in Japan.
Piqray/Vijoice (USD 128 million, +24%, +24% cc) sales grew mainly in the US, Emerging Growth Markets
and Europe. In addition to PIK3CA-related overgrowth spectrum (PROS), Piqray is the first and only therapy specifically developed for the approximately 40% of
HR+/HER2- advanced breast cancer patients who have a PIK3CA mutation, associated with
a worse prognosis.
Votrient (USD 102 million, -14%, -14% cc) sales declined due to increased competition, especially
from immune-oncology agents in metastatic renal cell carcinoma.
Scemblix (USD 106 million, +159%, +157% cc) sales grew across all regions, demonstrating the
high unmet need for effective and tolerable treatment options for CML patients, who
have been treated with 2 or more tyrosine kinase inhibitors, or who have the T315I
mutation.
Adakveo (USD 45 million, -10%, -11% cc) sales declined mainly in Emerging Growth Markets and
Europe. In August 2023, European Commission endorsed the CHMP’s recommendation to
revoke the conditional marketing authorization for Adakveo. Adakveo remains approved for use by the FDA for the reduction in frequency of vaso-occlusive
crises (pain crises) in adults and pediatric patients aged 16 years or older with
sickle cell disease. Novartis continues to discuss the STAND study results with FDA
and other health authorities globally.
Tabrecta (USD 36 million, 0%, +1% cc) sales were stable (cc). Tabrecta is the first therapy approved by the FDA to specifically target metastatic NSCLC
with a mutation that leads to MET exon 14 skipping (METex14) in line agnostic setting.
Other promoted brands
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Other Promoted Brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultibro Group
|
|
104
|
|
108
|
|
-4
|
|
-7
|
|
332
|
|
366
|
|
-9
|
|
-8
|
|
|
Xiidra
|
|
64
|
|
109
|
|
-41
|
|
-41
|
|
249
|
|
342
|
|
-27
|
|
-27
|
|
|
Beovu
|
|
47
|
|
52
|
|
-10
|
|
-9
|
|
151
|
|
154
|
|
-2
|
|
1
|
|
|
Other respiratory
|
|
21
|
|
19
|
|
11
|
|
21
|
|
69
|
|
58
|
|
19
|
|
27
|
|
|
Total Other Promoted Brands
|
|
236
|
|
288
|
|
-18
|
|
-19
|
|
801
|
|
920
|
|
-13
|
|
-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Promoted Brands 1
|
|
8 448
|
|
6 946
|
|
22
|
|
21
|
|
24 197
|
|
20 279
|
|
19
|
|
21
|
|
|
|
1 Total Promoted Brands refer to the sum of Total Other Promoted Brands and all Therapeutic
Areas brands (Cardiovascular, Renal and Metabolic, Immunology, Neuroscience, and Oncology).
|
Ultibro Group (USD 104 million, -4%, -7% cc) sales declined mainly in Europe, Japan and Emerging
Growth Markets due to various factors including competition. Ultibro Group consists of Ultibro Breezhaler, Seebri Breezhaler and Onbrez Breezhaler.
Xiidra (USD 64 million, -41%, -41% cc) sales declined mostly driven by increase in revenue
deductions. In September 2023, Novartis completed the divestment of Xiidra to Bausch + Lomb.
Beovu (USD 47 million, -10%, -9% cc) sales declined in the US and Europe, partly offset
by growth in Japan and Emerging Growth Markets.
Established BRANDS
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Established Brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lucentis
|
|
363
|
|
455
|
|
-20
|
|
-22
|
|
1 174
|
|
1 476
|
|
-20
|
|
-19
|
|
|
Sandostatin
|
|
338
|
|
295
|
|
15
|
|
15
|
|
998
|
|
933
|
|
7
|
|
8
|
|
|
Gilenya
|
|
270
|
|
507
|
|
-47
|
|
-48
|
|
771
|
|
1 667
|
|
-54
|
|
-53
|
|
|
Exforge Group
|
|
187
|
|
185
|
|
1
|
|
3
|
|
557
|
|
584
|
|
-5
|
|
-1
|
|
|
Galvus Group
|
|
181
|
|
212
|
|
-15
|
|
-4
|
|
539
|
|
650
|
|
-17
|
|
-10
|
|
|
Diovan Group
|
|
153
|
|
160
|
|
-4
|
|
-1
|
|
466
|
|
510
|
|
-9
|
|
-4
|
|
|
Gleevec/Glivec
|
|
144
|
|
178
|
|
-19
|
|
-17
|
|
433
|
|
570
|
|
-24
|
|
-21
|
|
|
Afinitor/Votubia
|
|
85
|
|
125
|
|
-32
|
|
-30
|
|
311
|
|
406
|
|
-23
|
|
-21
|
|
|
Contract manufacturing 1
|
|
471
|
|
271
|
|
74
|
|
60
|
|
1 174
|
|
879
|
|
34
|
|
30
|
|
|
Other 2
|
|
1 142
|
|
1 158
|
|
-1
|
|
-2
|
|
3 397
|
|
3 676
|
|
-8
|
|
-3
|
|
|
Total Established Brands 1, 2
|
|
3 334
|
|
3 546
|
|
-6
|
|
-7
|
|
9 820
|
|
11 351
|
|
-13
|
|
-11
|
|
|
|
1 2022 restated to reflect the transfer of the Sandoz Division’s biotechnology manufacturing
services to other companies’ activities to the Innovative Medicines Division that
was effective as of January 1, 2023.
|
2 2022 restated to reflect the transfer of the Coartem brand from the Sandoz Division
to the Innovative Medicines Division that was effective as of January 1, 2023.
|
Lucentis (USD 363 million, ex-US -20%, -22% cc) sales declined in Europe, Emerging Growth Markets
and Japan mainly due to biosimilar competition.
Sandostatin (USD 338 million, +15%, +15% cc) sales grew mainly in the US, benefiting from favorable
revenue deduction adjustment and inventory movements compared to the prior year.
Gilenya (USD 270 million, -47%, -48% cc) sales declined due to generic competition across
all regions. Novartis is in litigation against a generic manufacturer on the method
of treatment patent in the US, and against generic manufacturers on the dosing regimen
patent in Europe.
Discontinued operations
Results for discontinued operations in the third quarter and nine-months 2023 include
the results of the Sandoz Division and selected portions of corporate activities attributable
to Sandoz business, as well as certain expenses related to the spin-off.
In connection with the Sandoz spin-off on October 4, 2023, the Company will report
as part of its Q4 discontinued operations results a one-time non-cash non-taxable
IFRS gain of approximately USD 5.9 billion. This IFRS gain represents mainly the excess
amount of the IFRS distribution liability, which is the estimated fair value of the
Sandoz business distributed to Novartis AG shareholders, over the then carrying value
of Sandoz business net assets.
Third quarter
Discontinued operations net sales were USD 2.5 billion (+8%, +6% cc), mainly driven
by ex-US growth.
Operating loss amounted to USD 86 million, compared to an operating income of USD
342 million in the previous year. The operating loss in third quarter was driven by
the discontinued corporate transaction cost related to spin-off of the Sandoz business,
which were core adjustments.
Core operating income was USD 250 million (-51%, -38% cc), mainly driven by lower
gross margin and higher SG&A expenses.
Net income from discontinued operations amounted to USD 250 million, compared to USD
245 million in the previous year.
Nine months
Discontinued operations net sales were USD 7.4 billion (+6%, +8% cc), mainly driven
by ex-US growth.
Operating income amounted to USD 265 million, compared to USD 1.1 billion in the previous
year. The current year period includes the discontinued corporate transaction cost
related to spin-off of the Sandoz business, which were core adjustments.
Core operating income was USD 1.2 billion (-20%, -11% cc), mainly driven by higher
SG&A expenses and R&D investments.
Net income from discontinued operations amounted to USD 440 million, compared to USD
755 million in the previous year.
Total company
Third quarter
Total company net income was USD 1.8 billion, mainly due to higher operating income
and lower tax rate driven by non-recurring items compared to USD 1.6 billion in the
prior year. EPS increased to USD 0.85 from USD 0.73 in prior year.
Cash flows from operating activities amounted to USD 5.4 billion compared to USD 4.7
billion in the prior year. Free cash flow amounted to USD 5.0 billion compared to
USD 4.4 billion in the prior year.
Nine months
Total company net income was USD 6.4 billion, mainly due to higher operating income
compared to USD 5.5 billion in the prior year. EPS increased to USD 3.05 from USD
2.50 in prior year.
Cash flows from operating activities amounted to USD 11.9 billion compared to USD
10.1 billion in the prior year. Free cash flow amounted to USD 11.0 billion compared
to USD 9.3 billion in the prior year.
Company Cash Flow and Balance Sheet
Cash Flow
Third quarter
Net cash flows from operating activities from continuing operations amounted to USD
5.3 billion, compared with USD 4.3 billion in the prior year quarter. This increase
was mainly driven by higher net income adjusted for non-cash items and other adjustments,
including divestment gains, favorable changes in working capital, partly offset by
higher income taxes paid.
Net cash flows from operating activities from discontinued operations amounted to
USD 74 million, compared with USD 0.4 billion in the prior year quarter. This decrease
was mainly driven by lower net income from discontinued operations adjusted for non-cash
items and other adjustments, including divestment gains.
Net cash outflows used in investing activities from continuing operations amounted
to USD 2.0 billion, compared with USD 5.3 billion net cash inflows in the prior year
quarter.
The current year quarter net cash outflows from investing activities from continuing
operations were mainly driven by cash outflows of USD 3.4 billion for acquisitions
and divestments of businesses, net (including the acquisition of Chinook Therapeutics,
Inc. for USD 3.1 billion, net of cash acquired USD 0.1 billion, and the acquisition
of DTx Pharma Inc. for USD 0.5 billion, net of cash acquired USD 0.1 billion); USD
0.4 billion for purchases of intangible assets; and USD 0.3 billion for purchases
of property, plant and equipment. These cash outflows were partly offset by the proceeds
from sale of intangible assets of USD 1.8 billion (including USD 1.75 billion proceeds
from the divestment of the ‘front of eye’ ophthalmology assets to Bausch + Lomb);
and USD 0.1 billion from the sale of financial assets and property, plant and equipment.
Net proceeds from the sale of marketable securities, commodities and time deposits
amounted to USD 0.2 billion.
In the prior year quarter, net cash inflows from investing activities from continuing
operations of USD 5.3 billion were mainly driven by net proceeds of USD 5.7 billion
from the sale of marketable securities, commodities and time deposits. These cash
inflows were partly offset by USD 0.5 billion cash outflows for purchases of intangible
assets and property, plant and equipment.
Net cash outflows used in investing activities from discontinued operations amounted
to USD 0.2 billion, broadly in line with USD 0.1 billion in the prior year quarter.
Net cash outflows used in financing activities from continuing operations amounted
to USD 4.3 billion, compared with USD 4.7 billion in the prior year quarter.
The current year quarter net cash outflows used in financing activities from continuing
operations were mainly driven by USD 2.2 billion for the repayment of two bonds denominated
in euro (notional amounts of EUR 1.25 billion and of EUR 0.75 billion) at maturity;
USD 1.6 billion payments for net treasury share transactions; and USD 0.4 billion
from the net decrease in current financial debts.
In the prior year quarter, net cash outflows used in financing activities from continuing
operations of USD 4.7 billion were mainly driven by USD 2.7 billion for net treasury
share transactions; USD 1.5 billion for the repayment of a US dollar bond; USD 0.5
billion net decrease in current financial debts; and USD 0.1 billion payments for
lease liabilities.
The current year quarter net cash inflows from financing activities from discontinued
operations of USD 3.5 billion were mainly driven by USD 3.5 billion cash inflows from
bank borrowings (including the USD 3.3 billion Sandoz business borrowings on September
28, 2023, from a group of banks) in connection with the distribution (spin-off) of
the Sandoz business to Novartis AG shareholders (refer to Notes 2, 3 and 12 for further
details). Net cash inflows from financing activities from discontinued operations
in the prior year quarter were USD 11 million.
Free cash flow from continuing operations amounted to USD 5.0 billion (+24% USD),
compared with USD 4.1 billion in the prior year quarter, driven by higher net cash
flows from operating activities from continuing operations.
Net cash flows from operating activities for the total company amounted to USD 5.4
billion, compared with USD 4.7 billion in the prior year quarter. Total company free
cash flow amounted to USD 5.0 billion, compared with USD 4.4 billion in the prior
year quarter.
Nine months
Net cash flows from operating activities from continuing operations amounted to USD
11.7 billion, compared with USD 9.3 billion in the prior year period. This increase
was mainly driven by higher net income adjusted for non-cash items and other adjustments,
including divestment gains, favorable changes in working capital, partly offset by
higher payments out of provisions.
Net cash flows from operating activities from discontinued operations amounted to
USD 0.2 billion, compared with USD 0.9 billion in the prior year period. This decrease
was mainly driven by lower net income from discontinued operations adjusted for non-cash
items and other adjustments, including divestment gains.
Net cash inflows from investing activities from continuing operations amounted to
USD 7.7 billion, compared with USD 3.2 billion in the prior year period.
The current year period net cash inflows from investing activities from continuing
operations were driven by net proceeds of USD 11.1 billion from the sale of marketable
securities, commodities and time deposits; USD 2.0 billion from the sale of intangible
assets (including USD 1.75 billion cash proceeds from the divestment of the ‘front
of eye’ ophthalmology assets to Bausch + Lomb); and USD 0.3 billion from the sale
of financial assets and property, plant and equipment. These cash inflows were partly
offset by cash outflows of USD 3.6 billion for acquisitions and divestments of businesses,
net (including the acquisition of Chinook Therapeutics, Inc. for USD 3.1 billion,
net of cash acquired USD 0.1 billion, and the acquisition of DTx Pharma Inc. for USD
0.5 billion, net of cash acquired USD 0.1 billion); USD 1.3 billion for purchases
of intangible assets; USD 0.7 billion for purchases of property, plant and equipment;
and USD 0.1 billion for purchases of financial assets.
In the prior year period, net cash inflows from investing activities from continuing
operations of USD 3.2 billion were mainly driven by net proceeds of USD 5.6 billion
from the sale of marketable securities, commodities and time deposits; USD 0.3 billion
from the sale of intangible assets, financial assets and property, plant and equipment.
These cash inflows were partly offset by USD 1.1 billion for purchases of intangible
assets; USD 0.6 billion for purchases of property, plant and equipment; and USD 0.8
billion for acquisitions and divestments of businesses, net (primarily the acquisition
of Gyroscope Therapeutics Holdings plc for USD 0.8 billion).
Net cash outflows used in investing activities from discontinued operations amounted
to USD 0.3 billion, broadly in line with the prior year period.
Net cash outflows used in financing activities from continuing operations amounted
to USD 17.1 billion, compared with USD 16.6 billion in the prior year period.
The current year period net cash outflows used in financing activities from continuing
operations were mainly driven by USD 7.3 billion for the dividend payment; USD 7.3
billion for net treasury share transactions; USD 2.2 billion for the repayment of
two bonds denominated in euro (notional amounts of EUR 1.25 billion and of EUR 0.75
billion) at maturity, and USD 0.1 billion from the net decrease in current financial
debts. Payments of lease liabilities amounted to USD 0.2 billion.
In the prior year period, net cash outflows used in financing activities from continuing
operations of USD 16.6 billion were mainly driven by USD 7.5 billion for the dividend
payment; USD 7.9 billion for net treasury share transactions; USD 2.5 billion in aggregate
for the repayment of two US dollar bonds; and USD 0.2 billion payments for lease liabilities.
These cash outflows were partly offset by cash inflows of USD 1.4 billion from the
net increase in current financial debts and other net financing cash inflows of USD
0.1 billion.
The current year period net cash inflows from financing activities from discontinued
operations of USD 3.4 billion were mainly driven by USD 3.6 billion cash inflows from
bank borrowings (including the USD 3.3 billion Sandoz business borrowings on September
28, 2023, from a group of banks) in connection with the distribution (spin-off) of
the Sandoz business to Novartis AG shareholders (refer to Notes 2, 3 and 12 for further
details). Net cash inflows from financing activities from discontinued operations
in the prior year period were USD 14 million.
Free cash flow from continuing operations amounted to USD 11.0 billion (+27% USD),
compared with USD 8.7 billion in the prior year period driven by higher net cash flows
from operating activities from continuing operations.
Net cash flows from operating activities for the total company amounted to USD 11.9
billion, compared with USD 10.1 billion in the prior year period. Total company free
cash flow amounted to USD 11.0 billion, compared with USD 9.3 billion in the prior
year period.
Balance sheet
There has been a significant change on the September 30, 2023 consolidated balance
sheet resulting from the presentation of the Sandoz business as a discontinued operations,
following the September 15, 2023 shareholders’ approval to spin-off of Sandoz business
through a dividend in kind distribution to the Novartis AG shareholders (for further
details see Note 1, Note 2 and Note 3).
The December 31, 2022 consolidated balance sheet includes the assets and liabilities
of the Sandoz business. The September 30, 2023 consolidated balance sheet excludes
the assets and liabilities of the Sandoz business in the individual lines and presents
its total assets in a single line in current assets “Assets related to discontinued
operations” and its total liabilities in a single line in current liabilities “Liabilities
related to discontinued operations.” The consolidated balance sheet discussion and
analysis that follows excludes the impacts of the presentation of the assets and liabilities
of the Sandoz business in these respective single lines as current assets and current
liabilities, respectively. For details on the assets and liabilities of the Sandoz
business at September 30, 2023 see Note 12.
Assets
Total non-current assets of USD 67.0 billion decreased by USD 1.9 billion compared to December 31, 2022, excluding
the impact of the presentation of the Sandoz business non-current assets related to
discontinued operations.
Intangible assets other than goodwill decreased by USD 3.8 billion mainly due to amortization
and impairments and the divestment of the ‘front of eye’ ophthalmology assets, partially
offset by the acquisition of Chinook Therapeutics, Inc. and of DTx Pharma Inc., additions,
and favorable currency translation adjustments.
Goodwill increased by USD 1.6 billion mainly due to the acquisition of DTx Pharma
Inc. and of Chinook Therapeutics, Inc.
Deferred tax assets increased by USD 0.6 billion and property, plant and equipment,
right-of-use assets, investments in associated companies, financial assets, and other
non-current assets were broadly in line with December 31, 2022.
Total current assets of USD 45.7 billion decreased by USD 4.0 billion compared to December 31, 2022, excluding
the impact of the presentation of the Sandoz business non-current assets related to
discontinued operations.
Cash and cash equivalents, marketable securities, commodities, time deposits and derivative
financial instruments decreased by USD 6.2 billion mainly due to the dividend payment,
and net purchases of treasury shares and intangible assets, partially offset by the
cash generated through operating activities.
Inventories increased by USD 0.6 billion and trade receivables increased by USD 1.0
billion. Other current assets increased by USD 0.6 billion and income tax receivables
were broadly in line with December 31, 2022.
Liabilities
Total non-current liabilities of USD 26.1 billion decreased by USD 2.5 billion compared to December 31, 2022, excluding
the impact of the presentation of the Sandoz business non-current liabilities related
to discontinued operations.
Non-current financial debts decreased by USD 2.1 billion mainly due to the reclassification
of USD 2.1 billion from non-current to current financial debts of a USD denominated
bond with notional amount of USD 2.2 billion maturing in 2024.
Non-current lease liabilities, deferred tax liabilities and provisions and other non-current
liabilities were broadly in line with December 31, 2022.
Total current liabilities of USD 48.4 billion increased by USD 0.7 billion compared to December 31, 2022 excluding
the impact of the presentation of the Sandoz business non-current liabilities related
to discontinued operations. This increase was mainly due to recognition of the dividend
in kind distribution liability to effect the spin-off of the Sandoz business of USD
14.0 billion (see Note 3).
Current financial debts and derivative financial instruments decreased by USD 0.3
billion, mainly due to the repayment of a 0.5% coupon bond with a notional amount
of EUR 750 million and a 0.125% coupon bond with a notional amount
of EUR 1.25 billion partly offset by the reclassification of USD 2.1 billion from
non-current to current financial debts of a USD denominated bond with notional amount
of USD 2.2 billion maturing in 2024.
Provisions and other current liabilities increased by USD 1.4 billion. Trade payables,
current income tax liabilities and current lease liabilities were broadly in line
with December 31, 2022.
Equity
The Company’s equity decreased by USD 21.2 billion to USD 38.2 billion compared to
December 31, 2022.
This decrease was mainly due to the dividend in kind distribution liability of USD
14.0 billion (see Note 3), the cash-dividend payment of USD 7.3 billion and the purchase
of treasury shares of USD 7.3 billion. This was partially offset by the net income
of USD 6.4 billion, exercise of options and employee transactions of USD 0.2 billion,
and equity-based compensation of USD 0.7 billion.
Net debt and debt/equity ratio
The Company’s liquidity amounted to USD 12.7 billion at September 30, 2023, compared
to USD 18.9 billion on December 31, 2022. Total non-current and current financial
debts, including derivatives, amounted to USD 23.5 billion at September 30, 2023 compared
to USD 26.2 billion at December 31, 2022.
The debt/equity ratio were 0.62:1 at September 30, 2023, compared to 0.44:1 at December
31, 2022. As of September 30, 2023 the net debt was USD 10.8 billion, compared to
USD 7.2 billion on December 31, 2022.
Innovation Review
Novartis continues to focus its R&D portfolio prioritizing high value medicines with
transformative potential for patients. We now focus on ~115 projects in clinical development.
Selected Innovative Medicines approvals
Product
|
|
Active ingredient/ Descriptor
|
|
Indication
|
|
Region
|
|
|
|
Leqvio
|
|
inclisiran
|
|
Hypercholesterolemia
|
|
China, Japan
|
|
|
|
Cosentyx
|
|
secukinumab
|
|
Intravenous formulation for psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial SpA
|
|
US
|
|
|
|
Jakavi
|
|
ruxolitinib
|
|
Acute graft-versus-host disease
|
|
Japan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chronic graft-versus-host disease
|
|
Japan
|
|
|
|
Selected Innovative Medicines projects awaiting regulatory decisions
|
|
|
|
Completed submissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
Indication
|
|
US
|
|
EU
|
|
Japan
|
|
News update
|
|
|
Kisqali
|
|
Hormone receptor-positive / human epidermal growth factor receptor 2-negative early breast cancer (adjuvant)
|
|
|
|
Q3 2023
|
|
|
|
– EU filing
|
|
|
LNP023 (iptacopan)
|
|
Paroxysmal nocturnal hemoglobinuria
|
|
Q2 2023
|
|
Q2 2023
|
|
Q3 2023
|
|
– Japan filing
|
|
|
Cosentyx
|
|
Hidradenitis suppurativa
|
|
Q3 2022
|
|
Approved
|
|
|
|
|
|
|
VDT482 (tislelizumab)
|
|
2L Esophageal cancer
|
|
|
|
|
|
|
|
– Mutual termination of the agreement with BeiGene, Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-small cell lung cancer
|
|
|
|
|
|
|
|
|
|
|
Selected Innovative Medicines pipeline projects
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
Aimovig
|
|
Migraine, pediatrics
|
|
≥2026
|
|
3
|
|
|
|
|
AVXS-101 (OAV101)
|
|
Spinal muscular atrophy (IT formulation)
|
|
2025
|
|
3
|
|
|
|
|
Beovu
|
|
Diabetic retinopathy
|
|
2025
|
|
3
|
|
|
|
|
CFZ533 (iscalimab)
|
|
Sjögren's syndrome
|
|
≥2026
|
|
2
|
|
|
|
|
Coartem
|
|
Malaria, uncomplicated (<5 kg patients)
|
|
2024
|
|
3
|
|
– Submission will use the MAGHP procedure in Switzerland to facilitate rapid approval in developing countries
|
|
|
Cosentyx
|
|
Giant cell arteritis
|
|
2025
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Polymyalgia rheumatica
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotator cuff tendinopathy
|
|
≥2026
|
|
3
|
|
|
|
|
EXV811 (atrasentan)
|
|
IgA nephropathy
|
|
2024
|
|
3
|
|
– Chinook aquisition
|
|
|
FUB523 (zigakibart)
|
|
IgA nephropathy
|
|
≥2026
|
|
3
|
|
– Chinook aquisition
|
|
|
JDQ443 (opnurasib)
|
|
Non-small cell lung cancer, 2/3L
|
|
2024
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-small cell lung cancer (combos)
|
|
≥2026
|
|
2
|
|
|
|
|
KAE609 (cipargamin)
|
|
Malaria, uncomplicated
|
|
≥2026
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malaria, severe
|
|
≥2026
|
|
2
|
|
|
|
|
KLU156 (ganaplacide + lumefantrine)
|
|
Malaria, uncomplicated
|
|
≥2026
|
|
2
|
|
– FDA Orphan Drug designation – FDA Fast Track designation
|
|
|
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
Leqvio
|
|
Secondary prevention of cardiovascular events in patients with elevated levels of LDL-C
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary prevention CVRR
|
|
≥2026
|
|
3
|
|
|
|
|
LNA043
|
|
Osteoarthritis
|
|
≥2026
|
|
2
|
|
– FDA Fast Track designation
|
|
|
LNP023 (iptacopan)
|
|
IgA nephropathy
|
|
2024
|
|
3
|
|
– EU Orphan Drug designation – Ph3 APPLAUSE-IgAN study met its pre-specified interim analysis primary endpoint
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C3 glomerulopathy
|
|
2024
|
|
3
|
|
– EU Orphan Drug designation – EU PRIME designation – FDA Rare Pediatric designation – China Breakthrough Therapy designation – FDA Breakthrough Therapy designation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IC-MPGN
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atypical haemolytic uraemic syndrome
|
|
≥2026
|
|
3
|
|
|
|
|
LOU064 (remibrutinib)
|
|
Chronic spontaneous urticaria
|
|
2024
|
|
3
|
|
– Ph3 REMIX-1 and REMIX-2 studies met all primary and secondary endpoints
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple sclerosis
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CINDU
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sjögren's syndrome
|
|
≥2026
|
|
2
|
|
|
|
|
Lutathera
|
|
Gastroenteropancreatic neuroendocrine tumors, 1L in G2/3 tumors
|
|
2024
|
|
3
|
|
– Ph3 NETTER-2 trial met its primary endpoint
|
|
|
177Lu-NeoB
|
|
Multiple solid tumors
|
|
≥2026
|
|
1
|
|
|
|
|
LXE408
|
|
Visceral leishmaniasis
|
|
≥2026
|
|
2
|
|
|
|
|
MBG453 (sabatolimab)
|
|
Myelodysplastic syndrome
|
|
2024
|
|
3
|
|
– FDA Fast Track designation – EU Orphan Drug designation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfit acute myeloid leukemia
|
|
≥2026
|
|
2
|
|
|
|
|
MIJ821 (onfasprodil)
|
|
Depression
|
|
|
|
2
|
|
– Program discontinued following strategic review, including a benefit risk assessment of acute MDD with suicidality
|
|
|
Piqray
|
|
Ovarian cancer
|
|
|
|
3
|
|
– Program discontinued based on benefit-risk assessment
|
|
|
Pluvicto
|
|
Metastatic castration-resistant prostate cancer pre-taxane
|
|
2024
|
|
3
|
|
– Novartis is continuing to collect OS data, regulatory filings are anticipated in 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metastatic hormone sensitive prostate cancer
|
|
2024
|
|
3
|
|
|
|
|
PPY988 (GT005)
|
|
Geographic atrophy
|
|
|
|
2
|
|
– Program discontinued based on benefit-risk assessment. No new safety signals identified. Patients treated to be provided with long term safety follow up
|
|
|
QGE031 (ligelizumab)
|
|
Food allergy
|
|
≥2026
|
|
3
|
|
|
|
|
Scemblix
|
|
1L Chronic myeloid leukemia
|
|
2024
|
|
3
|
|
|
|
|
TQJ230 (pelacarsen)
|
|
Secondary prevention of cardiovascular events in patients with elevated levels of lipoprotein(a)
|
|
2025
|
|
3
|
|
– FDA Fast Track designation – China Breakthrough Therapy designation
|
|
|
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
VAY736 (ianalumab)
|
|
Auto-immune hepatitis
|
|
≥2026
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sjögren’s syndrome
|
|
≥2026
|
|
3
|
|
– FDA Fast Track designation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lupus nephritis
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systemic lupus erythematosus
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L Immune thrombocytopenia
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2L Immune thrombocytopenia
|
|
≥2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warm Autoimmune hemolytic anemia
|
|
≥2026
|
|
3
|
|
|
|
|
VDT482 (tislelizumab)
|
|
1L Gastric cancer
|
|
|
|
3
|
|
– Mutual termination of the agreement with BeiGene, Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L ESCC
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Localized ESCC
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L Small cell lung cancer
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L Urothelial cell carcinoma
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adj/Neo adj. NSCLC
|
|
|
|
3
|
|
|
|
|
Xolair
|
|
Food allergy
|
|
2023
|
|
3
|
|
|
|
|
XXB750
|
|
Hypertension
|
|
≥2026
|
|
2
|
|
|
|
|
YTB323
|
|
sr Lupus nephritis / Systemic lupus erythematosus
|
|
≥2026
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L High-risk large B-cell lymphoma
|
|
≥2026
|
|
2
|
|
|
|
|
Condensed Interim Consolidated Financial Statements
Consolidated income statements
Third quarter (unaudited)
(USD millions unless indicated otherwise)
|
|
Note
|
|
Q3 2023
|
|
Q3 2022
|
|
|
Net sales from continuing operations
|
|
10
|
|
11 782
|
|
10 492
|
|
|
Other revenues
|
|
10
|
|
310
|
|
291
|
|
|
Cost of goods sold
|
|
|
|
-3 117
|
|
-2 874
|
|
|
Gross profit from continuing operations
|
|
|
|
8 975
|
|
7 909
|
|
|
Selling, general and administration
|
|
|
|
-3 091
|
|
-2 936
|
|
|
Research and development
|
|
|
|
-3 925
|
|
-2 542
|
|
|
Other income
|
|
|
|
224
|
|
87
|
|
|
Other expense
|
|
|
|
-421
|
|
-692
|
|
|
Operating income from continuing operations
|
|
|
|
1 762
|
|
1 826
|
|
|
Loss from associated companies
|
|
|
|
-3
|
|
-5
|
|
|
Interest expense
|
|
|
|
-222
|
|
-206
|
|
|
Other financial income and expense
|
|
|
|
15
|
|
-28
|
|
|
Income before taxes from continuing operations
|
|
|
|
1 552
|
|
1 587
|
|
|
Income taxes
|
|
|
|
-39
|
|
-257
|
|
|
Net income from continuing operations
|
|
|
|
1 513
|
|
1 330
|
|
|
Net income from discontinued operations
|
|
12
|
|
250
|
|
245
|
|
|
Net income
|
|
|
|
1 763
|
|
1 575
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
|
|
1 761
|
|
1 573
|
|
|
Non-controlling interests
|
|
|
|
2
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic (million)
|
|
|
|
2 062
|
|
2 167
|
|
|
Basic earnings per share from continuing operations (USD) 1
|
|
|
|
0.73
|
|
0.61
|
|
|
Basic earnings per share from discontinued operations (USD) 1
|
|
|
|
0.12
|
|
0.12
|
|
|
Total basic earnings per share (USD) 1
|
|
|
|
0.85
|
|
0.73
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted (million)
|
|
|
|
2 075
|
|
2 180
|
|
|
Diluted earnings per share from continuing operations (USD) 1
|
|
|
|
0.73
|
|
0.61
|
|
|
Diluted earnings per share from discontinued operations (USD) 1
|
|
|
|
0.12
|
|
0.11
|
|
|
Total diluted earnings per share (USD) 1
|
|
|
|
0.85
|
|
0.72
|
|
|
|
1 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated income statements
Nine months to September 30 (unaudited)
(USD millions unless indicated otherwise)
|
|
Note
|
|
9M 2023
|
|
9M 2022
|
|
|
Net sales from continuing operations
|
|
10
|
|
34 017
|
|
31 630
|
|
|
Other revenues
|
|
10
|
|
867
|
|
865
|
|
|
Cost of goods sold
|
|
|
|
-9 450
|
|
-8 541
|
|
|
Gross profit from continuing operations
|
|
|
|
25 434
|
|
23 954
|
|
|
Selling, general and administration
|
|
|
|
-9 073
|
|
-9 010
|
|
|
Research and development
|
|
|
|
-8 804
|
|
-6 956
|
|
|
Other income
|
|
|
|
1 322
|
|
541
|
|
|
Other expense
|
|
|
|
-1 692
|
|
-2 338
|
|
|
Operating income from continuing operations
|
|
|
|
7 187
|
|
6 191
|
|
|
Loss from associated companies
|
|
|
|
-7
|
|
-8
|
|
|
Interest expense
|
|
|
|
-638
|
|
-593
|
|
|
Other financial income and expense
|
|
|
|
204
|
|
18
|
|
|
Income before taxes from continuing operations
|
|
|
|
6 746
|
|
5 608
|
|
|
Income taxes
|
|
|
|
-812
|
|
-874
|
|
|
Net income from continuing operations
|
|
|
|
5 934
|
|
4 734
|
|
|
Net income from discontinued operations
|
|
12
|
|
440
|
|
755
|
|
|
Net income
|
|
|
|
6 374
|
|
5 489
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
|
|
6 370
|
|
5 489
|
|
|
Non-controlling interests
|
|
|
|
4
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic (million)
|
|
|
|
2 085
|
|
2 196
|
|
|
Basic earnings per share from continuing operations (USD) 1
|
|
|
|
2.84
|
|
2.16
|
|
|
Basic earnings per share from discontinued operations (USD) 1
|
|
|
|
0.21
|
|
0.34
|
|
|
Total basic earnings per share (USD) 1
|
|
|
|
3.05
|
|
2.50
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted (million)
|
|
|
|
2 098
|
|
2 210
|
|
|
Diluted earnings per share from continuing operations (USD) 1
|
|
|
|
2.83
|
|
2.14
|
|
|
Diluted earnings per share from discontinued operations (USD) 1
|
|
|
|
0.21
|
|
0.34
|
|
|
Total diluted earnings per share (USD) 1
|
|
|
|
3.04
|
|
2.48
|
|
|
|
1 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated statements of comprehensive income
Third quarter (unaudited)
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
|
Net income
|
|
1 763
|
|
1 575
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be recycled into the consolidated income statement from continuing
operations
|
|
|
|
|
|
|
Net investment hedge, net of taxes
|
|
38
|
|
36
|
|
|
Currency translation effects, net of taxes
|
|
-389
|
|
-631
|
|
|
Total of items that are or may be recycled
|
|
-351
|
|
-595
|
|
|
|
|
|
|
|
|
Items that will never be recycled into the consolidated income statement from continuing
operations
|
|
|
|
|
|
|
Actuarial gains/(losses) from defined benefit plans, net of taxes
|
|
104
|
|
-530
|
|
|
Fair value adjustments on equity securities, net of taxes
|
|
27
|
|
40
|
|
|
Total of items that will never be recycled
|
|
131
|
|
-490
|
|
|
|
|
|
|
|
|
|
Other comprehensive income from continuing operations
|
|
-220
|
|
-1 085
|
|
|
Other comprehensive income from discontinued operations
|
|
-66
|
|
-129
|
|
|
Total comprehensive income
|
|
1 477
|
|
361
|
|
|
Total comprehensive income for the year attributable to:
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
1 476
|
|
363
|
|
|
Non-controlling interests
|
|
1
|
|
-2
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Nine months to September 30 (unaudited)
(USD millions)
|
|
9M 2023
|
|
9M 2022
|
|
|
Net income
|
|
6 374
|
|
5 489
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be recycled into the consolidated income statement from continuing
operations
|
|
|
|
|
|
|
Net investment hedge, net of taxes
|
|
32
|
|
84
|
|
|
Currency translation effects, net of taxes
|
|
63
|
|
-1 735
|
|
|
Total of items that are or may be recycled
|
|
95
|
|
-1 651
|
|
|
|
|
|
|
|
|
Items that will never be recycled into the consolidated income statement from continuing
operations
|
|
|
|
|
|
|
Actuarial gains from defined benefit plans, net of taxes
|
|
47
|
|
1 741
|
|
|
Fair value adjustments on equity securities, net of taxes
|
|
-19
|
|
-281
|
|
|
Total of items that will never be recycled
|
|
28
|
|
1 460
|
|
|
|
|
|
|
|
|
|
Other comprehensive income from continuing operations
|
|
123
|
|
-191
|
|
|
Other comprehensive income from discontinued operations
|
|
-21
|
|
-170
|
|
|
Total comprehensive income
|
|
6 476
|
|
5 128
|
|
|
Total comprehensive income for the year attributable to:
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
6 472
|
|
5 136
|
|
|
Non-controlling interests
|
|
4
|
|
-8
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated balance sheets
(USD millions)
|
|
Note
|
|
Sep 30, 2023 (unaudited)
|
|
Dec 31, 2022 (audited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
9 044
|
|
10 764
|
|
|
Right-of-use assets
|
|
|
|
1 300
|
|
1 431
|
|
|
Goodwill
|
|
|
|
23 416
|
|
29 301
|
|
|
Intangible assets other than goodwill
|
|
|
|
26 418
|
|
31 644
|
|
|
Investments in associated companies
|
|
|
|
202
|
|
143
|
|
|
Deferred tax assets
|
|
|
|
3 628
|
|
3 739
|
|
|
Financial assets
|
|
|
|
1 920
|
|
2 411
|
|
|
Other non-current assets
|
|
|
|
1 109
|
|
1 110
|
|
|
Total non-current assets
|
|
|
|
67 037
|
|
80 543
|
|
|
Current assets
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
5 610
|
|
7 175
|
|
|
Trade receivables
|
|
|
|
6 819
|
|
8 066
|
|
|
Income tax receivables
|
|
|
|
280
|
|
268
|
|
|
Marketable securities, commodities, time deposits and derivative financial instruments
|
|
|
|
290
|
|
11 413
|
|
|
Cash and cash equivalents
|
|
|
|
12 405
|
|
7 517
|
|
|
Other current assets
|
|
|
|
2 782
|
|
2 471
|
|
|
Total current assets related to continuing operations
|
|
|
|
28 186
|
|
36 910
|
|
|
Assets related to discontinued operations
|
|
12
|
|
17 474
|
|
|
|
|
Total current assets
|
|
|
|
45 660
|
|
36 910
|
|
|
Total assets
|
|
|
|
112 697
|
|
117 453
|
|
|
|
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
825
|
|
890
|
|
|
Treasury shares
|
|
|
|
-32
|
|
-92
|
|
|
Reserves
|
|
|
|
37 371
|
|
58 544
|
|
|
Equity attributable to Novartis AG shareholders
|
|
|
|
38 164
|
|
59 342
|
|
|
Non-controlling interests
|
|
|
|
81
|
|
81
|
|
|
Total equity
|
|
|
|
38 245
|
|
59 423
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Financial debts
|
|
|
|
18 068
|
|
20 244
|
|
|
Lease liabilities
|
|
|
|
1 453
|
|
1 538
|
|
|
Deferred tax liabilities
|
|
|
|
2 457
|
|
2 686
|
|
|
Provisions and other non-current liabilities
|
|
|
|
4 081
|
|
4 906
|
|
|
Total non-current liabilities
|
|
|
|
26 059
|
|
29 374
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Dividend in kind distribution liability
|
|
3
|
|
13 962
|
|
|
|
|
Trade payables
|
|
|
|
3 870
|
|
5 146
|
|
|
Financial debts and derivative financial instruments
|
|
|
|
5 458
|
|
5 931
|
|
|
Lease liabilities
|
|
|
|
210
|
|
251
|
|
|
Current income tax liabilities
|
|
|
|
2 129
|
|
2 533
|
|
|
Provisions and other current liabilities
|
|
|
|
13 974
|
|
14 795
|
|
|
Total current liabilities related to continuing operations
|
|
|
|
39 603
|
|
28 656
|
|
|
Liabilities related to discontinued operations
|
|
12
|
|
8 790
|
|
|
|
|
Total current liabilities
|
|
|
|
48 393
|
|
28 656
|
|
|
Total liabilities
|
|
|
|
74 452
|
|
58 030
|
|
|
Total equity and liabilities
|
|
|
|
112 697
|
|
117 453
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated statements of changes in equity
Third quarter (unaudited)
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at July 1, 2023
|
|
|
|
842
|
|
-52
|
|
55 682
|
|
-4 625
|
|
51 847
|
|
84
|
|
51 931
|
|
|
Net income
|
|
|
|
|
|
|
|
1 761
|
|
|
|
1 761
|
|
2
|
|
1 763
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
-285
|
|
-285
|
|
-1
|
|
-286
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
1 761
|
|
-285
|
|
1 476
|
|
1
|
|
1 477
|
|
|
Dividend in kind
|
|
3
|
|
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-6
|
|
-1 390
|
|
|
|
-1 396
|
|
|
|
-1 396
|
|
|
Reduction of share capital
|
|
4.1
|
|
-17
|
|
26
|
|
-9
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
|
|
-2
|
|
|
|
-2
|
|
|
|
-2
|
|
|
Equity-based compensation
|
|
|
|
|
|
0
|
|
221
|
|
|
|
221
|
|
|
|
221
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
Transaction costs, net of taxes
|
|
4.4
|
|
|
|
|
|
-74
|
|
|
|
-74
|
|
|
|
-74
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
52
|
|
-52
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
51
|
|
|
|
51
|
|
|
|
51
|
|
|
Total of other equity movements
|
|
|
|
-17
|
|
20
|
|
-15 110
|
|
-52
|
|
-15 159
|
|
-4
|
|
-15 163
|
|
|
Total equity at September 30, 2023
|
|
|
|
825
|
|
-32
|
|
42 333
|
|
-4 962
|
|
38 164
|
|
81
|
|
38 245
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at July 1, 2022
|
|
|
|
890
|
|
-60
|
|
65 432
|
|
-3 337
|
|
62 925
|
|
81
|
|
63 006
|
|
|
Net income
|
|
|
|
|
|
|
|
1 573
|
|
|
|
1 573
|
|
2
|
|
1 575
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
-1 210
|
|
-1 210
|
|
-4
|
|
-1 214
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
1 573
|
|
-1 210
|
|
363
|
|
-2
|
|
361
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-11
|
|
-2 702
|
|
|
|
-2 713
|
|
|
|
-2 713
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
|
|
-2
|
|
|
|
-2
|
|
|
|
-2
|
|
|
Equity-based compensation
|
|
|
|
|
|
1
|
|
213
|
|
|
|
214
|
|
|
|
214
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1
|
|
-1
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
-4
|
|
4
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
32
|
|
|
|
32
|
|
|
|
32
|
|
|
Total of other equity movements
|
|
|
|
|
|
-10
|
|
-2 462
|
|
4
|
|
-2 468
|
|
-1
|
|
-2 469
|
|
|
Total equity at September 30, 2022
|
|
|
|
890
|
|
-70
|
|
64 543
|
|
-4 543
|
|
60 820
|
|
78
|
|
60 898
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated statements of changes in equity
Nine months to September 30 (unaudited)
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at January 1, 2023
|
|
|
|
890
|
|
-92
|
|
63 540
|
|
-4 996
|
|
59 342
|
|
81
|
|
59 423
|
|
|
Net income
|
|
|
|
|
|
|
|
6 370
|
|
|
|
6 370
|
|
4
|
|
6 374
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
102
|
|
102
|
|
0
|
|
102
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
6 370
|
|
102
|
|
6 472
|
|
4
|
|
6 476
|
|
|
Dividends
|
|
|
|
|
|
|
|
-7 255
|
|
|
|
-7 255
|
|
|
|
-7 255
|
|
|
Dividend in kind
|
|
3
|
|
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-41
|
|
-7 243
|
|
|
|
-7 284
|
|
|
|
-7 284
|
|
|
Reduction of share capital
|
|
4.1
|
|
-65
|
|
94
|
|
-29
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
2
|
|
149
|
|
|
|
151
|
|
|
|
151
|
|
|
Equity-based compensation
|
|
|
|
|
|
5
|
|
649
|
|
|
|
654
|
|
|
|
654
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
11
|
|
|
|
11
|
|
|
|
11
|
|
|
Transaction costs, net of taxes
|
|
4.4
|
|
|
|
|
|
-74
|
|
|
|
-74
|
|
|
|
-74
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Value adjustments on financial assets sold
|
|
|
|
|
|
|
|
68
|
|
-68
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
109
|
|
|
|
109
|
|
|
|
109
|
|
|
Total of other equity movements
|
|
|
|
-65
|
|
60
|
|
-27 577
|
|
-68
|
|
-27 650
|
|
-4
|
|
-27 654
|
|
|
Total equity at September 30, 2023
|
|
|
|
825
|
|
-32
|
|
42 333
|
|
-4 962
|
|
38 164
|
|
81
|
|
38 245
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at January 1, 2022
|
|
|
|
901
|
|
-48
|
|
70 989
|
|
-4 187
|
|
67 655
|
|
167
|
|
67 822
|
|
|
Net income
|
|
|
|
|
|
|
|
5 489
|
|
|
|
5 489
|
|
0
|
|
5 489
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
-353
|
|
-353
|
|
-8
|
|
-361
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
5 489
|
|
-353
|
|
5 136
|
|
-8
|
|
5 128
|
|
|
Dividends
|
|
|
|
|
|
|
|
-7 506
|
|
|
|
-7 506
|
|
|
|
-7 506
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-44
|
|
-8 159
|
|
|
|
-8 203
|
|
|
|
-8 203
|
|
|
Reduction of share capital
|
|
4.1
|
|
-11
|
|
15
|
|
-4
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
1
|
|
88
|
|
|
|
89
|
|
|
|
89
|
|
|
Equity-based compensation
|
|
|
|
|
|
6
|
|
645
|
|
|
|
651
|
|
|
|
651
|
|
|
Shares delivered to Alcon employees as a result of the Alcon spin-off
|
|
|
|
|
|
0
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
Decrease of treasury share repurchase obligation under a share buyback trading plan
|
|
4.3
|
|
|
|
|
|
2 809
|
|
|
|
2 809
|
|
|
|
2 809
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-81
|
|
-81
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
3
|
|
-3
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
172
|
|
|
|
172
|
|
|
|
172
|
|
|
Total of other equity movements
|
|
|
|
-11
|
|
-22
|
|
-11 935
|
|
-3
|
|
-11 971
|
|
-81
|
|
-12 052
|
|
|
Total equity at September 30, 2022
|
|
|
|
890
|
|
-70
|
|
64 543
|
|
-4 543
|
|
60 820
|
|
78
|
|
60 898
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated statements of cash flows
Third quarter (unaudited)
(USD millions)
|
|
Note
|
|
Q3 2023
|
|
Q3 2022
|
|
|
Net income from continuing operations
|
|
|
|
1 513
|
|
1 330
|
|
|
Adjustments to reconcile net income to net cash flows from operating activities from
continuing operations
|
|
|
|
|
|
|
|
Reversal of non-cash items and other adjustments from continuing operations
|
|
6.1
|
|
3 329
|
|
2 920
|
|
|
Dividends received from associated companies and others
|
|
|
|
1
|
|
|
|
|
Interest received
|
|
|
|
109
|
|
82
|
|
|
Interest paid
|
|
|
|
-178
|
|
-159
|
|
|
Change in other financial receipts
|
|
|
|
37
|
|
89
|
|
|
Change in other financial payments
|
|
|
|
-4
|
|
19
|
|
|
Income taxes paid
|
|
6.2
|
|
-426
|
|
-260
|
|
|
Net cash flows from operating activities from continuing operations before working capital and provision changes
|
|
|
|
4 381
|
|
4 021
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
|
|
-255
|
|
-193
|
|
|
Change in net current assets and other operating cash flow items
|
|
6.3
|
|
1 178
|
|
447
|
|
|
Net cash flows from operating activities from continuing operations
|
|
|
|
5 304
|
|
4 275
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
74
|
|
446
|
|
|
Total net cash flows from operating activities
|
|
|
|
5 378
|
|
4 721
|
|
|
Purchases of property, plant and equipment
|
|
|
|
-261
|
|
-221
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
|
51
|
|
20
|
|
|
Purchases of intangible assets
|
|
|
|
-422
|
|
-251
|
|
|
Proceeds from sale of intangible assets
|
|
|
|
1 823
|
|
3
|
|
|
Purchases of financial assets
|
|
|
|
-11
|
|
-15
|
|
|
Proceeds from sale of financial assets
|
|
|
|
91
|
|
26
|
|
|
Purchases of other non-current assets
|
|
|
|
|
|
-1
|
|
|
Acquisitions and divestments of interests in associated companies, net
|
|
|
|
-3
|
|
-2
|
|
|
Acquisitions and divestments of businesses, net
|
|
6.4
|
|
-3 443
|
|
8
|
|
|
Purchases of marketable securities, commodities and time deposits
|
|
|
|
-28
|
|
-6 693
|
|
|
Proceeds from sale of marketable securities, commodities and time deposits
|
|
|
|
199
|
|
12 435
|
|
|
Net cash flows (used in)/from investing activities from continuing operations
|
|
|
|
-2 004
|
|
5 309
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
|
|
-208
|
|
-111
|
|
|
Total net cash flows (used in)/from investing activities
|
|
|
|
-2 212
|
|
5 198
|
|
|
Purchases of treasury shares
|
|
|
|
-1 625
|
|
-2 718
|
|
|
Proceeds from exercised options and other treasury share transactions, net
|
|
|
|
-1
|
|
|
|
|
Repayments of the current portion of non-current financial debts
|
|
|
|
-2 223
|
|
-1 500
|
|
|
Change in current financial debts
|
|
|
|
-418
|
|
-499
|
|
|
Payments of lease liabilities
|
|
|
|
-63
|
|
-64
|
|
|
Other financing cash flows, net
|
|
|
|
24
|
|
32
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
|
|
-4 306
|
|
-4 749
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
12
|
|
3 474
|
|
11
|
|
|
Total net cash flows used in financing activities
|
|
|
|
-832
|
|
-4 738
|
|
|
Net change in cash and cash equivalents before effect of exchange rate changes
|
|
|
|
2 334
|
|
5 181
|
|
|
Less cash and cash equivalents from discontinued operations at September 30, 2023
|
|
12
|
|
-648
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
-166
|
|
-80
|
|
|
Net change in cash and cash equivalents
|
|
|
|
1 520
|
|
5 101
|
|
|
Cash and cash equivalents at July 1
|
|
|
|
10 885
|
|
3 625
|
|
|
Cash and cash equivalents at September 30
|
|
|
|
12 405
|
|
8 726
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated statements of cash flows
Nine months to September 30 (unaudited)
(USD millions)
|
|
Note
|
|
9M 2023
|
|
9M 2022
|
|
|
Net income from continuing operations
|
|
|
|
5 934
|
|
4 734
|
|
|
Adjustments to reconcile net income to net cash flows from operating activities from
continuing operations
|
|
|
|
|
|
|
|
Reversal of non-cash items and other adjustments from continuing operations
|
|
6.1
|
|
8 578
|
|
7 875
|
|
|
Dividends received from associated companies and others
|
|
|
|
2
|
|
1
|
|
|
Interest received
|
|
|
|
482
|
|
119
|
|
|
Interest paid
|
|
|
|
-513
|
|
-455
|
|
|
Other financial receipts
|
|
|
|
64
|
|
89
|
|
|
Other financial payments
|
|
|
|
-14
|
|
-21
|
|
|
Income taxes paid
|
|
6.2
|
|
-1 694
|
|
-1 368
|
|
|
Net cash flows from operating activities from continuing operations before working capital and provision changes
|
|
|
|
12 839
|
|
10 974
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
|
|
-1 181
|
|
-451
|
|
|
Change in net current assets and other operating cash flow items
|
|
6.3
|
|
15
|
|
-1 252
|
|
|
Net cash flows from operating activities from continuing operations
|
|
|
|
11 673
|
|
9 271
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
238
|
|
854
|
|
|
Total net cash flows from operating activities
|
|
|
|
11 911
|
|
10 125
|
|
|
Purchases of property, plant and equipment
|
|
|
|
-654
|
|
-610
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
|
73
|
|
56
|
|
|
Purchases of intangible assets
|
|
|
|
-1 316
|
|
-1 131
|
|
|
Proceeds from sale of intangible assets
|
|
|
|
1 953
|
|
170
|
|
|
Purchases of financial assets
|
|
|
|
-77
|
|
-86
|
|
|
Proceeds from sale of financial assets
|
|
|
|
201
|
|
121
|
|
|
Purchases of other non-current assets
|
|
|
|
|
|
-1
|
|
|
Acquisitions and divestments of interests in associated companies, net
|
|
|
|
-8
|
|
-22
|
|
|
Acquisitions and divestments of businesses, net
|
|
6.4
|
|
-3 550
|
|
-833
|
|
|
Purchases of marketable securities, commodities and time deposits
|
|
|
|
-97
|
|
-24 147
|
|
|
Proceeds from sale of marketable securities, commodities and time deposits
|
|
|
|
11 216
|
|
29 706
|
|
|
Net cash flows from investing activities from continuing operations
|
|
|
|
7 741
|
|
3 223
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
|
|
-385
|
|
-288
|
|
|
Total net cash flows from investing activities
|
|
|
|
7 356
|
|
2 935
|
|
|
Dividends paid to shareholders of Novartis AG
|
|
|
|
-7 255
|
|
-7 506
|
|
|
Purchases of treasury shares
|
|
|
|
-7 468
|
|
-7 974
|
|
|
Proceeds from exercised options and other treasury share transactions, net
|
|
|
|
158
|
|
100
|
|
|
Repayments of the current portion of non-current financial debts
|
|
|
|
-2 223
|
|
-2 575
|
|
|
Change in current financial debts
|
|
|
|
-128
|
|
1 448
|
|
|
Payments of lease liabilities
|
|
|
|
-194
|
|
-198
|
|
|
Other financing cash flows, net
|
|
|
|
42
|
|
123
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
|
|
-17 068
|
|
-16 582
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
12
|
|
3 397
|
|
14
|
|
|
Total net cash flows used in financing activities
|
|
|
|
-13 671
|
|
-16 568
|
|
|
Net change in cash and cash equivalents before effect of exchange rate changes
|
|
|
|
5 596
|
|
-3 508
|
|
|
Less cash and cash equivalents from discontinued operations at September 30, 2023
|
|
12
|
|
-648
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
-60
|
|
-173
|
|
|
Net change in cash and cash equivalents
|
|
|
|
4 888
|
|
-3 681
|
|
|
Cash and cash equivalents at January 1
|
|
|
|
7 517
|
|
12 407
|
|
|
Cash and cash equivalents at September 30
|
|
|
|
12 405
|
|
8 726
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Notes to the Condensed Interim Consolidated Financial Statements for the three month and nine month period ended September 30, 2023 (unaudited)
1. Basis of preparation
These Condensed Interim Consolidated Financial Statements for the three month and
nine month interim period ended September 30, 2023, were prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and accounting policies set out in the 2022 Annual Report published on February 1,
2023.
Following the shareholder approval for the spin-off of our Sandoz business at the
Novartis AG 2023 Extraordinary General Meeting held on September 15, 2023, International
Financial Reporting Standards (IFRS) require the Sandoz Division and selected portions
of corporate activities attributable to Sandoz’s business, as well as certain expenses
related to the spin-off (the “Sandoz business”) to be reported as discontinued operations
in the consolidated financial statements. As a result, the Sandoz business has been
presented as discontinued operations in the consolidated financial statements. This
requires the three months and nine months September 30, 2023 consolidated income statement,
consolidated statement of comprehensive income and consolidated statement of cash
flows to present separately continuing operations from discontinued operations, with
comparative amounts in the prior years restated on a consistent basis. On the September
30, 2023, consolidated balance sheet, the Sandoz business discontinued operations
assets and liabilities are presented in a single line within current assets (“Assets
related to discontinued operations”) and within current liabilities (“Liabilities
related to discontinued operations”), respectively, with no restatement of December
31, 2022, consolidated balance sheet required. Refer to Note 2, Note 3, and Note 12
for further information and disclosures.
2. Selected critical accounting policies
The Company’s principal accounting policies are set out in Note 1 to the Consolidated
Financial Statements in the 2022 Annual Report and conform with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The preparation of interim financial statements requires management to make certain
estimates and assumptions, either at the balance sheet date or during the period,
which affect the reported amounts of revenues, expenses, assets, liabilities and contingent
amounts.
Estimates are based on historical experience and other assumptions that are considered
reasonable under the given circumstances and are regularly monitored. Actual outcomes
and results could differ from those estimates and assumptions. Revisions to estimates
are recognized in the period in which the estimate is revised.
As disclosed in the 2022 Annual Report, goodwill, and acquired In-Process Research
& Development projects are reviewed for impairment at least annually and these, as
well as all other investments in intangible assets, are reviewed for impairment whenever
an event or decision occurs that raises concern about their balance sheet carrying
value. The amount of goodwill and other intangible assets on the Company’s consolidated
balance sheet has risen significantly in recent years, primarily from acquisitions.
Impairment testing may lead to potentially significant impairment charges in the future
that could have a materially adverse impact on the Company’s results of operations
and financial condition.
The Novartis AG shareholders’ approval of a special distribution by way of a dividend
in kind to effect the spin-off of Sandoz Group AG (the Sandoz business), at the 2023
EGM held on September 15, 2023, required the recognition of a distribution liability
at the fair value of the Sandoz business to be distributed to Novartis AG shareholders.
This required the use of valuation techniques for purposes of impairment testing of
the Sandoz business net assets to be distributed and for the measurement of the fair
value of the distribution liability. These valuations required the use of management
assumptions and estimates related to estimating the Sandoz business fair value. These
fair value measurements are classified as “Level 3” in the fair value hierarchy. The
section “—Impairment of goodwill and intangible assets” in Note 1 to the Consolidated Financial
Statements in the Annual Report 2022 provide additional information on key assumptions
that are highly sensitive in the estimation of fair values using valuation techniques.
Due to these factors and inherent uncertainties in the use of estimates, actual outcomes
and results could vary significantly. The section below “Distribution of Sandoz Group
AG to Novartis AG shareholders” in this Note 2 and Note 3 provides further information
and disclosures.
The Company’s activities are not subject to significant seasonal fluctuations.
Non-current assets held for sale or held for distribution to owners
Non-current assets are classified as assets held for sale or related to discontinued
operations when their carrying amount is to be recovered principally through a sale
transaction or distribution to owners and a sale or distribution to owners is considered
highly probable. They are stated at the lower of carrying amount and fair value less
costs to sell with any resulting impairment recognized. Assets related to discontinued
operations and assets of disposal group held for sale are not depreciated or amortized.
The prior-year consolidated balance sheet is not restated.
Distribution of Sandoz Group AG to Novartis AG shareholders
At the 2023 Extraordinary General Meeting (EGM) of Novartis AG shareholders, held
on September 15, 2023, the Novartis AG shareholders approved a special distribution
by way of a dividend in kind to effect the spin-off of Sandoz Group AG.
The September 15, 2023 shareholder approval for the spin-off required the Sandoz Division
and selected portions of corporate activities attributable to Sandoz’s business (the
“Sandoz business”) to be reported as discontinued operations.
The shareholder approval to spin off the Sandoz business also required the recognition
of a distribution liability at the fair value of the Sandoz business. Novartis policy
is to measure the distribution liability at the fair value of the Sandoz business
net assets taken as a whole. The distribution liability was recognized through a reduction
in retained earnings. It is required to be adjusted at each balance sheet date for
changes in its estimated fair value, up to the date of the distribution to shareholders
through retained earnings. Any resulting impairment of the business assets to be distributed
would have been recognized in the consolidated income statements in “Other expense”
of discontinued operations, at the date of initial recognition of the distribution
liability or at subsequent dates resulting from changes of the distribution liability
valuation.
At the October 4, 2023, distribution settlement date, the resulting gain, which is
measured as the excess amount of the distribution liability over the then-carrying
value of the net assets of the business distributed, will be recognized in the fourth
quarter 2023 on the line “Gain on distribution of Sandoz Group AG to Novartis AG shareholders”
within the income statement of discontinued operations.
The recognition of the distribution liability required the use of valuation techniques
for purposes of impairment testing of the Sandoz business’ assets to be distributed
and for the measurement of the fair value of the distribution liability. These valuations required the use of management assumptions and estimates
related to the Sandoz business’ future cash flows, market multiples, opening share
price of Sandoz Group AG on the first day of trading its shares on the SIX Swiss Exchange,
to estimate day one market value, and control premiums to apply in estimating the
Sandoz business fair value. These fair value measurements are classified as “Level
3” in the fair value hierarchy. The section “—Impairment of goodwill and intangible assets” in Note 1 to the Consolidated Financial
Statements in the Annual Report 2022 provide additional information on key assumptions
that are highly sensitive in the estimation of fair values using valuation techniques.
Transaction costs that are directly attributable to the distribution (spin-off) of
Sandoz business to the Novartis AG shareholders by way of a dividend in kind, and
that would otherwise have been avoided, are accounted for as a deduction from equity
(within retained earnings) at the date of distribution (spin-off). Prior to the recognition
of the distribution liability, these costs were recorded as prepaid expenses in the
consolidated balance sheet.
For additional disclosures, refer to Note 3 and Note 12.
3. Significant transactions
The Company applied the acquisition method of accounting for businesses acquired,
and did not elect to apply the optional concentration test to account for acquired
business as an asset separately acquired.
Significant transaction closed in October 2023
Spin-off of the Sandoz business through a dividend in kind distribution to Novartis
AG shareholders
On July 18, 2023, Novartis announced its Board of Directors had unanimously endorsed
the proposed separation of the Sandoz business to create an independent company by
way of a spin-off and to seek shareholder approval for the spin-off of the Sandoz
business into a separately traded standalone company, following the complete structural
separation of the Sandoz business into a standalone company (the Sandoz business or
Sandoz Group AG) and subject to satisfaction of certain conditions and Novartis AG
shareholders’ approval.
At the 2023 EGM held on September 15, 2023, the Novartis AG shareholders approved
a special distribution by way of a dividend in kind to effect the spin-off of Sandoz
Group AG, subject to completion of certain conditions precedent to the distribution.
Upon shareholder approval, the Sandoz business was reported as discontinued operations
and the distribution liability was recognized at its fair value, which exceeded the
carrying value of the Sandoz business net assets.
The conditions precedent to the spin-off were met and on October 3, 2023 the spin-off
of the Sandoz business was effected by way of a distribution of a dividend in kind
of Sandoz Group AG shares to Novartis AG shareholders and ADR (American Depositary
Receipt) holders (the Distribution). Through the Distribution, each Novartis AG shareholder
received 1 Sandoz Group AG share for every 5 Novartis AG shares / ADRs they held on
October 3, 2023, close of business. As of October 4, 2023, the shares of Sandoz Group
AG are listed on the SIX Swiss Exchange (SIX) under the symbol “SDZ”.
On September 18, 2023, the Sandoz business entered into financing arrangements with
a group of banks under which it borrowed on September 28, 2023 a total amount of USD
3.3 billion. These borrowings consisted of a bridge in EUR (EUR 2.4 billion) and
term loans in EUR (EUR 0.2 billion) and USD (USD 0.5 billion). In addition, approximately
USD 0.4 billion of borrowings under a number of local bilateral facilities in different
countries were raised. This resulted in a total gross debt of USD 3.7 billion. These
outstanding borrowings of the Sandoz business legal entities was recognized in the
September 30, 2023 consolidated balance sheet within Liabilities related to discontinued
operations and within financing activities cash flows from discontinued operations.
Prior to the Distribution on October 3, 2023, through a series of intercompany transactions,
Sandoz business legal entities paid approximately USD 3.3 billion in cash to Novartis
and its affiliates.
At September 30, 2023, the dividend in kind distribution liability to effect the Distribution
(spin-off) of the Sandoz business amounted to USD 14.0 billion and was recorded as
a reduction to equity (retained earnings). It remained unchanged from its initial
recognition and was in excess of the then carrying value of the Sandoz business net
assets, which amounted to USD 8.7 billion (see Note 12). At the Distribution on October
3, 2023, the distribution liability was unchanged from September 30, 2023, and was
in excess of the Sandoz business net assets.
Certain consolidated foundations own Novartis AG dividend-bearing shares that restrict
their availability for use by Novartis. These Novartis AG shares are accounted for
as treasury shares. Through the Distribution, these foundations received Sandoz Group
AG shares representing an approximate 4.31% equity interest in Sandoz Group AG. Upon
the loss of control of Sandoz Group AG through the Distribution on October 3, 2023,
the financial investment in Sandoz Group AG will be recognized at its initial fair
value based on the opening traded share price of Sandoz Group AG on October 4, 2023
(a Level 1 hierarchy valuation). At initial recognition, on October 4, 2023, the Sandoz
Group AG financial investment’s fair value of USD 0.5 billion and will be reported
in the fourth quarter 2023 on the consolidated balance sheet as a financial asset.
Management has designated this investment at fair value through other comprehensive
income.
At September 30, 2023 there was USD 0.3 billion cumulative income included in other
comprehensive income relating to discontinued operations.
In the fourth quarter 2023, the Company will recognize a non-taxable, noncash gain
as at the Distribution date of the spin-off of the Sandoz business amounting to approximately
USD 5.9 billion, comprising the excess amount of the distribution liability over the
then carrying value of Sandoz business net assets, the gain on recognition of Sandoz
Group AG shares obtained through the consolidated foundation and Distribution related
transaction costs.
For additional disclosures on discontinued operations, refer to Note 12.
Significant transactions closed in third quarter 2023
Acquisition of DTx Pharma Inc.
In the second quarter of 2023, Novartis entered into an agreement to acquire DTx Pharma
Inc. (DTx), a San-Diego US based, pre-clinical stage biotechnology company focused
on leveraging its proprietary FALCON platform to develop siRNA therapies for neuroscience
indications. DTx’s lead program, DTx-1252 targets the root cause of CMT1A—the overexpression of PMP22, a protein that causes the myelin sheath that supports
and insulates nerves in the peripheral nervous system to function abnormally. The
transaction also includes two additional pre-clinical programs for other neuroscience
indications. The transaction closed on July 14, 2023.
The purchase price consists of a cash payment of USD 0.6 billion and potential additional milestones up to USD 0.5 billion, which the DTx Pharma Inc. shareholders
are eligible to receive upon achievement of specified milestones.
The fair value of the total purchase consideration was USD 0.6 billion. The amount
consisted of a cash payment of USD 0.6 billion, the fair value of contingent consideration
of USD 29 million, which DTx shareholders are eligible to receive upon achievement
of specified milestones. The preliminary purchase price allocation resulted in net
identifiable assets of USD 0.4 billion, consisting primarily of intangible assets
of USD 0.3 billion and cash of USD 0.1 billion. Goodwill amounted to USD 0.2 billion.
The results of operations since the date of acquisition are not material.
Acquisition of Chinook Therapeutics, Inc.
On June 12, 2023, Novartis entered into an agreement to acquire Chinook Therapeutics,
Inc. (Chinook Therapeutics), a Seattle, WA, based clinical stage biopharmaceutical
company with two late-stage medicines in development for rare, severe chronic kidney
diseases. The acquisition closed on August 11, 2023.
The purchase price consists of a cash payment of USD 3.2 billion and potential additional payments of up to USD 0.3 billion, which Chinook Therapeutics shareholders are eligible to receive upon achievement
of specified milestones.
The fair value of the total purchase consideration was USD 3.3 billion. The amount
consisted of an upfront cash payment of USD 3.2 billion and the fair value of contingent
consideration of USD 0.1 billion, which Chinook Therapeutics shareholders are eligible
to receive upon achievement of specified milestones. The preliminary purchase price
allocation resulted in net identifiable assets of USD 2.0 billion, consisting of intangible
assets of USD 2.1 billion, net deferred tax liabilities of USD 0.4 billion and other
net assets of USD 0.3 billion, including cash of USD 0.1 billion. Goodwill amounted
to USD 1.3 billion.
The results of operations since the date of acquisition are not material.
Significant transactions in 2022
Acquisition of Gyroscope Therapeutics Holdings plc
On December 22, 2021, Novartis entered into an agreement to acquire all outstanding
shares of Gyroscope Therapeutics Holdings plc (Gyroscope), a UK-based ocular gene
therapy company. Gyroscope focuses on the discovery and development of gene therapy
treatments for retinal indications. The purchase price consisted of a cash payment
of USD 0.8 billion, subject to certain customary purchase price adjustments, and potential additional
milestone payments of up to USD 0.7 billion, which Gyroscope shareholders are eligible to receive upon achievement of
specified milestones. The acquisition closed on February 17, 2022.
The fair value of the total purchase consideration was USD 1.0 billion. The amount consisted of an upfront cash payment of USD 0.8 billion (including customary purchase price adjustments) and the fair value of contingent
consideration of USD 0.2 billion, which Gyroscope shareholders are eligible to receive upon achievement of
specified milestones. The purchase price allocation resulted in net identifiable assets
of USD 0.9 billion, consisting primarily of intangible assets of USD 1.1 billion and net deferred tax liabilities of USD 0.2 billion. Goodwill amounted to USD 0.1 billion.
The 2022 results of operations since the date of acquisition were not material.
4. Summary of equity attributable to Novartis AG shareholders
|
|
|
|
Number of outstanding shares (in millions)
|
|
Issued share capital and reserves attributable to Novartis AG shareholders (in USD millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
2023
|
|
2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Balance at beginning of year
|
|
|
|
2 119.6
|
|
2 234.9
|
|
59 342
|
|
67 655
|
|
|
Shares acquired to be canceled
|
|
|
|
-74.9
|
|
-94.2
|
|
-7 150
|
|
-8 085
|
|
|
Other share purchases
|
|
|
|
-1.4
|
|
-1.3
|
|
-134
|
|
-118
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
2.8
|
|
1.9
|
|
151
|
|
89
|
|
|
Equity-based compensation
|
|
|
|
9.4
|
|
9.7
|
|
654
|
|
651
|
|
|
Shares delivered to Alcon employees as a result of the Alcon spin-off
|
|
|
|
|
|
0.0
|
|
|
|
5
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
11
|
|
12
|
|
|
Decrease of treasury share repurchase obligation under a share buyback trading plan
|
|
4.3
|
|
|
|
|
|
|
|
2 809
|
|
|
Transaction costs, net of taxes
|
|
4.4
|
|
|
|
|
|
-74
|
|
|
|
|
Dividends
|
|
|
|
|
|
|
|
-7 255
|
|
-7 506
|
|
|
Dividend in kind
|
|
3
|
|
|
|
|
|
-13 962
|
|
|
|
|
Net income of the period attributable to shareholders of Novartis AG
|
|
|
|
|
|
|
|
6 370
|
|
5 489
|
|
|
Other comprehensive income attributable to shareholders of Novartis AG
|
|
|
|
|
|
|
|
102
|
|
-353
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
109
|
|
172
|
|
|
Balance at September 30
|
|
|
|
2 055.5
|
|
2 151.0
|
|
38 164
|
|
60 820
|
|
|
|
4.1. In 2023 Novartis AG reduced its share capital by canceling the 126 million of
shares that were repurchased on the SIX Swiss Exchange second trading line during
the previous year.
In addition, in connection with the Distribution (spin-off) of Sandoz business, Novartis
AG shareholders approved at the 2023 EGM held on September 15, 2023, a decrease in
Novartis AG share capital in the amount of CHF 22.8 million (USD 17.1 million). The
capital decrease resulted in a reduction of the nominal value of the Novartis AG shares
by CHF 0.01 from CHF 0.50 per share to CHF 0.49 per share.
In 2022 Novartis AG reduced its share capital by canceling 30.7 million of shares
that were repurchased on the SIX Swiss Exchange second trading line during the previous
year.
4.2. At December 31, 2022, the market maker held 3 million written call options, originally issued as part of the share-based compensation
for employees, that had not yet been exercised. The weighted average exercise price
of these options at December 31, 2022, was USD 66.07, and they had contractual lives of 10 years, with remaining lives less than one year. In the first quarter of 2023, the market maker exercised 3 million written call options and as a result there are no written call option outstanding at September 30, 2023.
4.3. In December 2021, Novartis entered into an irrevocable, non-discretionary arrangement
with a bank to repurchase Novartis shares on the second trading line under its up-to
USD 15.0 billion share buyback. The arrangement was updated in July 2022, December 2022, and
May 2023, and concluded in June 2023.
In June 2023, Novartis entered into an irrevocable, non-discretionary arrangement
with a bank to repurchase 11.7 million Novartis shares on the second trading line, which concluded in July 2023.
In July 2023, Novartis entered into a new irrevocable, non-discretionary arrangement
with a bank to repurchase Novartis shares on the second trading line under its new
up-to USD 15.0 billion share buyback. Novartis is able to cancel this arrangement
but may be subject to a 90-day waiting period under certain conditions. As of September
30, 2023, these waiting period conditions were not applicable and as a result, there
was no requirement to record a liability under this arrangement as of September 30,
2023.
4.4. Transaction costs in first nine months 2023 of USD 91 million, net of tax of
USD 17 million, that are directly attributable to the Distribution (spin-off) of Sandoz
business to Novartis AG shareholders and that would otherwise have been avoided, are
recorded as a deduction from equity (retained earning). See Note 2.
4.5. Other movements include, for subsidiaries in hyperinflationary economies, the
impact of the restatement of the equity balances of the current period as well as
restatement of the non-monetary assets and liabilities with the general price index
at the beginning of the period.
5. Financial instruments
Fair value by hierarchy
The following table illustrates the three hierarchical levels for valuing financial
instruments at fair value as of September 30, 2023, and December 31, 2022. For additional information on the hierarchies and other matters, please
refer to the Consolidated Financial Statements in the 2022 Annual Report, published
on February 1, 2023.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Sep 30, 2023
|
|
Dec 31, 2022
|
|
Sep 30, 2023
|
|
Dec 31, 2022
|
|
Sep 30, 2023
|
|
Dec 31, 2022
|
|
Sep 30, 2023
|
|
Dec 31, 2022
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
|
Total cash and cash equivalents at fair value
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
|
Marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities
|
|
|
|
|
|
8
|
|
9
|
|
|
|
|
|
8
|
|
9
|
|
|
Derivative financial instruments
|
|
|
|
|
|
117
|
|
204
|
|
|
|
|
|
117
|
|
204
|
|
|
Total marketable securities and derivative financial instruments at fair value
|
|
|
|
|
|
125
|
|
213
|
|
|
|
|
|
125
|
|
213
|
|
|
Current contingent consideration receivables
|
|
|
|
|
|
|
|
|
|
60
|
|
43
|
|
60
|
|
43
|
|
|
Current financial investments - equity securities
|
|
182
|
|
|
|
|
|
|
|
56
|
|
|
|
238
|
|
|
|
|
Long-term financial investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt and equity securities
|
|
220
|
|
473
|
|
10
|
|
10
|
|
551
|
|
699
|
|
781
|
|
1 182
|
|
|
Fund investments
|
|
7
|
|
20
|
|
|
|
|
|
198
|
|
261
|
|
205
|
|
281
|
|
|
Non-current contingent consideration receivables
|
|
|
|
|
|
|
|
|
|
592
|
|
607
|
|
592
|
|
607
|
|
|
Total long-term financial investments at fair value
|
|
227
|
|
493
|
|
10
|
|
10
|
|
1 341
|
|
1 567
|
|
1 578
|
|
2 070
|
|
|
Associated companies at fair value through profit or loss
|
|
|
|
|
|
|
|
|
|
111
|
|
129
|
|
111
|
|
129
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current contingent consideration liabilities
|
|
|
|
|
|
|
|
|
|
-32
|
|
-131
|
|
-32
|
|
-131
|
|
|
Current other financial liabilities
|
|
|
|
|
|
|
|
|
|
-142
|
|
|
|
-142
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
-66
|
|
-55
|
|
|
|
|
|
-66
|
|
-55
|
|
|
Dividend in kind distribution liability 1
|
|
|
|
|
|
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
|
|
Total current financial liabilities at fair value
|
|
|
|
|
|
-66
|
|
-55
|
|
-14 136
|
|
-131
|
|
-14 202
|
|
-186
|
|
|
Non-current contingent consideration liabilities
|
|
|
|
|
|
|
|
|
|
-432
|
|
-704
|
|
-432
|
|
-704
|
|
|
Non-current other financial liabilities
|
|
|
|
|
|
|
|
|
|
-23
|
|
-232
|
|
-23
|
|
-232
|
|
|
Total non-current financial liabilities at fair value
|
|
|
|
|
|
|
|
|
|
-455
|
|
-936
|
|
-455
|
|
-936
|
|
|
|
1 See Note 3 for further disclosures
|
In the first nine months of 2023, there were three transfers of equity securities
from Level 3 to Level 1 for USD 63 million mainly due to Initial Public Offering.
The fair value of straight bonds amounted to USD 17.9 billion at September 30, 2023 (USD 20.3 billion at December 31, 2022) compared with the carrying amount of USD 20.2 billion at September 30, 2023 (USD 22.3 billion at December 31, 2022). For all other financial assets and liabilities, the
carrying amount is a reasonable approximation of the fair value.
The carrying amount of financial assets included in the line total long-term financial
investments of USD 1.6 billion at September 30, 2023 (USD 2.1 billion at December 31, 2022) is included in the line “Financial assets” of the consolidated
balance sheets. The carrying amount of financial assets included in the line current
financial investments - equity securities of USD 238 million at September 30, 2023
(nil at December 31, 2022) is included in the line “Other current assets” of the consolidated
balance sheets. The carrying amount of non-current contingent consideration liabilities
and non-current other financial liabilities included in the line total non-current
financial liabilities at fair value of USD 0.5 billion at September 30, 2023 (USD
0.9 billion at December 31, 2022) is included in the line “Provisions and other non-current
liabilities” of the consolidated balance sheet.
The Company’s exposure to financial risks has not changed significantly during the
period and there have been no major changes to the risk management department or in
any risk management policies.
6. Details to the consolidated statements of cash flows
6.1. Non-cash items and other adjustments from continuing operations
The following table shows the reversal of non-cash items and other adjustments in
the consolidated statements of cash flows.
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
|
Depreciation, amortization and impairments on:
|
|
|
|
|
|
Property, plant and equipment
|
|
295
|
|
307
|
|
|
Right-of-use assets
|
|
64
|
|
64
|
|
|
Intangible assets
|
|
2 752
|
|
1 544
|
|
|
Financial assets 1
|
|
-6
|
|
90
|
|
|
Change in provisions and other non-current liabilities
|
|
-130
|
|
228
|
|
|
Gains on disposal and other adjustments on property, plant and equipment; intangible
assets; financial assets; and other non-current assets, net
|
|
-65
|
|
-15
|
|
|
Equity-settled compensation expense
|
|
205
|
|
208
|
|
|
Loss from associated companies
|
|
3
|
|
5
|
|
|
Income taxes
|
|
39
|
|
257
|
|
|
Net financial expense
|
|
207
|
|
234
|
|
|
Other
|
|
-35
|
|
-2
|
|
|
Total
|
|
3 329
|
|
2 920
|
|
|
|
1 Includes fair value changes
|
(USD millions)
|
|
9M 2023
|
|
9M 2022
|
|
|
Depreciation, amortization and impairments on:
|
|
|
|
|
|
Property, plant and equipment
|
|
760
|
|
1 025
|
|
|
Right-of-use assets
|
|
197
|
|
200
|
|
|
Intangible assets
|
|
5 732
|
|
3 658
|
|
|
Financial assets 1
|
|
69
|
|
288
|
|
|
Change in provisions and other non-current liabilities
|
|
232
|
|
835
|
|
|
Gains on disposal and other adjustments on property, plant and equipment; intangible
assets; financial assets; and other non-current assets, net
|
|
-281
|
|
-181
|
|
|
Equity-settled compensation expense
|
|
617
|
|
602
|
|
|
Loss from associated companies
|
|
7
|
|
8
|
|
|
Income taxes
|
|
812
|
|
874
|
|
|
Net financial expense
|
|
434
|
|
575
|
|
|
Other
|
|
-1
|
|
-9
|
|
|
Total
|
|
8 578
|
|
7 875
|
|
|
|
1 Includes fair value changes
|
In the third quarter of 2023, other than through business combinations, there were
no additions to intangible assets (Q3 2022: USD 325 million) with deferred payments.
In the third quarter of 2023, there were USD 46 million (Q3 2022: USD 59 million) additions to right-of-use assets recognized.
In the nine-month period of 2023, other than through business combinations, there
were no additions to intangible assets with deferred payments.
In the nine-month period of 2022, other than through business combinations, there
were USD 644 million additions to intangible assets with deferred payments.
In the nine-month period of 2023, there were USD 238 million (9M 2022: USD 166 million) additions to right-of-use assets recognized.
6.2. Total amount of income taxes paid
In the first nine month period of 2023, the amount of income taxes paid by continuing
operations was USD 1 694 million (Q3 2023: USD 426 million) and by discontinued operations
was USD 162 million (Q3 2023: USD 52 million), which was included within “Net cash
flows from operating activities from discontinued operations.” In the first nine month
period of 2023, the total amount of income taxes paid by the Company was USD 1 856
million (Q3 2023: USD 478 million).
In the first nine month period of 2022, the total amount of income taxes paid by continuing
operations was USD 1 368 million (Q3 2022: USD 260 million) and by discontinued operations
was USD 191 million (Q3 2022: USD 60 million), which was included within “Net cash
flows
from operating activities from discontinued operations.” In the first nine month period
of 2022, the total amount of income taxes paid by the Company was USD 1 559 million
(Q3 2022: USD 320 million).
6.3. Cash flows from changes in working capital and other operating items included in the
net cash flows from operating activities from continuing operations
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Increase in inventories
|
|
-33
|
|
-129
|
|
-579
|
|
-514
|
|
|
Increase in trade receivables
|
|
-117
|
|
-136
|
|
-1 264
|
|
-825
|
|
|
Decrease in trade payables
|
|
-184
|
|
-121
|
|
-85
|
|
-325
|
|
|
Change in other current and non-current assets
|
|
16
|
|
127
|
|
-84
|
|
-86
|
|
|
Change in other current liabilities
|
|
1 496
|
|
706
|
|
2 027
|
|
498
|
|
|
Total
|
|
1 178
|
|
447
|
|
15
|
|
-1 252
|
|
|
6.4. Cash flows arising from acquisitions and divestments of businesses, net
The following table is a summary of the cash flow impact of acquisitions and divestments
of businesses. The most significant transactions are described in Note 3.
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Net assets recognized as a result of acquisitions of businesses
|
|
-3 696
|
|
9
|
|
-3 696
|
|
-1 077
|
|
|
Fair value of previously held equity interests
|
|
27
|
|
-2
|
|
27
|
|
22
|
|
|
Contingent consideration payable, net
|
|
163
|
|
-7
|
|
153
|
|
224
|
|
|
Payments (incl. prepayments), deferred consideration and other adjustments, net
|
|
61
|
|
|
|
-39
|
|
1
|
|
|
Cash flows used for acquisitions of businesses
|
|
-3 445
|
|
0
|
|
-3 555
|
|
-830
|
|
|
Cash flows from/(used for) divestments of businesses, net 1
|
|
2
|
|
8
|
|
5
|
|
-3
|
|
|
Cash flows (used in)/from acquisitions and divestments of businesses, net
|
|
-3 443
|
|
8
|
|
-3 550
|
|
-833
|
|
|
|
1 In the first nine months of 2023, USD 5 million (Q3 2023: USD 2 million) represented the net cash inflows from divestments in prior years.
|
In the first nine months of 2022, USD 3 million (Q3 2022: USD 8 million net cash inflows) net cash outflows from divestments of businesses included
USD 20 million (Q3 2022: nil) reduction to cash and cash equivalents due to the derecognized cash and cash equivalents
following a loss of control of a company upon expiry of an option to purchase the
company, partly offset by net cash inflows of USD 17 million (Q3 2022: USD 8 million) from business divestments in the 2022 periods and in prior years.
|
In the first nine months of 2022, the net identifiable assets of divested businesses
amounted to USD 106 million (Q3 2022: nil), comprised of non-current assets of USD 113 million (Q3 2022: nil), current assets of USD 22 million (Q3 2022: nil), including USD 20 million (Q3 2022: nil) cash and cash equivalents and of non-current and current liabilities of USD 29 million (Q3 2022: nil).
|
Notes 3 and 7 provide further information regarding acquisitions and divestments of
businesses. All acquisitions were for cash.
7. Acquisitions of businesses
Fair value of assets and liabilities arising from acquisitions of businesses:
(USD millions)
|
|
9M 2023
|
|
9M 2022
|
|
|
Property, plant and equipment
|
|
18
|
|
13
|
|
|
Right-of-use assets
|
|
16
|
|
12
|
|
|
Acquired research and development
|
|
2 408
|
|
1 213
|
|
|
Other intangible assets
|
|
15
|
|
|
|
|
Deferred tax assets
|
|
182
|
|
53
|
|
|
Non-current financial and other assets
|
|
148
|
|
|
|
|
Trade receivable and financial and other current assets
|
|
181
|
|
5
|
|
|
Cash and cash equivalents
|
|
226
|
|
88
|
|
|
Deferred tax liabilities
|
|
-592
|
|
-301
|
|
|
Current and non-current lease liabilities
|
|
-50
|
|
-12
|
|
|
Trade payables and other liabilities
|
|
-152
|
|
-68
|
|
|
Net identifiable assets acquired
|
|
2 400
|
|
1 003
|
|
|
Acquired cash and cash equivalents
|
|
-226
|
|
-88
|
|
|
Goodwill
|
|
1 522
|
|
162
|
|
|
Net assets recognized as a result of acquisitions of businesses 1
|
|
3 696
|
|
1 077
|
|
|
|
1 All net assets recognized relate to business combinations of continuing operations.
|
Note 3 details significant acquisitions of businesses, specifically the acquisition
of DTx Pharma and Chinook Therapeutics in the third quarter of 2023. In the first
nine months of 2022, there was the acquisition of Gyroscope. The goodwill arising
out of the acquisitions was mainly attributable to synergies, the accounting for deferred
tax liabilities on acquired assets and the assembled workforce. None of the goodwill was tax deductible.
8. Legal proceedings update
A number of Novartis companies are, and will likely continue to be, subject to various
legal proceedings, including litigations, arbitrations and governmental investigations,
that arise from time to time. Legal proceedings are inherently unpredictable. As a
result, the Company may become subject to substantial liabilities that may not be
covered by insurance and may in the future incur judgments or enter into settlements
of claims that could have a material adverse effect on its results of operations or
cash flow. Note 20 to the Consolidated Financial Statements in our 2022 Annual Report
and 2022 Form 20-F contains a summary as of the date of these reports of significant
legal proceedings to which Novartis or its subsidiaries were a party. The following
is a summary as of October 23, 2023, of significant developments in those proceedings,
as well as any new significant proceedings commenced since the date of the 2022 Annual
Report and 2022 Form 20-F.
Investigations and related litigations
Lucentis/Avastin® matters
In connection with an investigation into whether Novartis entities, F. Hoffmann-La
Roche AG, Genentech Inc. and Roche S.p.A. colluded to artificially preserve the market
positions of Avastin® and Lucentis, in 2014 the Italian Competition Authority (ICA)
imposed a fine equivalent to USD 125 million on the Novartis entities. Novartis paid the fine, subject to the right to
later claim recoupment, and appealed before the Consiglio di Stato (CdS). In 2014
and 2015, the Italian Ministry of Health and the Lombardia region sent letters with
payment requests for a total equivalent of approximately USD 1.3 billion in damages from Novartis and Roche entities based on these allegations. In
2019, the CdS upheld the ICA decision and fine. Following that CdS decision, several
additional Italian regions and hospitals sent letters claiming damages for an aggregate
amount of approximately USD 330 million. Novartis filed a revocation action before the CdS in 2019 and a further
appeal before the Supreme Court in 2020. Respectively in October 2021 and May 2023,
the Supreme Court and the CdS rejected Novartis’s actions.
The ICA decision is now final.
In 2019, the French Competition Authority (FCA) issued a Statement of Objections against
Novartis entities, alleging anti-competitive practices on the French market for anti-vascular
endothelial growth factor treatments for wet age-related macular degeneration from
2008 to 2013. In 2020, the FCA issued a decision finding that the Novartis entities
had infringed competition law by abusing a dominant position and imposing a fine
equivalent to approximately USD 452 million. Novartis paid the fine, again subject to recoupment, and appealed the FCA’s
decision. In February 2023, the Paris Court of Appeal (Court) overturned the FCA’s
decision which triggered the reimbursement of the originally paid fine (recorded as
“Other income” in the Company’s consolidated income statement), and in March 2023,
the FCA filed an appeal of the Court’s decision. Novartis entities are the subject
of similar investigations and proceedings involving competition authorities, which
are disclosed in the 2022 Annual Report and 2022 Form 20-F.
Inflation Reduction Act (IRA) litigation
In 2023, following the U.S. government’s selection of Entresto for the first round
of the IRA’s “Medicare Drug Price Negotiation Program,” NPC filed a complaint in the
U.S. District Court (USDC) for the District of New Jersey on the grounds that those
drug price-setting provisions are unconstitutional under the First, Fifth and Eighth
Amendments to the U.S. Constitution.
Antitrust class actions
Exforge
Since 2018, Novartis Group companies as well as other pharmaceutical companies have
been sued by various direct and indirect purchasers of Exforge in multiple US individual and putative class action complaints. They claim that Novartis
made a reverse payment in the form of an agreement not to launch an authorized generic,
alleging violations of federal antitrust law and state antitrust, consumer protection and common
laws, and seeking damages as well as injunctive relief. The cases were consolidated
in the S.D.N.Y. In 2022, Novartis agreed to a settlement in principle to pay USD 245 million to resolve these cases. In Q1 2023 Novartis paid USD 245 million to fund the required trust accounts. Certain of these settlements were subject
to court approval, a process that was completed in October 2023, which means the matters
are finally disposed of and completed.
Discontinued operations
On October 4, 2023, the separation and spin-off of the Sandoz business was completed
(see Note [3]). Pursuant to the Separation and Distribution Agreement between Novartis
and Sandoz entered into in connection with that separation and spin-off, Sandoz and
Novartis agreed, subject to certain limitations, exclusions and conditions, that Sandoz
would retain or assume (as applicable) liabilities, including pending and future claims,
which relate to the spun-off Sandoz business (whether arising prior to, at or after
the date of execution of the Separation and Distribution Agreement), including the
matters described below (the description of which was accurate as at the time of the
spin-off). Additionally, pursuant to the Separation and Distribution Agreement, Sandoz
has agreed to indemnify Novartis and each of its directors, officers, managers, members,
agents and employees against liabilities incurred in connection with the spun-off
Sandoz business, including the matters described below.
Government generic pricing antitrust investigations, antitrust class actions in the
United States
Since 2016, Sandoz Inc. has been part of an investigation into alleged price fixing
and market allocation of generic drugs in the United States. In 2020, Sandoz Inc.
reached a resolution with the DOJ Antitrust Division, pursuant to which Sandoz Inc.
paid USD 195 million and entered into a deferred prosecution agreement (DPA). The
Sandoz Inc. resolution related to instances of misconduct at the Company between 2013
and 2015 with regard to certain generic drugs sold in the United States. The term
of the DPA concluded in March 2023 and the underlying matter has been dismissed. Sandoz
Inc. also finalized a resolution with the DOJ Civil Division and in 2021 paid USD
185 million to settle related claims arising under the False Claims Act, and entered
into a corporate integrity agreement with the Office of Inspector General (OIG) of
the US Department of Health and Human Services (HHS). This resolved all federal government
matters related to price fixing allegations.
Since the third quarter of 2016, Sandoz Inc. and Fougera Pharmaceuticals Inc. have
been sued alongside other generic pharmaceutical companies in numerous related individual
and putative class action complaints by direct and indirect private purchasers and
by over 50 US states and territories, represented by their respective Attorneys General.
Plaintiffs claim that defendants, including Sandoz Inc., engaged in price fixing and
market allocation of generic drugs in the United States, and seek damages and injunctive
relief. The litigation includes complaints alleging product-specific conspiracies,
as well as complaints alleging the existence of an overarching industry conspiracy,
and assert claims for damages and penalties under federal and state antitrust and
consumer protection acts. The cases have been consolidated for pretrial purposes in
the USDC for the Eastern District of Pennsylvania, and as at the date of the spin-off
the claims are being vigorously contested by Sandoz.
Government opioid litigation in the United States and Canada relating to Sandoz products
Sandoz and Novartis entities are named as defendants in opioids litigation in the
US and Canada. In the US, Sandoz is named in more than 600 complaints filed in multidistrict
litigation (MDL) in US federal court in the Northern District of Ohio and 149 of those
cases also name Novartis AG and/or NPC. In addition to the MDL, fewer than 10 lawsuits
have been filed against Sandoz and, in certain cases, certain Novartis entities in
US state and federal courts. The plaintiffs are various US political subdivisions
(including certain cities, counties, states, other governmental agencies and tribes),
school districts, hospitals and third-party payors, and they seek civil damages under
various state law grounds, including consumer protection and nuisance, allegedly arising
from the manufacture, promotion, sale and distribution of opioids. On August 31, 2023,
Sandoz entered into a settlement for the opioids litigation in the US. Under the settlement,
Sandoz will pay USD 100 million into a qualified settlement fund administered by a
third party within 30 days of the time when 85% of plaintiffs who filed cases against
Sandoz agree to participate in the settlement. The deadline for plaintiffs to elect
to participate in the settlement is January 31, 2024, although that date can be extended.
In Canada, Sandoz has been named in 6 class actions initiated in the provinces of
British Columbia, Ontario, Alberta, Saskatchewan, and Québec. The claims are being
vigorously contested.
In addition to the matters described above, there have been other non-material developments
in the other legal matters described in Note 20 to the Consolidated Financial Statements
contained in our 2022 Annual Report and 2022 Form 20-F.
Novartis believes that its total provisions for investigations, product liability,
arbitration and other legal matters are adequate based upon currently available information.
However, given the inherent difficulties in estimating liabilities, there can be no
assurance that additional liabilities and costs will not be incurred beyond the amounts
provided.
9. Operating segment
Prior to the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz
business (refer to Note 2 and Note 3 for additional information), the businesses of
Novartis were divided operationally on a worldwide basis into two identified reporting
segments: Innovative Medicines Division and the Sandoz Division. In addition, we separately
reported Corporate activities.
Following the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz
business (see Note 2 and Note 3), the Company reported its consolidated financial
statements for the current and prior years as “continuing operations” and “discontinued
operations” (see Note 1).
Continuing operations include the retained business activities of Novartis, comprising
the Innovative Medicines Division and the continuing Corporate activities.
Discontinued operations include the Sandoz Division and selected portions of corporate
activities attributable to Sandoz’s business, as well as certain expenses related
to the spin-off. For further details and disclosures on discontinued operations, refer
to Note 3 and Note 12.
Effective January 1, 2023, the Sandoz business bio-technology manufacturing services
to other companies’ activities and the Coartem brand were transferred to the Novartis continuing operations. The financial information
of the Novartis continuing operations and discontinued operations were accordingly
adapted in 2023 and prior years, in compliance with IFRS. This restatement had no
impact on the reported financial results and consolidated balance sheet of the total
Company.
With the spin-off of the Sandoz business, Novartis operates as a single global operating
segment, as a focused innovative medicines company that is engaged in the research,
development, manufacturing and commercialization and sale of innovative medicines.
The Company’s research, development manufacturing and supply of products and functional
activities are managed globally on a vertically integrated basis. Commercial efforts
that coordinate marketing, sales and distribution of these products are organized
by geographic region or therapeutic area.
The Executive Committee of Novartis (ECN), chaired by the CEO, is the governance body
that is responsible for allocating resources and assessing the business performance
of the operating segment of the Company on a global basis and is the chief operating
decision-maker (CODM) for the Company.
The determination of a single operating segment is consistent with the consolidated
financial information regularly reviewed by the CODM for purposes of assessing performance
and allocating resources.
See Note 10 for revenue and geographic information disclosures.
10. Revenues and geographic information
Net sales
Net sales information
Net sales from continuing operations comprise the following:
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Net sales to third parties from continuing operations
|
|
11 436
|
|
10 299
|
|
33 212
|
|
31 006
|
|
|
Sales to discontinued operations
|
|
346
|
|
193
|
|
805
|
|
624
|
|
|
Net sales from continuing operations
|
|
11 782
|
|
10 492
|
|
34 017
|
|
31 630
|
|
|
Net sales from continuing operations by region1
Third quarter
|
|
Q3 2023 USD m
|
|
Q3 2022 USD m
|
|
% change USD
|
|
% change cc 2
|
|
Q3 2023 % of total
|
|
Q3 2022 % of total
|
|
|
Europe
|
|
3 930
|
|
3 360
|
|
17
|
|
11
|
|
33
|
|
32
|
|
|
US
|
|
4 648
|
|
4 117
|
|
13
|
|
13
|
|
39
|
|
39
|
|
|
Asia/Africa/Australasia
|
|
2 349
|
|
2 272
|
|
3
|
|
8
|
|
20
|
|
22
|
|
|
Canada and Latin America
|
|
855
|
|
743
|
|
15
|
|
21
|
|
8
|
|
7
|
|
|
Total
|
|
11 782
|
|
10 492
|
|
12
|
|
12
|
|
100
|
|
100
|
|
|
Of which in Established Markets
|
|
8 719
|
|
7 729
|
|
13
|
|
10
|
|
74
|
|
74
|
|
|
Of which in Emerging Growth Markets
|
|
3 063
|
|
2 763
|
|
11
|
|
17
|
|
26
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Net sales from continuing operations by location of customer. Emerging Growth Markets
comprise all markets other than the Established Markets of the US, Canada, Western
Europe, Japan, Australia and New Zealand.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 48.
|
Net sales from continuing operations by region1
Nine months to September 30
|
|
9M 2023 USD m
|
|
9M 2022 USD m
|
|
% change USD
|
|
% change cc 2
|
|
9M 2023 % of total
|
|
9M 2022 % of total
|
|
|
Europe
|
|
11 281
|
|
10 776
|
|
5
|
|
5
|
|
33
|
|
34
|
|
|
US
|
|
13 196
|
|
11 717
|
|
13
|
|
13
|
|
39
|
|
37
|
|
|
Asia/Africa/Australasia
|
|
7 077
|
|
6 944
|
|
2
|
|
9
|
|
21
|
|
22
|
|
|
Canada and Latin America
|
|
2 463
|
|
2 193
|
|
12
|
|
20
|
|
7
|
|
7
|
|
|
Total
|
|
34 017
|
|
31 630
|
|
8
|
|
10
|
|
100
|
|
100
|
|
|
Of which in Established Markets
|
|
25 070
|
|
23 401
|
|
7
|
|
7
|
|
74
|
|
74
|
|
|
Of which in Emerging Growth Markets
|
|
8 947
|
|
8 229
|
|
9
|
|
17
|
|
26
|
|
26
|
|
|
|
1 Net sales from continuing operations by location of customer. Emerging Growth Markets
comprise all markets other than the Established Markets of the US, Canada, Western
Europe, Japan, Australia and New Zealand.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 48.
|
Net sales from continuing operations by core therapeutic area; other promoted brands;
and established brands
Third quarter
|
|
Q3 2023
|
|
Q3 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m 1
|
|
USD
|
|
cc 2
|
|
|
Cardiovascular, Renal and Metabolic
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
1 485
|
|
1 135
|
|
31
|
|
31
|
|
|
Leqvio
|
|
90
|
|
34
|
|
165
|
|
165
|
|
|
Total Cardiovascular, Renal and Metabolic
|
|
1 575
|
|
1 169
|
|
35
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
1 329
|
|
1 274
|
|
4
|
|
4
|
|
|
Xolair 3
|
|
369
|
|
322
|
|
15
|
|
13
|
|
|
Ilaris
|
|
335
|
|
272
|
|
23
|
|
24
|
|
|
Total Immunology
|
|
2 033
|
|
1 868
|
|
9
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
657
|
|
289
|
|
127
|
|
124
|
|
|
Zolgensma
|
|
308
|
|
319
|
|
-3
|
|
-2
|
|
|
Mayzent
|
|
103
|
|
94
|
|
10
|
|
9
|
|
|
Aimovig
|
|
69
|
|
50
|
|
38
|
|
32
|
|
|
Total Neuroscience
|
|
1 137
|
|
752
|
|
51
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
Promacta/Revolade
|
|
576
|
|
523
|
|
10
|
|
10
|
|
|
Kisqali
|
|
562
|
|
327
|
|
72
|
|
76
|
|
|
Tafinlar + Mekinist
|
|
482
|
|
450
|
|
7
|
|
8
|
|
|
Tasigna
|
|
464
|
|
489
|
|
-5
|
|
-5
|
|
|
Jakavi
|
|
427
|
|
386
|
|
11
|
|
9
|
|
|
Pluvicto
|
|
256
|
|
80
|
|
220
|
|
217
|
|
|
Lutathera
|
|
159
|
|
132
|
|
20
|
|
19
|
|
|
Kymriah
|
|
124
|
|
134
|
|
-7
|
|
-9
|
|
|
Piqray/Vijoice
|
|
128
|
|
103
|
|
24
|
|
24
|
|
|
Votrient
|
|
102
|
|
118
|
|
-14
|
|
-14
|
|
|
Scemblix
|
|
106
|
|
41
|
|
159
|
|
157
|
|
|
Adakveo
|
|
45
|
|
50
|
|
-10
|
|
-11
|
|
|
Tabrecta
|
|
36
|
|
36
|
|
0
|
|
1
|
|
|
Total Oncology
|
|
3 467
|
|
2 869
|
|
21
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Promoted Brands
|
|
|
|
|
|
|
|
|
|
Ultibro Group
|
|
104
|
|
108
|
|
-4
|
|
-7
|
|
|
Xiidra
|
|
64
|
|
109
|
|
-41
|
|
-41
|
|
|
Beovu
|
|
47
|
|
52
|
|
-10
|
|
-9
|
|
|
Other respiratory
|
|
21
|
|
19
|
|
11
|
|
21
|
|
|
Total Other Promoted Brands
|
|
236
|
|
288
|
|
-18
|
|
-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Promoted Brands
|
|
8 448
|
|
6 946
|
|
22
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Established Brands
|
|
|
|
|
|
|
|
|
|
Lucentis
|
|
363
|
|
455
|
|
-20
|
|
-22
|
|
|
Sandostatin
|
|
338
|
|
295
|
|
15
|
|
15
|
|
|
Gilenya
|
|
270
|
|
507
|
|
-47
|
|
-48
|
|
|
Exforge Group
|
|
187
|
|
185
|
|
1
|
|
3
|
|
|
Galvus Group
|
|
181
|
|
212
|
|
-15
|
|
-4
|
|
|
Diovan Group
|
|
153
|
|
160
|
|
-4
|
|
-1
|
|
|
Gleevec/Glivec
|
|
144
|
|
178
|
|
-19
|
|
-17
|
|
|
Afinitor/Votubia
|
|
85
|
|
125
|
|
-32
|
|
-30
|
|
|
Contract manufacturing 4
|
|
471
|
|
271
|
|
74
|
|
60
|
|
|
Other 5
|
|
1 142
|
|
1 158
|
|
-1
|
|
-2
|
|
|
Total Established Brands 4, 5
|
|
3 334
|
|
3 546
|
|
-6
|
|
-7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales from continuing operations
|
|
11 782
|
|
10 492
|
|
12
|
|
12
|
|
|
|
1 In Q1 2023 Lucentis was reclassified from Other Promoted Brands to Established
Brands and Gilenya was reclassified from Neuroscience to Established Brands.
These reclassifications have been reflected in Q3 2022.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 48.
|
3 Net sales to from continuing operations reflect Xolair sales for all indications.
|
4 2022 restated to reflect the transfer of the Sandoz Division’s biotechnology manufacturing
services to other companies’ activities to the Innovative Medicines Division that
was effective as of January 1, 2023.
|
5 2022 restated to reflect the transfer of the Coartem brand from the Sandoz Division
to the Innovative Medicines Division that was effective as of January 1, 2023.
|
|
|
Net sales from continuing operations by core therapeutic area; other promoted brands;
and established brands
Nine months to September 30
|
|
9M 2023
|
|
9M 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m 1
|
|
USD
|
|
cc 2
|
|
|
Cardiovascular, Renal and Metabolic
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
4 400
|
|
3 353
|
|
31
|
|
33
|
|
|
Leqvio
|
|
232
|
|
70
|
|
231
|
|
231
|
|
|
Total Cardiovascular, Renal and Metabolic
|
|
4 632
|
|
3 423
|
|
35
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
3 677
|
|
3 708
|
|
-1
|
|
1
|
|
|
Xolair 3
|
|
1 085
|
|
1 042
|
|
4
|
|
6
|
|
|
Ilaris
|
|
979
|
|
832
|
|
18
|
|
20
|
|
|
Other
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total Immunology
|
|
5 741
|
|
5 583
|
|
3
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
1 530
|
|
723
|
|
112
|
|
112
|
|
|
Zolgensma
|
|
928
|
|
1 061
|
|
-13
|
|
-11
|
|
|
Mayzent
|
|
286
|
|
258
|
|
11
|
|
12
|
|
|
Aimovig
|
|
197
|
|
159
|
|
24
|
|
24
|
|
|
Other
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total Neuroscience
|
|
2 941
|
|
2 202
|
|
34
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
Promacta/Revolade
|
|
1 706
|
|
1 548
|
|
10
|
|
12
|
|
|
Kisqali
|
|
1 470
|
|
874
|
|
68
|
|
74
|
|
|
Tafinlar + Mekinist
|
|
1 436
|
|
1 305
|
|
10
|
|
13
|
|
|
Tasigna
|
|
1 402
|
|
1 448
|
|
-3
|
|
-1
|
|
|
Jakavi
|
|
1 276
|
|
1 173
|
|
9
|
|
11
|
|
|
Pluvicto
|
|
707
|
|
92
|
|
nm
|
|
nm
|
|
|
Lutathera
|
|
458
|
|
343
|
|
34
|
|
34
|
|
|
Kymriah
|
|
388
|
|
397
|
|
-2
|
|
-1
|
|
|
Piqray/Vijoice
|
|
374
|
|
261
|
|
43
|
|
44
|
|
|
Votrient
|
|
313
|
|
371
|
|
-16
|
|
-14
|
|
|
Scemblix
|
|
288
|
|
97
|
|
197
|
|
198
|
|
|
Adakveo
|
|
150
|
|
143
|
|
5
|
|
5
|
|
|
Tabrecta
|
|
113
|
|
97
|
|
16
|
|
17
|
|
|
Other
|
|
1
|
|
2
|
|
nm
|
|
nm
|
|
|
Total Oncology
|
|
10 082
|
|
8 151
|
|
24
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Promoted Brands
|
|
|
|
|
|
|
|
|
|
Ultibro Group
|
|
332
|
|
366
|
|
-9
|
|
-8
|
|
|
Xiidra
|
|
249
|
|
342
|
|
-27
|
|
-27
|
|
|
Beovu
|
|
151
|
|
154
|
|
-2
|
|
1
|
|
|
Other respiratory
|
|
69
|
|
58
|
|
19
|
|
27
|
|
|
Total Other Promoted Brands
|
|
801
|
|
920
|
|
-13
|
|
-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Promoted Brands
|
|
24 197
|
|
20 279
|
|
19
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Established Brands
|
|
|
|
|
|
|
|
|
|
Lucentis
|
|
1 174
|
|
1 476
|
|
-20
|
|
-19
|
|
|
Sandostatin
|
|
998
|
|
933
|
|
7
|
|
8
|
|
|
Gilenya
|
|
771
|
|
1 667
|
|
-54
|
|
-53
|
|
|
Exforge Group
|
|
557
|
|
584
|
|
-5
|
|
-1
|
|
|
Galvus Group
|
|
539
|
|
650
|
|
-17
|
|
-10
|
|
|
Diovan Group
|
|
466
|
|
510
|
|
-9
|
|
-4
|
|
|
Gleevec/Glivec
|
|
433
|
|
570
|
|
-24
|
|
-21
|
|
|
Afinitor/Votubia
|
|
311
|
|
406
|
|
-23
|
|
-21
|
|
|
Contract manufacturing 4
|
|
1 174
|
|
879
|
|
34
|
|
30
|
|
|
Other 5
|
|
3 397
|
|
3 676
|
|
-8
|
|
-3
|
|
|
Total Established Brands 4, 5
|
|
9 820
|
|
11 351
|
|
-13
|
|
-11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales from continuing operations
|
|
34 017
|
|
31 630
|
|
8
|
|
10
|
|
|
|
1 In Q1 2023 Lucentis was reclassified from Other Promoted Brands to Established
Brands and Gilenya was reclassified from Neuroscience to Established Brands.These
reclassifications have been reflected in 9M 2022.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 48.
|
3 Net sales from continuing operations reflect Xolair sales for all indications.
|
4 2022 restated to reflect the transfer of the Sandoz Division’s biotechnology manufacturing
services to other companies’ activities to the Innovative Medicines Division that
was effective as of January 1, 2023.
|
5 2022 restated to reflect the transfer of the Coartem brand from the Sandoz Division
to the Innovative Medicines Division that was effective as of January 1, 2023.
|
|
nm = not meaningful
|
Net sales from continuing operations of the top 20 brands in 2023
Third quarter
|
|
|
|
|
|
US
|
|
Rest of world
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brands
|
|
Brand classification by therapeutic area, other promoted brands or established brands
|
|
Key indications
|
|
USD m
|
|
% change USD/cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Entresto
|
|
Cardiovascular, Renal and Metabolic
|
|
Chronic heart failure, hypertension
|
|
728
|
|
28
|
|
757
|
|
34
|
|
34
|
|
1 485
|
|
31
|
|
31
|
|
|
Cosentyx
|
|
Immunology
|
|
Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS)
|
|
717
|
|
-3
|
|
612
|
|
15
|
|
15
|
|
1 329
|
|
4
|
|
4
|
|
|
Promacta/Revolade
|
|
Oncology
|
|
Immune thrombocytopenia (ITP), severe aplastic anemia (SAA)
|
|
314
|
|
11
|
|
262
|
|
10
|
|
8
|
|
576
|
|
10
|
|
10
|
|
|
Kesimpta
|
|
Neuroscience
|
|
Relapsing-remitting multiple sclerosis (RRMS)
|
|
407
|
|
70
|
|
250
|
|
nm
|
|
nm
|
|
657
|
|
127
|
|
124
|
|
|
Kisqali
|
|
Oncology
|
|
HR+/HER2- metastatic breast cancer
|
|
294
|
|
119
|
|
268
|
|
39
|
|
45
|
|
562
|
|
72
|
|
76
|
|
|
Tafinlar + Mekinist
|
|
Oncology
|
|
BRAF V600+ metastatic adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication
|
|
201
|
|
15
|
|
281
|
|
2
|
|
3
|
|
482
|
|
7
|
|
8
|
|
|
Tasigna
|
|
Oncology
|
|
Chronic myeloid leukemia (CML)
|
|
221
|
|
-6
|
|
243
|
|
-5
|
|
-5
|
|
464
|
|
-5
|
|
-5
|
|
|
Jakavi
|
|
Oncology
|
|
Myelofibrosis (MF), polycytomia vera (PV), graft-versus-host disease (GvHD)
|
|
|
|
|
|
427
|
|
11
|
|
9
|
|
427
|
|
11
|
|
9
|
|
|
Lucentis 2
|
|
Established Brands
|
|
Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO)
|
|
|
|
|
|
363
|
|
-20
|
|
-22
|
|
363
|
|
-20
|
|
-22
|
|
|
Xolair 3
|
|
Immunology
|
|
Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps
|
|
|
|
|
|
369
|
|
15
|
|
13
|
|
369
|
|
15
|
|
13
|
|
|
Sandostatin
|
|
Established Brands
|
|
Carcinoid tumors, acromegaly
|
|
218
|
|
15
|
|
120
|
|
14
|
|
16
|
|
338
|
|
15
|
|
15
|
|
|
Ilaris
|
|
Immunology
|
|
Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout)
|
|
182
|
|
27
|
|
153
|
|
19
|
|
20
|
|
335
|
|
23
|
|
24
|
|
|
Zolgensma
|
|
Neuroscience
|
|
Spinal muscular atrophy (SMA)
|
|
89
|
|
-10
|
|
219
|
|
0
|
|
2
|
|
308
|
|
-3
|
|
-2
|
|
|
Gilenya 2
|
|
Established Brands
|
|
Relapsing multiple sclerosis (RMS)
|
|
120
|
|
-63
|
|
150
|
|
-17
|
|
-19
|
|
270
|
|
-47
|
|
-48
|
|
|
Pluvicto
|
|
Oncology
|
|
PSMA-positive mCRPC patients post-ARPI, post-Taxane
|
|
238
|
|
222
|
|
18
|
|
200
|
|
165
|
|
256
|
|
220
|
|
217
|
|
|
Exforge Group
|
|
Established Brands
|
|
Hypertension
|
|
3
|
|
-40
|
|
184
|
|
2
|
|
4
|
|
187
|
|
1
|
|
3
|
|
|
Galvus Group
|
|
Established Brands
|
|
Type 2 diabetes
|
|
|
|
|
|
181
|
|
-15
|
|
-4
|
|
181
|
|
-15
|
|
-4
|
|
|
Diovan Group
|
|
Established Brands
|
|
Hypertension
|
|
11
|
|
0
|
|
142
|
|
-5
|
|
-1
|
|
153
|
|
-4
|
|
-1
|
|
|
Lutathera
|
|
Oncology
|
|
GEP-NETs gastroenteropancreatic neuroendocrine tumors
|
|
114
|
|
18
|
|
45
|
|
29
|
|
23
|
|
159
|
|
20
|
|
19
|
|
|
Gleevec/Glivec
|
|
Established Brands
|
|
Chronic myeloid leukemia (CML), gastrointestinal stromal tumors (GIST)
|
|
41
|
|
-16
|
|
103
|
|
-20
|
|
-18
|
|
144
|
|
-19
|
|
-17
|
|
|
Top 20 brands total
|
|
|
|
|
|
3 898
|
|
16
|
|
5 147
|
|
11
|
|
12
|
|
9 045
|
|
13
|
|
13
|
|
|
Rest of portfolio 4
|
|
|
|
|
|
750
|
|
1
|
|
1 987
|
|
13
|
|
10
|
|
2 737
|
|
9
|
|
7
|
|
|
Total net sales from continuing operations 4
|
|
|
|
|
|
4 648
|
|
13
|
|
7 134
|
|
12
|
|
11
|
|
11 782
|
|
12
|
|
12
|
|
|
|
1 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 48.
|
2 In Q1 2023 Lucentis was reclassified from Other Promoted Brands to Established
Brands and Gilenya was reclassified from Neuroscience to Established Brands.
|
3 Net sales from continuing operations reflect Xolair sales for all indications.
|
4 % change has been restated to reflect the transfers of the Sandoz Division’s biotechnology
manufacturing services and the Coartem brand to the Innovative Medicines Division
that were effective as of January 1, 2023.
|
|
nm = not meaningful
|
Net sales from continuing operations of the top 20 brands in 2023
Nine months to September 30
|
|
|
|
|
|
US
|
|
Rest of world
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brands
|
|
Brand classification by therapeutic area, other promoted brands or established brands
|
|
Key indications
|
|
USD m
|
|
% change USD/cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Entresto
|
|
Cardiovascular, Renal and Metabolic
|
|
Chronic heart failure, hypertension
|
|
2 187
|
|
32
|
|
2 213
|
|
31
|
|
35
|
|
4 400
|
|
31
|
|
33
|
|
|
Cosentyx
|
|
Immunology
|
|
Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS)
|
|
1 895
|
|
-11
|
|
1 782
|
|
13
|
|
17
|
|
3 677
|
|
-1
|
|
1
|
|
|
Promacta/Revolade
|
|
Oncology
|
|
Immune thrombocytopenia (ITP), severe aplastic anemia (SAA)
|
|
904
|
|
13
|
|
802
|
|
7
|
|
10
|
|
1 706
|
|
10
|
|
12
|
|
|
Kesimpta
|
|
Neuroscience
|
|
Relapsing-remitting multiple sclerosis (RRMS)
|
|
1 075
|
|
75
|
|
455
|
|
nm
|
|
nm
|
|
1 530
|
|
112
|
|
112
|
|
|
Kisqali
|
|
Oncology
|
|
HR+/HER2- metastatic breast cancer
|
|
700
|
|
117
|
|
770
|
|
40
|
|
49
|
|
1 470
|
|
68
|
|
74
|
|
|
Tafinlar + Mekinist
|
|
Oncology
|
|
BRAF V600+ metastatic adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication
|
|
591
|
|
17
|
|
845
|
|
5
|
|
10
|
|
1 436
|
|
10
|
|
13
|
|
|
Tasigna
|
|
Oncology
|
|
Chronic myeloid leukemia (CML)
|
|
664
|
|
2
|
|
738
|
|
-7
|
|
-4
|
|
1 402
|
|
-3
|
|
-1
|
|
|
Jakavi
|
|
Oncology
|
|
Myelofibrosis (MF), polycytomia vera (PV), graft-versus-host disease (GvHD)
|
|
|
|
|
|
1 276
|
|
9
|
|
11
|
|
1 276
|
|
9
|
|
11
|
|
|
Lucentis 2
|
|
Established Brands
|
|
Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO)
|
|
|
|
|
|
1 174
|
|
-20
|
|
-19
|
|
1 174
|
|
-20
|
|
-19
|
|
|
Xolair 3
|
|
Immunology
|
|
Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps
|
|
|
|
|
|
1 085
|
|
4
|
|
6
|
|
1 085
|
|
4
|
|
6
|
|
|
Sandostatin
|
|
Established Brands
|
|
Carcinoid tumors, acromegaly
|
|
630
|
|
6
|
|
368
|
|
10
|
|
14
|
|
998
|
|
7
|
|
8
|
|
|
Ilaris
|
|
Immunology
|
|
Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout)
|
|
486
|
|
20
|
|
493
|
|
15
|
|
19
|
|
979
|
|
18
|
|
20
|
|
|
Zolgensma
|
|
Neuroscience
|
|
Spinal muscular atrophy (SMA)
|
|
282
|
|
-16
|
|
646
|
|
-11
|
|
-8
|
|
928
|
|
-13
|
|
-11
|
|
|
Gilenya 2
|
|
Established Brands
|
|
Relapsing multiple sclerosis (RMS)
|
|
304
|
|
-68
|
|
467
|
|
-34
|
|
-32
|
|
771
|
|
-54
|
|
-53
|
|
|
Pluvicto
|
|
Oncology
|
|
PSMA-positive mCRPC patients post-ARPI, post-Taxane
|
|
670
|
|
nm
|
|
37
|
|
270
|
|
242
|
|
707
|
|
nm
|
|
nm
|
|
|
Exforge Group
|
|
Established Brands
|
|
Hypertension
|
|
11
|
|
-8
|
|
546
|
|
-5
|
|
-1
|
|
557
|
|
-5
|
|
-1
|
|
|
Galvus Group
|
|
Established Brands
|
|
Type 2 diabetes
|
|
|
|
|
|
539
|
|
-17
|
|
-10
|
|
539
|
|
-17
|
|
-10
|
|
|
Diovan Group
|
|
Established Brands
|
|
Hypertension
|
|
38
|
|
0
|
|
428
|
|
-9
|
|
-4
|
|
466
|
|
-9
|
|
-4
|
|
|
Lutathera
|
|
Oncology
|
|
GEP-NETs gastroenteropancreatic neuroendocrine tumors
|
|
324
|
|
36
|
|
134
|
|
29
|
|
30
|
|
458
|
|
34
|
|
34
|
|
|
Gleevec/Glivec
|
|
Established Brands
|
|
Chronic myeloid leukemia (CML), gastrointestinal stromal tumors (GIST)
|
|
118
|
|
-24
|
|
315
|
|
-24
|
|
-20
|
|
433
|
|
-24
|
|
-21
|
|
|
Top 20 brands total
|
|
|
|
|
|
10 879
|
|
14
|
|
15 113
|
|
5
|
|
9
|
|
25 992
|
|
9
|
|
11
|
|
|
Rest of portfolio 4
|
|
|
|
|
|
2 317
|
|
6
|
|
5 708
|
|
3
|
|
6
|
|
8 025
|
|
4
|
|
6
|
|
|
Total net sales from continuing operations 4
|
|
|
|
|
|
13 196
|
|
13
|
|
20 821
|
|
5
|
|
8
|
|
34 017
|
|
8
|
|
10
|
|
|
|
1 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 48.
|
2 In Q1 2023 Lucentis was reclassified from Other Promoted Brands to Established
Brands and Gilenya was reclassified from Neuroscience to Established Brands.
|
3 Net sales from continuing operations reflect Xolair sales for all indications.
|
4 % change has been restated to reflect the transfers of the Sandoz Division’s biotechnology
manufacturing services and the Coartem brand to the Innovative Medicines Division
that were effective as of January 1, 2023.
|
|
nm = not meaningful
|
Other revenues
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Profit sharing income
|
|
251
|
|
246
|
|
696
|
|
674
|
|
|
Royalty income
|
|
22
|
|
10
|
|
63
|
|
21
|
|
|
Milestone income
|
|
7
|
|
8
|
|
35
|
|
47
|
|
|
Other 1
|
|
30
|
|
27
|
|
73
|
|
123
|
|
|
Total other revenues
|
|
310
|
|
291
|
|
867
|
|
865
|
|
|
|
1 Other includes revenue from activities such as manufacturing or other services rendered,
to the extent such revenue is not recorded under net sales.
|
11. Other interim disclosures
Restructuring provisions movements
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Balance at beginning of period
|
|
1 045
|
|
731
|
|
1 131
|
|
345
|
|
|
Provisions related to discontinued operations 1
|
|
-41
|
|
|
|
-51
|
|
|
|
|
Additions to provisions 2
|
|
58
|
|
289
|
|
523
|
|
851
|
|
|
Cash payments
|
|
-179
|
|
-87
|
|
-645
|
|
-231
|
|
|
Releases of provisions 3
|
|
-23
|
|
-20
|
|
-115
|
|
-35
|
|
|
Transfers
|
|
-42
|
|
-1
|
|
-43
|
|
-1
|
|
|
Currency translation effects
|
|
-9
|
|
-9
|
|
9
|
|
-26
|
|
|
Balance at closing of period
|
|
809
|
|
903
|
|
809
|
|
903
|
|
|
|
1 Notes 2, 3 and 12 provide information related to discontinued operations.
|
2 Provisions charged to the consolidated income statement from continuing operations
were USD 283 million in Q3 2022 and USD 816 million in 9M 2022.
|
3 Releases of provisions credited to the consolidated income statement from continuing
operations were USD 15 million in Q3 2022 and USD 25 million in 9M 2022.
|
In the first nine months of 2023, additions to provisions of USD 523 million (Q3: USD 58 million) mainly related to the continuation of the initiative announced in April
2022, to implement a new streamlined organizational model designed to support innovation,
growth and productivity.
In the first nine months of 2022, additions to provisions of USD 851 million (Q3: USD 289 million) mainly related to the initiative announced in April 2022, to implement a
new streamlined organizational model designed to support innovation, growth and productivity,
as well as, to the continuation of the Innovative Medicines Division and the Operations
unit 2021 restructuring initiatives.
Property, plant and equipment and intangible assets
The following table shows the property, plant and equipment, the right-of-use assets
and the intangible assets impairment charges and reversals recognized:
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Property, plant and equipment impairment charges
|
|
-27
|
|
-61
|
|
-85
|
|
-320
|
|
|
Property, plant and equipment impairment reversal
|
|
-37
|
|
0
|
|
11
|
|
2
|
|
|
Right-of-use assets impairment charges
|
|
-2
|
|
|
|
-2
|
|
|
|
|
Intangible assets impairment charges 1
|
|
-1 739
|
|
-595
|
|
-2 665
|
|
-858
|
|
|
|
1 First nine months 2023 intangible assets impairment charges include the write-down
of IPR&D on the cessation of clinical development programs, including the clinical
development programs PPY988 (USD 1.0 billion) and VDT482 (USD 0.4 billion), and the
clinical research program NIZ985 (USD 0.3 billion); as well as the write-down of a
currently marketed product by USD 0.3 billion to reflect reduction in its recoverable
amount.
|
First nine months 2022 intangible assets impairment charges include the write-down
of IPR&D on the cessation of clinical development programs, including UNR844 (USD
0.6 billion).
|
In the first nine months of 2023, there were no reversals of prior-year impairment
charges on intangible assets (9M 2022: nil) and right-of-use assets (9M 2022: nil).
In the first nine months 2023 additions to property, plant and equipment and depreciation
amounted to USD
648 million, and USD 686 million respectively, (Q3 2023: USD 261 million and USD 231
million respectively).
In the first nine months 2022 additions to property, plant and equipment and depreciation
amounted to USD 625 million, and USD 708 million respectively, (Q3 2022: USD 248 million
and USD 246 million respectively).
In the first nine months of 2023 additions to intangible assets and amortization amounted
to USD 1 033 million, and USD 3 067 million respectively, (Q3 2023: USD 318 million
and USD 1 014 million respectively).
In the first nine months of 2022 additions to intangible assets and amortization amounted
to USD 1 646 million, and USD 2 800 million respectively, (Q3 2022: USD 559 million
and USD 948 million respectively).
Completion of the Divestment of intangible assets
On June 30, 2023, Novartis entered into an agreement with Bausch + Lomb Corporation
to divest the currently marketed product Xiidra and certain IPR&D assets related to ‘front of eye’ ophthalmology. The transaction
was accounted for as a divestment of assets. The transaction closed on September 29,
2023.
The purchase price consists of a total cash payment of USD 1.75 billion and potential
milestone payments related to the currently marketed product and IPR&D assets of up
to USD 750 million.
Financial debt
In the third quarter of 2023, Novartis repaid the 0.5% coupon bond with a notional
amount of EUR 750 million issued in 2018 by Novartis Finance SA, Luxembourg, in accordance
with its terms.
In the third quarter of 2023, Novartis repaid the 0.125% coupon bond with a notional
amount of EUR 1.25 billion issued in 2016 by Novartis Finance SA, Luxembourg, in accordance
with its terms.
12. Discontinued operations
Discontinued operations include the operational results from the Sandoz business together
with certain corporate activities attributable to the Sandoz business, as well as
certain other expenses related to the spin-off (refer to Notes 2 and 3 for further
details).
The Sandoz business operates in the off-patent medicines segment and specializes in
the development, manufacturing, and marketing of generic pharmaceuticals and biosimilars.
The Sandoz business is organized globally into two franchises: Generics and Biosimilars.
Consolidated income statement – Discontinued operations
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Net sales to third parties from discontinued operations
|
|
2 329
|
|
2 244
|
|
7 128
|
|
6 849
|
|
|
Sales to continuing operations
|
|
147
|
|
42
|
|
300
|
|
149
|
|
|
Net sales from discontinued operations
|
|
2 476
|
|
2 286
|
|
7 428
|
|
6 998
|
|
|
Other revenues
|
|
7
|
|
8
|
|
19
|
|
21
|
|
|
Cost from goods sold
|
|
-1 493
|
|
-1 167
|
|
-4 044
|
|
-3 645
|
|
|
Gross profit from discontinued operations
|
|
990
|
|
1 127
|
|
3 403
|
|
3 374
|
|
|
Selling, general and administration
|
|
-581
|
|
-477
|
|
-1 728
|
|
-1 496
|
|
|
Research and development
|
|
-230
|
|
-194
|
|
-671
|
|
-598
|
|
|
Other income
|
|
28
|
|
17
|
|
56
|
|
96
|
|
|
Other expense
|
|
-293
|
|
-131
|
|
-795
|
|
-319
|
|
|
Operating (loss)/income from discontinued operations
|
|
-86
|
|
342
|
|
265
|
|
1 057
|
|
|
as % from net sales
|
|
-3.5%
|
|
15.0%
|
|
3.6%
|
|
15.1%
|
|
|
Income from associated companies
|
|
1
|
|
1
|
|
2
|
|
2
|
|
|
Interest expense
|
|
-14
|
|
-9
|
|
-33
|
|
-25
|
|
|
Other financial income and expense
|
|
-2
|
|
-2
|
|
-20
|
|
-12
|
|
|
(Loss)/Income before taxes from discontinued operations
|
|
-101
|
|
332
|
|
214
|
|
1 022
|
|
|
Taxes 1
|
|
351
|
|
-87
|
|
226
|
|
-267
|
|
|
Net income from discontinued operations
|
|
250
|
|
245
|
|
440
|
|
755
|
|
|
|
1 The tax rate in the third quarter 2023 and in the first nine months 2023 was impacted
by non-recurring items such as tax benefits arising from intercompany transactions
to effect the spin-off of the Sandoz business, net decreases in uncertain tax positions
of the Sandoz business and the favorable settlement of a tax matter related to the
Alcon business, which was spun-off in 2019. Excluding these impacts, the tax rate
would have been 28% in third quarter 2023 and 31.2% in the first nine months 2023,
compared to 26.2% and 26.1% in third quarter 2022 and the first nine months 2022,
respectively. The tax rate in the third quarter 2023 is higher than the prior year
period primarily due to a change in profit mix. The tax rate in the first nine months
2023 is higher than the prior year period primarily due to a change in profit mix
and the increased relative impact of recurring permanent items as a result of lower
income before taxes for the first nine months 2023 compared to 2022.
|
Discontinued operations net assets
The following table presents the Sandoz business assets and liabilities classified
as assets related to discontinued operations and liabilities related to discontinued
operations in the September 30, 2023, consolidated balance sheet:
(USD millions)
|
|
Sep 30, 2023 (unaudited)
|
|
|
Assets related to discontinued operations
|
|
|
|
Property, plant and equipment
|
|
1 447
|
|
|
Right-of-use assets
|
|
133
|
|
|
Goodwill
|
|
7 424
|
|
|
Intangible assets other than goodwill
|
|
1 481
|
|
|
Deferred tax assets
|
|
661
|
|
|
Financial assets, investments in associated companies and other non-current assets
|
|
142
|
|
|
Inventories
|
|
2 565
|
|
|
Trade receivables
|
|
2 277
|
|
|
Cash and cash equivalents 1
|
|
648
|
|
|
Other current assets and income tax receivables
|
|
696
|
|
|
Assets related to discontinued operations
|
|
17 474
|
|
|
|
|
|
|
Liabilities related to discontinued operations
|
|
|
|
Non-current and current financial debts
|
|
3 691
|
|
|
Non-current and current lease liabilities
|
|
139
|
|
|
Deferred tax liabilities
|
|
270
|
|
|
Non-current and current provisions and other liabilities
|
|
3 335
|
|
|
Trade payables
|
|
1 152
|
|
|
Current income tax liabilities
|
|
203
|
|
|
Liabilities related to discontinued operations
|
|
8 790
|
|
|
|
|
|
|
Net assets related to discontinued operations
|
|
8 684
|
|
|
|
1 On October 2, 2023 through a series of intercompany transactions in connection with
the Distribution (spin-off) of the Sandoz business to Novartis AG shareholders (refer
to Note 3 for further details) USD 38 million was paid in cash from a Novartis affiliate
to the Sandoz business. Including this transaction, cash and cash equivalents on Distribution
date October 3, 2023, amounted to USD 686 million.
|
Supplemental disclosures related to Discontinued operations
Net income
Included in net income from discontinued operations are:
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
Interest income
|
|
1
|
|
1
|
|
2
|
|
2
|
|
|
Depreciation of property, plant and equipment
|
|
-45
|
|
-44
|
|
-144
|
|
-147
|
|
|
Depreciation of right-of-use assets
|
|
-14
|
|
-8
|
|
-32
|
|
-25
|
|
|
Amortization of intangible assets
|
|
-60
|
|
-55
|
|
-171
|
|
-168
|
|
|
Impairment charges on property, plant and equipment
|
|
-3
|
|
|
|
-5
|
|
-1
|
|
|
Impairment charges on intangible assets
|
|
-30
|
|
-7
|
|
-44
|
|
-11
|
|
|
Additions to restructuring provisions
|
|
-11
|
|
-5
|
|
-27
|
|
-35
|
|
|
Equity-based compensation of Novartis equity plans
|
|
-24
|
|
-17
|
|
-60
|
|
-46
|
|
|
Balance sheet
The following shows the additions to property, plant and equipment, right-of-use assets
and to goodwill and intangible assets for discontinued operations for the period from
January 1, 2023, to the date of reclassification:
(USD millions)
|
|
Sep 30, 2023 (unaudited)
|
|
|
Additions to property, plant and equipment
|
|
245
|
|
|
Additions to right-of-use assets
|
|
66
|
|
|
Additions to goodwill and intangible assets
|
|
221
|
|
|
Financial debt
Sandoz business entered into financing agreements with a group of banks under which
it borrowed on September 28, 2023 a total amount of USD 3.3 billion. See Note 3 for
further disclosures.
Net cash flows from financing activities from discontinued operations
In the first nine months of 2023, the net cash inflows from financing activities from
discontinued operations of USD 3.4 billion (9M 2022: USD 14 million; Q3 2023: USD
3.5 billion; Q3 2022: USD 11 million) were mainly driven by USD 3.6 billion (Q3 2023:
USD 3.5 billion) cash inflows from bank borrowings (including the USD 3.3 billion
Sandoz business borrowings on September 28, 2023, from a group of banks) in connection
with the Distribution (spin-off) of the Sandoz business to Novartis AG shareholders
(see Note 3).
For additional information related to the Distribution (spin-off) of the Sandoz business
to Novartis AG shareholders, refer to Notes 2 and 3.
13. Events subsequent to the September 30, 2023, consolidated balance sheet
Spin-off of the Sandoz business through a dividend in kind distribution to Novartis
AG shareholders
The Novartis AG shareholders approved the spin-off of the Sandoz business at the 2023
EGM held on September 15, 2023, subject to completion of certain conditions precedent
to the distribution. The conditions precedent to the spin-off were met and on October
3, 2023, the spin-off of the Sandoz business was effected by way of a distribution
of a dividend in kind of Sandoz Group AG shares to Novartis AG shareholders and ADR
(American Depositary Receipt) holders (the Distribution). Through the Distribution,
each Novartis AG shareholder received 1 Sandoz Group AG share for every 5 Novartis
AG shares/ ADRs they held on October 3, 2023, close of business. As of October 4,
2023, the shares of Sandoz Group AG are listed on the SIX Swiss Exchange (SIX) under
the symbol “SDZ.” In the fourth quarter 2023, the Company will recognize a non-taxable,
noncash gain as at the Distribution date of the spin-off of the Sandoz business amounting
to approximately USD 5.9 billion, representing primarily the excess amount of the
distribution liability, which is the estimated fair value of the Sandoz business distributed
to Novartis AG shareholders, over the then carrying value of Sandoz business net assets.
For additional information see Note 3 and Note 12.
Supplementary information (unaudited)
Non-IFRS disclosures
Novartis uses certain non-IFRS metrics when measuring performance, especially when
measuring current-year results against prior periods, including core results, constant
currencies and free cash flow.
Despite the use of these measures by management in setting goals and measuring the
Company’s performance, these are non-IFRS measures that have no standardized meaning
prescribed by IFRS. As a result, such measures have limits in their usefulness to
investors.
Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS
measures) may not be comparable to the calculation of similar measures of other companies.
These non-IFRS measures are presented solely to permit investors to more fully understand
how the Company’s management assesses underlying performance. These non-IFRS measures
are not, and should not be viewed as, a substitute for IFRS measures.
As an internal measure of Company performance, these non-IFRS measures have limitations,
and the Company’s performance management process is not solely restricted to these
metrics.
Core results
The Company’s core results – including core operating income, core net income and core earnings per share – exclude fully the amortization and impairment charges of intangible assets, excluding
software, net gains and losses on fund investments and equity securities valued at
fair value through profit and loss, and certain acquisition- and divestment-related
items. The following items that exceed a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses;
divestment gains and losses; restructuring charges/releases and related items; legal-related
items; impairments of property, plant and equipment, software, and financial assets,
and income and expense items that management deems exceptional and that are or are
expected to accumulate within the year to be over a USD 25 million threshold.
Novartis believes that investor understanding of the Company’s performance is enhanced
by disclosing core measures of performance since, core measures exclude items that
can vary significantly from year to year, they enable better comparison of business
performance across years. For this same reason, Novartis uses these core measures
in addition to IFRS and other measures as important factors in assessing the Company’s
performance.
The following are examples of how these core measures are utilized:
• In addition to monthly reports containing financial information prepared under International
Financial Reporting Standards (IFRS), senior management receives a monthly analysis
incorporating these core measures.
• Annual budgets are prepared for both IFRS and core measures.
As an internal measure of Company performance, the core results measures have limitations,
and the Company’s performance management process is not solely restricted to these
metrics. A limitation of the core results measures is that they provide a view of
the Company’s operations without including all events during a period, such as the
effects of an acquisition, divestment, or amortization/impairments of purchased intangible
assets, impairments to property, plant and equipment and restructurings and related
items.
Constant currencies
Changes in the relative values of non-US currencies to the US dollar can affect the
Company’s financial results and financial position. To provide additional information
that may be useful to investors, including changes in sales volume, we present information
about our net sales and various values relating to operating and net income that are
adjusted for such foreign currency effects.
Constant currency calculations have the goal of eliminating two exchange rate effects
so that an estimate can be made of underlying changes in the consolidated income statement
excluding the impact of fluctuations in exchanges rates:
• The impact of translating the income statements of consolidated entities from their
non-USD functional currencies to USD
• The impact of exchange rate movements on the major transactions of consolidated entities
performed in currencies other than their functional currency.
We calculate constant currency measures by translating the current year’s foreign
currency values for sales and other income statement items into USD (excluding the
IAS 29 “Financial Reporting in Hyperinflationary Economies” adjustments to the local
currency income statements of subsidiaries operating in hyperinflationary economies),
using the average exchange rates from the prior year and comparing them to the prior
year values in USD.
We use these constant currency measures in evaluating the Company’s performance, since
they may assist us in evaluating our ongoing performance from year to year. However,
in performing our evaluation, we also consider equivalent measures of performance
that are not affected by changes in the relative value of currencies.
Growth rate calculation
For ease of understanding, Novartis uses a sign convention for its growth rates such
that a reduction in operating expenses or losses compared with the prior year is shown
as a positive growth.
Free cash flow
Effective January 1, 2023, Novartis revised its definition of free cash flow, to define
free cash flow as net cash flows from operating activities less purchases of property,
plant and equipment. This new definition provides a simpler performance measure focusing
on core operating activities, and also excludes items that can vary
significantly from year to year which enables better comparison of business performance
across years. The prior year free cash flow amounts have been revised to conform with
the new free cash flow definition to aid in comparability.
Free cash flow is a non-IFRS measure and is not intended to be a substitute measure
for net cash flows from operating activities as determined under IFRS. Free cash flow
is presented as additional information because management believes it is a useful
supplemental indicator of the Company’s ability to operate without reliance on additional
borrowing or use of existing cash. Free cash flow is a measure of the net cash generated
that is available for investment in strategic opportunities, returning to shareholders
and for debt repayment. Free cash flow is a non-IFRS measure, which means it should
not be interpreted as a measure determined under IFRS.
Additional information
Net debt
Novartis calculates net debt as current financial debts and derivative financial instruments
plus non-current financial debts less cash and cash equivalents and marketable securities,
commodities, time deposits and derivative financial instruments.
Net debt is presented as additional information because it sets forth how management
monitors net debt or liquidity and management believes it is a useful supplemental
indicator of the Company’s ability to pay dividends, to meet financial commitments,
and to invest in new strategic opportunities, including strengthening its balance
sheet.
See page 57 for additional disclosures related to net debt.
CORE RESULTS – Reconciliation from IFRS results to core results – Total Company
(USD millions unless indicated otherwise)
|
|
Q3 2023
|
|
Q3 2022
|
|
9M 2023
|
|
9M 2022
|
|
|
IFRS operating income from continuing operations
|
|
1 762
|
|
1 826
|
|
7 187
|
|
6 191
|
|
|
Amortization of intangible assets
|
|
955
|
|
903
|
|
2 896
|
|
2 675
|
|
|
Impairments
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
1 738
|
|
592
|
|
2 664
|
|
855
|
|
|
Property, plant and equipment related to the company-wide rationalization of manufacturing sites
|
|
46
|
|
58
|
|
3
|
|
309
|
|
|
Other property, plant and equipment
|
|
11
|
|
1
|
|
33
|
|
1
|
|
|
Total impairment charges
|
|
1 795
|
|
651
|
|
2 700
|
|
1 165
|
|
|
Acquisition or divestment of businesses and related items
|
|
|
|
|
|
|
|
|
|
|
- Income
|
|
-1
|
|
|
|
-64
|
|
-3
|
|
|
- Expense
|
|
20
|
|
|
|
23
|
|
7
|
|
|
Total acquisition or divestment of businesses and related items, net
|
|
19
|
|
|
|
-41
|
|
4
|
|
|
Other items
|
|
|
|
|
|
|
|
|
|
|
Divestment gains
|
|
-90
|
|
9
|
|
-222
|
|
-139
|
|
|
Financial assets - fair value adjustments
|
|
-6
|
|
90
|
|
69
|
|
288
|
|
|
Restructuring and related items
|
|
|
|
|
|
|
|
|
|
|
- Income
|
|
-59
|
|
-18
|
|
-154
|
|
-29
|
|
|
- Expense
|
|
156
|
|
468
|
|
951
|
|
1 188
|
|
|
Legal-related items
|
|
|
|
|
|
|
|
|
|
|
- Income
|
|
|
|
|
|
-484
|
|
-51
|
|
|
- Expense
|
|
|
|
18
|
|
31
|
|
120
|
|
|
Additional income
|
|
-169
|
|
-178
|
|
-439
|
|
-297
|
|
|
Additional expense
|
|
42
|
|
3
|
|
57
|
|
34
|
|
|
Total other items
|
|
-126
|
|
392
|
|
-191
|
|
1 114
|
|
|
Total adjustments
|
|
2 643
|
|
1 946
|
|
5 364
|
|
4 958
|
|
|
Core operating income from continuing operations
|
|
4 405
|
|
3 772
|
|
12 551
|
|
11 149
|
|
|
as % of net sales
|
|
37.4%
|
|
36.0%
|
|
36.9%
|
|
35.2%
|
|
|
(Loss)/income from associated companies
|
|
-3
|
|
-5
|
|
-7
|
|
-8
|
|
|
Interest expense
|
|
-222
|
|
-206
|
|
-638
|
|
-593
|
|
|
Other financial income and expense
|
|
15
|
|
-28
|
|
204
|
|
18
|
|
|
Core adjustments to other financial income and expense
|
|
31
|
|
22
|
|
89
|
|
72
|
|
|
Income taxes, adjusted for above items (core income taxes)
|
|
-641
|
|
-520
|
|
-1 879
|
|
-1 655
|
|
|
Core net income from continuing operations
|
|
3 585
|
|
3 035
|
|
10 320
|
|
8 983
|
|
|
Core net income from discontinued operations 1
|
|
199
|
|
384
|
|
889
|
|
1 118
|
|
|
Core net income
|
|
3 784
|
|
3 419
|
|
11 209
|
|
10 101
|
|
|
Core net income attributable to shareholders of Novartis AG
|
|
3 782
|
|
3 417
|
|
11 205
|
|
10 101
|
|
|
Core basic EPS from continuing operations (USD) 2
|
|
1.74
|
|
1.40
|
|
4.95
|
|
4.09
|
|
|
Core basic EPS from discontinued operations (USD) 1, 2
|
|
0.09
|
|
0.18
|
|
0.42
|
|
0.51
|
|
|
Core basic EPS (USD) 2
|
|
1.83
|
|
1.58
|
|
5.37
|
|
4.60
|
|
|
|
1 For details on discontinued operations reconciliation from IFRS to core net income,
please refer to page 53.
|
2 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
CORE RESULTS – Reconciliation from IFRS results to core results – Total Company
Third quarter
(USD millions unless indicated otherwise)
|
|
Q3 2023 IFRS results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items 3
|
|
Other items 4
|
|
Q3 2023 Core results
|
|
Q3 2022 Core results
|
|
|
Gross profit from continuing operations
|
|
8 975
|
|
786
|
|
|
|
|
|
28
|
|
9 789
|
|
8 890
|
|
|
Operating income from continuing operations
|
|
1 762
|
|
955
|
|
1 795
|
|
19
|
|
-126
|
|
4 405
|
|
3 772
|
|
|
Income before taxes from continuing operations
|
|
1 552
|
|
955
|
|
1 795
|
|
19
|
|
-95
|
|
4 226
|
|
3 555
|
|
|
Income taxes 5
|
|
-39
|
|
|
|
|
|
|
|
|
|
-641
|
|
-520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
1 513
|
|
|
|
|
|
|
|
|
|
3 585
|
|
3 035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations 6
|
|
250
|
|
|
|
|
|
|
|
|
|
199
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
1 763
|
|
|
|
|
|
|
|
|
|
3 784
|
|
3 419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from continuing operations (USD) 7
|
|
0.73
|
|
|
|
|
|
|
|
|
|
1.74
|
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from discontinued operations (USD) 6, 7
|
|
0.12
|
|
|
|
|
|
|
|
|
|
0.09
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS (USD) 7
|
|
0.85
|
|
|
|
|
|
|
|
|
|
1.83
|
|
1.58
|
|
|
|
The following are adjustments to arrive at core gross profit from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-3 117
|
|
786
|
|
|
|
|
|
28
|
|
-2 303
|
|
-1 893
|
|
|
|
The following are adjustments to arrive at core operating income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
|
-3 091
|
|
|
|
|
|
|
|
-2
|
|
-3 093
|
|
-2 929
|
|
|
Research and development
|
|
-3 925
|
|
169
|
|
1 738
|
|
18
|
|
-187
|
|
-2 187
|
|
-2 070
|
|
|
Other income
|
|
224
|
|
|
|
36
|
|
-1
|
|
-80
|
|
179
|
|
19
|
|
|
Other expense
|
|
-421
|
|
|
|
21
|
|
2
|
|
115
|
|
-283
|
|
-138
|
|
|
|
The following are adjustments to arrive at core income before taxes from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
15
|
|
|
|
|
|
|
|
31
|
|
46
|
|
-6
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets; research and development includes the amortization of acquired rights to technologies
|
2 Impairments: research and development include net impairment charges related to intangible
assets; other income and other expense includes net impairment charges related to
property, plant and equipment
|
3 Acquisition or divestment of businesses and related items, including restructuring
and integration charges: research & development and other expense include restructuring
and integration cost charges
|
4 Other items: cost of goods sold, selling, general and administration, research and
development, other income and other expense include restructuring income and charges
related to the initiative to implement a new streamlined organizational model, the
company-wide rationalization of manufacturing sites and other net restructuring charges
and related items; cost of goods sold and research and development also include contingent
consideration adjustments; selling, general and administration includes adjustments
to provisions; other income and other expense include fair value adjustments and divestment
gains and losses on financial assets and fair value adjustment on a contingent receivable;
other expense includes also legal related items; other financial income and expense
includes the monetary loss on the restatement of non-monetary items for subsidiaries
in hyperinflationary economies
|
5 Taxes on the adjustments between IFRS and core results, for each item included in
the adjustment, take into account the tax rate that will finally be applicable to
the item based on the jurisdiction where the adjustment will finally have a tax impact.
Generally, this results in amortization and impairment of intangible assets and acquisition-related
restructuring and integration items having a full tax impact. There is usually a tax
impact on other items, although this is not always the case for items arising from
legal settlements in certain jurisdictions. Adjustments related to income from associated
companies are recorded net of any related tax effect. Due to these factors and the
differing effective tax rates in the various jurisdictions, the tax on the total adjustments
of USD 2.7 billion to arrive at the core results before tax amounts to USD 602 million.
The average tax rate on the adjustments is 22.5% since the quarterly core tax charge
of 15.2% has been applied to the pre-tax income of the period.
|
6 For details on discontinued operations reconciliation from IFRS to core net income
please refer to page 53.
|
7 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
CORE RESULTS – Reconciliation from IFRS results to core results – Total Company
Nine months to September 30
(USD millions unless indicated otherwise)
|
|
9M 2023 IFRS results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items 3
|
|
Other items 4
|
|
9M 2023 Core results
|
|
9M 2022 Core results
|
|
|
Gross profit from continuing operations
|
|
25 434
|
|
2 529
|
|
310
|
|
|
|
107
|
|
28 380
|
|
26 683
|
|
|
Operating income from continuing operations
|
|
7 187
|
|
2 896
|
|
2 700
|
|
-41
|
|
-191
|
|
12 551
|
|
11 149
|
|
|
Income before taxes from continuing operations
|
|
6 746
|
|
2 896
|
|
2 700
|
|
-41
|
|
-102
|
|
12 199
|
|
10 638
|
|
|
Income taxes 5
|
|
-812
|
|
|
|
|
|
|
|
|
|
-1 879
|
|
-1 655
|
|
|
Net income from continuing operations
|
|
5 934
|
|
|
|
|
|
|
|
|
|
10 320
|
|
8 983
|
|
|
Net income from discontinued operations 6
|
|
440
|
|
|
|
|
|
|
|
|
|
889
|
|
1 118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
6 374
|
|
|
|
|
|
|
|
|
|
11 209
|
|
10 101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from continuing operations (USD) 7
|
|
2.84
|
|
|
|
|
|
|
|
|
|
4.95
|
|
4.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from discontinued operations (USD) 6, 7
|
|
0.21
|
|
|
|
|
|
|
|
|
|
0.42
|
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS (USD) 7
|
|
3.05
|
|
|
|
|
|
|
|
|
|
5.37
|
|
4.60
|
|
|
|
The following are adjustments to arrive at core gross profit from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-9 450
|
|
2 529
|
|
310
|
|
|
|
107
|
|
-6 504
|
|
-5 812
|
|
|
|
The following are adjustments to arrive at core operating income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
|
-9 073
|
|
|
|
|
|
|
|
28
|
|
-9 045
|
|
-9 003
|
|
|
Research and development
|
|
-8 804
|
|
367
|
|
2 356
|
|
18
|
|
-306
|
|
-6 369
|
|
-6 173
|
|
|
Other income
|
|
1 322
|
|
|
|
-10
|
|
-64
|
|
-929
|
|
319
|
|
209
|
|
|
Other expense
|
|
-1 692
|
|
|
|
44
|
|
5
|
|
909
|
|
-734
|
|
-567
|
|
|
|
The following are adjustments to arrive at core income before taxes from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
204
|
|
|
|
|
|
|
|
89
|
|
293
|
|
90
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets; research and development includes the amortization of acquired rights to technologies
|
2 Impairments: cost of goods sold, research and development, other income and other
expense include net impairment charges related to intangible assets; other income
and other expense includes also net impairment charges related to property, plant
and equipment
|
3 Acquisition or divestment of businesses and related items, including restructuring
and integration charges: other income includes a favorable stamp duties tax settlement
related to a prior periods acquisition; other income and other expense include also
restructuring and integration costs charges and reversals
|
4 Other items: cost of goods sold, selling, general and administration, research and
development, other income and other expense include restructuring income and charges
related to the initiative to implement a new streamlined organizational model, the
company-wide rationalization of manufacturing sites and other net restructuring charges
and related items; cost of goods sold and research and development also include contingent
consideration adjustments; cost of goods sold and selling, general and administration
includes also adjustments to provisions; research and development also include a write-off
prepaid expenses for a terminated clinical development program; other income and other
expense include fair value adjustments, divestment gains, losses and gains on financial
assets, legal related items and fair value adjustment on a contingent receivable,
other income includes also gains from the divestment of products and curtailment gains;
other financial income and expense includes the monetary loss on the restatement of
non-monetary items for subsidiaries in hyperinflationary economies
|
5 Taxes on the adjustments between IFRS and core results, for each item included in
the adjustment, take into account the tax rate that will finally be applicable to
the item based on the jurisdiction where the adjustment will finally have a tax impact.
Generally, this results in amortization and impairment of intangible assets and acquisition-related
restructuring and integration items having a full tax impact. There is usually a tax
impact on other items, although this is not always the case for items arising from
legal settlements in certain jurisdictions. Adjustments related to income from associated
companies are recorded net of any related tax effect. Due to these factors and the
differing effective tax rates in the various jurisdictions, the tax on the total adjustments
of USD 5.5 billion to arrive at the core results before tax amounts to USD 1.1 billion.
The average tax rate on the adjustments is 19.6% since the full year core tax charge
of 15.4% has been applied to the pre-tax income of the period.
|
6 For details on discontinued operations reconciliation from IFRS to core net income
please refer to page 53.
|
7 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
CORE RESULTS – Reconciliation from IFRS results to core results – Discontinued operations
Third quarter
(USD millions)
|
|
Q3 2023 IFRS results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items
|
|
Other items 3
|
|
Q3 2023 Core results
|
|
Q3 2022 Core results
|
|
|
Gross profit from discontinued operations
|
|
990
|
|
54
|
|
22
|
|
|
|
21
|
|
1 087
|
|
1 209
|
|
|
Operating (loss)/income from discontinued operations
|
|
-86
|
|
54
|
|
30
|
|
|
|
252
|
|
250
|
|
510
|
|
|
Income before taxes from discontinued operations
|
|
-101
|
|
54
|
|
30
|
|
|
|
257
|
|
240
|
|
502
|
|
|
Income taxes
|
|
351
|
|
|
|
|
|
|
|
|
|
-41
|
|
-118
|
|
|
Net income from discontinued operations
|
|
250
|
|
|
|
|
|
|
|
|
|
199
|
|
384
|
|
|
Basic EPS from discontinued operations (USD)
|
|
0.12
|
|
|
|
|
|
|
|
|
|
0.09
|
|
0.18
|
|
|
|
The following are adjustments to arrive at core gross profit from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-1 493
|
|
54
|
|
22
|
|
|
|
21
|
|
-1 396
|
|
-1 089
|
|
|
|
The following are adjustments to arrive at core operating income from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
-230
|
|
|
|
8
|
|
|
|
|
|
-222
|
|
-193
|
|
|
Other income
|
|
28
|
|
|
|
|
|
|
|
-2
|
|
26
|
|
11
|
|
|
Other expense
|
|
-293
|
|
|
|
|
|
|
|
233
|
|
-60
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following are adjustments to arrive at core income before taxes from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
-2
|
|
|
|
|
|
|
|
5
|
|
3
|
|
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets
|
2 Impairments: cost of goods sold and research and development include impairment charges
related to intangible assets
|
3 Other items: cost of goods sold, selling, other income and other expense include charges
related to the Sandoz spin-off (see Note 3 and Note 12), the company-wide rationalization
of manufacturing sites and other net restructuring charges and related items; other
expense includes also legal-related items; other financial income and expense includes
the monetary loss on the restatement of non-monetary items for subsidiaries in hyperinflationary
economies
|
Nine months to September 30
(USD millions)
|
|
9M 2023 IFRS results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items
|
|
Other items 3
|
|
9M 2023 Core results
|
|
9M 2022 Core results
|
|
|
Gross profit from discontinued operations
|
|
3 403
|
|
165
|
|
34
|
|
|
|
57
|
|
3 659
|
|
3 623
|
|
|
Operating income from discontinued operations
|
|
265
|
|
165
|
|
43
|
|
|
|
712
|
|
1 185
|
|
1 486
|
|
|
Income before taxes from discontinued operations
|
|
214
|
|
165
|
|
43
|
|
|
|
718
|
|
1 140
|
|
1 460
|
|
|
Income taxes
|
|
226
|
|
|
|
|
|
|
|
|
|
-251
|
|
-342
|
|
|
Net income from discontinued operations
|
|
440
|
|
|
|
|
|
|
|
|
|
889
|
|
1 118
|
|
|
Basic EPS from discontinued operations (USD)
|
|
0.21
|
|
|
|
|
|
|
|
|
|
0.42
|
|
0.51
|
|
|
|
The following are adjustments to arrive at core gross profit from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-4 044
|
|
165
|
|
34
|
|
|
|
57
|
|
-3 788
|
|
-3 396
|
|
|
|
The following are adjustments to arrive at core operating income from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
|
-1 728
|
|
|
|
|
|
|
|
25
|
|
-1 703
|
|
-1 488
|
|
|
Research and development
|
|
-671
|
|
|
|
10
|
|
|
|
|
|
-661
|
|
-597
|
|
|
Other income
|
|
56
|
|
|
|
-1
|
|
|
|
-24
|
|
31
|
|
75
|
|
|
Other expense
|
|
-795
|
|
|
|
|
|
|
|
654
|
|
-141
|
|
-127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following are adjustments to arrive at core income before taxes from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
-20
|
|
|
|
|
|
|
|
6
|
|
-14
|
|
-3
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets
|
2 Impairments: cost of goods sold and research and development include impairment charges
related to intangible assets; other income includes a reversal of impairment charges
related to property, plant and equipment
|
3 Other items: cost of goods sold, selling, general and administration, other income
and other expense include charges related to the Sandoz spin-off (see Note 3 and Note
12), the company-wide rationalization of manufacturing sites and other net restructuring
charges and related items; cost of goods sold and selling, general and administration
also include adjustments to provisions; other expense includes legal-related items;
other financial income and expense includes the monetary loss on the restatement of
non-monetary items for subsidiaries in hyperinflationary economies
|
Free cash flow
The following table is a reconciliation of the three major categories of the IFRS
consolidated statements of cash flows to free cash flow:
Third quarter
|
|
Q3 2023
|
|
Q3 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
IFRS cash flow
|
|
Adjustments
|
|
Free cash flow
|
|
IFRS cash flow
|
|
Adjustments 1
|
|
Revised Free cash flow 1
|
|
|
Net cash flows from operating activities from continuing operations
|
|
5 304
|
|
|
|
5 304
|
|
4 275
|
|
|
|
4 275
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
74
|
|
|
|
74
|
|
446
|
|
|
|
446
|
|
|
Total net cash flows from operating activities
|
|
5 378
|
|
|
|
5 378
|
|
4 721
|
|
|
|
4 721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows (used in)/from investing activities from continuing operations
|
|
-2 004
|
|
1 743
|
|
-261
|
|
5 309
|
|
-5 530
|
|
-221
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
-208
|
|
134
|
|
-74
|
|
-111
|
|
46
|
|
-65
|
|
|
Total net cash flows (used in)/from investing activities 2
|
|
-2 212
|
|
1 877
|
|
-335
|
|
5 198
|
|
-5 484
|
|
-286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
-4 306
|
|
4 306
|
|
0
|
|
-4 749
|
|
4 749
|
|
0
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
3 474
|
|
-3 474
|
|
0
|
|
11
|
|
-11
|
|
0
|
|
|
Total net cash flows used in financing activities 3
|
|
-832
|
|
832
|
|
0
|
|
-4 738
|
|
4 738
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from continuing operations 1
|
|
|
|
|
|
5 043
|
|
|
|
|
|
4 054
|
|
|
Free cash flow from discontinued operations 1
|
|
|
|
|
|
0
|
|
|
|
|
|
381
|
|
|
Free cash flow 1
|
|
|
|
|
|
5 043
|
|
|
|
|
|
4 435
|
|
|
|
1 To aid in comparability, the prior year adjustments and free cash flow amounts have
been revised to conform with the new free cash flow definition that was effective
as of January 1, 2023.
|
2 With the exception of purchases of property, plant and equipment, all net cash flows
from investing activities from continuing operations and from discontinued operations
are excluded from the free cash flow.
|
3 Net cash flows (used in)/from financing activities from continuing operations and
from discontinued operations are excluded from the free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
Nine months to September 30
|
|
9M 2023
|
|
9M 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
IFRS cash flow
|
|
Adjustments
|
|
Free cash flow
|
|
IFRS cash flow
|
|
Adjustments 1
|
|
Revised Free cash flow 1
|
|
|
Net cash flows from operating activities from continuing operations
|
|
11 673
|
|
|
|
11 673
|
|
9 271
|
|
|
|
9 271
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
238
|
|
|
|
238
|
|
854
|
|
|
|
854
|
|
|
Total net cash flows from operating activities
|
|
11 911
|
|
|
|
11 911
|
|
10 125
|
|
|
|
10 125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from/(used in) investing activities from continuing operations
|
|
7 741
|
|
-8 395
|
|
-654
|
|
3 223
|
|
-3 833
|
|
-610
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
-385
|
|
166
|
|
-219
|
|
-288
|
|
98
|
|
-190
|
|
|
Total net cash flows from/(used in) investing activities 2
|
|
7 356
|
|
-8 229
|
|
-873
|
|
2 935
|
|
-3 735
|
|
-800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
-17 068
|
|
17 068
|
|
0
|
|
-16 582
|
|
16 582
|
|
0
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
3 397
|
|
-3 397
|
|
0
|
|
14
|
|
-14
|
|
0
|
|
|
Total net cash flows used in financing activities 3
|
|
-13 671
|
|
13 671
|
|
0
|
|
-16 568
|
|
16 568
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from continuing operations 1
|
|
|
|
|
|
11 019
|
|
|
|
|
|
8 661
|
|
|
Free cash flow from discontinued operations 1
|
|
|
|
|
|
19
|
|
|
|
|
|
664
|
|
|
Free cash flow 1
|
|
|
|
|
|
11 038
|
|
|
|
|
|
9 325
|
|
|
|
1 To aid in comparability, the prior year adjustments and free cash flow amounts have
been revised to conform with the new free cash flow definition that was effective
as of January 1, 2023.
|
2 With the exception of purchases of property, plant and equipment, all net cash flows
from investing activities from continuing operations and from discontinued operations
are excluded from the free cash flow.
|
3 Net cash flows (used in)/from financing activities from continuing operations and
from discontinued operations are excluded from the free cash flow.
|
|
The following table is a summary of the free cash flow:
Third quarter
(USD millions)
|
|
Q3 2023
|
|
Q3 2022
|
|
|
Operating income from continuing operations
|
|
1 762
|
|
1 826
|
|
|
Adjustments for non-cash items
|
|
|
|
|
|
Depreciation, amortization and impairments
|
|
3 105
|
|
2 005
|
|
|
Change in provisions and other non-current liabilities
|
|
-130
|
|
228
|
|
|
Other
|
|
105
|
|
191
|
|
|
Operating income adjusted for non-cash items from continuing operations
|
|
4 842
|
|
4 250
|
|
|
Dividends received from associated companies and others
|
|
1
|
|
|
|
|
Interest received and change in other financial receipts
|
|
146
|
|
171
|
|
|
Interest paid and change in other financial payments
|
|
-182
|
|
-140
|
|
|
Income taxes paid
|
|
-426
|
|
-260
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
-255
|
|
-193
|
|
|
Change in inventories and trade receivables less trade payables
|
|
-334
|
|
-386
|
|
|
Change in other net current assets and other operating cash flow items
|
|
1 512
|
|
833
|
|
|
Net cash flows from operating activities from continuing operations
|
|
5 304
|
|
4 275
|
|
|
Purchases of property, plant and equipment
|
|
-261
|
|
-221
|
|
|
Free cash flow from continuing operations 1
|
|
5 043
|
|
4 054
|
|
|
Free cash flow from discontinued operations 1, 2
|
|
0
|
|
381
|
|
|
Total free cash flow 1
|
|
5 043
|
|
4 435
|
|
|
|
1 To aid in comparability, the prior year free cash flow amounts have been revised to
conform with the new free cash flow definition that was effective as of January 1,
2023
|
2 In the third quarter of 2023, the free cash flow from discontinued operations was
zero (Q3 2022: USD 381 million cash inflow) consisting of USD 74 million (Q3 2022:
USD 446 million) net cash inflows from operating activities from discontinued operations,
less purchases of property, plant and equipment by discontinued operations of USD
74 million (Q3 2022: USD 65 million).
|
Nine months to September 30
(USD millions)
|
|
9M 2023
|
|
9M 2022
|
|
|
Operating income from continuing operations
|
|
7 187
|
|
6 191
|
|
|
Adjustments for non-cash items
|
|
|
|
|
|
Depreciation, amortization and impairments
|
|
6 758
|
|
5 171
|
|
|
Change in provisions and other non-current liabilities
|
|
232
|
|
835
|
|
|
Other
|
|
335
|
|
412
|
|
|
Operating income adjusted for non-cash items from continuing operations
|
|
14 512
|
|
12 609
|
|
|
Dividends received from associated companies and others
|
|
2
|
|
1
|
|
|
Interest received and other financial receipts
|
|
546
|
|
208
|
|
|
Interest paid and other financial payments
|
|
-527
|
|
-476
|
|
|
Income taxes paid
|
|
-1 694
|
|
-1 368
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
-1 181
|
|
-451
|
|
|
Change in inventories and trade receivables less trade payables
|
|
-1 928
|
|
-1 664
|
|
|
Change in other net current assets and other operating cash flow items
|
|
1 943
|
|
412
|
|
|
Net cash flows from operating activities from continuing operations
|
|
11 673
|
|
9 271
|
|
|
Purchases of property, plant and equipment
|
|
-654
|
|
-610
|
|
|
Free cash flow from continuing operations 1
|
|
11 019
|
|
8 661
|
|
|
Free cash flow from discontinued operations 1, 2
|
|
19
|
|
664
|
|
|
Total free cash flow 1
|
|
11 038
|
|
9 325
|
|
|
|
1 To aid in comparability, the prior year free cash flow amounts have been revised to
conform with the new free cash flow definition that was effective as of January 1,
2023
|
2 In the first nine months of 2023, the free cash flow from discontinued operations
was a cash inflow of USD 19 million (9M 2022: USD 664 million) consisting of USD 238
million (9M 2022: USD 854 million) net cash inflows from operating activities from
discontinued operations, less purchases of property, plant and equipment by discontinued
operations of USD 219 million (9M 2022: USD 190 million).
|
|
Additional information
Net debt
Condensed consolidated changes in net debt
Third quarter
(USD millions)
|
|
Q3 2023 1
|
|
Q3 2022
|
|
|
Net change in cash and cash equivalents
|
|
1 520
|
|
5 101
|
|
|
Change in marketable securities, commodities, time deposits, financial debts and derivatives financial instruments
|
|
3 023
|
|
-3 266
|
|
|
Change in net debt
|
|
4 543
|
|
1 835
|
|
|
Net debt at July 1
|
|
-15 374
|
|
-9 519
|
|
|
Net debt at September 30
|
|
-10 831
|
|
-7 684
|
|
|
|
1 Excluding net debt related to discontinued operations
|
Nine months to September 30
(USD millions)
|
|
9M 2023 1
|
|
9M 2022
|
|
|
Net change in cash and cash equivalents
|
|
4 888
|
|
-3 681
|
|
|
Change in marketable securities, commodities, time deposits, financial debts and derivatives financial instruments
|
|
-8 474
|
|
-3 135
|
|
|
Change in net debt
|
|
-3 586
|
|
-6 816
|
|
|
Net debt at January 1
|
|
-7 245
|
|
-868
|
|
|
Net debt at September 30
|
|
-10 831
|
|
-7 684
|
|
|
|
1 Excluding net debt related to discontinued operations
|
Components of net debt
(USD millions)
|
|
Sep 30, 2023 1
|
|
Dec 31, 2022
|
|
Sep 30, 2022
|
|
|
Non-current financial debts
|
|
-18 068
|
|
-20 244
|
|
-19 732
|
|
|
Current financial debts and derivative financial instruments
|
|
-5 458
|
|
-5 931
|
|
-7 055
|
|
|
Total financial debts
|
|
-23 526
|
|
-26 175
|
|
-26 787
|
|
|
Less liquidity
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
12 405
|
|
7 517
|
|
8 726
|
|
|
Marketable securities, commodities, time deposits and derivative financial instruments
|
|
290
|
|
11 413
|
|
10 377
|
|
|
Total liquidity
|
|
12 695
|
|
18 930
|
|
19 103
|
|
|
Net debt at end of period
|
|
-10 831
|
|
-7 245
|
|
-7 684
|
|
|
|
1 Excluding net debt related to discontinued operations
|
Share information
|
|
Sep 30, 2023
|
|
Sep 30, 2022
|
|
|
Number of shares outstanding
|
|
2 055 460 483
|
|
2 150 980 441
|
|
|
Registered share price (CHF)
|
|
93.87
|
|
75.53
|
|
|
ADR price (USD)
|
|
101.86
|
|
76.01
|
|
|
Market capitalization (USD billions) 1
|
|
211.7
|
|
166.2
|
|
|
Market capitalization (CHF billions) 1
|
|
192.9
|
|
162.5
|
|
|
|
1 Market capitalization is calculated based on the number of shares outstanding (excluding
treasury shares). Market capitalization in USD is based on the market capitalization
in CHF converted at the quarter end CHF/USD exchange rate.
|
Effects of currency fluctuations
Principal currency translation rates
(USD per unit)
|
|
Average rates Q3 2023
|
|
Average rates Q3 2022
|
|
Average rates 9M 2023
|
|
Average rates 9M 2022
|
|
Period-end rates Sep 30, 2023
|
|
Period-end rates Sep 30, 2022
|
|
|
1 CHF
|
|
1.132
|
|
1.034
|
|
1.109
|
|
1.051
|
|
1.097
|
|
1.023
|
|
|
1 CNY
|
|
0.138
|
|
0.146
|
|
0.142
|
|
0.152
|
|
0.137
|
|
0.141
|
|
|
1 EUR
|
|
1.088
|
|
1.007
|
|
1.084
|
|
1.065
|
|
1.059
|
|
0.980
|
|
|
1 GBP
|
|
1.266
|
|
1.177
|
|
1.244
|
|
1.258
|
|
1.224
|
|
1.114
|
|
|
100 JPY
|
|
0.692
|
|
0.724
|
|
0.726
|
|
0.785
|
|
0.672
|
|
0.692
|
|
|
100 RUB
|
|
1.063
|
|
1.663
|
|
1.221
|
|
1.445
|
|
1.031
|
|
1.721
|
|
|
Currency impact on key figures
The following table provides a summary of the currency impact on key Company figures
due to their conversion into US dollars, the Company’s reporting currency, of the
financial data from entities reporting in non-US dollars. Constant currency (cc) calculations
apply the exchange rates of the prior year period to the current period financial
data for entities reporting in non-US dollars.
Third quarter
|
|
Change in USD % Q3 2023
|
|
Change in constant currencies % Q3 2023
|
|
Percentage point currency impact Q3 2023
|
|
|
Net sales from continuing operations
|
|
12
|
|
12
|
|
0
|
|
|
Operating income from continuing operations
|
|
-4
|
|
13
|
|
-17
|
|
|
Net income from continuing operations
|
|
14
|
|
37
|
|
-23
|
|
|
Basic earnings per share (USD) from continuing operations
|
|
20
|
|
45
|
|
-25
|
|
|
Core operating income from continuing operations
|
|
17
|
|
21
|
|
-4
|
|
|
Core net income from continuing operations
|
|
18
|
|
23
|
|
-5
|
|
|
Core basic earnings per share (USD) from continuing operations
|
|
24
|
|
29
|
|
-5
|
|
|
|
|
|
|
|
|
|
|
|
Nine months to September 30
|
|
Change in USD % 9M 2023
|
|
Change in constant currencies % 9M 2023
|
|
Percentage point currency impact 9M 2023
|
|
|
Net sales from continuing operations
|
|
8
|
|
10
|
|
-2
|
|
|
Operating income from continuing operations
|
|
16
|
|
31
|
|
-15
|
|
|
Net income from continuing operations
|
|
25
|
|
41
|
|
-16
|
|
|
Basic earnings per share (USD) from continuing operations
|
|
31
|
|
49
|
|
-18
|
|
|
Core operating income from continuing operations
|
|
13
|
|
19
|
|
-6
|
|
|
Core net income from continuing operations
|
|
15
|
|
22
|
|
-7
|
|
|
Core basic earnings per share (USD) from continuing operations
|
|
21
|
|
28
|
|
-7
|
|
|
|
|
|
|
|
|
|
|
|
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,” “expected,” “momentum,” “continue,” “drivers,” “confident,”
“outlook,” “remain,” “committed,” “prioritized,” “prioritizing,” “continued,” “growing,”
“growth,” “plans,” “on-track,” “continuing,” “anticipated,” “to follow,” “will,” “outlook,”
“may,” “upcoming,” “ongoing,” “focus,” “pipeline,” “potential,” “estimated,” “launch,”
“to deliver,” “transformation,” “transformative,” “address,” “planned,” “focusing,”
“accelerated,” “long-term,” “innovation,” “priority,” “can,” “awaiting,” 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 potential future, pending
or announced transactions; or regarding potential future sales or earnings of Novartis;
or regarding discussions of strategy, priorities, plans, expectations or intentions,
including our transformation into a “pure-play” innovative medicines business; or
regarding our liquidity or cash flow positions and our ability to meet our ongoing
financial obligations and operational needs; or regarding our USD 15 billion share
buyback; or regarding our appeal of the negative decision of the US District Court
for the District of Delaware on the validity of our patent covering Entresto and combinations
of sacubitril and valsartan. 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. There can be no guarantee
that the investigational or approved products described in this press release will
be submitted or approved for sale or for any additional indications or labeling in
any market, or at any particular time. Nor can there be any guarantee that such products
will be commercially successful in the future. Neither can there be any guarantee
expected benefits or synergies from the transactions described in this press release
will be achieved in the expected timeframe, or at all. In particular, our expectations
could be affected by, among other things: liquidity or cash flow disruptions affecting
our ability to meet our ongoing financial obligations and to support our ongoing business
activities; the impact of a partial or complete failure of the return to normal global
healthcare systems including prescription dynamics; global trends toward healthcare
cost containment, including ongoing government, payer and general public pricing and
reimbursement pressures and requirements for increased pricing transparency; uncertainties
regarding potential significant breaches of data security or data privacy, or disruptions
of our information technology systems; regulatory actions or delays or government
regulation generally, including potential regulatory actions or delays with respect
to the development of the products described in this press release; the potential
that the benefits and opportunities expected from our planned spin-off of Sandoz may
not be realized or may be more difficult or take longer to realize than expected;
the uncertainties 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; safety, quality, data integrity, or manufacturing issues; uncertainties
involved in the development or adoption of potentially transformational technologies
and business models; uncertainties regarding actual or potential legal proceedings,
investigations or disputes; our performance on environmental, social and governance
measures; general political, economic and business conditions, including the effects
of and efforts to mitigate pandemic diseases such as COVID-19; uncertainties regarding
future global exchange rates; uncertainties regarding future demand for our products;
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
AG and its subsidiaries. BAUSCH + LOMB is a registered trademark of Bausch & Lomb
Incorporated.
About Novartis
Novartis is a focused innovative medicines company. Every day, we work to reimagine
medicine to improve and extend people’s lives so that patients, healthcare professionals
and societies are empowered in the face of serious disease. Our medicines reach more
than 250 million people worldwide.
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with
us on LinkedIn, Facebook, X/Twitter and Instagram.
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.
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.
Important dates
November 13, 2023
Impact and Health Equity Annual Event
November 28, 2023
R&D Day
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