|
|
Ad hoc announcement pursuant to Art. 53 LR
|
|
Novartis International AG
Novartis Global Communications
CH-4002 Basel
Switzerland
https://www.novartis.com
https://twitter.com/novartisnews
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FINANCIAL RESULTS | FINANZERGEBNISSE
Novartis continues strong momentum in Q3 with 10% sales growth, 20% core operating income growth, and important innovation
milestones; raises FY 2024 guidance
•
|
Q3 net sales grew +10% (cc1, +9% USD) with core operating income up +20% (cc, +17% USD)
|
o
|
Sales growth driven by continued strong performance from Entresto (+26% cc), Cosentyx
(+28% cc), Kisqali (+43% cc), Kesimpta (+28% cc), Pluvicto (+50% cc) and Leqvio (+119% cc)
|
o
|
Core operating income margin 40.1%, +340 basis points (cc), mainly driven by higher net sales
|
•
|
Q3 operating income grew +123% (cc, +106% USD); net income up +121% (cc, +111% USD)
|
•
|
Q3 core EPS grew +20% (cc, +18% USD) to USD 2.06
|
•
|
Q3 free cash flow1 of USD 6.0 billion (+18% USD) driven by higher net cash flows from operating activities
|
•
|
Strong nine months performance with sales up +11% (cc, +9% USD) and core operating income up +20% (cc, +17% USD)
|
•
|
Q3 selected innovation milestones:
|
o
|
Kisqali FDA approval and positive CHMP opinion for HR+/HER2-
stage II and III eBC
|
o
|
Fabhalta FDA accelerated approval for IgAN
|
o
|
Pluvicto FDA filing for pre-taxane mCRPC
|
•
|
Full-year 2024 guidance raised2
|
o
|
Net sales expected to grow low double-digit (from high single to low double-digit)
|
o
|
Core operating income expected to grow high teens (from mid to high teens)
|
Basel, October 29, 2024 – commenting on Q3 2024 results, Vas Narasimhan, CEO of Novartis, said:
“Novartis delivered another quarter of strong operational performance in Q3, with sales up 10% and core operating income up 20%. All key
growth drivers contributed to the momentum. We achieved important indications expansions for Kisqali in early breast cancer and Fabhalta in IgA
nephropathy, and we completed our PSMAfore filing for Pluvicto in the US. With the momentum in our business and pipeline, we were able to once again upgrade our full-year guidance and remain
highly confident in our mid-term outlook.”
Key figures
|
Continuing operations3
|
|
Q3 2024
|
Q3 2023
|
% change
|
9M 2024
|
9M 2023
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
12 823
|
11 782
|
9
|
10
|
37 164
|
34 017
|
9
|
11
|
Operating income
|
3 627
|
1 762
|
106
|
123
|
11 014
|
7 187
|
53
|
61
|
Net income
|
3 185
|
1 513
|
111
|
121
|
9 119
|
5 934
|
54
|
62
|
EPS (USD)
|
1.58
|
0.73
|
116
|
127
|
4.50
|
2.84
|
58
|
67
|
Free cash flow
|
5 965
|
5 043
|
18
|
|
12 618
|
11 019
|
15
|
|
Core operating income
|
5 145
|
4 405
|
17
|
20
|
14 635
|
12 551
|
17
|
20
|
Core net income
|
4 133
|
3 585
|
15
|
17
|
11 822
|
10 320
|
15
|
18
|
Core EPS (USD)
|
2.06
|
1.74
|
18
|
20
|
5.83
|
4.95
|
18
|
21
|
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 46 of the Interim Financial Report. Unless
otherwise noted, all growth rates in this Release refer to same period in prior year. 2. Please see detailed guidance assumptions on page 7. 3. As defined on page 35 of the Interim Financial Report, Continuing operations include
the retained business activities of Novartis, comprising the innovative medicines business and the continuing corporate activities and Discontinued operations include operational results from the Sandoz business.
Strategy
Our focus
In 2023, Novartis completed its transformation into a “pure-play” innovative medicines business. We have a clear focus on four
core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease 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.
Our priorities
1.
|
Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence,
with a rich pipeline across our core therapeutic areas.
|
2.
|
Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis
remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
|
3.
|
Strengthening foundations: Unleashing the power of our people, scaling data science and technology and
continuing to build trust with society.
|
Financials
Following the September 15, 2023, shareholder approval of the spin-off of Sandoz, Novartis reported its consolidated financial statements as “continuing
operations” and “discontinued operations.”
Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business 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.
While the commentary below focuses on continuing operations, we also provide information on discontinued operations.
Continuing operations
Third quarter
Net sales were USD 12.8 billion (+9%, +10% cc), with volume contributing 12 percentage points to growth. Generic competition had a negative impact of 2
percentage points and pricing was flat.
Operating income was USD 3.6 billion (+106%, +123% cc), mainly driven by lower impairments and higher net sales, partly offset by higher R&D
investments.
Net income was USD 3.2 billion (+111%, +121% cc), mainly driven by higher operating income. EPS was USD 1.58 (+116%, +127% cc), benefiting from the lower
weighted average number of shares outstanding.
Core operating income was USD 5.1 billion (+17%, +20% cc), mainly driven by higher net sales, partly offset by higher R&D investments. Core operating
income margin was 40.1% of net sales, increasing 2.7 percentage points (+3.4 percentage points cc).
Core net income was USD 4.1 billion (+15%, +17% cc), mainly due to higher core operating income. Core EPS was USD 2.06 (+18%, +20% cc), benefiting from the lower weighted average number of
shares outstanding.
Free cash flow from continuing operations amounted to USD 6.0 billion (+18% USD), compared with USD 5.0 billion in the prior-year quarter, driven by higher
net cash flows from operating activities from continuing operations.
Nine months
Net sales were USD 37.2 billion (+9%, +11% cc) with volume contributing 14 percentage points to growth. Generic competition had a negative impact of 2
percentage points and pricing had a negative impact of 1 percentage point.
Operating income was USD 11.0 billion (+53%, +61% cc), mainly driven by higher net sales, lower impairments and restructuring charges, partly offset by
prior-year one-time income from legal matters and higher R&D investments.
Net income was USD 9.1 billion (+54%, +62% cc), mainly driven by higher operating income. EPS was USD 4.50 (+58%, +67% cc), benefiting from the lower
weighted average number of shares outstanding.
Core operating income was USD 14.6 billion (+17%, +20% cc), mainly driven by higher net sales, partly offset by higher R&D investments. Core operating
income margin was 39.4% of net sales, increasing 2.5 percentage points (+3.2 percentage points cc).
Core net income was USD 11.8 billion (+15%, +18% cc), mainly due to higher core operating income. Core EPS was USD 5.83 (+18%, +21% cc), benefiting from
the lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 12.6 billion (+15% USD), compared with USD 11.0 billion in the prior-year period, driven by
higher net cash flows from operating activities from continuing operations.
Discontinued operations
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz and
certain other expenses related to the spin-off of the Sandoz business.
Third quarter
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the third quarter of 2024 related to discontinued operations.
In the third quarter of 2023, discontinued operations net sales were USD 2.5 billion, operating loss amounted to USD 86 million and net income from discontinued operations was USD 250 million. For further details see Note 3 “Significant
acquisition of businesses and spin-off of Sandoz business” and Note 11 “Discontinued operations” to the condensed interim consolidated financial statements.
Nine months
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the first nine months of 2024 related to discontinued
operations. In the first nine months of 2023, discontinued operations net sales were USD 7.4 billion, operating income amounted to USD 265 million and net income from discontinued operations was USD 440 million. For further details see
Note 3 “Significant acquisition of businesses and spin-off of Sandoz business” and Note 11 “Discontinued operations” to the condensed interim consolidated financial statements.
Total Company
Third quarter
Total Company net income was USD 3.2 billion in 2024, compared to USD 1.8 billion in 2023 and basic EPS was USD 1.58 compared to USD 0.85 in prior year
quarter. Net cash flows from operating activities for total Company amounted to USD 6.3 billion and free cash flow amounted to USD 6.0 billion.
Nine months
Total Company net income was USD 9.1 billion in 2024, compared to USD 6.4 billion in 2023 and basic EPS was USD 4.50 compared to USD 3.05 in prior year.
Net cash flows from operating activities for total Company amounted to USD 13.4 billion and free cash flow amounted to USD 12.6 billion.
Q3 key growth drivers
Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q3 growth) including:
Entresto
|
(USD 1 865 million, +26% cc) sustained robust, demand-led growth, with increased penetration in the US and Europe following guideline-directed medical therapy in heart
failure, as well as in China with increased penetration in hypertension
|
Cosentyx
|
(USD 1 693 million, +28% cc) sales grew mainly in the US, Europe and emerging growth markets, driven by recent launches (including the HS indication and the IV
formulation in the US) and volume growth in core indications
|
Kisqali
|
(USD 787 million, +43% cc) sales grew strongly across all regions, based on increasing recognition of its overall survival benefit in HR+/HER2- advanced breast cancer
and Category 1 NCCN guidelines recommendation
|
Kesimpta
|
(USD 838 million, +28% cc) sales grew reflecting increased demand for a high efficacy product with convenient self-administered dosing; the prior-year period benefited
from a one-time revenue deduction adjustment in Europe
|
Pluvicto
|
(USD 386 million, +50% cc) sales grew in the US and Europe. Q3 sales benefited from a one-time revenue deduction adjustment in Europe. With supply now unconstrained,
the focus is on increasing share in established RLT sites, while opening new sites and referral pathways, and initiating new patients
|
Leqvio
|
(USD 198 million, +119% cc) continued to show steady growth, with a focus on increasing account and patient adoption, and continuing medical education
|
Jakavi
|
(USD 500 million, +18% cc) sales grew across all regions driven by strong demand across indications
|
Scemblix
|
(USD 182 million, +72% cc) sales grew across all regions demonstrating the continued high unmet need in CML
|
Tafinlar + Mekinist
|
(USD 534 million, +12% cc) sales grew mainly in the US and emerging growth markets, driven by increased demand
|
Xolair
|
(USD 418 million, +15% cc) grew mainly in emerging growth markets and Europe
|
Fabhalta
|
(USD 44 million) launch continues in PNH with an approval in IgAN in Q3
|
Ilaris
|
(USD 372 million, +12% cc) sales grew across all regions, led by the US and Europe
|
Lutathera
|
(USD 190 million, +19% cc) sales grew across all regions due to increased demand and earlier line adoption (within indication) in the US and Japan
|
Emerging Growth Markets*
|
Grew +12% (cc) overall. China grew +18% (cc) to USD 1.0 billion, mainly driven by Entresto, Cosentyx and Leqvio
|
*All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand
Net sales of the top 20 brands in the third quarter and nine months
|
Q3 2024
|
% change
|
9M 2024
|
% change
|
|
USD m
|
USD
|
cc
|
USD m
|
USD
|
cc
|
Entresto
|
1 865
|
26
|
26
|
5 642
|
28
|
30
|
Cosentyx
|
1 693
|
27
|
28
|
4 545
|
24
|
25
|
Kesimpta
- excl. PY revenue deduction adjust.
|
838
|
28
55
|
28
56
|
2 274
|
49
61
|
49
62
|
Kisqali
|
787
|
40
|
43
|
2 131
|
45
|
48
|
Promacta/Revolade
|
569
|
-1
|
0
|
1 633
|
-4
|
-3
|
Tafinlar + Mekinist
|
534
|
11
|
12
|
1 531
|
7
|
9
|
Jakavi
|
500
|
17
|
18
|
1 449
|
14
|
16
|
Tasigna
|
419
|
-10
|
-9
|
1 260
|
-10
|
-9
|
Xolair
|
418
|
13
|
15
|
1 244
|
15
|
17
|
Ilaris
|
372
|
11
|
12
|
1 096
|
12
|
16
|
Pluvicto
- excl. revenue deduction adjust.
|
386
|
51
37
|
50
36
|
1 041
|
47
42
|
47
42
|
Sandostatin Group
|
305
|
-10
|
-8
|
973
|
-3
|
-1
|
Zolgensma
|
308
|
0
|
1
|
952
|
3
|
4
|
Lucentis
|
245
|
-33
|
-32
|
834
|
-29
|
-28
|
Exforge Group
|
174
|
-7
|
-4
|
544
|
-2
|
1
|
Lutathera
|
190
|
19
|
19
|
534
|
17
|
17
|
Leqvio
|
198
|
120
|
119
|
531
|
129
|
130
|
Scemblix
|
182
|
72
|
72
|
482
|
67
|
69
|
Galvus Group
|
159
|
-12
|
-6
|
458
|
-15
|
-8
|
Diovan Group
|
150
|
-2
|
2
|
450
|
-3
|
1
|
Top 20 brands total
|
10 292
|
17
|
18
|
29 604
|
17
|
19
|
R&D update - key developments from the third quarter
New approvals
Kisqali
(ribociclib)
|
FDA approved Kisqali with a broad indication for HR+/HER2- stage II and III early breast cancer (eBC) at high risk of
recurrence, approximately doubling the population eligible for CDK4/6 inhibitor adjuvant therapy, with the inclusion of those without nodal involvement. In addition, the CHMP issued a positive opinion for Kisqali in eBC in October.
|
Fabhalta
(iptacopan)
|
FDA granted accelerated approval to Fabhalta for the reduction of proteinuria in adults with primary immunoglobulin A
nephropathy (IgAN) at risk of rapid disease progression.
|
Regulatory updates
Pluvicto
(lutetium Lu177 vipivotide tetraxetan)
|
Completed FDA submission for Pluvicto pre-taxane mCRPC label expansion based on the positive Phase III PSMAfore study.
|
Scemblix
(asciminib)
|
FDA granted Priority Review status to Scemblix for the treatment of newly diagnosed adult patients with Philadelphia
chromosome-positive CML in chronic phase (Ph+ CML-CP). Scemblix is also under regulatory review in this indication in key international markets worldwide, including in China and Japan.
|
Fabhalta
(iptacopan)
|
Submissions for the treatment of C3 glomerulopathy (C3G) completed in the EU, China and Japan.
|
Results from ongoing trials and other highlights
Kisqali
(ribociclib)
|
Results from a four-year post-hoc analysis of the pivotal Phase III NATALEE trial showed the addition of Kisqali to endocrine
therapy (ET) in patients with stage II and III HR+/HER2- eBC reduced the risk of recurrence by 28.5% compared to ET alone. This invasive disease-free survival benefit was consistent across all pre-specified patient subgroups,
including those with node-negative disease. Results were also consistent across secondary efficacy endpoints, with a trend for improvement in overall survival. Safety and tolerability remained consistent with previously reported
results. Data presented at ESMO Congress 2024.
|
Leqvio
(inclisiran)
|
In the Phase III V-MONO study, Leqvio demonstrated clinically meaningful and statistically significant low-density
lipoprotein cholesterol (LDL-C) lowering versus both placebo and ezetimibe in patients who were at low or moderate risk of developing atherosclerotic cardiovascular disease (ASCVD) and not receiving lipid-lowering therapy.
Novartis plans to present results from this trial at an upcoming medical meeting and share with regulatory agencies including FDA.
|
Kesimpta
(ofatumumab)
|
Data from the ALITHIOS open-label extension study showed first-line Kesimpta treatment for up to six years led to less
disability and disease progression in recently diagnosed (≤3 years) and treatment-naïve people with relapsing multiple sclerosis (RMS), compared to those who switched from teriflunomide.
In the separate US-based single-arm OLIKOS Phase IIIb study, all clinically stable RMS patients who switched from intravenous anti-CD20 therapy to Kesimpta showed no new gadolinium-enhancing (Gd+) T1 lesions at 12 months. Data from both studies were presented at the ECTRIMS 2024 Annual Meeting.
|
Pelabresib
|
Based on Novartis review of 48-week data from the Phase III MANIFEST-2 study, longer follow-up time is needed to determine, in consultation with Health Authorities,
the regulatory path for pelabresib in myelofibrosis. We will continue to follow patients in MANIFEST-2 and evaluate the potential for additional studies to support registration. The 48-week data will be presented at an upcoming
medical meeting.
|
XXB750
|
Novartis will not advance further development of XXB750 in resistant hypertension and heart failure, following current scientific assessment and review of available
data from early investigational studies.
|
BD&L
|
Novartis, in collaboration with Versant Ventures, established Borealis Biosciences, an independent, discovery-stage biotechnology company focused on developing
next-generation RNA-based medicines for kidney diseases. Under the agreement, Novartis has the option to acquire two future development-ready programs to augment its renal portfolio, a strategic area of focus for the company.
Novartis entered into a collaboration agreement with Generate:Biomedicines to discover and develop protein therapeutics across multiple disease areas with generative
AI. The collaboration will combine Generate’s AI platform with Novartis expertise and capabilities in target biology, biologics development, and clinical development to create novel therapeutics and to accelerate the pace of drug
discovery and development.
|
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 2024, Novartis repurchased a total of 52.7 million shares for USD 5.7 billion on the SIX Swiss Exchange second trading
line. These purchases included 45.4 million shares (USD 4.8 billion) under the up-to USD 15 billion share buyback announced in July 2023 (with up to USD 7.9 billion still to be executed). In addition, 7.3 million shares (USD 0.9 billion)
were repurchased to mitigate dilution related to participation plans of associates, with the remainder of repurchases for this purpose to be executed in Q4 2024. Further, 1.1 million shares (for an equity value of USD 0.1 billion) were
repurchased from associates. In the same period, 9.1 million shares (for an equity value of USD 0.8 billion) were delivered as a result of share deliveries related to participation plans of associates. Consequently, the total number of
shares outstanding decreased by 44.7 million versus December 31, 2023. These treasury share transactions resulted in an equity decrease of USD 5.0 billion and a net cash outflow of USD 5.5 billion.
As of September 30, 2024, net debt increased to USD 16.3 billion compared to USD 10.2 billion net debt at December 31, 2023. The increase was mainly due to
the free cash flow of USD 12.6 billion being more than offset by the USD 7.6 billion annual dividend payment, net cash outflow for M&A / intangible assets transactions of USD 5.5 billion, and cash outflow for treasury share
transactions of USD 5.5 billion.
As of Q3 2024, the long-term credit rating for the company is Aa3 with Moody’s Ratings and AA- with S&P Global Ratings.
2024 outlook
Barring unforeseen events; growth vs prior year in cc
|
Previous guidance
|
Net sales
|
Expected to grow low double-digit
|
(from high single to low double-digit)
|
Core operating income
|
Expected to grow high teens
|
(from mid to high teens)
|
Key assumptions:
•
|
We assume Tasigna, Promacta and Entresto
US generic entry mid-2025 for forecasting purposes
|
Foreign exchange impact
If late-October exchange rates prevail for the remainder of 2024, the foreign exchange impact for the year would be negative 1 percentage point on net
sales and negative 3 to negative 4 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 2024
|
Q3 2023
|
% change
|
|
9M 2024
|
9M 2023
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
12 823
|
11 782
|
9
|
10
|
|
37 164
|
34 017
|
9
|
11
|
Operating income
|
3 627
|
1 762
|
106
|
123
|
|
11 014
|
7 187
|
53
|
61
|
As a % of sales
|
28.3
|
15.0
|
|
|
|
29.6
|
21.1
|
|
|
Net income
|
3 185
|
1 513
|
111
|
121
|
|
9 119
|
5 934
|
54
|
62
|
EPS (USD)
|
1.58
|
0.73
|
116
|
127
|
|
4.50
|
2.84
|
58
|
67
|
Cash flows from operating activities
|
6 286
|
5 304
|
19
|
|
|
13 426
|
11 673
|
15
|
|
Non-IFRS measures
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
5 965
|
5 043
|
18
|
|
|
12 618
|
11 019
|
15
|
|
Core operating income
|
5 145
|
4 405
|
17
|
20
|
|
14 635
|
12 551
|
17
|
20
|
As a % of sales
|
40.1
|
37.4
|
|
|
|
39.4
|
36.9
|
|
|
Core net income
|
4 133
|
3 585
|
15
|
17
|
|
11 822
|
10 320
|
15
|
18
|
Core EPS (USD)
|
2.06
|
1.74
|
18
|
20
|
|
5.83
|
4.95
|
18
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations2
|
Q3 2024
|
Q3 2023
|
% change
|
|
9M 2024
|
9M 2023
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
|
2 476
|
nm
|
nm
|
|
|
7 428
|
nm
|
nm
|
Operating (loss)/income
|
|
-86
|
nm
|
nm
|
|
|
265
|
nm
|
nm
|
As a % of sales
|
|
-3.5
|
|
|
|
|
3.6
|
|
|
Net income
|
|
250
|
nm
|
nm
|
|
|
440
|
nm
|
nm
|
Non-IFRS measures
|
|
|
|
|
|
|
|
|
|
Core operating income
|
|
250
|
nm
|
nm
|
|
|
1 185
|
nm
|
nm
|
As a % of sales
|
|
10.1
|
|
|
|
|
16.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
Q3 2024
|
Q3 2023
|
% change
|
|
9M 2024
|
9M 2023
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
USD m
|
USD m
|
USD
|
cc
|
Net income
|
3 185
|
1 763
|
nm
|
nm
|
|
9 119
|
6 374
|
nm
|
nm
|
EPS (USD)
|
1.58
|
0.85
|
nm
|
nm
|
|
4.50
|
3.05
|
nm
|
nm
|
Cash flows from operating activities
|
6 286
|
5 378
|
nm
|
nm
|
|
13 426
|
11 911
|
nm
|
nm
|
Non-IFRS measures
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
5 965
|
5 043
|
nm
|
nm
|
|
12 618
|
11 038
|
nm
|
nm
|
Core net income
|
4 133
|
3 784
|
nm
|
nm
|
|
11 822
|
11 209
|
nm
|
nm
|
Core EPS (USD)
|
2.06
|
1.83
|
nm
|
nm
|
|
5.83
|
5.37
|
nm
|
nm
|
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 46 of the Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.
2. As defined on page 35 of the Interim Financial Report, Continuing operations include the retained business activities of Novartis,
comprising the innovative medicines business 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 Interim Financial Report at the link below:
https://ml-eu.globenewswire.com/resource/download/6504f5e3-a14c-43ba-8b72-44dcc5a45156/
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 “may,” “can,” “will,” “continue,” “ongoing,” “grow,” “launch,” “expect,” “deliver,” “focus,” “address,” “accelerate,” “deliver,” “remain,” “scaling,” “guidance,” “outlook,” “long-term,” “priority,” “potential,”
“momentum,” 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 results of ongoing clinical trials; or regarding potential future, pending or announced transactions; regarding potential future sales or earnings; or by discussions of strategy, plans, expectations or intentions,
including discussions regarding our continued investment into new R&D capabilities and manufacturing; or regarding our capital structure; or regarding the consequences of the spin-off of Sandoz and our transformation into a
“pure-play” innovative medicines company. 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: uncertainties regarding the success of key products, commercial priorities and strategy;
uncertainties in the research and development of new products, including clinical trial results and additional analysis of existing clinical data; uncertainties regarding the use of new and disruptive technologies, including artificial
intelligence; 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 our
ability to realize the strategic benefits, operational efficiencies or opportunities expected from our external business opportunities; our ability to realize the intended benefits of our separation of Sandoz into a new publicly traded
standalone company; 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; uncertainties in
the development or adoption of potentially transformational digital technologies and business models; uncertainties surrounding the implementation of our new IT projects and systems; uncertainties regarding potential significant breaches
of information security or disruptions of our information technology systems; uncertainties regarding actual or potential legal proceedings, including regulatory actions or delays or government regulation related to the products and
pipeline products described in this press release; safety, quality, data integrity, or manufacturing issues; our performance on and ability to comply with environmental, social and governance measures and requirements; major political,
macroeconomic and business developments, including impact of the war in certain parts of the world; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; and other risks and factors
referred to in Novartis AG’s most recently filed Form 20-F and in subsequent reports filed with, or furnished to, 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.
About Novartis
Novartis is an 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 9:00 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 our business and pipeline of selected compounds in late-stage development. A copy of today's earnings call presentation can be found at https://www.novartis.com/investors/event-calendar.
Important dates
November 20-21, 2024 |
Meet Novartis Management 2024 (London, UK)
|
December 9, 2024 |
Impact & Sustainability annual investor event (virtual)
|
January 31, 2025 |
Fourth quarter & full year 2024 results |
Novartis Third Quarter and Nine Months 2024 Condensed Interim Financial Report – Supplementary Data
COMPANY OPERATING PERFORMANCE REVIEW
Discontinued operations
10
COMPANY CASH FLOW AND BALANCE SHEET
11
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements
17
Consolidated statements of comprehensive income
19
Consolidated balance sheets
20
Consolidated statements of changes in equity
21
Consolidated statements of cash flows
23
Notes to condensed interim consolidated financial statements
25
SUPPLEMENTARY INFORMATION
46
CORE RESULTS - Reconciliation from IFRS® Accounting Standards results to non-IFRS measure core results
48
Discontinued operations
51
ADDITIONAL INFORMATION
Effects of currency fluctuations
56
Company
Key figures
Third quarter and nine months
(USD millions unless indicated otherwise)
|
|
Q3 2024 USD m
|
|
Q3 2023 USD m
|
|
% change USD
|
|
% change cc 1
|
|
9M 2024 USD m
|
|
9M 2023 USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Net sales from continuing operations
|
|
12 823
|
|
11 782
|
|
9
|
|
10
|
|
37 164
|
|
34 017
|
|
9
|
|
11
|
|
|
Other revenues
|
|
349
|
|
310
|
|
13
|
|
13
|
|
1 000
|
|
867
|
|
15
|
|
15
|
|
|
Cost of goods sold
|
|
-3 234
|
|
-3 117
|
|
-4
|
|
-3
|
|
-9 503
|
|
-9 450
|
|
-1
|
|
0
|
|
|
Gross profit from continuing operations
|
|
9 938
|
|
8 975
|
|
11
|
|
12
|
|
28 661
|
|
25 434
|
|
13
|
|
15
|
|
|
Selling, general and administration
|
|
-3 134
|
|
-3 091
|
|
-1
|
|
-2
|
|
-9 065
|
|
-9 073
|
|
0
|
|
-1
|
|
|
Research and development
|
|
-2 392
|
|
-3 925
|
|
39
|
|
40
|
|
-7 180
|
|
-8 804
|
|
18
|
|
19
|
|
|
Other income
|
|
355
|
|
224
|
|
58
|
|
57
|
|
877
|
|
1 322
|
|
-34
|
|
-35
|
|
|
Other expense
|
|
-1 140
|
|
-421
|
|
-171
|
|
-167
|
|
-2 279
|
|
-1 692
|
|
-35
|
|
-33
|
|
|
Operating income from continuing operations
|
|
3 627
|
|
1 762
|
|
106
|
|
123
|
|
11 014
|
|
7 187
|
|
53
|
|
61
|
|
|
% of net sales
|
|
28.3
|
|
15.0
|
|
|
|
|
|
29.6
|
|
21.1
|
|
|
|
|
|
|
Loss from associated companies
|
|
-4
|
|
-3
|
|
-33
|
|
-14
|
|
-35
|
|
-7
|
|
nm
|
|
nm
|
|
|
Interest expense
|
|
-264
|
|
-222
|
|
-19
|
|
-25
|
|
-731
|
|
-638
|
|
-15
|
|
-18
|
|
|
Other financial income and expense
|
|
26
|
|
15
|
|
73
|
|
-34
|
|
107
|
|
204
|
|
-48
|
|
-8
|
|
|
Income before taxes from continuing operations
|
|
3 385
|
|
1 552
|
|
118
|
|
129
|
|
10 355
|
|
6 746
|
|
53
|
|
62
|
|
|
Income taxes
|
|
-200
|
|
-39
|
|
nm
|
|
nm
|
|
-1 236
|
|
-812
|
|
-52
|
|
-60
|
|
|
Net income from continuing operations
|
|
3 185
|
|
1 513
|
|
111
|
|
121
|
|
9 119
|
|
5 934
|
|
54
|
|
62
|
|
|
Net income from discontinued operations
|
|
|
|
250
|
|
nm
|
|
nm
|
|
|
|
440
|
|
nm
|
|
nm
|
|
|
Net income
|
|
3 185
|
|
1 763
|
|
nm
|
|
nm
|
|
9 119
|
|
6 374
|
|
nm
|
|
nm
|
|
|
Basic earnings per share from continuing operations (USD)
|
|
1.58
|
|
0.73
|
|
116
|
|
127
|
|
4.50
|
|
2.84
|
|
58
|
|
67
|
|
|
Basic earnings per share from discontinued operations (USD)
|
|
|
|
0.12
|
|
nm
|
|
nm
|
|
|
|
0.21
|
|
nm
|
|
nm
|
|
|
Total basic earnings per share (USD)
|
|
1.58
|
|
0.85
|
|
nm
|
|
nm
|
|
4.50
|
|
3.05
|
|
nm
|
|
nm
|
|
|
Net cash flows from operating activities from continuing operations
|
|
6 286
|
|
5 304
|
|
19
|
|
|
|
13 426
|
|
11 673
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS measures 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from continuing operations
|
|
5 965
|
|
5 043
|
|
18
|
|
|
|
12 618
|
|
11 019
|
|
15
|
|
|
|
|
Core operating income from continuing operations
|
|
5 145
|
|
4 405
|
|
17
|
|
20
|
|
14 635
|
|
12 551
|
|
17
|
|
20
|
|
|
% of net sales
|
|
40.1
|
|
37.4
|
|
|
|
|
|
39.4
|
|
36.9
|
|
|
|
|
|
|
Core net income from continuing operations
|
|
4 133
|
|
3 585
|
|
15
|
|
17
|
|
11 822
|
|
10 320
|
|
15
|
|
18
|
|
|
Core basic earnings per share from continuing operations (USD)
|
|
2.06
|
|
1.74
|
|
18
|
|
20
|
|
5.83
|
|
4.95
|
|
18
|
|
21
|
|
|
|
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 46. Unless otherwise noted,
all growth rates in this release refer to same period in prior-year.
|
nm = not meaningful
|
Strategy
Our focus
In 2023, Novartis completed its transformation into a “pure-play” innovative medicines
business. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic,
immunology, neuroscience and oncology), with multiple significant in-market and pipeline
assets in each of these areas, that address high disease 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.
Our priorities
1. Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence,
with a rich pipeline across our core therapeutic areas.
2. Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis
remains disciplined and shareholder-focused in our approach to capital allocation,
with substantial cash generation and a strong capital structure supporting continued
flexibility.
3. Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing
to build trust with society.
Financials
Following the September 15, 2023, shareholder approval of the spin-off of Sandoz,
Novartis reported its consolidated financial statements as “continuing operations”
and “discontinued operations.”
Continuing operations include the retained business activities of Novartis, comprising
the innovative medicines business 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.
While the commentary below focuses on continuing operations, we also provide information
on discontinued operations.
Continuing operations
Third quarter
Net sales
Net sales were USD 12.8 billion (+9%, +10% cc), with volume contributing 12 percentage
points to growth. Generic competition had a negative impact of 2 percentage points
and pricing was flat. Sales in the US were USD 5.4 billion (+16%) and in the rest
of the world USD 7.4 billion (+4%, +6% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 1.9 billion, +26%, +26% cc), Cosentyx (USD 1.7 billion, +27%, +28% cc), Kisqali (USD 787 million, +40%, +43% cc), Kesimpta (USD 838 million, +28%, +28% cc), Pluvicto (USD 386 million, +51%, +50% cc) and Leqvio (USD 198 million, +120%, +119% cc), partly offset by erosion due to generic competition,
mainly for Gilenya and Lucentis.
In the US (USD 5.4 billion, +16%), sales growth was mainly driven by Cosentyx, Entresto, Kesimpta and Kisqali, partly offset by the impact of generic competition on Gilenya, and the Xiidra divestment. In Europe (USD 4.0 billion, +1%, +1% cc), sales growth was mainly driven
by Entresto, Pluvicto, Cosentyx, Jakavi and Kisqali, partly offset by increased generic competition for Lucentis and Gilenya. Sales in emerging growth markets were USD 3.3 billion (+8%, +12% cc), including
USD 1.0 billion sales from China (+19%, +18% cc).
Operating income
Operating income was USD 3.6 billion (+106%, +123% cc), mainly driven by higher net
sales and lower impairments, partly offset by higher R&D investments. Operating income
margin was 28.3% of net sales,
increasing 13.3 percentage points (+14.6 percentage points cc). Other revenue as
a percentage of sales was in-line with the prior year. Cost of goods sold as a percentage
of sales decreased by 1.5 percentage points (cc). R&D expenses as a percentage of
net sales decreased by 15.3 percentage points (cc). SG&A expenses as a percentage
of net sales decreased by 2.1 percentage points (cc). Other income and expense as
a percentage of net sales decreased the margin by 4.3 percentage points (cc).
Core adjustments were USD 1.5 billion, mainly due to amortization and impairments,
compared to USD 2.6 billion in the prior year. Core adjustments decreased compared
to the prior year, mainly due to lower impairments.
Core operating income was USD 5.1 billion (+17%, +20% cc), mainly driven by higher
net sales, partly offset by higher R&D investments. Core operating income margin was
40.1% of net sales, increasing 2.7 percentage points (+3.4 percentage points cc).
Other revenue as a percentage of sales was in-line with the prior year. Core cost
of goods sold as a percentage of sales decreased by 0.3 percentage points (cc). Core
R&D expenses as a percentage of net sales decreased by 0.7 percentage points (cc).
Core SG&A expenses as a percentage of net sales decreased by 2.1 percentage points
(cc). Core other income and expense as a percentage of net sales increased the margin
by 0.3 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 264 million and other financial income and expense
amounted to an income of USD 26 million, both broadly in line with prior-year quarter.
Core other financial income and expense amounted to an income of USD 56 million, broadly
in line with prior-year quarter.
Income taxes
The tax rate in the third quarter was 5.9% compared to 2.5% in the prior year. The
current year tax rate was favorably impacted by the effect of changes in uncertain
tax positions, the recognition of deferred tax assets on prior years' tax credit carryforwards
and the effect of adjusting the current year tax rate to the estimated full year tax
rate, which was lower than previously estimated, partially offset by a non-deductible
impairment of goodwill. The prior year third quarter tax rate was 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. Excluding these impacts, the tax rate in the
third quarter would have been 15.1% compared to 14.9% in the prior year. The increase
from the prior year was mainly the result of the impact of the enactment of Pillar
Two tax legislation in Switzerland, which became effective on January 1, 2024, partially
offset by of a change in profit mix.
The core tax rate (core taxes as a percentage of core income before tax) was 16.2%
compared to 15.2% in the prior year. The 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 this impact the prior year quarter
core tax rate would have been 15.4%. The increase from the prior year was mainly the
result of the impact of the enactment of Pillar Two tax legislation in Switzerland,
which became effective on January 1, 2024, partially offset by a change in profit
mix.
Net income, EPS and free cash flow
Net income was USD 3.2 billion (+111%, +121% cc), mainly driven by higher operating
income. EPS was USD 1.58 (+116%, +127% cc), benefiting from the lower weighted average
number of shares outstanding.
Core net income was USD 4.1 billion (+15%, +17% cc), mainly due to higher core operating
income. Core EPS was USD 2.06 (+18%, +20% cc), benefiting from the lower weighted
average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 6.0 billion (+18% USD),
compared with USD 5.0 billion in the prior-year quarter, driven by higher net cash flows from operating
activities from continuing operations.
Nine months
Net sales
Net sales were USD 37.2 billion (+9%, +11% cc) with volume contributing 14 percentage
points to growth. Generic competition had a negative impact of 2 percentage points
and pricing had a negative impact of 1 percentage point. Sales in the US were USD
15.1 billion (+15%) and in the rest of the world USD 22.0 billion (+6%, +8% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 5.6 billion, +28%, +30% cc), Cosentyx (USD 4.5 billion, +24%, +25% cc), Kesimpta (USD 2.3 billion, +49%, +49% cc), Kisqali (USD 2.1 billion, +45%, +48% cc), Pluvicto (USD 1.0 billion, +47%, +47% cc) and Leqvio (USD 531 million, +129%, +130% cc), partly offset by erosion due to generic competition,
mainly for Lucentis and Gilenya, and the Xiidra divestment.
In the US (USD 15.1 billion, +15%), sales growth was mainly driven by Cosentyx, Entresto, Kesimpta, Kisqali, Pluvicto and Leqvio, partly offset by the Xiidra divestment and the impact of generic competition on Gilenya. In Europe (USD 11.6 billion, +3%, +4% cc), sales growth was mainly driven by Entresto, Kesimpta, Pluvicto, Cosentyx and Kisqali, partly offset by erosion due to generic competition, mainly for Lucentis and Gilenya. Sales in emerging growth markets were USD 10.0 billion (+12%, +16% cc), including
USD 3.1 billion sales from China (+22%, +25% cc).
Operating income
Operating income was USD 11.0 billion (+53%, +61% cc), mainly driven by higher net
sales, lower impairments and restructuring charges, partly offset by prior-year one-time
income from legal matters and higher R&D investments. Operating income margin was
29.6% of net sales, increasing 8.5 percentage points (+9.5 percentage points cc).
Other revenue as a percentage of sales increased by 0.1 percentage points (cc). Cost
of goods sold as a percentage of sales decreased by 2.6 percentage points (cc). R&D
expenses as a percentage of net sales decreased by 6.9 percentage points (cc). SG&A
expenses as a percentage of net sales decreased by 2.4 percentage points (cc). Other
income and expense as a percentage of net sales decreased the margin by 2.5 percentage
points (cc).
Core adjustments were USD 3.6 billion, mainly due to amortization, compared to USD
5.4 billion in the prior year. Core adjustments decreased compared to the prior year,
mainly due to lower impairments and restructuring charges, partly offset by prior-year
one-time income from legal matters.
Core operating income was USD 14.6 billion (+17%, +20% cc), mainly driven by higher
net sales, partly offset by higher R&D investments. Core operating income margin was
39.4% of net sales, increasing 2.5 percentage points (+3.2 percentage points cc).
Other revenue as a percentage of sales increased by 0.1 percentage points (cc). Core
cost of goods sold as a percentage of sales increased by 0.2 percentage points (cc).
Core R&D expenses as a percentage of net sales decreased by 0.7 percentage points
(cc). Core SG&A expenses as a percentage of net sales decreased by 2.4 percentage
points (cc). Core other income and expense as a percentage of net sales increased
the margin by 0.2 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 731 million compared to USD 638 million in the prior
year mainly due to an increase in financial debts. Other financial income and expense
amounted to an income of USD 107 million compared with an income of USD 204 million
in the prior year, mainly due to higher net losses from the impact of IAS Standards
29 “Financial Reporting in Hyperinflationary Economies” and lower interest income,
partly offset by realized gains on sale of financial assets.
Core other financial income and expense amounted to an income of USD 212 million compared
to an income of USD 293 million in the prior year, mainly due to lower interest income.
Income taxes
The tax rate in the first nine months was 11.9% compared to 12.0% in the prior year
period. The current year tax rate was favorably impacted by the effect of changes
in uncertain tax positions and the recognition of deferred tax assets on prior years'
tax credit carryforwards, partially offset by the effect of a non-deductible impairment
of goodwill. The prior year tax 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 tax rate in the first nine months would have been 15.1% compared to 15.3% in the
prior year period. The decrease from the prior year was mainly the result of a change
in profit mix, partially offset by the impact of the enactment of Pillar Two tax legislation
in Switzerland, which became effective on January 1, 2024.
The core tax rate (core taxes as a percentage of core income before tax) was 16.2%
in the first nine months and 15.4% in the prior year period. The increase from the
prior year was mainly the result of a change in profit mix and the impact of the enactment
of Pillar Two tax legislation in Switzerland, which became effective on January 1,
2024.
Net income, EPS and free cash flow
Net income was USD 9.1 billion (+54%, +62% cc), mainly driven by higher operating
income. EPS was USD 4.50 (+58%, +67% cc), benefiting from the lower weighted average
number of shares outstanding.
Core net income was USD 11.8 billion (+15%, +18% cc), mainly due to higher core operating
income. Core EPS was USD 5.83 (+18%, +21% cc), benefiting from the lower weighted
average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 12.6 billion (+15% USD),
compared with USD 11.0 billion in the prior-year period, driven by higher net cash flows from operating
activities from continuing operations.
Product commentary (relating to Q3 performance)
Cardiovascular, RENAL and METABOLIC
|
|
Q3 2024
|
|
Q3 2023
|
|
% change
|
|
% change
|
|
9M 2024
|
|
9M 2023
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Cardiovascular, renal and metabolic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
1 865
|
|
1 485
|
|
26
|
|
26
|
|
5 642
|
|
4 400
|
|
28
|
|
30
|
|
|
Leqvio
|
|
198
|
|
90
|
|
120
|
|
119
|
|
531
|
|
232
|
|
129
|
|
130
|
|
|
Total cardiovascular, renal and metabolic
|
|
2 063
|
|
1 575
|
|
31
|
|
31
|
|
6 173
|
|
4 632
|
|
33
|
|
35
|
|
|
Entresto (USD 1 865 million, +26%, +26% cc) sustained robust, demand-led growth. In the US
and Europe, Entresto penetration grew through the continued adoption of guideline-directed medical therapy
in heart failure. In China and Japan, Entresto volume growth was fueled by heart failure as well as hypertension. In the US, Novartis
is in ANDA litigation with generic manufacturers. Novartis has appealed to reverse
the negative US district court decision to uphold the validity of its combination
patent covering Entresto and combinations of sacubitril and valsartan, which expires in 2025 (with pediatric
exclusivity). Several generics have received final approval in the US. Novartis filed
a lawsuit against FDA challenging the approval of one generic ANDA, which is now on
appeal. Any US commercial launch of a generic Entresto product prior to the final outcome of the combination patent appeal, or ongoing litigations
involving other patents or the FDA, may be at risk of later litigation developments.
Leqvio (USD 198 million, +120%, +119% cc) launch in the US and other markets is ongoing,
delivering a medicine with effective and consistent LDL-C reduction in two maintenance
doses per year. Focus remains on increased account and patient adoption and continuing
medical education. Leqvio is registered in more than 100 countries and commercially available in 78. Novartis
obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals.
Immunology
|
|
Q3 2024
|
|
Q3 2023
|
|
% change
|
|
% change
|
|
9M 2024
|
|
9M 2023
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
1 693
|
|
1 329
|
|
27
|
|
28
|
|
4 545
|
|
3 677
|
|
24
|
|
25
|
|
|
Xolair 1
|
|
418
|
|
369
|
|
13
|
|
15
|
|
1 244
|
|
1 085
|
|
15
|
|
17
|
|
|
Ilaris
|
|
372
|
|
335
|
|
11
|
|
12
|
|
1 096
|
|
979
|
|
12
|
|
16
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
nm
|
|
nm
|
|
|
Total immunology
|
|
2 483
|
|
2 033
|
|
22
|
|
23
|
|
6 886
|
|
5 741
|
|
20
|
|
22
|
|
|
|
1 Net sales reflect Xolair sales for all indications.
|
nm = not meaningful
|
Cosentyx (USD 1 693 million, +27%, +28% cc) sales grew mainly in the US, Europe and emerging
growth markets, driven by strong demand from recent launches (including the HS indication
and the IV formulation in the US) and volume growth in core indications (PsO, PsA,
AS and nr-axSpA). Since initial approval in 2015, Cosentyx has shown sustained efficacy and a robust safety profile, treating more than 1.6
million patients across 8 indications.
Xolair (USD 418 million, ex-US +13%, +15% cc) growth was driven mainly by emerging growth
markets and Europe. 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.
Ilaris (USD 372 million, +11%, +12% cc) sales grew across all regions, led by the US and
Europe. Contributors to growth include strong performance in the Periodic Fever Syndromes
and Still’s disease indications.
Neuroscience
|
|
Q3 2024
|
|
Q3 2023
|
|
% change
|
|
% change
|
|
9M 2024
|
|
9M 2023
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
838
|
|
657
|
|
28
|
|
28
|
|
2 274
|
|
1 530
|
|
49
|
|
49
|
|
excl. PY revenue deduction adjust. 1
|
|
|
|
|
|
55
|
|
56
|
|
|
|
|
|
61
|
|
62
|
|
|
Zolgensma
|
|
308
|
|
308
|
|
0
|
|
1
|
|
952
|
|
928
|
|
3
|
|
4
|
|
|
Aimovig
|
|
79
|
|
69
|
|
14
|
|
16
|
|
232
|
|
197
|
|
18
|
|
18
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
nm
|
|
nm
|
|
|
Total neuroscience
|
|
1 225
|
|
1 034
|
|
18
|
|
19
|
|
3 459
|
|
2 655
|
|
30
|
|
31
|
|
|
|
1 Sales growth benefiting from a one-time revenue deduction adjustment in Europe in
the prior period
|
nm = not meaningful
|
Kesimpta (USD 838 million, +28%, +28% cc) sales grew reflecting increased demand and strong
access. The prior period benefitted from a one-time revenue deduction adjustment (USD
118 million) in Europe. Kesimpta is a high efficacy B-cell therapy, with a favorable safety and tolerability profile
and an at-home self-administration for a broad population of RMS patients. Kesimpta is now approved in 90 countries with more than 100,000 patients treated.
Zolgensma (USD 308 million, 0%, +1% cc) continues to treat mainly incident patients in established
markets, translating into stable sales this quarter. Zolgensma is now approved in 55 countries with more than 4,000 patients treated globally through
clinical trials, early access programs and in the commercial setting.
Aimovig (USD 79 million, ex-US, ex-Japan +14%, +16% cc) sales grew mainly in Europe driven
by increased demand for migraine prevention. Novartis commercializes Aimovig ex-US and ex-Japan, while Amgen retains all rights in the US and in Japan.
ONCOLOGY
|
|
Q3 2024
|
|
Q3 2023
|
|
% change
|
|
% change
|
|
9M 2024
|
|
9M 2023
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kisqali
|
|
787
|
|
562
|
|
40
|
|
43
|
|
2 131
|
|
1 470
|
|
45
|
|
48
|
|
|
Promacta/Revolade
|
|
569
|
|
576
|
|
-1
|
|
0
|
|
1 633
|
|
1 706
|
|
-4
|
|
-3
|
|
|
Tafinlar + Mekinist 1
|
|
534
|
|
482
|
|
11
|
|
12
|
|
1 531
|
|
1 436
|
|
7
|
|
9
|
|
|
Jakavi
|
|
500
|
|
427
|
|
17
|
|
18
|
|
1 449
|
|
1 276
|
|
14
|
|
16
|
|
|
Tasigna
|
|
419
|
|
464
|
|
-10
|
|
-9
|
|
1 260
|
|
1 402
|
|
-10
|
|
-9
|
|
|
Pluvicto
|
|
386
|
|
256
|
|
51
|
|
50
|
|
1 041
|
|
707
|
|
47
|
|
47
|
|
excl. revenue deduction adjust. 2
|
|
|
|
|
|
37
|
|
36
|
|
|
|
|
|
42
|
|
42
|
|
|
Lutathera
|
|
190
|
|
159
|
|
19
|
|
19
|
|
534
|
|
458
|
|
17
|
|
17
|
|
|
Scemblix
|
|
182
|
|
106
|
|
72
|
|
72
|
|
482
|
|
288
|
|
67
|
|
69
|
|
|
Piqray/Vijoice
|
|
111
|
|
128
|
|
-13
|
|
-13
|
|
340
|
|
374
|
|
-9
|
|
-9
|
|
|
Kymriah
|
|
102
|
|
124
|
|
-18
|
|
-17
|
|
335
|
|
388
|
|
-14
|
|
-12
|
|
|
Fabhalta
|
|
44
|
|
|
|
nm
|
|
nm
|
|
72
|
|
|
|
nm
|
|
nm
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total oncology
|
|
3 824
|
|
3 284
|
|
16
|
|
18
|
|
10 808
|
|
9 506
|
|
14
|
|
15
|
|
|
|
1 Majority of sales for Mekinist and Tafinlar are combination, but both
can be used as monotherapy.
|
2 Sales growth benefiting from a one-time revenue deduction adjustment in Europe
|
nm = not meaningful
|
Kisqali (USD 787 million, +40%, +43% cc) sales grew strongly across all regions, based on
increasing recognition of its consistently reported overall survival in HR+/HER2-
advanced breast cancer, Category 1 NCCN
guidelines recommendation, and highest ESMO-Magnitude of Clinical Benefit Scale scores
in the CDK4/6 inhibitor class. Novartis is in US ANDA litigation with a generic manufacturer.
Promacta/Revolade (USD 569 million, -1%, 0% cc) sales were broadly in line following discontinued proactive
promotion in most markets.
Tafinlar + Mekinist (USD 534 million, +11%, +12% cc) sales grew mainly in the US and emerging growth
markets, driven by demand in BRAF+ adjuvant melanoma, NSCLC, pediatric low-grade glioma,
and tumor agnostic indications, while maintaining demand in the highly competitive
BRAF+ metastatic melanoma market.
Jakavi (USD 500 million, +17% USD, +18% cc) sales grew across all regions driven by strong
demand in all indications. Incyte retains all rights to ruxolitinib (Jakafi®) in the
US.
Tasigna (USD 419 million, -10%, -9% cc) sales declined across most regions due to lower demand
and increasing competition.
Pluvicto (USD 386 million, +51%, +50% cc) sales grew in the US and Europe. Pluvicto is the 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 anti-cancer treatments (ARPI and taxane-based
chemotherapy). Pluvicto is now on the market in several EU countries. Current period sales benefited from
a one-time revenue deduction adjustment (USD 36 million) in Europe. Novartis is in
litigation with a manufacturer developing a radiopharmaceutical to treat PSMA-positive
prostate cancer.
Lutathera (USD 190 million, +19%, +19% cc) sales grew across all regions due to increased demand
and earlier line adoption (within indication) in the US and Japan. Novartis is in
ANDA litigation with a generic manufacturer.
Scemblix (USD 182 million, +72% USD, +72% cc) sales grew across all regions, demonstrating
continued high unmet need for effective and tolerable treatment options for adult
CML patients treated with two or more tyrosine kinase inhibitors.
Piqray/Vijoice (USD 111 million, -13%, -13% cc) sales declined in the US due to increased competition.
Kymriah (USD 102 million, -18% USD, -17% cc) declined both in the US and ex-US, partly offset
by strong performance in pediatric and young adult patients up to 25 years of age
with B-cell acute lymphoblastic leukemia (pALL) in the US, and follicular lymphoma
indication uptake ex-US.
Fabhalta (USD 44 million, nm) launch continues in PNH with an approval in IgAN in August 2024.
Established BRANDS
|
|
Q3 2024
|
|
Q3 2023
|
|
% change
|
|
% change
|
|
9M 2024
|
|
9M 2023
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Established brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandostatin Group
|
|
305
|
|
338
|
|
-10
|
|
-8
|
|
973
|
|
998
|
|
-3
|
|
-1
|
|
|
Lucentis
|
|
245
|
|
363
|
|
-33
|
|
-32
|
|
834
|
|
1 174
|
|
-29
|
|
-28
|
|
|
Exforge Group
|
|
174
|
|
187
|
|
-7
|
|
-4
|
|
544
|
|
557
|
|
-2
|
|
1
|
|
|
Galvus Group
|
|
159
|
|
181
|
|
-12
|
|
-6
|
|
458
|
|
539
|
|
-15
|
|
-8
|
|
|
Diovan Group
|
|
150
|
|
153
|
|
-2
|
|
2
|
|
450
|
|
466
|
|
-3
|
|
1
|
|
|
Gilenya
|
|
130
|
|
270
|
|
-52
|
|
-51
|
|
443
|
|
771
|
|
-43
|
|
-41
|
|
|
Contract manufacturing
|
|
279
|
|
471
|
|
-41
|
|
-41
|
|
829
|
|
1 174
|
|
-29
|
|
-29
|
|
|
Other
|
|
1 786
|
|
1 893
|
|
-6
|
|
-5
|
|
5 307
|
|
5 804
|
|
-9
|
|
-8
|
|
|
Total established brands
|
|
3 228
|
|
3 856
|
|
-16
|
|
-15
|
|
9 838
|
|
11 483
|
|
-14
|
|
-13
|
|
|
Sandostatin Group (USD 305 million, -10%, -8% cc) sales declined mainly in the US ahead of the entry
of the first generic product in the US in October 2024.
Lucentis (USD 245 million, ex-US -33%, -32% cc) sales declined in Europe, emerging growth markets,
and Japan, mainly due to competition.
Exforge Group (USD 174 million, -7%, -4% cc) sales declined mainly in China.
Galvus Group (USD 159 million, -12%, -6% cc) sales declined mainly in Japan and Europe, primarily
due to generic competition.
Diovan Group (USD 150 million, -2%, +2% cc) sales grew (cc) mainly in emerging growth markets
and Europe, partly offset by a decline in the US.
Gilenya (USD 130 million, +52%, -51% cc) sales declined (cc) due to generic competition, mainly
in the US and Europe.
Discontinued operations
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars
division, certain corporate activities attributable to Sandoz and certain other expenses
related to the spin-off of the Sandoz business.
Third quarter
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results
in the third quarter of 2024 related to discontinued operations. In the third quarter
of 2023, discontinued operations net sales were USD 2.5 billion, operating loss amounted
to USD 86 million and net income from discontinued operations was USD 250 million.
For further details see Note 3 “Significant acquisition of businesses and spin-off
of Sandoz business” and Note 11 “Discontinued operations” to the condensed interim
consolidated financial statements.
Nine months
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results
in the first nine months of 2024 related to discontinued operations. In the first
nine months of 2023, discontinued operations net sales were USD 7.4 billion, operating
income amounted to USD 265 million and net income from discontinued operations was
USD 440 million. For further details see Note 3 “Significant acquisition of businesses
and spin-off of Sandoz business” and Note 11 “Discontinued operations” to the condensed
interim consolidated financial statements.
Total Company
Third quarter
Total Company net income was USD 3.2 billion in 2024, compared to USD 1.8 billion
in 2023 and basic EPS was USD 1.58 compared to USD 0.85 in prior year quarter. Net
cash flows from operating activities for total Company amounted to USD 6.3 billion
and free cash flow amounted to USD 6.0 billion.
Nine months
Total Company net income was USD 9.1 billion in 2024, compared to USD 6.4 billion
in 2023 and basic EPS was USD 4.50 compared to USD 3.05 in prior year. Net cash flows
from operating activities for total Company amounted to USD 13.4 billion and free
cash flow amounted to USD 12.6 billion.
Company Cash Flow and Balance Sheet
Cash flow
Third quarter
Net cash flows from operating activities from continuing operations amounted to USD
6.3 billion, compared with USD 5.3 billion in the prior-year quarter. This increase
was mainly driven by higher net income from continuing operations, adjusted for non-cash
items and other adjustments, including divestment gains.
In the prior-year quarter, net cash flows from operating activities from discontinued
operations amounted to USD 0.1 billion (Q3 2024: nil).
Net cash outflows used in investing activities from continuing operations amounted
to USD 0.4 billion, compared with USD 2.0 billion in the prior-year quarter.
In the current-year quarter, net cash outflows used in investing activities from continuing
operations were mainly driven by USD 0.5 billion for purchases of intangible assets
and USD 0.3 billion for purchases of property, plant and equipment. These were partly
offset by cash inflows of USD 0.2 billion from the sale of financial assets; and by
net proceeds of USD 0.3 billion from the sale of marketable securities, commodities
and time deposits.
In the prior-year quarter, net cash outflows used in investing activities from continuing
operations of USD 2.0 billion 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 the 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 outflows used in investing activities from discontinued
operations amounted to USD 0.2 billion (Q3 2024: nil).
Net cash outflows used in financing activities from continuing operations amounted
to USD 0.4 billion, compared with USD 4.3 billion in the prior-year quarter.
In the current-year quarter, the cash outflows used in financing activities from continuing
operations of USD 4.1 billion were mainly driven by USD 2.8 billion for net treasury
share transactions, the change in current financial debts of USD 0.8 billion, and
the repayments of other current financial debts of USD 0.3 billion. These cash outflows
were partly offset by cash inflows of USD 3.7 billion from the issuance of US dollar
denominated bonds with a notional amount of USD 3.7 billion.
In the prior-year quarter, net cash outflows used in financing activities from continuing
operations of USD 4.3 billion 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 inflows from financing activities from discontinued
operations amounted to USD 3.5 billion (Q3 2024: nil).
Free cash flow from continuing operations amounted to USD 6.0 billion (+18% USD),
compared with USD 5.0 billion in the prior-year quarter, driven by higher net cash flows from operating
activities from continuing operations.
For the total Company, net cash flows from operating activities amounted to USD 6.3
billion, compared with USD 5.4 billion in the prior-year quarter, and free cash flow
amounted to USD 6.0 billion, compared with USD 5.0 billion in the prior-year quarter.
Nine months
Net cash flows from operating activities from continuing operations amounted to USD
13.4 billion, compared with USD 11.7 billion in the prior-year period. This increase
was mainly driven by higher net income from continuing
operations, adjusted for non-cash items and other adjustments, including divestment
gains and lower payments out of provisions, partly offset by unfavorable changes in
working capital.
In the prior-year period, net cash flows from operating activities from discontinued
operations amounted to USD 0.2 billion (9M 2024: nil).
Net cash outflows used in investing activities from continuing operations amounted
to USD 4.5 billion, compared with USD 7.7 billion net cash inflows in the prior-year
period.
In the current year period, net cash outflows used in investing activities from continuing
operations were mainly driven by USD 3.6 billion for acquisitions and divestments
of businesses, including the acquisition of Mariana Oncology for USD 1.0 billion (USD
1.1 billion, net of cash acquired of USD 0.1 billion) and the acquisition of MorphoSys
AG for USD 2.3 billion (USD 2.5 billion, net of cash acquired of USD 0.2 billion).
Cash outflows for purchases of intangible assets amounted to USD 1.9 billion; purchases
of property, plant and equipment amounted to USD 0.8 billion; and purchases of financial
assets amounted to USD 0.1 billion. These were partly offset by cash inflows of USD
0.9 billion from the sale of financial assets (including USD 0.7 billion proceeds
from the sale of Sandoz Group AG shares by consolidated foundations); and by net proceeds
of USD 1.0 billion from the sale of marketable securities, commodities and time deposits.
In the prior-year period, net cash inflows from investing activities from continuing
operations of USD 7.7 billion were driven by the 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 of USD 0.1 billion, and the acquisition
of DTx Pharma Inc. for USD 0.5 billion, net of cash acquired of 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 outflows used in investing activities from discontinued
operations amounted to USD 0.4 billion (9M 2024: nil).
Net cash outflows used in financing activities from continuing operations amounted
to USD 8.7 billion, compared with USD 17.1 billion in the prior-year period.
In the current-year period, net cash outflows used in financing activities from continuing
operations were mainly driven by USD 7.6 billion for the dividend payment; USD 5.5
billion for net treasury share transactions; the USD 2.15 billion repayment of a US
dollar bond at maturity, and the USD 0.3 billion repayments of other current financial
debts. These cash outflows were partly offset by cash inflows from the issuance of
bonds totaling USD 6.1 billion (denominated in US dollars with a notional amount of
USD 3.7 billion and in Swiss francs with a notional amount of CHF 2.2 billion, equivalent
to USD 2.5 billion). The change in current financial debts resulted in net cash inflows
of USD 1.0 billion.
In the prior-year period, net cash outflows used in financing activities from continuing
operations of USD 17.1 billion 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 inflows from financing activities from discontinued
operations amounted to USD 3.4 billion (9M 2024: nil).
Free cash flow from continuing operations amounted to USD 12.6 billion (+15% USD),
compared with USD 11.0 billion in the prior-year period, driven by higher net cash flows from operating
activities from continuing operations.
For the total Company, net cash flows from operating activities amounted to USD 13.4
billion, compared with USD 11.9 billion in the prior-year period, and free cash flow
amounted to USD 12.6 billion, compared with USD 11.0 billion in the prior-year period.
Balance sheet
Assets
Total non-current assets of USD 72.3 billion increased by USD 2.8 billion compared to December 31, 2023.
Intangible assets other than goodwill increased by USD 1.0 billion mainly due the
impact of the Mariana Oncology and MorphoSys business acquisitions, additions and
favorable currency adjustments, partially offset by amortization, and impairments.
Goodwill increased by USD 1.6 billion mainly due the impact of the Mariana Oncology
and MorphoSys business acquisitions, and favorable currency adjustments, partially
offset by an impairment (see Note 3 to the interim consolidated financial statements).
Financial assets decreased by USD 0.5 billion mainly due to the sale of Sandoz AG
shares by consolidated foundations. Property, plant and equipment increased by USD
0.2 billion mainly as additions were only partly offset by depreciation charges. Deferred
tax assets increased by USD 0.3 billion.
Other non-current assets, right-of-use assets and investments in associated companies
were broadly in line with December 31, 2023.
Total current assets of USD 31.3 billion increased by USD 0.8 billion compared to December 31, 2023.
Cash and cash equivalents increased by USD 0.2 billion mainly as cash generated through
operating activities of USD 13.4 billion, net proceeds from changes in financial debts
of USD 4.7 billion and other net cash from investing and financing activities of USD
0.7 billion, were only partly offset by the USD 7.6 billion dividend payment, USD
3.6 billion for acquisitions of businesses (mainly for the Mariana Oncology and MorphoSys
AG business acquisitions), USD 1.9 billion for purchases of intangible assets, and
USD 5.5 billion for net purchases of treasury shares.
Marketable securities, commodities, time deposits and derivative financial instruments
decreased by USD 0.6 billion, mainly due to the net sales of marketable securities,
commodities and time deposits and fair value adjustments on derivative financial instruments.
Trade receivables increased by USD 0.9 billion, mainly driven by the increase in net
sales. Other current assets increased by USD 0.5 billion. Income tax receivables and
inventories were broadly in line with December 31, 2023.
Liabilities
Total non-current liabilities of USD 32.0 billion increased by USD 5.1 billion compared to December 31, 2023.
Non-current financial debts increased by USD 5.3 billion mainly due to the issuance
of Swiss franc denominated bonds of USD 2.6 billion (notional amount of CHF 2.2 billion)
and from the issuance of US dollar denominated bonds with a notional amount of USD
3.7 billion and financial debts acquired through the MorphoSys business acquisition
of USD 0.6 billion, partly offset by the reclassification of USD 1.6 billion from non-current
to current financial debts consisting of a US dollar denominated bond with notional
amount of USD 1.0 billion and a Swiss franc denominated bond of notional amount of
CHF 0.5 billion both maturing in 2025.
Non-current lease liabilities, deferred tax liabilities and provisions and other non-current
liabilities were broadly in line with December 31, 2023.
Total current liabilities of USD 28.1 billion increased by USD 1.7 billion compared to December 31, 2023.
Current financial debts and derivative financial instruments increased by USD 0.4 billion
compared to December 31, 2023, mainly due to the issuance of commercial paper notes
under the US commercial paper program and the reclassification of USD 1.6 billion from
non-current to current financial debts of a US dollar denominated bond with notional
amount of USD 1.0 billion and a Swiss franc denominated bond of notional amount of
CHF 0.5 billion both maturing in 2025, partly offset by the repayment of a US dollar
bond at maturity of USD 2.15 billion.
Trade payables decreased by USD 0.8 billion. Provisions and other current liabilities
increased by USD 1.9 billion mainly driven by the increase in provisions for deductions
from revenue. Current income tax liabilities increased by USD 0.3 billion. Current
lease liabilities were broadly in line with December 31, 2023.
Equity
The Company’s equity decreased by USD 3.3 billion to USD 43.4 billion compared to
December 31, 2023.
This decrease was mainly driven by the net income of USD 9.1 billion and favorable
impact from equity-based compensation of USD 0.8 billion being more than offset by
the cash-dividend to Novartis AG shareholders of USD 7.6 billion and the purchase
of treasury shares of USD 5.8 billion.
Net debt and debt/equity ratio
The Company’s liquidity amounted to USD 14.0 billion as at September 30, 2024, compared
with USD 14.4 billion as at December 31, 2023. Total non-current and current financial
debts, including derivatives, amounted to USD 30.3 billion as at September 30, 2024,
compared with USD 24.6 billion as at December 31, 2023.
The debt/equity ratio increased to 0.70:1 as at September 30, 2024, compared with
0.53:1 as at December 31, 2023. The net debt increased to USD 16.3 billion as at September
30, 2024, compared with USD 10.2 billion as at December 31, 2023.
Innovation Review
Novartis continues to focus its R&D portfolio prioritizing high value medicines with
transformative potential for patients. We now focus on ~100 projects in clinical development.
Selected Innovative Medicines approvals
Product
|
|
Active ingredient/ Descriptor
|
|
Indication
|
|
Region
|
|
|
|
Kisqali
|
|
ribociclib
|
|
Hormone receptor-positive / human epidermal growth factor receptor 2-negative early breast cancer (adjuvant)
|
|
US
|
|
|
|
Fabhalta
|
|
iptacopan
|
|
IgA nephropathy
|
|
US
|
|
|
|
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
|
|
|
|
– Positive CHMP opinion received in October
|
|
|
Scemblix
|
|
1L chronic myeloid leukemia
|
|
Q2 2024
|
|
|
|
Q3 2024
|
|
– US Priority Review granted – Japan and China submissions
|
|
|
Atrasentan
|
|
IgA nephropathy
|
|
Q2 2024
|
|
|
|
|
|
|
|
|
Fabhalta
|
|
C3G
|
|
|
|
Q3 2024
|
|
Q3 2024
|
|
– EU and Japan submissions
|
|
|
Pluvicto
|
|
Metastatic castration-resistant prostate cancer, pre-taxane
|
|
Q3 2024
|
|
|
|
|
|
– US submission
|
|
|
Lutathera
|
|
Gastroenteropancreatic neuroendocrine tumors, 1L in G2/3 tumors
|
|
|
|
Q2 2024
|
|
|
|
|
|
|
Coartem
|
|
Malaria (<5kg patients)
|
|
|
|
|
|
|
|
– Submission using MAGHP procedure in Switzerland to facilitate rapid approvals in developing countries
|
|
|
Selected Innovative Medicines pipeline projects
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
Aimovig
|
|
Migraine, pediatrics
|
|
≥2027
|
|
3
|
|
|
|
|
AVXS-101 (OAV101)
|
|
Spinal muscular atrophy (IT formulation)
|
|
2025
|
|
3
|
|
|
|
|
Beovu
|
|
Diabetic retinopathy
|
|
2025
|
|
3
|
|
|
|
|
CFZ533 (iscalimab)
|
|
Sjögren's syndrome
|
|
≥2027
|
|
2
|
|
|
|
|
Cosentyx
|
|
Giant cell arteritis
|
|
2025
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Polymyalgia rheumatica
|
|
2026
|
|
3
|
|
|
|
|
DAK539 (pelabresib)
|
|
Myelofibrosis
|
|
|
|
3
|
|
– Morphosys aquisition – Based on Novartis review of 48-week data from the Ph3 MANIFEST-2 study, longer follow-up time is needed to determine, in consultation with Health Authorities, the regulatory path for pelabresib in myelofibrosis
|
|
|
FUB523 (zigakibart)
|
|
IgA nephropathy
|
|
≥2027
|
|
3
|
|
|
|
|
KAE609 (cipargamin)
|
|
Malaria, uncomplicated
|
|
≥2027
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malaria, severe
|
|
≥2027
|
|
2
|
|
|
|
|
KLU156 (ganaplacide + lumefantrine)
|
|
Malaria, uncomplicated
|
|
2026
|
|
3
|
|
– FDA Orphan Drug designation – FDA Fast Track designation
|
|
|
Leqvio
|
|
Secondary prevention of cardiovascular events in patients with elevated levels of LDL-C
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary prevention CVRR
|
|
≥2027
|
|
3
|
|
|
|
|
LNA043
|
|
Osteoarthritis
|
|
≥2027
|
|
2
|
|
– FDA Fast Track designation
|
|
|
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
LNP023 (iptacopan)
|
|
IC-MPGN
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atypical haemolytic uraemic syndrome
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Myasthenia gravis
|
|
≥2027
|
|
3
|
|
|
|
|
LOU064 (remibrutinib)
|
|
Chronic spontaneous urticaria
|
|
2025
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CINDU
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple sclerosis
|
|
≥2027
|
|
3
|
|
|
|
|
177Lu-NeoB
|
|
Multiple solid tumors
|
|
≥2027
|
|
1
|
|
|
|
|
LXE408
|
|
Visceral leishmaniasis
|
|
≥2027
|
|
2
|
|
|
|
|
Pluvicto
|
|
Metastatic hormone sensitive prostate cancer
|
|
2025
|
|
3
|
|
– Event-driven trial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oligometastatic prostate cancer
|
|
≥2027
|
|
3
|
|
|
|
|
QGE031 (ligelizumab)
|
|
Food allergy
|
|
|
|
3
|
|
– Project discontinued
|
|
|
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
|
|
|
VAY736 (ianalumab)
|
|
Auto-immune hepatitis
|
|
|
|
2
|
|
– Project discontinued following Ph2 readout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sjögren’s syndrome
|
|
2026
|
|
3
|
|
– FDA Fast Track designation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lupus nephritis
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systemic lupus erythematosus
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L immune thrombocytopenia
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2L immune thrombocytopenia
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warm autoimmune hemolytic anemia
|
|
≥2027
|
|
3
|
|
|
|
|
Vijoyce
|
|
Lymphatic malformations
|
|
≥2027
|
|
3
|
|
– US, EU Orphan Drug designation
|
|
|
XXB750
|
|
Hypertension
|
|
|
|
2
|
|
– NVS will not advance further development following current scientific assessment and review of available data of early investigational studies.
|
|
|
YTB323
|
|
Severe refractory lupus nephritis / Systemic lupus erythematosus
|
|
≥2027
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L high-risk large B-cell lymphoma
|
|
≥2027
|
|
2
|
|
|
|
|
Condensed Interim Consolidated Financial Statements
Consolidated income statements
Third quarter (unaudited)
(USD millions unless indicated otherwise)
|
|
Note
|
|
Q3 2024
|
|
Q3 2023
|
|
|
Net sales from continuing operations
|
|
9
|
|
12 823
|
|
11 782
|
|
|
Other revenues
|
|
9
|
|
349
|
|
310
|
|
|
Cost of goods sold
|
|
|
|
-3 234
|
|
-3 117
|
|
|
Gross profit from continuing operations
|
|
|
|
9 938
|
|
8 975
|
|
|
Selling, general and administration
|
|
|
|
-3 134
|
|
-3 091
|
|
|
Research and development
|
|
|
|
-2 392
|
|
-3 925
|
|
|
Other income
|
|
|
|
355
|
|
224
|
|
|
Other expense
|
|
|
|
-1 140
|
|
-421
|
|
|
Operating income from continuing operations
|
|
|
|
3 627
|
|
1 762
|
|
|
Loss from associated companies
|
|
|
|
-4
|
|
-3
|
|
|
Interest expense
|
|
|
|
-264
|
|
-222
|
|
|
Other financial income and expense
|
|
|
|
26
|
|
15
|
|
|
Income before taxes from continuing operations
|
|
|
|
3 385
|
|
1 552
|
|
|
Income taxes
|
|
|
|
-200
|
|
-39
|
|
|
Net income from continuing operations
|
|
|
|
3 185
|
|
1 513
|
|
|
Net income from discontinued operations
|
|
11
|
|
|
|
250
|
|
|
Net income
|
|
|
|
3 185
|
|
1 763
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
|
|
3 189
|
|
1 761
|
|
|
Non-controlling interests
|
|
|
|
-4
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic (million)
|
|
|
|
2 012
|
|
2 062
|
|
|
Basic earnings per share from continuing operations (USD) 1
|
|
|
|
1.58
|
|
0.73
|
|
|
Basic earnings per share from discontinued operations (USD) 1
|
|
|
|
|
|
0.12
|
|
|
Total basic earnings per share (USD) 1
|
|
|
|
1.58
|
|
0.85
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted (million)
|
|
|
|
2 027
|
|
2 075
|
|
|
Diluted earnings per share from continuing operations (USD) 1
|
|
|
|
1.57
|
|
0.73
|
|
|
Diluted earnings per share from discontinued operations (USD) 1
|
|
|
|
|
|
0.12
|
|
|
Total diluted earnings per share (USD) 1
|
|
|
|
1.57
|
|
0.85
|
|
|
|
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 2024
|
|
9M 2023
|
|
|
Net sales from continuing operations
|
|
9
|
|
37 164
|
|
34 017
|
|
|
Other revenues
|
|
9
|
|
1 000
|
|
867
|
|
|
Cost of goods sold
|
|
|
|
-9 503
|
|
-9 450
|
|
|
Gross profit from continuing operations
|
|
|
|
28 661
|
|
25 434
|
|
|
Selling, general and administration
|
|
|
|
-9 065
|
|
-9 073
|
|
|
Research and development
|
|
|
|
-7 180
|
|
-8 804
|
|
|
Other income
|
|
|
|
877
|
|
1 322
|
|
|
Other expense
|
|
|
|
-2 279
|
|
-1 692
|
|
|
Operating income from continuing operations
|
|
|
|
11 014
|
|
7 187
|
|
|
Loss from associated companies
|
|
|
|
-35
|
|
-7
|
|
|
Interest expense
|
|
|
|
-731
|
|
-638
|
|
|
Other financial income and expense
|
|
|
|
107
|
|
204
|
|
|
Income before taxes from continuing operations
|
|
|
|
10 355
|
|
6 746
|
|
|
Income taxes
|
|
|
|
-1 236
|
|
-812
|
|
|
Net income from continuing operations
|
|
|
|
9 119
|
|
5 934
|
|
|
Net income from discontinued operations
|
|
11
|
|
|
|
440
|
|
|
Net income
|
|
|
|
9 119
|
|
6 374
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
|
|
9 123
|
|
6 370
|
|
|
Non-controlling interests
|
|
|
|
-4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic (million)
|
|
|
|
2 029
|
|
2 085
|
|
|
Basic earnings per share from continuing operations (USD) 1
|
|
|
|
4.50
|
|
2.84
|
|
|
Basic earnings per share from discontinued operations (USD) 1
|
|
|
|
|
|
0.21
|
|
|
Total basic earnings per share (USD) 1
|
|
|
|
4.50
|
|
3.05
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted (million)
|
|
|
|
2 044
|
|
2 098
|
|
|
Diluted earnings per share from continuing operations (USD) 1
|
|
|
|
4.46
|
|
2.83
|
|
|
Diluted earnings per share from discontinued operations (USD) 1
|
|
|
|
|
|
0.21
|
|
|
Total diluted earnings per share (USD) 1
|
|
|
|
4.46
|
|
3.04
|
|
|
|
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 2024
|
|
Q3 2023
|
|
|
Net income
|
|
3 185
|
|
1 763
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be recycled into the consolidated income statement
|
|
|
|
|
|
|
Net investment hedge, net of taxes
|
|
-65
|
|
38
|
|
|
Cash flow hedge, net of taxes
|
|
-25
|
|
|
|
|
Currency translation effects, net of taxes
|
|
1 310
|
|
-467
|
|
|
Total of items that are or may be recycled
|
|
1 220
|
|
-429
|
|
|
|
|
|
|
|
|
Items that will never be recycled into the consolidated income statement
|
|
|
|
|
|
|
Actuarial (losses)/gains from defined benefit plans, net of taxes
|
|
-16
|
|
116
|
|
|
Fair value adjustments on equity securities, net of taxes
|
|
-34
|
|
27
|
|
|
Total of items that will never be recycled
|
|
-50
|
|
143
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income
|
|
1 170
|
|
-286
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
4 355
|
|
1 477
|
|
|
Total comprehensive income for the period attributable to:
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
4 354
|
|
1 476
|
|
|
Continuing operations
|
|
4 354
|
|
1 292
|
|
|
Discontinued operations
|
|
|
|
184
|
|
|
Non-controlling interests
|
|
1
|
|
1
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Nine months to September 30 (unaudited)
(USD millions)
|
|
9M 2024
|
|
9M 2023
|
|
|
Net income
|
|
9 119
|
|
6 374
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be recycled into the consolidated income statement
|
|
|
|
|
|
|
Net investment hedge, net of taxes
|
|
-14
|
|
9
|
|
|
Cash flow hedge, net of taxes
|
|
-25
|
|
|
|
|
Currency translation effects, net of taxes
|
|
-54
|
|
55
|
|
|
Total of items that are or may be recycled
|
|
-93
|
|
64
|
|
|
|
|
|
|
|
|
Items that will never be recycled into the consolidated income statement
|
|
|
|
|
|
|
Actuarial gains from defined benefit plans, net of taxes
|
|
120
|
|
57
|
|
|
Fair value adjustments on equity securities, net of taxes
|
|
85
|
|
-19
|
|
|
Total of items that will never be recycled
|
|
205
|
|
38
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income
|
|
112
|
|
102
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
9 231
|
|
6 476
|
|
|
Total comprehensive income for the period attributable to:
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
9 234
|
|
6 472
|
|
|
Continuing operations
|
|
9 234
|
|
6 053
|
|
|
Discontinued operations
|
|
|
|
419
|
|
|
Non-controlling interests
|
|
-3
|
|
4
|
|
|
|
The accompanying Notes form an integral part of the condensed interim consolidated
financial statements
|
Consolidated balance sheets
(USD millions)
|
|
Note
|
|
Sep 30, 2024 (unaudited)
|
|
Dec 31, 2023 (audited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
9 749
|
|
9 514
|
|
|
Right-of-use assets
|
|
|
|
1 452
|
|
1 410
|
|
|
Goodwill
|
|
|
|
24 930
|
|
23 341
|
|
|
Intangible assets other than goodwill
|
|
|
|
27 902
|
|
26 879
|
|
|
Investments in associated companies
|
|
|
|
106
|
|
205
|
|
|
Deferred tax assets
|
|
|
|
4 646
|
|
4 309
|
|
|
Financial assets
|
|
|
|
2 086
|
|
2 607
|
|
|
Other non-current assets
|
|
|
|
1 389
|
|
1 199
|
|
|
Total non-current assets
|
|
|
|
72 260
|
|
69 464
|
|
|
Current assets
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
5 939
|
|
5 913
|
|
|
Trade receivables
|
|
|
|
7 966
|
|
7 107
|
|
|
Income tax receivables
|
|
|
|
184
|
|
426
|
|
|
Marketable securities, commodities, time deposits and derivative financial instruments
|
|
|
|
411
|
|
1 035
|
|
|
Cash and cash equivalents
|
|
|
|
13 609
|
|
13 393
|
|
|
Other current assets
|
|
|
|
3 155
|
|
2 607
|
|
|
Total current assets
|
|
|
|
31 264
|
|
30 481
|
|
|
Total assets
|
|
|
|
103 524
|
|
99 945
|
|
|
|
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
793
|
|
825
|
|
|
Treasury shares
|
|
|
|
-40
|
|
-41
|
|
|
Reserves
|
|
|
|
42 564
|
|
45 883
|
|
|
Equity attributable to Novartis AG shareholders
|
|
4
|
|
43 317
|
|
46 667
|
|
|
Non-controlling interests
|
|
|
|
124
|
|
83
|
|
|
Total equity
|
|
|
|
43 441
|
|
46 750
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Financial debts
|
|
10
|
|
23 750
|
|
18 436
|
|
|
Lease liabilities
|
|
|
|
1 596
|
|
1 598
|
|
|
Deferred tax liabilities
|
|
|
|
2 216
|
|
2 248
|
|
|
Provisions and other non-current liabilities
|
|
|
|
4 389
|
|
4 523
|
|
|
Total non-current liabilities
|
|
|
|
31 951
|
|
26 805
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Trade payables
|
|
|
|
4 087
|
|
4 926
|
|
|
Financial debts and derivative financial instruments
|
|
|
|
6 566
|
|
6 175
|
|
|
Lease liabilities
|
|
|
|
247
|
|
230
|
|
|
Current income tax liabilities
|
|
|
|
2 165
|
|
1 893
|
|
|
Provisions and other current liabilities
|
|
|
|
15 067
|
|
13 166
|
|
|
Total current liabilities
|
|
|
|
28 132
|
|
26 390
|
|
|
Total liabilities
|
|
|
|
60 083
|
|
53 195
|
|
|
Total equity and liabilities
|
|
|
|
103 524
|
|
99 945
|
|
|
|
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, 2024
|
|
|
|
793
|
|
-25
|
|
45 836
|
|
-4 871
|
|
41 733
|
|
169
|
|
41 902
|
|
|
Net income
|
|
|
|
|
|
|
|
3 189
|
|
|
|
3 189
|
|
-4
|
|
3 185
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
1 165
|
|
1 165
|
|
5
|
|
1 170
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
3 189
|
|
1 165
|
|
4 354
|
|
1
|
|
4 355
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-15
|
|
-2 952
|
|
|
|
-2 967
|
|
|
|
-2 967
|
|
|
Exercise of options and employee transactions
|
|
|
|
|
|
|
|
33
|
|
|
|
33
|
|
|
|
33
|
|
|
Equity-based compensation
|
|
|
|
|
|
0
|
|
265
|
|
|
|
265
|
|
|
|
265
|
|
|
Shares delivered to Sandoz employees as a result of the Sandoz spin-off
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
-35
|
|
|
|
-35
|
|
|
|
-35
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
22
|
|
-22
|
|
|
|
|
|
|
|
|
Impact of change in ownership of consolidated entities
|
|
|
|
|
|
|
|
-70
|
|
|
|
-70
|
|
-42
|
|
-112
|
|
|
Other movements
|
|
4.4
|
|
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
|
Total of other equity movements
|
|
|
|
|
|
-15
|
|
-2 733
|
|
-22
|
|
-2 770
|
|
-46
|
|
-2 816
|
|
|
Total equity at September 30, 2024
|
|
|
|
793
|
|
-40
|
|
46 292
|
|
-3 728
|
|
43 317
|
|
124
|
|
43 441
|
|
|
|
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, 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
|
|
|
|
-17
|
|
26
|
|
-9
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
|
|
|
|
|
|
-2
|
|
|
|
-2
|
|
|
|
-2
|
|
|
Equity-based compensation
|
|
|
|
|
|
0
|
|
221
|
|
|
|
221
|
|
|
|
221
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
Transaction costs, net of taxes
|
|
4.3
|
|
|
|
|
|
-74
|
|
|
|
-74
|
|
|
|
-74
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
52
|
|
-52
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.4
|
|
|
|
|
|
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
|
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, 2024
|
|
|
|
825
|
|
-41
|
|
49 649
|
|
-3 766
|
|
46 667
|
|
83
|
|
46 750
|
|
|
Net income
|
|
|
|
|
|
|
|
9 123
|
|
|
|
9 123
|
|
-4
|
|
9 119
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
111
|
|
111
|
|
1
|
|
112
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
9 123
|
|
111
|
|
9 234
|
|
-3
|
|
9 231
|
|
|
Dividends
|
|
4.1
|
|
|
|
|
|
-7 624
|
|
|
|
-7 624
|
|
|
|
-7 624
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-30
|
|
-5 750
|
|
|
|
-5 780
|
|
|
|
-5 780
|
|
|
Reduction of share capital
|
|
4.2
|
|
-32
|
|
26
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
|
|
|
|
|
|
-2
|
|
|
|
-2
|
|
|
|
-2
|
|
|
Equity-based compensation
|
|
|
|
|
|
5
|
|
812
|
|
|
|
817
|
|
|
|
817
|
|
|
Shares delivered to Sandoz employees as a result of the Sandoz spin-off
|
|
|
|
|
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
-27
|
|
|
|
-27
|
|
|
|
-27
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
73
|
|
-73
|
|
|
|
|
|
|
|
|
Impact of change in ownership of consolidated entities
|
|
|
|
|
|
|
|
-98
|
|
|
|
-98
|
|
48
|
|
-50
|
|
|
Other movements
|
|
4.4
|
|
|
|
|
|
118
|
|
|
|
118
|
|
|
|
118
|
|
|
Total of other equity movements
|
|
|
|
-32
|
|
1
|
|
-12 480
|
|
-73
|
|
-12 584
|
|
44
|
|
-12 540
|
|
|
Total equity at September 30, 2024
|
|
|
|
793
|
|
-40
|
|
46 292
|
|
-3 728
|
|
43 317
|
|
124
|
|
43 441
|
|
|
|
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, 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
|
|
|
|
-65
|
|
94
|
|
-29
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
|
|
|
|
2
|
|
149
|
|
|
|
151
|
|
|
|
151
|
|
|
Equity-based compensation
|
|
|
|
|
|
5
|
|
649
|
|
|
|
654
|
|
|
|
654
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
11
|
|
|
|
11
|
|
|
|
11
|
|
|
Transaction costs, net of taxes
|
|
4.3
|
|
|
|
|
|
-74
|
|
|
|
-74
|
|
|
|
-74
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
68
|
|
-68
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.4
|
|
|
|
|
|
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
|
Consolidated statements of cash flows
Third quarter (unaudited)
(USD millions)
|
|
Note
|
|
Q3 2024
|
|
Q3 2023
|
|
|
Net income from continuing operations
|
|
|
|
3 185
|
|
1 513
|
|
|
Adjustments to reconcile net income from continuing operations to net cash flows from
operating activities from continuing operations
|
|
|
|
|
|
|
|
Reversal of non-cash items and other adjustments
|
|
6.1
|
|
2 626
|
|
3 329
|
|
|
Dividends received from associated companies and others
|
|
|
|
|
|
1
|
|
|
Interest received
|
|
|
|
112
|
|
109
|
|
|
Interest paid
|
|
|
|
-239
|
|
-178
|
|
|
Change in other financial receipts
|
|
|
|
|
|
37
|
|
|
Change in other financial payments
|
|
|
|
63
|
|
-4
|
|
|
Income taxes paid
|
|
6.2
|
|
-285
|
|
-426
|
|
|
Net cash flows from operating activities from continuing operations before working capital and provision changes
|
|
|
|
5 462
|
|
4 381
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
|
|
-216
|
|
-255
|
|
|
Change in net current assets and other operating cash flow items
|
|
6.3
|
|
1 040
|
|
1 178
|
|
|
Net cash flows from operating activities from continuing operations
|
|
|
|
6 286
|
|
5 304
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
|
|
74
|
|
|
Total net cash flows from operating activities
|
|
|
|
6 286
|
|
5 378
|
|
|
Purchases of property, plant and equipment
|
|
|
|
-321
|
|
-261
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
|
1
|
|
51
|
|
|
Purchases of intangible assets
|
|
|
|
-478
|
|
-422
|
|
|
Proceeds from sale of intangible assets
|
|
|
|
23
|
|
1 823
|
|
|
Purchases of financial assets
|
|
|
|
-53
|
|
-11
|
|
|
Proceeds from sale of financial assets
|
|
|
|
226
|
|
91
|
|
|
Proceeds from sale of other non-current assets
|
|
|
|
1
|
|
|
|
|
Acquisitions and divestments of interests in associated companies, net
|
|
|
|
-12
|
|
-3
|
|
|
Acquisitions and divestments of businesses, net
|
|
6.4
|
|
-51
|
|
-3 443
|
|
|
Purchases of marketable securities, commodities and time deposits
|
|
|
|
-958
|
|
-28
|
|
|
Proceeds from sale of marketable securities, commodities and time deposits
|
|
|
|
1 248
|
|
199
|
|
|
Net cash flows used in investing activities from continuing operations
|
|
|
|
-374
|
|
-2 004
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
|
|
|
|
-208
|
|
|
Total net cash flows used in investing activities
|
|
|
|
-374
|
|
-2 212
|
|
|
Purchases of treasury shares
|
|
|
|
-2 854
|
|
-1 625
|
|
|
Proceeds from exercised options and other treasury share transactions, net
|
|
|
|
5
|
|
-1
|
|
|
Proceeds from non-current financial debts
|
|
|
|
3 670
|
|
|
|
|
Repayments of the current portion of non-current financial debts
|
|
|
|
|
|
-2 223
|
|
|
Change in current financial debts
|
|
|
|
-807
|
|
-418
|
|
|
Repayments of other current financial debts
|
|
|
|
-289
|
|
|
|
|
Payments of lease liabilities
|
|
|
|
-64
|
|
-63
|
|
|
Payments from changes in ownership interests in consolidated subsidiaries
|
|
|
|
-90
|
|
|
|
|
Other financing cash flows, net
|
|
|
|
47
|
|
24
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
|
|
-382
|
|
-4 306
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
11
|
|
|
|
3 474
|
|
|
Total net cash flows used in financing activities
|
|
|
|
-382
|
|
-832
|
|
|
Net change in cash and cash equivalents before effect of exchange rate changes
|
|
|
|
5 530
|
|
2 334
|
|
|
Less cash and cash equivalents from discontinued operations at September 30, 2023
|
|
|
|
|
|
-648
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
176
|
|
-166
|
|
|
Net change in cash and cash equivalents
|
|
|
|
5 706
|
|
1 520
|
|
|
Cash and cash equivalents at July 1
|
|
|
|
7 903
|
|
10 885
|
|
|
Cash and cash equivalents at September 30
|
|
|
|
13 609
|
|
12 405
|
|
|
|
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 2024
|
|
9M 2023
|
|
|
Net income from continuing operations
|
|
|
|
9 119
|
|
5 934
|
|
|
Adjustments to reconcile net income from continuing operations to net cash flows from
operating activities from continuing operations
|
|
|
|
|
|
|
|
Reversal of non-cash items and other adjustments
|
|
6.1
|
|
7 523
|
|
8 578
|
|
|
Dividends received from associated companies and others
|
|
|
|
1
|
|
2
|
|
|
Interest received
|
|
|
|
347
|
|
482
|
|
|
Interest paid
|
|
|
|
-641
|
|
-513
|
|
|
Other financial receipts
|
|
|
|
|
|
64
|
|
|
Other financial payments
|
|
|
|
-31
|
|
-14
|
|
|
Income taxes paid
|
|
6.2
|
|
-1 334
|
|
-1 694
|
|
|
Net cash flows from operating activities from continuing operations before working capital and provision changes
|
|
|
|
14 984
|
|
12 839
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
|
|
-847
|
|
-1 181
|
|
|
Change in net current assets and other operating cash flow items
|
|
6.3
|
|
-711
|
|
15
|
|
|
Net cash flows from operating activities from continuing operations
|
|
|
|
13 426
|
|
11 673
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
|
|
238
|
|
|
Total net cash flows from operating activities
|
|
|
|
13 426
|
|
11 911
|
|
|
Purchases of property, plant and equipment
|
|
|
|
-808
|
|
-654
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
|
39
|
|
73
|
|
|
Purchases of intangible assets
|
|
|
|
-1 875
|
|
-1 316
|
|
|
Proceeds from sale of intangible assets
|
|
|
|
43
|
|
1 953
|
|
|
Purchases of financial assets
|
|
|
|
-145
|
|
-77
|
|
|
Proceeds from sale of financial assets
|
|
|
|
936
|
|
201
|
|
|
Proceeds from sale of other non-current assets
|
|
|
|
1
|
|
|
|
|
Acquisitions and divestments of interests in associated companies, net
|
|
|
|
-8
|
|
-8
|
|
|
Acquisitions and divestments of businesses, net
|
|
6.4
|
|
-3 649
|
|
-3 550
|
|
|
Purchases of marketable securities, commodities and time deposits
|
|
|
|
-1 198
|
|
-97
|
|
|
Proceeds from sale of marketable securities, commodities and time deposits
|
|
|
|
2 184
|
|
11 216
|
|
|
Net cash flows (used in)/from investing activities from continuing operations
|
|
|
|
-4 480
|
|
7 741
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
|
|
|
|
-385
|
|
|
Total net cash flows (used in)/from investing activities
|
|
|
|
-4 480
|
|
7 356
|
|
|
Dividends paid to shareholders of Novartis AG
|
|
4.1
|
|
-7 624
|
|
-7 255
|
|
|
Purchases of treasury shares
|
|
|
|
-5 569
|
|
-7 468
|
|
|
Proceeds from exercised options and other treasury share transactions, net
|
|
|
|
30
|
|
158
|
|
|
Proceeds from non-current financial debts
|
|
|
|
6 143
|
|
|
|
|
Repayments of the current portion of non-current financial debts
|
|
|
|
-2 150
|
|
-2 223
|
|
|
Change in current financial debts
|
|
|
|
982
|
|
-128
|
|
|
Repayments of other current financial debts
|
|
|
|
-289
|
|
|
|
|
Payments of lease liabilities
|
|
|
|
-190
|
|
-194
|
|
|
Payments from changes in ownership interests in consolidated subsidiaries
|
|
|
|
-137
|
|
|
|
|
Other financing cash flows, net
|
|
|
|
58
|
|
42
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
|
|
-8 746
|
|
-17 068
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
11
|
|
|
|
3 397
|
|
|
Total net cash flows used in financing activities
|
|
|
|
-8 746
|
|
-13 671
|
|
|
Net change in cash and cash equivalents before effect of exchange rate changes
|
|
|
|
200
|
|
5 596
|
|
|
Less cash and cash equivalents from discontinued operations at September 30, 2023
|
|
|
|
|
|
-648
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
16
|
|
-60
|
|
|
Net change in cash and cash equivalents
|
|
|
|
216
|
|
4 888
|
|
|
Cash and cash equivalents at January 1
|
|
|
|
13 393
|
|
7 517
|
|
|
Cash and cash equivalents at September 30
|
|
|
|
13 609
|
|
12 405
|
|
|
|
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, 2024 (unaudited)
1. Basis of preparation
The consolidated financial statements of the Company are prepared in accordance with
International Financial Reporting Standards (IFRS®) Accounting Standards as issued by the International Accounting Standards Board.
They are prepared in accordance with the historical cost convention, except for items
that are required to be accounted for at fair value. These Condensed Interim Consolidated
Financial Statements for the three month and nine month period ended September 30,
2024, were prepared in accordance with International Accounting Standards (IAS®) Standards 34 Interim Financial Reporting and accounting policies set out in the
2023 Annual Report published on January 31, 2024.
At the Novartis AG Extraordinary General Meeting, held on September 15, 2023, our
shareholders approved the spin-off of the Sandoz business. Following the shareholder
approval IFRS Accounting Standards required 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 condensed interim consolidated financial
statements. This requires the three month and nine month period ended 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.
The shareholder approval on September 15, 2023, for the spin-off the Sandoz business,
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 was 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, was recognized 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 the 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 “—Goodwill and intangible assets other than goodwill” in Note 1 to the Consolidated
Financial Statements in the Annual Report 2023 provides 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
the Sandoz business to Novartis AG shareholders by way of a dividend in kind, and
that would otherwise have been avoided, were accounted for as a deduction from equity
(within retained earnings). Prior to the recognition of the distribution liability,
these costs were recorded as prepaid expenses in the consolidated balance sheet.
For further information and disclosures, refer to Note 3 and Note 11.
2. Accounting policies
The Company’s accounting policies are set out in Note 1 to the Consolidated Financial
Statements in the 2023 Annual Report and conform with IFRS Accounting Standards as
issued by the International Accounting Standards Board.
The preparation of 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, including the distribution
liability 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 2023 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 Company’s activities are not subject to significant seasonal fluctuations.
Status of adoption of significant new or amended IFRS standards or interpretations
No new IFRS Accounting Standards were adopted by the Company in 2024. In addition,
new IFRS Accounting Standards amendments or interpretations that became effective
in 2024 did not have a material impact on the Company’s consolidated financial statements.
In the second quarter of 2024, the following new IFRS Accounting Standard, which is
not yet effective, was issued by the International Accounting Standards Board:
IFRS 18 Presentation and Disclosures in Financial Statements
IFRS 18 Presentation and Disclosure in Financial Statements was issued by the International
Accounting Standards Board in April 2024. IFRS 18 is effective on January 1, 2027,
and is required to be applied retrospectively to comparative periods presented, with
early adoption permitted. IFRS 18, upon adoption replaces IAS Standards 1 - Presentation
of Financial Statements.
IFRS 18 sets out new requirements focused on improving financial reporting by:
• requiring additional defined structure to the statement of profit or loss (i.e. consolidated
statement of income), to reduce diversity in the reporting, by requiring five categories
(operating, investing, financing, income taxes and discontinued operations) and defined
subtotals and totals (operating income, income before financing, income taxes and
net income),
• requiring disclosures in the notes to the financial statements about management-defined
performance measures (i.e. non-IFRS measures), and
• adding new principles for aggregation and disaggregation of information in the primary
financial statements and notes.
IFRS 18 will not impact the recognition or measurement of items in the financial statements,
but it might change what an entity reports as its ‘operating profit or loss’, due
to the classification of certain income and expense items between the five categories
of the consolidated income statement. It might also change what an entity reports
as operating activities, investing activities and financing activities within the
statement of cash flows, due to the change in classification of certain cash flow
items between these three categories of the cash flows statement. Novartis is currently
assessing the impact of adopting IFRS 18.
Based on the Company’s assessment, there are no other IFRS Accounting Standards, amendments
or interpretations not yet effective in 2024 that would be expected to have a material
impact on the Company’s consolidated financial statements.
3. Significant acquisitions of businesses and spin-off of Sandoz business
The Company applied the acquisition method of accounting for businesses acquired,
and did not elect to apply the optional concentrati