Novartis delivers strong operational performance in the first half of
2009 driven by sustained Pharm
Novartis delivers strong operational performance in the first half of 2009 driven by sustained Pharmaceuticals innovation
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ * Pharmaceuticals an industry growth leader: Net sales up 12% (local currencies) in first half of 2009 on contributions from new products and expansion in all regions * R&D maintains momentum: Anti-cancer therapy Afinitor introduced in the US, awaiting EU approval; new biologic Ilaris and OTC brand Prevacid 24HR gain US approvals; clinical trials set to start in July for A(H1N1) pandemic flu vaccine * H1 2009 operating results advance well, but impacted negatively by currencies: * Net sales of USD 20.3 billion grow 8% in local currencies (lc), decline 2% in US dollars * Operating income of USD 4.7 billion up 11% in constant currencies and excluding exceptional items in both periods, down 5% in US dollars * Free cash flow before dividends advances 33% to USD 3.4 billion * Net income of USD 4.0 billion falls 12%, includes negative currency impact and Alcon financing costs * Basic EPS: USD 1.76 in first half of 2009 vs. USD 2.01 in 2008 period * Novartis reaffirms expectations for strong operational performance in 2009 and record earnings in constant currenciesKey figures - Continuing operationsFirst half H1 2009 H1 2008 % change % of % of net net USD m sales USD m sales USD lcNet sales 20 255 20 635 -2 8Operating income 4 711 23.3 4 949 24.0 -5Net income 4 019 19.8 4 574 22.2 -12Basic earnings USD USDper share 1.76 2.01 -12Second quarter Q2 2009 Q2 2008 % change % of % of net net USD m sales USD m sales USD lcNet sales 10 546 10 726 -2 8Operating income 2 364 22.4 2 461 22.9 -4Net income 2 044 19.4 2 266 21.1 -10Basic earnings USDper share 0.90 USD 0.99 -9Basel, July 16, 2009 - Commenting on the results, Dr. Daniel Vasella,Chairman and CEO of Novartis, said: "I am pleased that ourpharmaceuticals business continues to deliver double-digit underlyinggrowth, driven by the strong momentum of our recently launchedproducts. Our pipeline continues to deliver a steady stream ofinnovative medicines. In the first six months of 2009 we haveintroduced our new anti-cancer therapy Afinitor in the US and gainedfirst approval for llaris as a new biologic therapy forauto-inflammatory diseases. We are advancing well in our efforts torapidly produce and commercialize a vaccine against the H1N1 virus,with clinical trials set to begin in July. We continue to expectrecord underlying results in constant currencies based on innovationand productivity initiatives."OVERVIEWFirst halfPharmaceuticals delivered strong and sustained growth to lead theGroup's healthcare portfolio. The division's net sales rose 12% inlocal currencies (+3% in US dollars) thanks to rapid expansion ofrecently launched products such as Lucentis, Exforge, Exjade, ExelonPatch, Reclast/Aclasta, Tasigna, Tekturna/Rasilez and Galvus andgrowth in all therapeutic franchises and regions. R&D highlightsincluded the US launch of the anti-cancer medicine Afinitor, which isawaiting EU approval. US approvals were also granted for the biologictherapy Ilaris for some auto-inflammatory conditions and the OTCproduct Prevacid 24HR.Challenging global economic conditions dampened growth in ConsumerHealth (+1% lc), while Sandoz (+4% lc) achieved greatly improvedperformances in many key markets outside the US.Group net sales rose 8% in local currencies, but declined 2% in USdollars to USD 20.3 billion. Solid operational gains were offset by10 percentage points from the negative impact of the stronger USdollar. Higher sales volumes contributed seven percentage points overthe 2008 period, while net price changes provided one percentagepoint.Operating income fell 5% to USD 4.7 billion, but rose 11% whenadjusted for the impact of currency movements, exceptional items andthe amortization of intangible assets in both periods. Significantproductivity gains in production, marketing and selling, andadministrative areas helped to finance R&D projects involving manynovel and potentially first-in-class compounds as well as rapidexpansion in high-growth markets.Net income fell 12% to USD 4.0 billion, also impacted by financingcosts for the 25% Alcon stake acquired in mid-2008. Basic earningsper share (EPS) declined to USD 1.76 in the first half of 2009 fromUSD 2.01 in the year-ago period.Second quarterNet sales rose 8% in local currencies, but fell 2% to USD 10.5billion from the loss of 10 percentage points of growth to currencymovements. The dynamic business expansion in Pharmaceuticals (+11%lc) led the performance ahead of Sandoz (+4% lc) and Consumer Health(+2% lc). Vaccines and Diagnostics (-15% lc) was hampered bycomparison to the prior year that included deliveries of H5N1pandemic flu vaccines.Operating income fell 4% to USD 2.4 billion, but rose 13% whenadjusted for the impact of adverse currency movements, exceptionalitems and the amortization of intangible assets in both periods.Net income fell 10% to USD 2.0 billion, affected by currency changesand higher financing costs, which included a EUR 1.5 billion bondissued in the second quarter of 2009. Basic earnings per share (EPS)declined to USD 0.90 from USD 0.99 in the year-ago period.Delivering sustainable growth by meeting broad healthcare needsResults in the first half of 2009 confirm the Group's strongoperational performance as Novartis continues to focus on deliveringlong-term sustainable growth from a portfolio that addresses broadhealthcare needs. The Group is selectively strengthening itsbusinesses, stepping up investments in innovation and expanding inhigh-growth markets while improving organizational efficiency.In Pharmaceuticals, ongoing dynamic growth of recently launchedproducts (+91% lc) provided USD 2.0 billion of net sales in the firsthalf of 2009, which represented 15% of net sales compared to 9% inthe first half of 2008. These contributions have made Novartis one ofthe fastest-growing pharmaceutical companies in 2009 in terms oflocal currency net sales. New products emerging from the R&Dpipeline, led by the anti-cancer medicine Afinitor, are expected tofurther support the expansion underway in all therapeutic areas. Topemerging markets also continue to deliver robust growth.Vaccines and Diagnostics is making good progress in creating avaccine against the new strain of influenza A(H1N1). Novartis hasstarted large-scale antigen production at all sites in Europe, usingboth traditional egg-based manufacturing as well as its fastercell-based vaccine production capacity to maximize the potentialvaccine supply. Using cell-culture technology, first batches havebeen successfully produced for both the wild virus strain and the"reassortant seed" modified virus recommended by the WHO and healthauthorities. Clinical trials will start in July for this vaccine.Novartis has secured several orders for H1N1 vaccines amiddiscussions with more than 35 governments. The US government has nowawarded Novartis two contracts totaling USD 979 million for futurepurchase of H1N1 bulk vaccine and the Group's proprietary MF59adjuvant, while contracts have also been received from othercountries.Sandoz, a world leader in generics, is growing rapidly in selectedkey markets and taking actions to broaden its product portfolio.Sandoz agreed in May to acquire the generic oncology injectablesbusiness of EBEWE Pharma for EUR 925 million (USD 1.3 billion), whichwill create a new global growth platform and improve access tooncology medicines. Sandoz is also addressing FDA concerns about theWilson manufacturing site in the US. An FDA inspection is anticipatedfor the 2009 third quarter.Consumer Health continues to focus on maximizing the value of itstrusted brands and expanding geographically, led by sustained growthin CIBA Vision from the rollout of new contact lens products. In thesecond quarter of 2009, Prevacid 24HR earned US regulatory approvalas the first OTC (over-the-counter) version of this proton pumpinhibitor for frequent heartburn; launch in the US is set for laterin 2009.Expansion in targeted high-growth markets continues. Net sales in thetop six emerging markets rose 20% lc to USD 1.8 billion in the firsthalf of 2009, with only limited signs to date of an adverse impactfrom global economic conditions.Forward, an initiative for greater productivity, increased efficiencyand speed, is progressing rapidly ahead of schedule with USD 631million of incremental savings in the first half of 2009, which arebeing partially reinvested to bolster growth. Forward has nowachieved cumulative cost savings of USD 1.7 billion and exceeded the2010 goal of USD 1.6 billion (compared to 2007) 18 months ahead ofplan.Group outlook(Barring any unforeseen events)Novartis reaffirms expectations for strong underlying momentum in2009, with Group net sales growing at a mid-single-digit rate inlocal currencies. Pharmaceuticals net sales are now expected toexpand at a minimum high-single-digit rate in 2009, also in localcurrencies. Underlying growth in operating and net income to recordlevels in 2009, however, could be more than offset in reportedresults by currency-related losses.BUSINESS REVIEWFirst halfNet sales H1 2009 H1 2008 % change USD m USD m USD lcPharmaceuticals 13 548 13 192 3 12Vaccines and Diagnostics 494 602 -18 -9Sandoz 3 500 3 854 -9 4Consumer Health continuing operations 2 713 2 987 -9 1Net sales from continuing operations 20 255 20 635 -2 8Pharmaceuticals: USD 13.5 billion (+3%, +12% lc)Dynamic local currency growth driven by double-digit advances in allregions, particularly Europe (USD 4.9 billion, +12% lc) and the US(USD 4.6 billion, +11%), and also Japan (USD 1.5 billion, +10% lc)following the launches of four newly approved medicines in early2009. The six targeted emerging markets of Brazil, China, India,Russia, South Korea and Turkey (USD 1.2 billion, +22% lc) maintaineda rapid expansion pace.New launches and the rollout of new products - led by Lucentis,Exforge, Exjade, Exelon Patch, Reclast/Aclasta and Tekturna/Rasilez -contributed USD 2.0 billion of net sales in the 2009 period. Thisrepresented 15% of division net sales compared to 9% in the firsthalf of 2008. Product launches also contributed eight percentagepoints of the division's local currency net sales growth of 12% lc.All therapeutic franchises expanded at double-digit rates. Oncology(USD 4.2 billion, +15% lc), the largest franchise, kept up a strongpace thanks to Gleevec/Glivec (USD 1.9 billion, +15% lc), Femara (USD596 million, +15% lc) and Exjade (USD 295 million, +35% lc). Thestrategic Cardiovascular franchise (USD 3.6 billion, +14% lc) showedsolid growth, helped by the new high blood pressure medicines Exforge(USD 304 million) and Tekturna/Rasilez (USD 119 million) thatcontributed more than seven percentage points of incremental growth.Diovan (USD 2.9 billion, +6% lc) showed double-digit gains in Japanand solid advances in Europe and the US. Neuroscience and Ophthalmics(USD 2.1 billion, +11% lc) was driven by Lucentis (USD 523 million,+42% lc) and Exelon Patch (USD 214 million) as well as initialcontributions from Extavia (USD 12 million).Vaccines and Diagnostics: USD 494 million (-18%, -9% lc)Higher deliveries of seasonal flu vaccines to the Southern Hemisphereas well as for pediatric vaccine components and rabies vaccines inthe 2009 period more than offset a decline in TBE (tick-borneencephalitis) vaccines, which reflected markets reaching the end ofthe catch-up phase in central Europe. The absence of H5N1 pandemicflu vaccine sales weighed on the 2009 performance compared to the2008 period.Sandoz: USD 3.5 billion (-9%, +4% lc)Solid sales growth in local currencies was seen in all regionsoutside the US, led by Central and Eastern Europe (+12% lc) andAsia-Pacific (+26% lc). Also contributing were the three approvedSandoz biosimilars (+62% lc). Market share gains were seen in Germany(+3% lc) in a declining market. Sales in the US (-1% lc) fell mostlydue to price erosion as well as limited new product launches and theimpact of ongoing lost sales from remediation of the Wilsonmanufacturing site.Consumer Health: USD 2.7 billion (-9%, +1% lc)CIBA Vision benefited from solid expansion and market share gains fornew contact lens products. Animal Health was largely unchanged as thefarm animal business recovered from 2008, but reduced consumerspending affected the companion animal business. Despite adverseglobal market conditions, OTC net sales (lc) were in line with the2008 period.Operating income H1 2009 H1 2008 Change % of % of net net USD m sales USD m sales %Pharmaceuticals 4 275 31.6 4 274 32.4 0Vaccines and Diagnostics -234 -128Sandoz 538 15.4 591 15.3 -9Consumer Health continuingoperations 506 18.7 566 18.9 -11Corporate Income & Expense, net -374 -354Operating incomefrom continuing operations 4 711 23.3 4 949 24.0 -5Pharmaceuticals: USD 4.3 billion (+0%)Reported operating income was affected by the negative impact ofcurrencies (-11 percentage points) and lower favorable exceptionalitems (-4 percentage points). Excluding these effects, underlyingoperating income advanced 15% thanks to the double-digit salesexpansion and productivity savings, outpacing the 12% lc net salesexpansion. Adjusted for intangible asset charges and exceptionalitems, the operating margin was 33.0% in the 2009 period compared to32.6% in 2008. Cost of Goods Sold was steady at 16.7% of net sales,while other revenues fell 0.9 percentage points following the end ofBetaseron® royalty receipts in late 2008. R&D investments rose to20.5% of net sales from 20.2% in the 2008 period. Marketing & Salesexpenses fell to 29.6% in 2009 from 30.4% in the first half of 2008.Productivity gains of USD 458 million enabled both underlying marginimprovements and significant investments to support launches andhypergrowth plans in Oncology and targeted emerging markets.Vaccines and Diagnostics: USD -234 millionThe adjusted operating loss, which excludes exceptional items and theamortization of intangible assets, rose to USD 35 million compared toa loss of USD 4 million in the year-ago period. Results for the 2009period included a USD 45 million legal charge, while the 2008 firsthalf included a USD 49 million exceptional gain for a diagnosticslicense fee.Sandoz: USD 538 million (-9%)Volume expansion in many key markets and ongoing productivity gainswere more than offset by lower contributions from the US and negativecurrency movements of about 13 percentage points. Marketing & Salesand R&D both fell as a percentage of net sales despite continuedexpansion in growth markets and new product development. Cost ofGoods Sold rose on changes in product mix due to a lack of major USproduct launches.Consumer Health: USD 506 million (-11%)In constant currencies, operating income improved 7% over theyear-ago period on the strength of business expansion and supplychain productivity gains in CIBA Vision.Corporate Income & Expense, netThe increase in net corporate expenses was due mainly to higherpension expenses.Second quarterNet sales Q2 2009 Q2 2008 % change USD m USD m USD lcPharmaceuticals 7 115 6 928 3 11Vaccines and Diagnostics 247 322 -23 -15Sandoz 1 774 1 948 -9 4Consumer Health continuing operations 1 410 1 528 -8 2Net sales from continuing operations 10 546 10 726 -2 8Pharmaceuticals: USD 7.1 billion (+3%, +11% lc)Continuing the strong momentum of the 2009 first quarter, all regionsshowed double-digit underlying net sales growth. Europe (USD 2.6billion, +12% lc), the division's largest region, had strongincremental growth from recently launched products. The US (USD 2.4billion, +9%) also benefited from expansion of the rejuvenatingproduct portfolio. In addition, Canada and Latin America (USD 607million, +12% lc) delivered strong performances. The six targetedemerging markets of Brazil, China, India, Russia, South Korea andTurkey (USD 651 million, +25% lc) all advanced rapidly and were ledby Russia, Turkey and China.Recently launched products delivered USD 1.1 billion of net sales inthe second quarter of 2009, representing 16% of the division's netsales compared to 10% in the 2008 quarter. These new products alsoprovided eight percentage points of the 11% lc net sales growth inthe 2009 period.All therapeutic franchises delivered improvements in underlyingsales, led by Oncology (USD 2.2 billion, +17% lc) benefiting frombroad advances and the US launch of Afinitor. The strategicCardiovascular franchise (USD 1.9 billion, +14% lc) was helped byExforge and Tekturna/Rasilez. Neuroscience and Ophthalmics (USD 1.1billion, +10% lc) saw rapid gains for Lucentis and Exelon Patch.Vaccines and Diagnostics: USD 247 million (-23%, -15% lc)Lower sales of TBE (tick-borne encephalitis) vaccines and the lack ofH5N1 vaccine sales led to the decline. No sales were booked in the2009 quarter for initial orders of H1N1 pandemic flu vaccines.Sandoz: USD 1.8 billion (-9%, +4% lc)Maintaining the pace of the 2009 first quarter, top markets achievedstrong performances and were led by Asia-Pacific (+24% lc), Centraland Eastern Europe (+6% lc) and Germany (+4% lc). The US (+2% lc)returned to year-on-year quarterly growth for the first time sincethe fourth quarter of 2007.Consumer Health: USD 1.4 billion (-8%, +2% lc)New contact lens product launches underpinned local currency growthand market share gains for CIBA Vision. The Animal Health farmbusiness and OTC expanded in North America ahead of their respectivemarkets, while the overall businesses continued to suffer fromreduced consumer spending and wholesaler destocking due to creditpressures. Operating income Q2 2009 Q2 2008 Change % of % of net net USD m sales USD m sales %Pharmaceuticals 2 213 31.1 2 178 31.4 2Vaccines and Diagnostics -167 -75Sandoz 247 13.9 246 12.6 0Consumer Health continuingoperations 271 19.2 304 19.9 -11Corporate Income & Expense,net -200 -192Operating incomefrom continuing operations 2 364 22.4 2 461 22.9 -4Pharmaceuticals: USD 2.2 billion (+2%)Operating income improved while absorbing the negative impact ofcurrencies (-10 percentage points) and reduced favorable exceptionalitems (-5 percentage points). Excluding these effects, underlyingoperating income advanced 17% thanks to the strong business expansionand increased productivity gains, outpacing the 11% lc net salesgrowth. The adjusted operating margin rose 1.1 percentage points to32.7% of net sales in 2009 compared to 31.6% in 2008. The end ofBetaseron® royalty receipts in late 2008 led to a decline of 0.9percentage points in other revenues. Cost of Goods Sold improved by0.7 percentage points to 16.6% of net sales mainly from product mix.R&D investments rose 0.7 percentage points to 20.3% of net sales tosupport late-stage projects and biologics. Marketing & Sales fell 0.8percentage points to 29.6% of net sales. Productivity savings enabledboth underlying margin improvements and significant investments tobolster growth.Vaccines and Diagnostics: USD -167 millionExcluding exceptional items and amortization of intangible assets,the adjusted operating loss was USD 46 million in the second quarterof 2009 compared to adjusted operating income of USD 16 million inthe 2008 period.Sandoz: USD 247 million (+0%)The operating margin rose 1.3 percentage points to 13.9% from the2008 quarter as focused efforts on productivity gains, includingreductions in Cost of Goods Sold and total function costs, helpedmaintain profitability at the prior-year level despite negativecurrency movements (-12 percentage points) and lower contributionsfrom the US.Consumer Health: USD 271 million (-11%)Significant R&D investments across all businesses were financed byproductivity gains in marketing, general and administrative expenses.Operating income grew 5% over the year-ago period in constantcurrencies.Corporate Income & Expense, netNet corporate expenses in the second quarter of 2009, which wereslightly higher than the year-ago period, included higher pensionexpenses.FINANCIAL REVIEWFirst half and second quarter H1 H1 Change Q2 Q2 Change 2009 2008 2009 2008 USD m USD m % USD m USD m %Operating income from continuingoperations 4 711 4 949 -5 2 364 2 461 -4Income fromassociatedcompanies 207 256 -19 124 119 4Financial income 43 233 -82 91 85 7Interest expense -222 -118 88 -136 -61 123Taxes -720 -746 -3 -399 -338 18Net income from continuingoperations 4 019 4 574 -12 2 044 2 266 -10Net income from discontinuedoperations 9 -6Total net income 4 019 4 583 -12 2 044 2 260 -10Income from associated companiesThe decline in income from associated companies in the first half of2009 resulted mainly from reduced contributions from the Roche stake,which included a negative adjustment of USD 40 million since Roche'sreported 2008 results were lower than anticipated. However, incomefrom associated companies rose 4% in the second quarter of 2009 toUSD 124 million on increased contributions from both the Roche andAlcon investments.Financial result, netAverage net debt in the 2009 first half amounted to USD 2.3 billioncompared to average net liquidity of USD 5.9 billion in 2008,reflecting the mid-2008 purchase of the Alcon stake. As a result, andalso due to currency losses and lower financial yields, financialincome in the first half fell by USD 190 million to USD 43 million.Also in the first half of 2009, interest expense rose to USD 222million, which included an additional expense of USD 136 million inthe 2009 period for the US dollar and Euro bonds issued in the firsthalf of 2009 and the Swiss franc bonds issued in mid-2008. In thesecond quarter of 2009, financial income was up 7% over the year-agoperiod, but interest expenses more than doubled due to the issuanceof debt.TaxesThe tax rate (taxes as a percentage of pre-tax income) was 15.2% inthe first half of 2009 compared to 14.0% in the year-ago period basedon a reassessment of the Group's anticipated full-year tax rate. Thisresulted in a substantial increase in the tax rate to 16.3% for thesecond quarter of 2009 compared to 13.0% in the year-ago period.Net income from continuing operationsAmong factors for the 12% decline in net income to USD 4.0 billion inthe first half of 2009 were reduced contributions from the operatingbusinesses and associated companies as well as higher financialcharges. These same factors also weighed on net income in the secondquarter of 2009, which fell 10% to USD 2.0 billion.Basic earnings per shareBasic earnings per share (EPS) from continuing operations were USD1.76 per share in the first half of 2009, down from USD 2.01 in the2008 period, in line with the decline in net income. For the secondquarter, basic EPS also fell in line with net income, declining 9% toUSD 0.90 per share from USD 0.99 in the prior-year quarter.Balance sheetTotal assets increased to USD 84.3 billion at the end of the firsthalf of 2009 compared to USD 78.3 billion at the end of 2008, mainlyreflecting proceeds from recent bond issues that are held as cash andmarketable securities.The Group's equity was largely unchanged at USD 50.5 billion at theend of the first half of 2009 compared to USD 50.4 billion at the endof 2008 as net income of USD 4.0 billion in the 2009 period waslargely offset by the dividend payment in the 2009 first quarteramounting to USD 3.9 billion, an 18% increase in US dollars from the2008 dividend payment of USD 3.3 billion.The Group's debt/equity ratio rose to 0.27:1 at the end of the firsthalf of 2009 from 0.15:1 at the end of 2008, reflecting thesuccessful issuance of a USD 5 billion bond (two tranches) in the USin the first quarter and the launch of a EUR 1.5 billion bond in thesecond quarter. At the end of the first half of 2009, financial debtof USD 13.9 billion consisted of USD 4.7 billion in current and USD9.2 billion in non-current liabilities.Overall liquidity increased to USD 11.8 billion at June 30, 2009,from USD 6.1 billion at the end of 2008. Taking into account the debtraised in 2009, net debt increased to USD 2.1 billion at June 30,2009, from USD 1.2 billion at December 31, 2008, and net liquidity ofUSD 5.5 billion at June 30, 2008.Credit agencies maintained their ratings of Novartis debt during thefirst half of 2009. Moody's rated the Group as Aa2 for long-termmaturities and P-1 for short-term maturities and Standard & Poor'shad a rating of AA- and A-1+, for long-term and short-termmaturities, respectively. Fitch had a long-term rating of AA and ashort-term rating of F1+. These agencies maintained a "stable"outlook.Cash flowCash flow from operating activities from continuing operations rose29% to USD 4.6 billion in the first half of 2009 compared to theyear-ago period as a result of improved working capital management aswell as lower financial and tax payments in the first six months of2009 compared to the prior-year period. Operating cash flow in thefirst half of 2008 also included restructuring payments for theForward productivity initiative.A substantial portion of proceeds from the US dollar and euro bondissues in the first half of 2009 were reinvested into marketablesecurities, resulting in an outflow of USD 5.6 billion in cash flowfrom investing activities in the first half of 2009 compared to aninflow of USD 4.5 billion in the year-ago period. Cash inflows fromfinancing activities were a net USD 2.5 billion in the 2009 firsthalf, composed of a combined USD 7.1 billion of proceeds from thebond issues that were partially offset by the dividend payment for2008 of USD 3.9 billion and other items totaling USD 0.7 billion.PHARMACEUTICALS PRODUCT REVIEWNote: Net sales growth data refer to year-to-date 2009 performance inlocal currencies.Strategic Cardiovascular franchiseThe strategic Cardiovascular franchise (USD 3.6 billion, +14% lc)showed solid growth on expansion of the high blood pressure medicinesExforge and Tekturna/Rasilez, providing more than seven percentagepoints of franchise net sales gains in the 2009 first half. Diovanunderpinned the franchise with rising contributions in all markets,leading to overall gains in the US and global antihypertension marketsegments.Diovan (USD 2.9 billion, +6% lc) benefited from double-digit growthin Japan, which now accounts for about 20% of net sales, and a solidperformance in Europe ahead of the anticipated entry of genericversions as early as the second half of 2009 of losartan, anothermedicine in the angiotensin receptor blockers (ARB) segment. In theUS, Diovan (+5%) continues to grow solidly despite generic versionsof rival high blood pressure medicines in other classes.Exforge (USD 304 million +96% lc), a single pill containing theangiotensin receptor blocker Diovan (valsartan) and the calciumchannel blocker amlodipine, has been steadily outpacing the highblood pressure medicine market due to its differentiated efficacyprofile. Exforge HCT, which includes the addition of a diuretic tothis combination, received US regulatory approval in April 2009 asthe only high blood pressure therapy with three medicines in onepill.Tekturna/Rasilez (USD 119 million, +117% lc), the first new type ofhigh blood pressure medicine in more than a decade, has acceleratedits growth pace thanks to an increasing body of data affirming itsability to reduce blood pressure for more than 24 hours, itspotential benefits for organ protection, and its consistentsuperiority in clinical trials over ramipril, a leading ACE inhibitor(another class of high blood pressure medicines). Data from theASPIRE HIGHER outcomes program and various single-pill combinationswith other medicines are expected to drive future growth. RasilezHCT, a single-pill combination with a diuretic, has been launched inEurope after approval in January 2009. This combination is availablein the US as Tekturna HCT. A single-pill combination with valsartanwas also submitted for European approval in June 2009, matching a USsubmission in late 2008. Another combination with amlodipine is ontrack for US and EU submissions in 2009.OncologyGleevec/Glivec (USD 1.9 billion, +15% lc), a targeted therapy forcertain forms of chronic myeloid leukemia (CML) and gastrointestinalstromal tumors (GIST), has achieved sustained double-digit growthbased on its leadership position in treating these cancers backed bynew clinical data and regulatory approvals. Glivec received Europeanregulatory approval in May 2009 as a post-surgery (adjuvant setting)therapy for GIST following Swiss (February 2009) and US (December2008) approvals.Tasigna (USD 88 million), a second-line therapy for patients with aform of chronic myeloid leukemia (CML) resistant or intolerant toprior therapy, including Gleevec/Glivec, has been expanding quicklyin the US, Germany and the UK while also demonstrating potential tobecome a leading therapy for newly diagnosed CML patients. Phase IIdata at the European Hematology Association meeting in Junedemonstrated that patients treated with Tasigna at 12 months hadrapid responses and a deep reduction in the amount of the abnormalprotein that causes CML. Results from a Phase III trial comparingTasigna and Gleevec/Glivec are expected in 2010. A first-line studyin GIST began enrollment in March.Zometa (USD 701 million, +10% lc), an intravenous bisphosphonatetherapy for patients with cancer that has spread to the bones, hasbeen growing due to improved compliance and use in existingindications. Also supporting the broad expansion have been landmarkdata first presented in 2008, and published in early 2009 in "The NewEngland Journal of Medicine," that showed the significant anti-cancerbenefit of Zometa in reducing the risk of cancer recurrence or deathin premenopausal women with hormone-sensitive, early-stage breastcancer. Studies are underway to review the potential anti-cancerbenefits of Zometa in other tumor types.Femara (USD 596 million, +15% lc), an oral therapy for women withhormone-sensitive breast cancer, continued with strong growth in 2009on the back of gains in the European initial post-surgery (adjuvantsetting) segment. The entry of generic competition in some markets,however, had a modest impact on the positive performance.Sandostatin (USD 539 million, +6% lc), for acromegaly andneuroendocrine tumors of the gastrointestinal tract and pancreas,benefited from increasing use of Sandostatin LAR, the once-monthlyversion that accounts for nearly 90% of net sales. Updated Phase IIIdata presented at the American Society of Clinical Oncology (ASCO)meeting in May further demonstrated a significant delay in tumorprogression in patients with metastatic neuroendocrine tumors of themidgut who were treated with Sandostatin LAR. These data formed thebasis of the recent US National Comprehensive Cancer Network (NCCN)update on treatment guidelines for neuroendocrine tumors.Exjade (USD 295 million, +35% lc), approved in more than 90countries as the only once-daily oral therapy for transfusional ironoverload, recently received regulatory approvals in Brazil, the USand Canada for a new dose of 40 mg/kg, which provides a new optionfor patients who require higher dose titration for iron chelation.This new dose was also approved in Switzerland in early 2009.Afinitor (USD 12 million), an oral inhibitor of the mTOR pathway, waslaunched in the US after regulatory approval was granted in March asthe first therapy for patients with advanced renal cell carcinoma(kidney cancer) after failure of treatment with sunitinib orsorafenib. European Union regulatory approval is anticipated soon,after the Committee for Medicinal Products (CHMP) issued a positiveopinion in May supporting approval in renal cell carcinoma followingprogression on VEGF-targeted therapy. Afinitor is being studied inmany cancer types: Phase III studies are underway in neuroendocrinetumors (NET), breast cancer, lymphoma and tuberous sclerosis complex(TSC), while Phase III trials are planned to be initiated inhepatocellular carcinoma (HCC) and gastric cancer. A Phase III trialin carcinoids (a type of NET) is ongoing and will continue through tofinal analysis, with regulatory submissions for this indicationexpected in 2010. Positive data have also recently been presentedfrom early clinical studies in HCC and lymphoma. This product'sactive ingredient, everolimus, is the same as in the transplanttherapy Certican.Other Pharmaceuticals productsLucentis (USD 523 million, +42% lc), a biotechnology eye therapyapproved in more than 80 countries, generated ongoing dynamic growthin Europe, Latin America, Japan and key emerging markets based on itsstatus as the only treatment proven to maintain and improve vision inpatients with "wet" age-related macular degeneration, a leading causeof blindness in people over age 50. Genentech holds the US rights tothis medicine.Exelon/Exelon Patch (USD 436 million, +24% lc), a therapy for mild tomoderate forms of Alzheimer's disease dementia and also dementialinked with Parkinson's disease, has seen dynamic growth in the USand Europe since the late 2007 launch of Exelon Patch, a novel skinpatch, that accounts for about half of franchise net sales.Reclast/Aclasta (USD 200 million, +105% lc), the first once-yearlyinfusion therapy for osteoporosis, has been fueled by increasingpatient access to infusion centers in the US and Europe as well as agrowing list of approved indications for use in a broad range ofpatients suffering from various types of this debilitating disease.Reclast/Aclasta, approved for five indications, gained additional USapproval in May as the only therapy to prevent postmenopausalosteoporosis with convenient, less-frequent dosing, while Europeanapproval was granted in June for treatment of osteoporosis caused bysteroid treatment in men and postmenopausal women, an indicationalready approved in the US.Xolair (USD 140 million, +67% lc, Novartis sales), a biotechnologydrug for moderate to severe persistent asthma in the US and allergicasthma in Europe, has grown strongly thanks to its approval in morethan 60 countries, including the Japan launch in early 2009. Novartisco-promotes Xolair with Genentech in the US and shares a portion ofoperating income. Genentech's US sales were USD 277 million in thefirst half of 2009.Galvus/Eucreas (USD 65 million), two oral treatments for type 2diabetes, have grown strongly during the rollout since 2008 in manyEuropean, Latin American and Asia-Pacific markets. Galvus is approvedin 60 countries, while Eucreas (a single-pill combination with theoral anti-diabetes medicine metformin) is now available in 21countries.Extavia (USD 12 million), for patients with some forms of multiplesclerosis (MS), has been prescribed for use by about 3,000 patientsin Europe since the early 2009 launch that marks the entry ofNovartis into this disease area. Extavia is the same medicinalproduct as Betaferon®/ Betaseron®, which is marketed by BayerSchering. Novartis gained rights to its own branded version inagreements with Bayer Schering after Novartis fully acquired Chiron.Novartis expects to launch Extavia in the US in 2009.R&D UPDATEPharmaceuticalsIlaris (canakinumab, formerly ACZ885), a human antibody targetingIL-1 beta, received US regulatory approval in June as a new therapyto treat children as young as four years old and adults with CAPS(Cryopyrin-Associated Periodic Syndromes), a group of seriouslife-long auto-inflammatory diseases. Decisions are pending onregulatory submissions in several countries, including Europe, Canadaand Switzerland. Data from a one-year Phase III trial published in"The New England Journal of Medicine" in June confirmed that Ilarisoffered rapid and long-term clinical remission in CAPS patients.Studies are underway in other disease areas believed to involve IL-1beta, including some forms of gout, Systemic Juvenile IdiopathicArthritis (SJIA), Chronic Obstructive Pulmonary Disease (COPD) andtype 2 diabetes.Coartem (artemether/lumefantrine), the leading artemisinin-basedcombination treatment for malaria, received US regulatory approval inApril. Novartis has provided more than 250 million Coartem treatmentsto date for public-sector use in malaria-endemic regions.QAB149 (indacaterol), a bronchodilator in development for ChronicObstructive Pulmonary Disease (COPD), has been shown in Phase IIIclinical trials to significantly improve lung function over thecurrently available treatments formoterol and tiotropium at threemonths of therapy. QAB149 also improved symptom control in COPD, alife-threatening lung condition affecting 210 million peopleworldwide. Further Phase III data will be presented at the EuropeanRespiratory Society meeting in September 2009. QAB149, which isexpected to form the cornerstone of planned combination therapies indevelopment against COPD, was submitted for US and Europeanregulatory review in late 2008.FTY720 (fingolimod), a novel oral development therapy for multiplesclerosis, showed continued low relapse rates after four years inpatients with relapsing-remitting MS in an open-label Phase IIextension study. The data, presented at the American Academy ofNeurology (AAN) meeting in April, also showed no significant changein the safety profile from three to four years. Data at AAN fromTRANSFORMS, a one-year Phase III trial against interferon beta-1a(Avonex®), showed 80-83% of MS patients given FTY720 wererelapse-free for one year compared to 69% of patients treated withAvonex® (p<0.001), with a safety profile for FTY720 in line withprevious experience. US and European regulatory submissions areexpected by the end of 2009. Initial results of the Phase IIIplacebo-controlled FREEDOMS trials are also expected in the fourthquarter of 2009.Certican (everolimus), an oral inhibitor of the mTOR pathway, wassubmitted for US regulatory approval in June for use in kidneytransplant patients. Results of a one-year study, which wasundertaken in response to "approvable letters" from the FDA, achievedprimary efficacy and renal function targets and were also consistentwith experience seen in 70 countries - including in Europe - wherethis medicine has been approved. Everolimus is also the activeingredient in the anti-cancer therapy Afinitor, which has beenapproved in the US.AGO178 (agomelatine), a once-daily investigational treatment forpatients with major depression, will be studied in additional PhaseIII trials to further explore the benefit/risk and pharmacokineticprofile of this compound. A recent review of data from previous PhaseIII trials confirmed the known efficacy and safety profile of thedrug. Submission for US regulatory approval, which had beenanticipated in 2009, is now expected in 2012. The US rights to thiscompound were acquired in March 2006 from Servier.Vaccines and DiagnosticsMenveo, which was submitted in 2008 for US regulatory approval as anew vaccine to protect against four common types of meningococcalmeningitis in people age 11-55, has received a Complete Responseletter from the FDA requesting additional information on thesubmission's clinical and CMC (Chemistry Manufacturing and Control)sections. No new clinical trials are required, and Novartis expectsto respond to all questions fully in 2009. Menveo was also submittedin 2008 for regulatory approval in Europe for use in adolescents(from age 11) and adults. Clinical trials are underway in other agegroups, including as young as from two months, to protect against theserogroups A, C, W-135 and Y found with this often-fatal bacterialinfection.SandozOmnitrope, the pioneering biosimilar of the recombinant human growthhormone somatropin, has received regulatory approval as thefirst-ever biosimilar in Japan under the brand name Somatropin BSS.C. This approval paves the way for greater access to high-qualitybiopharmaceuticals in the world's second-largest pharmaceuticalsmarket and comes about three months after Japanese authoritiespublished guidelines for a biosimilar regulatory pathway, which isbased on similar scientific principles already in place in theEuropean Union. Sandoz pioneered the field of biosimilars with theapproval and launch of Omnitrope in the US and Europe. Omnitrope wasalso approved in Canada in 2009. Sandoz is the only company withthree approved biosimilars in Europe: Omnitrope, Binocrit (epoetinalfa) and Zarzio (filgrastim).OTCPrevacid 24HR (lansoprazole delayed-release capsules 15 mg), aonce-daily proton pump inhibitor, received US regulatory approval inMay as the first and only OTC (over-the-counter) version of thispopular prescription medicine. The FDA granted three years ofmarketing exclusivity for the 15 mg OTC dose, meaning that no brandedor private label competition is allowed before May 2012. Prevacid24HR is expected to be available in the US later in 2009. Novartisgained the rights for OTC development and commercialization ofPrevacid® from Takeda Pharmaceuticals North America, Inc.DisclaimerThis release contains certain forward-looking statements relating tothe Group's business, which can be identified by terminology such as"momentum," "awaiting," "set," "expectations," "pipeline," "expect,""potentially," "sustainable," "expected," "potential," "will,""planned," "outlook," "could", "anticipated," "expects," "paves theway," "may," or similar expressions, or by express or implieddiscussions regarding potential new products, potential newindications for existing products, or regarding potential futurerevenues from any such products, or potential future sales orearnings of the Novartis Group or any of its divisions or businessunits; or regarding the potential acquisition of any business byNovartis; or by discussions of strategy, plans, expectations orintentions. You should not place undue reliance on these statements.Such forward-looking statements reflect the current views of theGroup regarding future events, and involve known and unknown risks,uncertainties and other factors that may cause actual results to bematerially different from any future results, performance orachievements expressed or implied by such statements. There can be noguarantee that any new products will be approved for sale in anymarket, or that any new indications will be approved for existingproducts in any market, or that such products will achieve anyparticular revenue levels. Nor can there be any guarantee that theNovartis Group, or any of its divisions or business units, willachieve any particular financial results. Neither can there be anyguarantee that the proposed acquisition of any business will becompleted in the expected form or within the expected time frame orat all. Nor can there be any guarantee that Novartis will be able torealize any of the potential synergies, strategic benefits oropportunities as a result of the proposed acquisition. In particular,management's expectations could be affected by, among other things,the uncertain outcome and progress of the ongoing global financialand economic crisis, including uncertainties regarding future globalexchange rates and uncertainties regarding future demand for ourproducts; uncertainties involved in the development of newpharmaceutical products; unexpected clinical trial results, includingadditional analysis of existing clinical data or unexpected newclinical data; unexpected regulatory actions or delays or governmentregulation generally; the Group's ability to obtain or maintainpatent or other proprietary intellectual property protection;uncertainties regarding actual or potential legal proceedings,including, among others, product liability litigation, litigationregarding sales and marketing practices, government investigationsand intellectual property disputes; competition in general;government, industry, and general public pricing and other politicalpressures; the impact that the foregoing factors could have on thevalues attributed to the Group's assets and liabilities as recordedin the Group's consolidated balance sheet; and other risks andfactors referred to in Novartis AG's current Form 20-F on file withthe US Securities and Exchange Commission. Should one or more ofthese risks or uncertainties materialize, or should underlyingassumptions prove incorrect, actual results may vary materially fromthose described herein as anticipated, believed, estimated orexpected. Novartis is providing the information in these materials asof this date and does not undertake any obligation to update anyforward-looking statements as a result of new information, futureevents or otherwise.About NovartisNovartis provides healthcare solutions that address the evolvingneeds of patients and societies. Focused solely on healthcare,Novartis offers a diversified portfolio to best meet these needs:innovative medicines, cost-saving generic pharmaceuticals, preventivevaccines, diagnostic tools and consumer health products. Novartis isthe only company with leading positions in these areas. In 2008, theGroup's continuing operations achieved net sales of USD 41.5 billionand net income of USD 8.2 billion. Approximately USD 7.2 billion wasinvested in R&D activities throughout the Group. Headquartered inBasel, Switzerland, Novartis Group companies employ approximately99,000 full-time-equivalent associates and operate in more than 140countries around the world. For more information, please visithttp://www.novartis.com.Important datesOctober 22, 2009 Third quarter and first nine months2009 resultsDecember 9, 2009 Novartis investor event: Oncology andpipeline update (Basel)January 2010 Fourth quarter and full-year 2009resultsAll product names appearing in italics are trademarks owned by orlicensed to Novartis Group Companies.Please find full media release in English attached and on thefollowing link:http://hugin.info/134323/R/1307495/301013.pdfFurther language versions are available through the following links:German version is available through the following link:http://hugin.info/134323/R/1307487/301012.pdfFrench version is available through the following link:http://hugin.info/134323/R/1307488/301011.pdfhttp://hugin.info/134323/R/1329090/313616.pdf --- End of Message ---Novartis International AGPosfach Basel WKN: 904278; ISIN: CH0012005267; Index: SLCI, SMI, SPI, SLIFE;Listed: Main Market in SIX Swiss Exchange, ZLS in BX Berne eXchange;
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Datum: 16.07.2009 - 06:59 Uhr
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