Novartis delivers strong new product momentum and operational
performance in first nine months of 20
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ * Strong underlying growth in first nine months of 2009 from healthcare portfolio: * Net sales of USD 31.3 billion rise 8% in local currencies (lc), led by double-digit expansion in Pharmaceuticals * Operating income of USD 7.3 billion up 1%, but advances 11% in constant currencies and excluding exceptional items * Net income of USD 6.1 billion down 8% due to negative currency impact, Alcon-related financing costs and USD 189 million of associated companies charges; but net income in constant currencies rises 2% * Basic EPS: USD 2.69 in first nine months of 2009 vs. USD 2.93 in 2008 * Free cash flow before dividends advances 20% to USD 6.1 billion * Progress in innovation: 2009 approvals for Afinitor (US/EU), Ilaris (US) and H1N1 pandemic flu vaccines; positive Phase III data for QAB149 (COPD) and FTY720 (MS) * Novartis on track for record sales and earnings in constant currencies in 2009Key figures - Continuing operationsNine months to September 30 YTD 2009 YTD 2008 % change % of % of USD m net sales USD m net sales USD lcNet sales 31 341 31 382 0 8Operating income 7 345 23.4 7 284 23.2 1Net income 6 131 19.6 6 656 21.2 -8Basic earnings pershare USD 2.69 USD 2.93 -8Third quarter Q3 2009 Q3 2008 % change % of % of USD m net sales USD m net sales USD lcNet sales 11 086 10 747 3 7Operating income 2 634 23.8 2 335 21.7 13Net income 2 112 19.1 2 082 19.4 1Basic earnings pershare USD 0.93 USD 0.92 1Basel, October 22, 2009 - Commenting on the results, Dr. DanielVasella, Chairman and CEO of Novartis, said: "I am pleased with ourstrong underlying performance, led by the momentum of ourPharmaceuticals business, outpacing the competition and benefitingfrom innovative product growth rejuvenating the portfolio. Ourinvestments in R&D show excellent results, with many key approvals in2009, most notably the anti-cancer therapy Afinitor and thebiotechnology medicine Ilaris. Deliveries of H1N1 pandemic fluvaccines are underway as Novartis works at full capacity to meetpublic health demands. The Sandoz generics business also made goodprogress, coupled with a turnaround in the US. We expect recordfull-year underlying results based on the significant progress todate in 2009."OVERVIEWNine months to September 30The sustained underlying business expansion in Pharmaceuticals, withnet sales rising 11% in local currencies (+4% in US dollars),strengthened the Group's healthcare portfolio in the first ninemonths of 2009.Group net sales rose 8% in local currencies, but were steady at USD31.3 billion in US dollars. Sandoz (+4% lc) and Consumer Health (+3%lc) also provided contributions. Top-performing regions includedEurope (USD 12.9 billion, +7% lc) and the United States (USD 10.1billion, +5% lc) as well as the top six emerging markets (USD 2.8billion, +16% lc). Higher volumes provided seven percentage points ofgrowth, while net price changes added one percentage point. However,the stronger US dollar compared to the 2008 period offset theunderlying business expansion by eight percentage points.Operating income rose 1% to USD 7.3 billion, and at a faster 11% pacewhen adjusted for the impact of currency movements, exceptional itemsand amortization of intangible assets in both periods.Pharmaceuticals, where operating income rose 8%, and productivitygains in all divisions provided resources for business expansion andled to the Group operating income margin improving 0.2 percentagepoints to 23.4% of net sales.Net income, however, fell 8% to USD 6.1 billion from the impact ofAlcon-related financing costs as well as significantly reduced incomefrom investments in Roche and Alcon in the third quarter of 2009 anda higher tax rate. Basic earnings per share (EPS) fell to USD 2.69 inthe first nine months of 2009 from USD 2.93 in the 2008 period.Third quarterNovartis maintained the strong underlying momentum of 2009 asthird-quarter net sales grew 7% in local currencies, while reportednet sales rose 3% to USD 11.1 billion as four percentage points ofgrowth were lost to adverse currency movements. Pharmaceuticals (+11%lc) led the performance, while Consumer Health (+5% lc) and Sandoz(+4% lc) achieved local-currency gains in challenging markets.Vaccines and Diagnostics (-16% lc) fell on sharply lower sales ofH5N1 (avian flu) pandemic vaccines in 2009.Operating income advanced 13% to USD 2.6 billion, while the Group'soperating income margin rose 2.1 percentage points to 23.8% of netsales on margin improvements in Pharmaceuticals, Sandoz and ConsumerHealth. Operating income was up 9% when adjusted for currencymovements, exceptional items and amortization of intangible assets.Net income rose 1% to USD 2.1 billion as the 13% increase in Groupoperating income was largely offset by a loss from associatedcompanies due to USD 189 million of charges for Roche's restructuringof Genentech and an Alcon-related R&D project impairment, increasedfinancing costs and a higher tax rate. As a result, basic earningsper share (EPS) only climbed to USD 0.93 from USD 0.92 in the 2008quarter.Achieving success with long-term R&D investmentsNovartis has been reaping the benefits of long-term, disciplinedinvestments in innovation, achieving more than 30 major regulatoryapprovals and significant progress in the Group's R&D pipeline so farin 2009.Important approvals include the anti-cancer medicine Afinitor, thehigh blood pressure combination therapy Valturna, the biotechnologydrug Ilaris and the H1N1 pandemic flu vaccines. The late-stagepipeline is also progressing quickly: European regulatory approvalexpected soon for QAB149 (COPD), while further positive Phase IIIdata presented in September 2009 reaffirmed the potential of FTY720(MS).R&D investments complement other strategic initiatives as Novartisseeks to deliver long-term sustainable growth from a focusedportfolio addressing broad healthcare needs. In addition toinvestments in innovation, Novartis is selectively strengthening itsbusinesses, expanding in high-growth markets and improvingorganizational efficiency.High-growth markets are increasingly contributing to the businessexpansion. Net sales in the top six emerging markets rose 16% lc toUSD 2.8 billion in the first nine months of 2009, with only limitedsigns to date of adverse impact from global economic conditions.These six markets - Brazil, China, India, Russia, South Korea andTurkey - represented 9% of the Group's net sales for the 2009 period.New products are transforming Pharmaceuticals and positioningNovartis as one of the industry's fastest-growing companies. Recentlylaunched products provided dynamic growth (+88% lc) and USD 3.3billion of net sales in the first nine months of 2009, boosting theirshare of net sales to 16% from 9% in the 2008 period. New productapprovals in 2009, such as Afinitor and Ilaris, are set to supportbusiness expansion. In Japan, approvals of five new medicines to datein 2009 - Tasigna, Xolair, Co-Dio, Lucentis and Rasilez - areexpected to underpin momentum in this important market.Vaccines and Diagnostics began delivering vaccines in the last weekof September for the new H1N1 influenza strain as US and Europeanregulatory approvals were received. Large-scale antigen productioncontinues at all sites in Europe. Approximately 90 million to 120million doses are expected to be produced by the end of 2009, withexpected fourth-quarter net sales contributions of approximately USD400 million to USD 700 million. In early October, Novartis alsocompleted its shipment of 27 million seasonal influenza vaccines forthe US market, ahead of original plans, to allow for earliervaccination.Sandoz completed in September the acquisition of EBEWE Pharma'sspecialty generics injectables business for EUR 0.8 billion (USD 1.2billion), creating a new global growth platform and improving accessto oncology medicines. This acquisition is set to further driveexpansion in the fast-growing injectables market and represents animportant extension of the Sandoz portfolio. In addition, themanufacturing site in Wilson, North Carolina, has a renewed focus onnew product launches following the successful completion of an FDAinspection in the third quarter of 2009.Consumer Health is preparing the upcoming US launch of Prevacid 24HR,the first OTC version of this prescription drug for frequentheartburn pain and an important addition to the division's currentportfolio of 15 global brands with annual sales of more than USD 100million. Novartis aims to make Prevacid 24HR a top-five OTC brand inthe US, where this proton pump inhibitor has three years of marketexclusivity.Group outlook(Barring any unforeseen events)Novartis expects to deliver a strong operational performance in 2009.Group net sales are now set to grow at a high-single-digit rate inlocal currencies, even excluding anticipated H1N1 pandemic fluvaccines sales in the fourth quarter of 2009. Pharmaceuticals netsales in local currencies are now expected to expand at adouble-digit rate in 2009. Operating and net income are expected toreach record levels in constant currencies for the full year, evenexcluding the contribution from H1N1 pandemic flu vaccine sales.However, currency-related losses could significantly reduce growth inreported results.BUSINESS REVIEWNine months to September 30Net sales YTD 2009 YTD 2008 % change USD m USD m USD lcPharmaceuticals 20 765 19 901 4 11Vaccines and Diagnostics 1 037 1 268 -18 -13Sandoz 5 350 5 753 -7 4Consumer Health continuing operations 4 189 4 460 -6 3Net sales from continuing operations 31 341 31 382 0 8Pharmaceuticals: USD 20.8 billion (+4%, +11% lc)Sustained dynamic performance achieved in local currencies thanks torapid expansion of recently launched products and double-digit growthin all regions. The global rollouts of new products, includingLucentis, Exforge, Exjade, Exelon Patch, Reclast/Aclasta andTekturna/Rasilez, are transforming the portfolio and provided USD 3.3billion of net sales in the 2009 period. These products accounted for16% of net sales, up from 9% in 2008, and eight percentage points ofthe division's 11% local currency net sales growth.All therapeutic franchises advanced at double-digit rates in localcurrencies. Oncology (USD 6.5 billion, +13% lc), the largestfranchise, grew thanks to Gleevec/Glivec (USD 2.9 billion, +12% lc),Femara (USD 925 million, +16% lc) and Exjade (USD 469 million, +30%lc). The strategic Cardiovascular and Metabolism franchise (USD 5.4billion, +12% lc) was led by the new medicines Exforge (USD 475million) and Tekturna/Rasilez (USD 202 million) as well as theflagship product Diovan (USD 4.4 billion, +5% lc). The diabetesmedicine Galvus (USD 115 million) outpaced competition in some keymarkets in Europe, Latin America and Asia. Neuroscience andOphthalmics (USD 3.3 billion, +13% lc) gains were led by Lucentis(USD 858 million, +48% lc) and Exelon (USD 687 million, +24% lc).Europe (USD 7.6 billion, +11% lc) as well as Latin America and Canada(USD 1.8 billion, +14% lc) showed strong performances. Gains werealso seen in the US (USD 7.1 billion, +10% lc), while Japan (USD 2.2billion, +9% lc) benefited from new product launches. The six topemerging markets of Brazil, China, India, Russia, South Korea andTurkey (USD 1.8 billion, +19% lc) kept up a good growth pace.Vaccines and Diagnostics: USD 1.0 billion (-18%, -13% lc)A sharp reduction in deliveries of H5N1 avian pandemic flu vaccinescompared to the 2008 period as well as lower sales of TBE (tick-borneencephalitis) vaccines in Europe were among reasons for the decline.Seasonal influenza vaccines sales were down in the 2009 period,mainly due to price pressure in the US.Sandoz: USD 5.4 billion (-7%, +4% lc)Sandoz achieved three quarters of consistent 4% lc growth in 2009compared to only 1% lc in 2008. Retail generics in Germany (+5% lc)grew in a declining market, reaching a 29% share as launches offsetthe switch to tenders by some government health insurance providers.US retail generics and biosimilars (+1%) delivered 18 new launches sofar in 2009 (vs. 17 in all of 2008), but price erosion offset some ofthe volume gains. Other regions were higher, led by Asia-Pacific(+20% lc) on growth in China and Japan.Consumer Health: USD 4.2 billion (-6%, +3% lc)CIBA Vision is the industry's fastest-growing contact lens and lenscare company, driven by the expansion of new products that havefueled solid local currency growth. Animal Health grew ahead of itsglobal market and gained share in the US parasiticide market, whileOTC delivered an increasingly positive underlying performance duringthe year.Operating income YTD 2009 YTD 2008 Change % of % of net net USD m sales USD m sales %Pharmaceuticals 6 486 31.2 6 017 30.2 8Vaccines and Diagnostics -211 52 4.1Sandoz 850 15.9 884 15.4 -4Consumer Health continuing operations 809 19.3 858 19.2 -6Corporate Income & Expense, net -589 -527Operating incomefrom continuing operations 7 345 23.4 7 284 23.2 1Pharmaceuticals: USD 6.5 billion (+8%)Operating income grew 8%, well ahead of sales, and advanced at afaster 16% pace when adjusted in both periods for adverse currencymovements (-10 percentage points) and exceptional items (+2percentage points). The double-digit sales expansion and productivitygains of more than USD 700 million in the 2009 period fueledoperating income growth and enabled significant investments in newproduct launches as well as accelerated investments in Oncologyprojects, particularly Afinitor, and targeted emerging markets suchas China. Marketing & Sales expenses fell to 29.0% of net sales in2009 from 30.0% in the 2008 period while supporting the globalrollouts of a range of new products, including Galvus, Exelon Patch,Tekturna/Rasilez and Afinitor. R&D investments were 20.3% of netsales in 2009 while supporting ten new Phase III trials started in2009, but declined from 21.3% in the 2008 period that included anexceptional charge of USD 223 million for impairment of the Aurograbdevelopment project.Vaccines and Diagnostics: USD -211 millionCore operating income, which excludes exceptional items andamortization of intangible assets, fell to USD 66 million from USD254 million in the year-ago period. Investments were made in clinicaltrials for H1N1 pandemic vaccines and late-stage meningitis vaccinedevelopment projects. Results in 2009 included exceptional legalcharges of USD 45 million, while the 2008 period benefited from a USD49 million exceptional gain for a diagnostics license.Sandoz: USD 850 million (-4%)Strong performance realized with 8% growth in constant currencies onvolume expansion in key markets and major productivity gains, butthese were more than offset in reported results by negative currencymovements (-12 percentage points). The Project Compete initiative ledto reduced total function costs compared to the 2008 period, with theoperating income margin rising 0.5 percentage points to 15.9% of netsales.Consumer Health: USD 809 million (-6%)Increased productivity provided operating income growth of 9% inconstant currencies, well ahead of 3% lc sales growth. These gains,however, were more than offset by adverse currency movements (-15percentage points).Corporate Income & Expense, netThe increase in net corporate expenses was due mainly to higherpension expenses.Third quarterNet sales Q3 2009 Q3 2008 % change USD m USD m USD lcPharmaceuticals 7 217 6 709 8 11Vaccines and Diagnostics 543 666 -18 -16Sandoz 1 850 1 899 -3 4Consumer Health continuing operations 1 476 1 473 0 5Net sales from continuing operations 11 086 10 747 3 7Pharmaceuticals: USD 7.2 billion (+8%, +11% lc)Ongoing dynamic growth in the 2009 third quarter thanks to the rapidexpansion of new products and sustained contributions from keymarkets. Recently launched products reached USD 1.3 billion of netsales in the 2009 quarter, representing 18% of divisional net salescompared to 11% in the 2008 quarter. These new products also providednine percentage points of the 11% lc net sales growth in the 2009period.All therapeutic franchises delivered strong underlying growth.Initial contributions from the US launch of Afinitor supportedOncology (USD 2.3 billion, +11% lc), while Exforge andTekturna/Rasilez underpinned the strategic Cardiovascular andMetabolism franchise (USD 1.8 billion, +9% lc). The diabetes therapyGalvus (USD 50 million) also continued its dynamic performance inEurope, Latin America and Asia. Neuroscience and Ophthalmics (USD 1.2billion, +18% lc) saw rapid gains for Lucentis (USD 335 million, +60%lc ) and Exelon (USD 251 million, +23% lc).Important growth contributions came from Europe (USD 2.6 billion, +9%lc) as well as Latin America and Canada (USD 645 million, +17% lc)and the US (USD 2.4 billion, +10% lc). Japan (USD 773 million, +8%lc) advanced thanks to contributions from new product launches in2009. The six top emerging markets (USD 639 million, +12% lc) furtheradvanced and were led by China and Turkey.Vaccines and Diagnostics: USD 543 million (-18%, -16% lc)Approximately 27 million doses of seasonal flu vaccines weredelivered for the 2009/2010 season in the US and Europe by earlyOctober 2009, with net sales per dose down slightly from the 2008period due mainly to price pressure in the US. Higher shipments ofrabies and pediatric vaccines helped partially offset the significantdecline in 2009 of H5N1 avian pandemic flu vaccine sales. Net salesof approximately USD 17 million were recorded in the 2009 quarter forH1N1 pandemic flu vaccines delivered in late September.Sandoz: USD 1.9 billion (-3%, +4% lc)Key markets achieved solid underlying growth from new productlaunches and intensified commercialization efforts. For retailgenerics, top performers included Germany (+8% lc), Western Europe(+6% lc) and Asia-Pacific (+9% lc). US retail generics andbiosimilars (+5%) net sales had a second consecutive quarter in 2009of year-on-year growth thanks to new product launches, including afirst-to-market launch of generic tacrolimus (Prograf®). Central andEastern Europe grew strongly, but results were tempered bychallenging economic conditions.Consumer Health: USD 1.5 billion (0%, +5% lc)All businesses contributed to the strongest underlying quarterlyperformance since the first quarter of 2008. CIBA Vision continued togain market share from new products, while the US and Latin Americadrove business expansion in Animal Health. OTC gained momentum due tostrong demand for cough and cold medicines.Operating income Q3 2009 Q3 2008 Change % of % of net net USD m sales USD m sales %Pharmaceuticals 2 211 30.6 1 743 26.0 27Vaccines and Diagnostics 23 4.2 180 27.0 -87Sandoz 312 16.9 293 15.4 6Consumer Health continuing operations 303 20.5 292 19.8 4Corporate Income & Expense, net -215 -173Operating incomefrom continuing operations 2 634 23.8 2 335 21.7 13Pharmaceuticals: USD 2.2 billion (+27%)Operating income advanced 27%, significantly ahead of sales, andstill rose 16% when adjusted in both periods for currency changes (-6percentage points) and exceptional items (+17 percentage points). Thestrong underlying business expansion, with net sales rising 11% lc,and productivity savings led to operating income gains and enabledsignificant investments in new product launches, key developmentprojects and geographic expansion. Marketing & Sales expenses fell1.4 percentage points to 27.8% of net sales in the 2009 quarter,while R&D investments declined 3.7 percentage points to 19.7% of netsales in 2009 from the same period 2008, which included anexceptional charge of USD 223 million for impairment of the Aurograbdevelopment project.Vaccines and Diagnostics: USD 23 millionLower contributions from H5N1 and seasonal influenza vaccines in the2009 quarter as well as investments in H1N1 pandemic vaccines andlate-stage trials for the meningitis vaccines were the main factorsfor reduced operating income. Excluding exceptional items andamortization of intangible assets, core operating income fell to USD102 million from USD 258 million in the 2008 period.Sandoz: USD 312 million (+6%)In constant currencies, operating income rose 18% from productivityimprovements in marketing and purchasing while supporting strategicR&D investments, more than offsetting the impact of adverse currencymovements (-11 percentage points) in reported results as theoperating income margin rose 1.5 percentage points to 16.9% of netsales.Consumer Health: USD 303 million (+4%)Supply chain and other productivity gains helped fund R&D initiativesand new product launches across the division. In constant currencies,operating income grew 14%, which was well ahead of local-currencysales growth. The operating income margin rose 0.7 percentage pointsto 20.5% of net sales.Corporate Income & Expense, netNet corporate expenses in the 2009 third quarter rose USD 42 millioncompared to the year-ago period, mainly due to higher pension andinsurance expenses.FINANCIAL REVIEWNine months to September 30 and third quarter YTD YTD Change Q3 Q3 Change 2009 2008 2009 2008 USD m USD m % USD m USD m %Operating income from continuing operations 7 345 7 284 1 2 634 2 335 13Income from associatedcompanies 186 344 -46 -21 88 -124Financial income 94 326 -71 51 93 -45Interest expense -395 -214 85 -173 -96 80Taxes -1 099 -1 084 1 -379 -338 12Net income from continuing operations 6 131 6 656 -8 2 112 2 082 1Net income from discontinuedoperations 28 19Total net income 6 131 6 684 -8 2 112 2 101 1Income from associated companiesExceptional charges totaling USD 189 million for actions taken byRoche and Alcon resulted in a loss of USD 21 million from associatedcompanies in the third quarter of 2009 compared to an income of USD88 million in the 2008 period. An exceptional charge of USD 97million was taken as part of Roche's restructuring charge for theGenentech acquisition, while a USD 92 million impairment charge wastaken after Alcon stopped a pharmaceuticals development project.These factors also led to sharply reduced income from associatedcompanies in the first nine months of 2009, which fell 46% to USD 186million from the year-ago period.Financial expense, netInterest expense rose 80% in the 2009 third quarter to USD 173million following the issuance of US dollar and euro bonds in thefirst half of 2009. Financial income for the 2009 third quarter fell45% to USD 51 million due to lower financial yields and currencylosses. For the first nine months of 2009, interest expense rose 85%to USD 395 million, reflecting the issuance of bonds after theacquisition of a 25% stake in Alcon in mid-2008, and financial incomefell 71% to USD 94 million.TaxesThe tax rate (taxes as a percentage of pre-tax income) for the firstnine months and third quarter of 2009 was 15.2%, in line withfull-year expectations, and higher than the 14.0% tax rate in both ofthe same periods in 2008.Net income from continuing operationsFor the first nine months of 2009, operating income growth was morethan offset by increased financial charges, reduced contributionsfrom associated companies and a higher tax rate, which resulted innet income falling 8% to USD 6.1 billion. However, net income inconstant currencies rose 2% over the year-ago period. In the thirdquarter of 2009, net income was up 1% to USD 2.1 billion as thedouble-digit business expansion was negatively impacted by thesenon-operating factors.Basic earnings per shareBasic earnings per share (EPS) were USD 2.69 in the first nine monthsof 2009, down from USD 2.93 in the year-ago period. For the thirdquarter, basic EPS increased to USD 0.93 in 2009 from USD 0.92 pershare in the 2008 quarter.Balance sheetTotal assets increased to USD 90.7 billion at the end of the 2009third quarter compared to USD 78.3 billion at the end of 2008 mainlyas a result of proceeds from recent bond issues, which are held ascash and marketable securities, and intangible assets acquiredthrough the September 2009 purchase of EBEWE Pharma's specialtygenerics business.The Group's equity rose to USD 53.3 billion at the end of the 2009third quarter from USD 50.4 billion at the end of 2008 as net incomeof USD 6.1 billion and translation gains of USD 0.9 billion in the2009 period more than offset the dividend payment in the 2009 firstquarter amounting to USD 3.9 billion and actuarial losses of USD 0.8billion for defined benefit plans.The Group's debt/equity ratio rose to 0.27:1 at the end of the 2009third quarter from 0.15:1 at the end of 2008, reflecting the issuanceof the USD 5 billion bond (two tranches) in the US in the firstquarter and the issuance of a EUR 1.5 billion bond in the secondquarter. At September 30, 2009, the Group's financial debt of USD14.4 billion consisted of USD 5.7 billion in current and USD 8.7billion in non-current liabilities.Overall liquidity rose to USD 14.2 billion at September 30, 2009,more than double the end-2008 level of USD 6.1 billion, due toimproving free cash flow from continuing operations (beforedividends), which rose 20% to USD 6.1 billion in the first ninemonths of 2009, and proceeds from the bond issues. Net debt(financial debt net of liquidity) was reduced to USD 0.2 billion fromUSD 1.2 billion at December 31, 2008.Credit agencies have maintained their ratings of Novartis debt during2009. Moody's rated the Group as Aa2 for long-term maturities and P-1for short-term maturities and Standard & Poor's had a rating of AA-and A-1+, for long-term and short-term maturities, respectively.Fitch had a long-term rating of AA and a short-term rating of F1+.These agencies maintained a "stable" outlook.Cash flowCash flow from operating activities was USD 7.7 billion in the firstnine months of 2009, an 18% increase over the year-ago period thatwas driven by improvements of USD 0.5 billion in net working capitaland a reduction of USD 0.4 billion in tax payments compared to the2008 period.Cash outflows from investing activities reached USD 10.0 billion inthe first nine months of 2009 and included USD 7.5 billion inmarketable securities investments with proceeds from bond offeringsas well as USD 0.9 billion related to the EBEWE Pharma genericsbusiness acquisition and USD 1.3 billion for capital expenditures.Cash inflows from financing activities were a net USD 3.0 billion inthe 2009 period, as the USD 7.1 billion of proceeds from bond issueswere partially offset by the dividend payment for 2008 of USD 3.9billion and other items totaling USD 0.2 billion.PHARMACEUTICALS PRODUCT REVIEWNote: Net sales growth data refer to year-to-date 2009 performance inlocal currencies.Strategic Cardiovascular and Metabolism franchiseRapidly growing contributions from new products provided 74% of theincremental growth in the strategic Cardiovascular and Metabolismfranchise (USD 5.4 billion, +12% lc) in the first nine months of2009. Seven medicines within the Exforge, Tekturna/Rasilez and Diovanbrands are available in many markets, reaffirming the position ofNovartis as the world's largest provider of branded anti-hypertensiontherapies based on annual sales.Diovan (USD 4.4 billion, +5% lc) achieved solid worldwide growth,driven by expansion in Japan, which accounts for approximately 20% ofnet sales and where the Co-Dio diuretic combination therapy waslaunched in 2009. Results from the Japanese KYOTO HEART study,presented in September at the European Society of CardiologyCongress, demonstrated that the addition of Diovan to a non-ARB-basedtreatment regimen for high blood pressure provided a significant 45%relative risk reduction in cardiovascular events, including stroke,over a conventional non-ARB treatment regimen. Diovan also maintainedstrong growth in Europe, where the expected entry of generic versionsof losartan, another medicine in the angiotensin receptor blockers(ARB) segment, has been delayed until the first half of 2010. In theUS, Diovan (+3%) expanded during the 2009 nine-month period despitegreater use of generic versions of high blood pressure medicines inother classes.Exforge (USD 475 million +81% lc), a single pill with the angiotensinreceptor blocker Diovan (valsartan) and the calcium channel blockeramlodipine, delivered above-market growth and expanded faster thanthe broader high blood pressure segment. Exforge HCT, which adds adiuretic to this combination, was launched in the US after regulatoryapproval in April 2009 as a high blood pressure therapy with threemedicines in one pill. Exforge was submitted for Japanese regulatoryapproval in late 2008.Tekturna/Rasilez (USD 202 million, +114% lc), the first new class ofhigh blood pressure medicine in more than a decade, is growingconsistently. Key drivers are clinical data demonstrating itsprolonged efficacy in lowering blood pressure for more than 24 hours,and superiority in clinical trials over ramipril, a leading ACEinhibitor (an older class of high blood pressure medicines). Rasilezwas launched in Japan in October 2009. Valturna - a single-pillcombination of Tekturna/Rasilez and Diovan (valsartan) - gained USregulatory approval in September based on clinical data showing thismedicine offers significantly higher blood pressure reduction thaneither valsartan or aliskiren alone.Galvus/Eucreas (USD 115 million, +416% lc), oral treatments for type2 diabetes, have been expanding rapidly in many European, LatinAmerican and Asia-Pacific markets, and outperforming a competitormedicine in the DPP-IV segment in some countries. First launched in2008, Galvus is now approved in 69 countries, while Eucreas (asingle-pill combination with the oral anti-diabetes medicinemetformin) is approved in 50 countries.OncologyGleevec/Glivec (USD 2.9 billion, +12% lc), a targeted therapy forsome 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. The latest approval wasfor use in adjuvant (post-surgery) GIST patients, which is nowapproved in more than 25 countries in North America, Europe andAsia-Pacific.Tasigna (USD 144 million, +171% lc) is approved in 65 countries as asecond-line therapy for patients with a form of chronic myeloidleukemia (CML) resistant or intolerant to prior therapy, includingGleevec/Glivec. New clinical data has demonstrated the potential ofTasigna to become a leading therapy for newly diagnosed CML patients.Independent Phase II data published in the journal "Blood" showedmolecular traces of this form of leukemia were reduced to nearlyundetectable levels in 85% of patients after 12 months. In October2009, results from the global ENESTnd trial, the largest head-to-headcomparison of a targeted therapy against Glivec ever conducted,showed that Tasigna produced faster and deeper responses than Glivecin newly diagnosed CML patients. A Phase III trial of Tasigna as athird-line therapy for GIST did not meet its primary endpoint, butresults showed a two-month improvement in median overall survival(not statistically significant) for patients treated with Tasigna. Asa result, Novartis will not seek regulatory approval for thisindication. A first-line study in GIST began enrollment in March.Zometa (USD 1.1 billion, +9% lc), an intravenous bisphosphonatetherapy for patients with cancer that has spread to bones, is growingdue to improved compliance and use in existing indications. Studiesare underway to review potential anti-cancer benefits in other tumortypes. US and European regulatory submissions are planned in the 2009fourth quarter for the use of Zometa in adjuvant breast cancer inpremenopausal women based on published anti-cancer data for thisindication.Femara (USD 925 million, +16% lc), an oral therapy for women withhormone-sensitive breast cancer, has seen strong sales during 2009due to growth in the initial adjuvant (post-surgery) setting. InAugust, "The New England Journal of Medicine" published results fromthe landmark BIG 1-98 study affirming the five-year upfront use ofFemara after surgery was an optimal treatment approach versustamoxifen for postmenopausal women with early-stage, hormone-receptorpositive breast cancer. These data were submitted to US and EUauthorities for inclusion in product information.Sandostatin (USD 839 million, +6% lc), for patients with acromegalyand neuro-endocrine tumors of the gastrointestinal tract andpancreas, has grown from increasing use of Sandostatin LAR, theonce-monthly version that accounts for nearly 90% of net sales. PhaseIII data demonstrating a significant delay in tumor progression inpatients with metastatic neuroendocrine tumors of the midgut who weretreated with Sandostatin LAR were published recently in the "Journalof Clinical Oncology." These data formed the basis of a recent USNational Comprehensive Cancer Network (NCCN) update on treatmentguidelines for neuroendocrine tumors.Exjade (USD 469 million, +30% lc), currently approved in more than90 countries as the only once-daily oral therapy for transfusionaliron overload, received US and Canadian regulatory approvals in 2009to extend the dose range to 40 mg/kg. This new dosing range, whichwas also approved in Switzerland in 2009 and will apply to variousother countries, provides a new option to patients who require higherdose titration for iron chelation. The FDA is reviewing Exjade safetyinformation specifically on the risk of adverse events in patientswith myelodysplastic syndrome (MDS) compared to patients withoutthese conditions. Novartis is working with the FDA to further reviewand clarify the population of MDS patients most appropriate fortreatment with Exjade.Afinitor (USD 38 million), an oral inhibitor of the mTOR pathway,received European approval in August 2009 for use in patients withadvanced renal cell carcinoma (RCC, kidney cancer) whose diseaseprogressed on or after treatment with VEGF-targeted therapy. Thisfollows the US launch in March as the first therapy for patients withRCC after failure of treatment with sunitinib or sorafenib. Afinitoris being studied in many cancer types: Phase III studies are underwayin patients with neuroendocrine tumors (NET), breast cancer,lymphoma, tuberous sclerosis complex (TSC) and gastric cancer. Alate-stage trial is planned to start in patients with hepatocellularcarcinoma (HCC) in early 2010. The active ingredient, everolimus, isthe same as in the transplant therapy Certican.Other Pharmaceuticals productsLucentis (USD 858 million, +48% lc), a biotechnology eye therapyapproved in more than 80 countries, delivered sustained growth on topperformances in France, the United Kingdom, Australia and Japan.Lucentis is the only treatment proven to maintain and improve visionin patients with "wet" age-related macular degeneration, a leadingcause of blindness in people over age 50. Late-stage clinical trialsare underway to assess the benefits of Lucentis in patients withcertain forms of diabetic macular edema. Genentech holds the USrights to this medicine.Exelon/Exelon Patch (USD 687 million, +24 % lc), a therapy for mildto moderate forms of Alzheimer's disease dementia as well as dementialinked with Parkinson's disease, now achieves more than half of itssales from Exelon Patch, the novel skin patch launched in late 2007and now available in more than 50 countries worldwide.Reclast/Aclasta (USD 325 million, +100% lc), the first once-yearlyinfusion therapy for osteoporosis, continues to expand on increasingpatient access to infusion centers and a broad range of use inpatients suffering from various types of this debilitating disease. Agrowing number of patients are returning for treatment with thismedicine, which is known as Reclast in the US and Aclasta in the restof the world. It is approved for up to six indications involving thetreatment of osteoporosis in men and postmenopausal women, includingthose who have experienced a low-trauma hip fracture.Xolair (USD 218 million, +53% lc, Novartis sales), a biotechnologydrug for moderate to severe persistent asthma in the US and severepersistent allergic asthma in Europe, has maintained solid growthbased on approvals in more than 60 countries, including Japan sinceearly 2009. European Union approval was granted in August 2009 foruse in children age 6-11 suffering from severe persistent allergicasthma. This approval was based on data showing Xolair reduced asthmaattacks in this age group by 34% at 24 weeks and 50% at one year.Novartis co-promotes Xolair with Genentech in the US and shares aportion of operating income. Genentech's US sales were USD 424million in the first nine months of 2009.Extavia (USD 26 million), for patients with relapsing forms ofmultiple sclerosis (MS), was first launched in the European Union inearly 2009 and is now available in more than 15 countries, includingthe US where it was launched recently after regulatory approval wasgranted in August 2009. This medicine marks the entry of Novartisinto the field of MS. Extavia is the same medicinal product asBetaferon®/ Betaseron® from Bayer Schering, with rights gained to aNovartis-branded version in agreements with Bayer Schering.R&D UPDATENovartis ranks as having one of the industry's most competitivepharmaceuticals development pipelines with 147 projects in clinicaldevelopment, of which 27 involve new molecular entities in late-stagetrials or under regulatory review.More than 30 positive regulatory decisions have been achieved to datein 2009 in the US, European Union and Japan. These include a historicfive regulatory approvals to date in Japan for Rasilez, Tasigna,Xolair, Co-Dio and Lucentis, with regulatory decisions pending forExforge and Galvus in the world's second-largest pharmaceuticalsmarket. Other approvals include Afinitor (cancer) in the US andEuropean Union as well as the US approvals of the new biotechnologydrug Ilaris (CAPS) and Extavia (multiple sclerosis) as well as thehigh blood pressure combination therapies Valturna, Exforge HCT andTekturna HCT.Other important regulatory approvals in 2009 were received for theH1N1 pandemic flu vaccines in the US and Europe as well as thefirst-ever biosimilar in Japan and Prevacid 24HR, the first and onlyOTC version of this proton pump inhibitor in the US.PharmaceuticalsIlaris (canakinumab, ACZ885), a human antibody targeting IL-1 beta,was launched in the US and Switzerland in August 2009 as a newtherapy to treat children as young as age four and adults with CAPS(Cryopyrin-Associated Periodic Syndrome), a rare life-long andpotentially fatal auto-inflammatory disease. In July 2009, Ilarisreceived a positive opinion for European Union regulatory approval.This biotechnology drug represents an important advance in thedevelopment of personalized medicines since it specifically targetsIL-1 beta, the major trigger of inflammation in auto-inflammatorydiseases. Studies are ongoing in other diseases in which IL-1 betaplays an important role, such as some forms of gout - one of the mostpainful types of arthritis, COPD (Chronic Obstructive PulmonaryDisease), type 2 diabetes and systemic juvenile idiopathic arthritis.QAB149 (indacaterol), a new and effective once-daily bronchodilatortherapy for people with COPD (Chronic Obstructive Pulmonary Disease),received a positive opinion in September supporting European Unionregulatory approval. The extensive Phase III program for this producthas demonstrated statistically superior improvements in lung functionand COPD symptoms, especially breathlessness, compared to currentlyavailable bronchodilators, including the market leader tiotropium. Inthe US, Novartis is working with the FDA to address issues raised ina Complete Response letter received in October 2009.FTY720 (fingolimod), a novel oral development therapy for multiplesclerosis, is on track for regulatory submissions in the US andEurope by the end of 2009. Initial results released in September 2009from the two-year Phase III FREEDOMS study showed FTY720 wassignificantly superior to placebo in reducing both relapses anddisability progression in patients with relapsing-remitting MS(RRMS). These data build on the one-year Phase III TRANSFORMS studypresented at the American Academy of Neurology meeting in April 2009showing that FTY720 significantly reduced relapses more thaninterferon beta-1a (Avonex®), a standard of care in RRMS. FTY720 hasa well-studied safety profile with more than 5,300 patient-years ofexposure, including patients now in their sixth year of treatment. MSaffects up to 2.5 million people worldwide and is a leading cause ofneurological disability in young adults.Vaccines and DiagnosticsMenveo, a novel vaccine in clinical development to protect againstfour common types of meningococcal meningitis, is making goodprogress toward US and European regulatory approvals for initial usein adolescents (from age 11) and adults. Novartis submitted in August2009 answers to a Complete Response letter received earlier in theyear from the FDA requesting additional information on thesubmission's clinical and CMC (Chemistry Manufacturing and Control)sections. No new clinical trials were required. A European Unionregulatory decision is expected in 2010 for use in adolescents (fromage 11) and adults. Trials are underway in other age groups,including as young as two months, to protect against serogroups A, C,W-135 and Y found with this serious bacterial infection.DisclaimerThis release contains certain forward-looking statements relating tothe Group's business, which can be identified by terminology such as"momentum," "on track," "expect," "pipeline," "potential,""strategic," "long-term," "set," "expected," "growth platform,""upcoming," "aims," "outlook", "expects," "could," "will," "planned,""risk," "pending," "potentially," or similar expressions, or byexpress or implied discussions regarding potential new products,potential new indications for existing products, or regardingpotential future revenues from any such products, or potential futuresales or earnings of the Novartis Group or any of its divisions orbusiness units; or regarding the potential acquisition of anybusiness by Novartis; or by discussions of strategy, plans,expectations or intentions. You should not place undue reliance onthese statements. Such forward-looking statements reflect the currentviews of the Group regarding future events, and involve known andunknown risks, uncertainties and other factors that may cause actualresults to be materially different from any future results,performance or achievements expressed or implied by such statements.There can be no guarantee that any new products will be approved forsale in any market, or that any new indications will be approved forexisting products in any market, or that such products will achieveany particular revenue levels. Nor can there be any guarantee thatthe Novartis 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 datesDecember 9, 2009 Novartis investor event: Oncology and pipeline updateJanuary 26, 2010 Fourth quarter and full-year 2009 resultsFebruary 26, 2010 Annual General MeetingApril 20, 2010 First quarter 2010 resultsJuly 15, 2010 Second quarter and first half 2010 resultsOctober 21, 2010 Third quarter and first nine months 2010 resultsPlease find full media release in English attached and on thefollowing link:http://hugin.info/134323/R/1349248/325064.pdfFurther language versions are available through the following links:German version is available through the following link:http://hugin.info/134323/R/1349244/325052.pdfFrench version is available through the following link:http://hugin.info/134323/R/1349245/325054.pdfhttp://hugin.info/134323/R/1349248/325064.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;
Datum: 22.10.2009 - 07:00 Uhr
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