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Novartis delivered solid performance in the second quarter, with strong innovation and progress on new launches

Basel, July 21, 2015 - Commenting on the results, Joseph Jimenez, CEO of Novartis, said: "Novartis had a strong quarter for innovation, with US approval and launch of both Entresto and Glatopa being key highlights. Additionally, we reported a broad range of positive clinical data across franchises, including Tafinlar/Mekinist in metastatic melanoma and Cosentyx in ankylosing spondylitis. We are confident we will deliver on our priorities for the year, and confirm our full-year guidance."

  • Sales, core[1] operating income and core EPS grew (cc[1]) for continuing operations[2] in Q2:
    • Net sales amounted to USD 12.7 billion (-5%, +6% cc)
    • Operating income was USD 2.3 billion (-28%, -14% cc)
    • Core operating income was USD 3.6 billion (-7%, +6% cc)
    • Q2 core margin improved 0.3 percentage points (cc)
    • Core EPS was USD 1.27 (-7%, +7% cc), and free cash flow[1] was USD 2.1 billion
    • Further strengthening of USD impacted sales by -11% and core operating income by -13%
    • Strong performance for Sandoz (net sales +11% cc, core operating income +30% cc) and Pharmaceuticals (net sales +6% cc, core operating income +9% cc), more than offset weak quarter for Alcon (net sales 0% cc, core operating income -10% cc)
       
  • Strong innovation momentum continued in Q2, culminating in key launches
    • Entresto approved and launched in US (July) for chronic heart failure with reduced ejection fraction
    • Glatopa, the first generic competitor to Copaxone® 20mg, approved and launched in US
    • Approvals for Zykadia (EU) and Promacta (US), and positive CHMP opinion for Farydak
    • Positive data including Tafinlar/Mekinist combination in metastatic melanoma, Afinitor in GI and lung NET and Cosentyx in ankylosing spondylitis
       
  • Growth Products continued to drive Q2 performance and rejuvenate portfolio
    • Growth Products[3] grew 24% (USD) to USD 4.4 billion, or 35% of net sales
    • Strong performance in Emerging Growth Markets[3] (+8% cc)
  • Outlook 2015 for continuing operations confirmed:
    • Continuing operations net sales expected to grow mid-single digit (cc); core operating income expected to grow ahead of sales at a high-single digit rate (cc)
    • To reflect first half performance, Novartis raises Sandoz FY guidance to high single digit sales growth (cc), lowers Alcon FY guidance to low single digit sales growth (cc)

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References:

[1] Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 52 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.
[2] Continuing operations are defined on page 42 of the Condensed Interim Financial Report.
[3] Growth Products are defined on page 2 and Emerging Growth Markets on page 6.