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Novartis Q1 Results 2016

Novartis delivered solid Q1 despite Gleevec loss of exclusivity; investing behind new launches for long-term growth

  • Net sales up 1% (cc[1]), as Growth Products offset Gleevec impact
    • Growth Products[2] grew 24% (USD) to USD 3.9 billion, or 34% of Group net sales
    • Cosentyx (USD 176 million) continues to grow strongly, benefitting from long-term efficacy data for psoriasis and new launches in AS and PsA[3]
    • Entresto (USD 17 million) launch continues to accelerate in EU, field force ramping up in US
  • Core[1] operating income declines (-5% cc), driven by generic erosion and growth investments
    • Marketing & Sales expense up 1.1 percentage points to 23.6% of sales behind new launches
    • Core operating income margin declined 1.8 percentage points (cc)
    • Core EPS of USD 1.17, down 5% (cc)
    • Free cash flow[1] of USD 1.4 billion
  • Continued to build the pipeline in Q1
    • Afinitor received FDA approval for progressive, nonfunctional GI/lung NET
    • New analysis of PARADIGM-HF data reinforces benefit of Entresto to clinically stable patients
    • Cosentyx data in psoriasis showed superiority to Stelara® in sustaining skin clearance at 52 weeks
    • Acquired exclusive ex-US rights to research, develop and commercialize Jakavi in GVHD
    • Sandoz acquired rights to biosimilar infliximab in Europe
    • Alcon acquired Transcend Medical, strengthening its Surgical glaucoma pipeline
  • Group-wide initiatives and Alcon growth plan on track
    • Transferred operational control for Ophthalmic Pharmaceuticals from Alcon to Pharmaceuticals Division and selected mature products from Pharmaceuticals Division to Sandoz
    • Alcon growth plan on track, with steps taken to accelerate innovation and sales, strengthen customer relationships and improve basic operations
    • Centralization of manufacturing and integration of drug development on track for July 1, 2016 implementation; expected annual cost savings of USD 1 billion by 2020 confirmed
  • 2016 Outlook confirmed:
    • Net sales and core operating income expected to be broadly in line with prior year (cc)

Basel, April 21, 2016 - Commenting on the results, Joseph Jimenez, CEO of Novartis, said:
"I am pleased we were able to show sales growth in constant currencies despite the entry of a generic version of Gleevec in the US. As expected, our results reflect additional investments behind our new launches and Alcon. We are on track with the plan we outlined in January to further focus our divisions, drive greater innovation and significant synergies and productivity. I remain confident in our long-term growth prospects, underpinned by our strong pipeline and the talent leading our Research and Development functions."


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[1] Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 39 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.
[2] Growth Products are defined on page 2.
[3] Ankylosing spondylitis (AS) and psoriatic arthritis (PsA).