Novartis delivers solid Q3 results, with strong growth in Innovative Medicines. Announces strategic review of Sandoz

  • Q3 net sales grew +5% (cc¹, +6% USD)
    • Innovative Medicines grew +7% (cc, +8% USD)
    • Strong performance of key growth drivers: Entresto (+44% cc), Cosentyx (+22% cc), Kesimpta (USD 109 million), Jakavi (+26% cc), Zolgensma (+28% cc), Promacta/Revolade (+18% cc) and Kisqali (+27% cc)
    • Sandoz declined -2% (cc, -1% USD), affected by continued pricing pressures. Ex-US sales grew +3% (cc)
  • Q3 core¹ operating income grew +9% (cc, +10% USD)
    • Innovative Medicines grew +13% (cc, +14% USD), due to higher sales and productivity programs
    • Sandoz declined -15% (cc, -13% USD), impacted by gross margin
  • Q3 operating income grew +32% (cc, +34% USD)
  • Q3 net income increased +41% (cc, +43% USD)
  • Q3 free cash flow1 of USD 4.4 billion (+64% USD), with higher operating income, lower payments out of provisions and favorable changes in working capital
  • Nine months sales grew +4% (cc, +7% USD) and core operating income grew +4% (cc, +7% USD)
    • Innovative Medicines sales grew +6% (cc, +9% USD) and core operating income +8% (cc, +11% USD)
    • Sandoz sales declined -4% (cc, 0% USD) and core operating income declined -18% (cc, -15% USD)
  • Increasing peak sales guidance for Cosentyx (at least USD 7.0 billion) and Entresto (at least USD 5.0 billion)
  • Key innovation milestones
    • Zolgensma partial clinical trial hold lifted by FDA; Ph3 IT clinical trial for SMA to proceed Q4 2021
    • Kisqali demonstrated statistically significant OS benefit for 1L HR+/HER2- advanced breast cancer
    • Cosentyx met primary endpoint in Ph2 Giant Cell Arteritis study; Ph3 started
    • Remibrutinib met primary endpoint in Ph2b CSU study; Ph3 in CSU and MS planned
    • 177Lu-PSMA-617 and Asciminib granted priority review by FDA
  • Commencing a strategic review of Sandoz to maximize shareholder value, options range from retaining the business to separation
  • 2021 Group guidance² unchanged

Strategic review of the Sandoz Division

Novartis has commenced a strategic review of the Sandoz Division. The review will explore all options, ranging from retaining the business to separation, in order to determine how to best maximize value for our shareholders.

Sandoz is a global leader in generic pharmaceuticals and biosimilars. Its global portfolio covers all major therapeutic areas with a global market leadership position in biosimilars, generic antibiotics and oncology medicines.

Innovative Medicines net sales were USD 10.6 billion (+8%, +7% cc). Volume contributed 10 percentage points to sales growth. Pharmaceuticals BU sales grew +8% (cc), with continued strong growth from Entresto, Cosentyx, Kesimpta and Zolgensma. Oncology BU grew +5% (cc) driven by strong performance from Jakavi, Promacta/Revolade and Kisqali. Generic competition had a negative impact of 3 percentage points, mainly due to Diovan, Ciprodex and Exjade. Net pricing had a negligible impact on sales growth. Operating income was USD 2.8 billion (+40%, +38% cc). Core operating income was USD 4.0 billion (+14%, +13% cc). Core operating income margin was 37.8% of net sales, increasing 2.0 percentage points (+1.9 percentage points cc).

Sandoz net sales were USD 2.4 billion (-1%, -2% cc). Volume increased by 7 percentage points more than offset by a negative price effect of 9 percentage points. Sales in Europe grew +2% (cc), while sales in the US declined -20%. Global sales of Biopharmaceuticals grew +5% (cc). Operating income was USD 440 million (+11%, +9% cc). Core operating income was USD 571 million (-13%, -15% cc). Core Operating income margin was 23.8%, decreasing 3.4 percentage points (-3.6 percentage points cc).

Q3 key growth drivers

Entresto(USD 924 million, +44% cc) continued strong growth with increased patient share across markets, driven by demand as essential first choice therapy for HF patients
Cosentyx(USD 1.2 billion, +22% cc) strong growth driven by sustained underlying demand across indications in the US and Europe and strong volume growth in China
Kesimpta(USD 109 million) sales driven by launch uptake, strong access and increased demand based on a superior benefit-risk profile; now approved in 54 countries
Jakavi(USD 426 million, +26% cc) showed double-digit growth across all regions, driven by strong demand in the myelofibrosis and polycythemia vera indications
Zolgensma(USD 375 million, 28% cc) strong growth driven by expanding access in Europe and Emerging Growth Markets
Promacta/Revolade(USD 522 million, +18% cc) showed double-digit growth across all regions, driven by increased use in chronic ITP and as first-line treatment for severe aplastic anemia
Ilaris(USD 272 million, +24% cc) strong sales were driven by continued double-digit growth across all regions
Kisqali(USD 232 million, +27% cc) continued to see growth across all regions, benefiting from the ongoing impact of positive overall survival data in three Ph3 studies
Xolair(USD 365 million, +13% cc) continued to see growth, mainly driven by the chronic spontaneous urticaria and severe allergic asthma indications
Tasigna(USD 514 million, +7% cc) growth was mainly driven by Emerging Growth Markets
Lucentis(USD 556 million, +6% cc) sales grew in Emerging Growth Markets and Europe
Mayzent(USD 76 million, +55% cc) continued to grow, driven by fulfilling an important unmet need in MS patients showing signs of progression despite being on other treatments
Kymriah(USD 146 million, +20% cc) continued to see growth across all markets as coverage continued to expand, with more than 340 qualified treatment centers in 30 countries
Biopharmaceuticals(USD 526 million, +5% cc) sales were driven by continued growth ex-US
Emerging Growth Markets*Overall, sales grew +15% (cc). China grew strongly with sales reaching USD 839 million (+18% cc)

About Novartis

Novartis is reimagining medicine to improve and extend people’s lives. As a leading global medicines company, we use innovative science and digital technologies to create transformative treatments in areas of great medical need. In our quest to find new medicines, we consistently rank among the world’s top companies investing in research and development. Novartis products reach nearly 800 million people globally and we are finding innovative ways to expand access to our latest treatments. About 108,000 people of more than 140 nationalities work at Novartis around the world.

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