Novartis delivered strong core margin expansion (cc) and continued to strengthen the pipeline in Q3; on track for full - year guidance
Basel, October 27, 2015 - Commenting on the results, Joseph Jimenez, CEO of Novartis, said: “Novartis continued to make strong progress on innovation and key launches in the third quarter. The Pharmaceuticals and Sandoz Divisions continue to perform exceptionally well, offsetting softness in the Alcon Division. Entresto was approved and launched in the US, and Tafinlar + Mekinist was approved in the EU for BRAF-mutant melanoma. We confirm our full - year guidance.”
- Solid growth (cc[1]) in Q3 sales, core operating income, core EPS for continuing operations[2]
- Net sales were USD 12.3 billion (-6%, +6% cc)
- Operating income was USD 2.2 billion (-18%, +2% cc)
- Core operating income was USD 3.5 billion (-3%, +14% cc)
- Core operating income margin improved 2.2 percentage points (cc)
- Net income declined mainly due to Q3 provision for conditional settlement in principle of specialty pharmacies case (slightly below USD 0.4 billion)[3] and prior-year gain from sale of Idenix shares
- Core EPS was up 14% (cc) to USD 1.27 (-1% USD), and free cash flow[1] was USD 2.8 billion (-11% USD primarily due to currency)
- Strong USD negatively impacting sales by -12% and core operating income by -17%
- Strong performance of Pharmaceuticals and Sandoz more than offset weakness at Alcon
- Alcon growth acceleration plan development underway and will be reflected in 2016 guidance given with 2015 full-year results
- Strong innovation momentum and progress on new launches continued in Q3
- Entresto received positive CHMP opinion and Swissmedic approval
- Tafinlar + Mekinist received EMA approval and FDA priority review in BRAF V600+ melanoma
- New data on Cosentyx showed sustained efficacy in psoriasis patients after three years
- Progress continued in immuno-oncology with acquisition of Admune Therapeutics (IL-15), licensing agreements with XOMA (TGF-beta) and Palobiofarma (adenosine receptor)
- Neuroscience pipeline was strengthened with Amgen partnership for BACE and migraine portfolio; pending acquisition from GSK of ofatumumab rights in multiple sclerosis
- Sandoz filing for biosimilar etanercept was accepted by FDA
- Growth Products continued to drive Q3 performance and rejuvenate portfolio
- Growth Products[4] grew 14% (USD) to USD 4.2 billion, or 34% of net sales
- Cosentyx launch off to strong start in US; Entresto approved and launched in US
- 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)
Read the media release (PDF)
- 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)
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 51 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] With, inter alia, the Southern District of New York
[4] Growth Products are defined on page 2.