Group net sales reached USD 14.3 billion (-4%, +1% cc) in the second quarter, with growth from recently launched products more than offsetting the loss associated with the Diovan patent expiration. Currency had a negative impact of 5 percentage points as a result of the strengthening of the dollar against most major currencies.

Products launched since 2007, which include Lucentis, Gilenya, Afinitor, Tasigna and Galvus, continued to perform strongly. These recently launched products grew 8% to USD 4.1 billion and now comprise 29% of Group net sales, up from 25% a year ago.

Pharmaceuticals had another quarter of good underlying growth despite the Diovan patent expiration in Europe, with net sales of USD 8.3 billion (-1%, +4% cc). Strong volume growth of 9 percentage points more than offset the effect of generics entries (-4 percentage points) and a negative pricing impact of 1 percentage point. Excluding Diovan, net sales grew 8%, demonstrating the strong underlying performance of the division. Recently launched products, the key growth driver for Pharmaceuticals, generated USD 2.8 billion of net sales, growing 28% cc over the same period last year. These products now represent 34% of division sales, compared to 28% in the year-ago period.

Alcon net sales grew 1% (+5% cc) to USD 2.6 billion in the quarter. This robust performance was led by strong Surgical sales growth of 3% (+8% cc), benefitting from strong cataract product sales in the US and Emerging Growth Markets, as well as contact lens sales growth of 2% (+6% cc), underpinned by the solid uptake of new products such as the LenSx femtosecond refractive cataract laser and silicone hydrogel lens Dailies Total1. Ophthalmic Pharmaceuticals grew 4% in cc, reflecting a weak ocular allergy season (sales of allergy products declined 6%).

Sandoz net sales declined 13% (-7% cc) to USD 2.1 billion driven by 7 percentage points of price erosion. Volume was flat, as the expected lower sales for enoxaparin (USD 156 million in the second quarter of 2012 compared to USD 284 million in the 2011 period) and US authorized generics, together with the market decline in Germany, offset strong double-digit growth in the rest of Western Europe, Asia, Central and Eastern Europe, and biosimilars (+39% cc). Vaccines and Diagnostics net sales were up 17% (+21% cc) to USD 349 million. Sales growth was driven by Menveo, which continued to see double-digit growth in the US, as well as the timing of bulk pediatric shipments in 2011, which produced a weak comparative quarter. Consumer Health, which includes OTC and Animal Health, declined 24% (-18% cc) to USD 904 million in the quarter, impacted by the suspension of production at the Lincoln, Nebraska manufacturing site.

Commenting on the results, Joseph Jimenez, CEO of Novartis, said: "Novartis achieved eight significant regulatory milestones in the second quarter, including CHMP recommendation for Afinitor in advanced breast cancer, further enhancing our future growth prospects. Pharmaceuticals and Alcon delivered solid financial performance and operating leverage in the second quarter, underpinned by our continued focus on portfolio rejuvenation, with recently launched products now representing 29% of Group net sales compared to 25% last year."

First half
Group net sales amounted to USD 28.0 billion (-3%, 0% cc), with the strong sales of recently launched products offsetting the negative impact of the Diovan patent expiration. Currency depressed net sales by 3 percentage points.

Across the Group's diversified healthcare portfolio, products launched since 2007 continued to perform strongly with 12% growth over the previous year. These recently launched products now comprise 28% of Group net sales, up from 24% a year ago.

Pharmaceuticals net sales expanded to USD 16.1 billion (0%, +4% cc) with 9 percentage points of volume growth partly offset by the impact of generic entries of 5 percentage points. Excluding the impact of Diovan and other patent expiries, the division grew 8% in constant currencies. Recently launched products contributed USD 5.5 billion to net sales, representing 34% of total net sales for the division compared to 27% in the 2011 period.

Alcon net sales rose 3% (+6% cc) to USD 5.2 billion, driven by strong performance in Surgical (+6%, +9% cc) and Ophthalmic Pharmaceuticals (+2%, +5% cc). Vision Care net sales reached USD 1.2 billion and grew 1% (+3% cc) over the previous year. Emerging Growth Markets continued to expand, growing 13% cc over the first half of 2011.

Sandoz sales were down 12% (-7% cc) to USD 4.3 billion in the first half compared to a very strong base in the prior year, driven by declines in the US and Germany partly offset by double-digit sales growth in the rest of Western Europe and Asia and continued strong results from biosimilars (+46% cc). Total sales volume was flat as a result of competition on US sales of enoxaparin, lost US authorized generics of gemcitabine and lansoprazole in the prior year, and lower sales in Germany. Price erosion was 7 percentage points in the first half.

Vaccines and Diagnostics net sales declined 3% (-1% cc) to USD 648 million compared to the year-ago period, impacted by the timing of release of bulk pediatric shipments. Consumer Health sales declined 22% (-18% cc) to USD 1.8 billion mainly due to the suspension of production at its US manufacturing facility in Lincoln, Nebraska.

About Novartis
Novartis provides innovative healthcare solutions that address the evolving needs of patients and societies. Headquartered in Basel, Switzerland, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines and diagnostic tools, over-the-counter and animal health products. Novartis is the only global company with leading positions in these areas. In 2011, the Group achieved net sales of USD 58.6 billion, while approximately USD 9.6 billion (USD 9.2 billion excluding impairment and amortization charges) was invested in R&D throughout the Group. Novartis Group companies employ approximately 126,000 full-time-equivalent associates and operate in more than 140 countries around the world.