Novartis
  • Pharmaceuticals an industry growth leader: Net sales up 12% (local currencies) in first half of 2009 on contributions from new products and expansion in all regions
  • R&D maintains momentum: Anti-cancer therapy Afinitor introduced in the US, awaiting EU approval; new biologic Ilaris and OTC brand Prevacid 24HR gain US approvals; clinical trials set to start in July for A(H1N1) pandemic flu vaccine
  • H1 2009 operating results advance well, but impacted negatively by currencies:
    • Net sales of USD 20.3 billion grow 8% in local currencies (lc), decline 2% in US dollars
    • Operating income of USD 4.7 billion up 11% in constant currencies and excluding exceptional items in both periods, down 5% in US dollars
    • Free cash flow before dividends advances 33% to USD 3.4 billion
  • Net income of USD 4.0 billion falls 12%, includes negative currency impact and Alcon financing costs
    • Basic EPS: USD 1.76 in first half of 2009 vs. USD 2.01 in 2008 period
  • Novartis reaffirms expectations for strong operational performance in 2009 and record earnings in constant currencies

Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis, said: "I am pleased that our pharmaceuticals business continues to deliver double-digit underlying growth, driven by the strong momentum of our recently launched products. Our pipeline continues to deliver a steady stream of innovative medicines. In the first six months of 2009 we have introduced our new anti-cancer therapy Afinitor in the US and gained first approval for llaris as a new biologic therapy for auto-inflammatory diseases. We are advancing well in our efforts to rapidly produce and commercialize a vaccine against the H1N1 virus, with clinical trials set to begin in July. We continue to expect record underlying results in constant currencies based on innovation and productivity initiatives."

First half
Pharmaceuticals delivered strong and sustained growth to lead the Group's healthcare portfolio. The division's net sales rose 12% in local currencies (+3% in US dollars) thanks to rapid expansion of recently launched products such as Lucentis, Exforge, Exjade, Exelon Patch, Reclast/Aclasta, Tasigna, Tekturna/Rasilez and Galvus and growth in all therapeutic franchises and regions. R&D highlights included the US launch of the anti-cancer medicine Afinitor, which is awaiting EU approval. US approvals were also granted for the biologic therapy Ilaris for some auto-inflammatory conditions and the OTC product Prevacid 24HR.

Challenging global economic conditions dampened growth in Consumer Health (+1% lc), while Sandoz (+4% lc) achieved greatly improved performances in many key markets outside the US.

Group net sales rose 8% in local currencies, but declined 2% in US dollars to USD 20.3 billion. Solid operational gains were offset by 10 percentage points from the negative impact of the stronger US dollar. Higher sales volumes contributed seven percentage points over the 2008 period, while net price changes provided one percentage point.

Operating income fell 5% to USD 4.7 billion, but rose 11% when adjusted for the impact of currency movements, exceptional items and the amortization of intangible assets in both periods. Significant productivity gains in production, marketing and selling, and administrative areas helped to finance R&D projects involving many novel and potentially first-in-class compounds as well as rapid expansion in high-growth markets.

Net income fell 12% to USD 4.0 billion, also impacted by financing costs for the 25% Alcon stake acquired in mid-2008. Basic earnings per share (EPS) declined to USD 1.76 in the first half of 2009 from USD 2.01 in the year-ago period.

Second quarter
Net sales rose 8% in local currencies, but fell 2% to USD 10.5 billion from the loss of 10 percentage points of growth to currency movements. The dynamic business expansion in Pharmaceuticals (+11% lc) led the performance ahead of Sandoz (+4% lc) and Consumer Health (+2% lc). Vaccines and Diagnostics (-15% lc) was hampered by comparison to the prior year that included deliveries of H5N1 pandemic flu vaccines.

Operating income fell 4% to USD 2.4 billion, but rose 13% when adjusted for the impact of adverse currency movements, exceptional items and the amortization of intangible assets in both periods. Net income fell 10% to USD 2.0 billion, affected by currency changes and higher financing costs, which included a EUR 1.5 billion bond issued in the second quarter of 2009. Basic earnings per share (EPS) declined to USD 0.90 from USD 0.99 in the year-ago period.

About Novartis
Novartis provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and consumer health products. Novartis is the only company with leading positions in these areas. In 2008, the Group's continuing operations achieved net sales of USD 41.5 billion and net income of USD 8.2 billion. Approximately USD 7.2 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 99,000 full-time-equivalent associates and operate in more than 140 countries around the world. For more information, please visit http://www.novartis.com.