BASEL, SWITZERLAND -- 01/17/08 --
* Group results in 2007 set new record as net sales rise 8% (+3% in
local currencies) to USD 39.8 billion and net income reaches USD
12.0 billion (+ 66%) with earnings per share up 68% to USD 5.15
* Results include contributions from Medical Nutrition and
Gerber until divestments during 2007 and after-tax
divestment gains of USD 5.2 billion in net income
* Continuing operations now focused solely on healthcare
* Full-year net sales rise 11% (+6% in local currencies) to
USD 38.1 billion on strong contributions particularly from
Sandoz and Vaccines and Diagnostics
* Pharmaceuticals in the US adversely impacted by generic
competition and Zelnorm suspension
* One-time charges in 2007 of approximately USD 1 billion for
Corporate environmental provision and "Forward" initiative
to improve competitiveness
* Excluding these one-time charges, operating income rises 2%.
Including these charges, but excluding gains from nutrition
business divestments, operating income declines 11%
* Net income from continuing operations falls 4% to USD 6.5
billion, while earnings per share decline 3% to USD 2.81
* Launches progressing well for recently approved products -
including Exforge, Tekturna/Rasilez, Lucentis, Exjade and Xolair
- with 15 approvals in the US and the European Union
* Increasing returns to shareholders while maintaining sound
financial foundation
* New CHF 10 billion share repurchase program proposed for
shareholder approval following share repurchases totaling
CHF 4.7 billion in 2007
* Dividend of CHF 1.60 per share proposed for 2007, up 19%
from 2006 and represents dividend payout ratio of 49% of net
income from continuing operations
* Novartis expects record results in 2008 from continuing
operations on strong growth outlook for Sandoz, Vaccines and
Diagnostics, and Consumer Health
* First-half 2008 results in Pharmaceuticals to show ongoing
negative impact of lost net sales in the US; new growth
phase set to emerge in second half of the year
Basel, January 17, 2008 - Commenting on the results, Dr. Daniel
Vasella, Chairman and CEO of Novartis said: "Novartis delivered a
strong performance in all major regions and in all divisions, with
the exception of Pharmaceuticals in the US hit by generic competition
and a product withdrawal. The dynamic growth of Sandoz and Vaccines &
Diagnostics and the strong contribution of Consumer Health underscore
the benefits of our focused diversification strategy in healthcare
businesses to tap new sources of growth and balance risks. The 15
approvals for new prescription medicines obtained in the US and in
the EU lay the foundation for a new growth cycle in Pharmaceuticals,
which is expected to emerge in the second half of 2008, while our
initiative "Forward" is designed to improve the efficiency and
productivity of the organization providing savings of USD 1.6 billion
in 2010. I am confident Novartis will deliver record results in 2008
and is well-positioned to benefit from current and future trends in
healthcare."
TOTAL GROUP
Key figures - Full year
+-------------------------------------------------------------------+
| | 2007 | 2006 | % change |
|----------------------+----------------+----------------+----------|
| | | % of | | % of | | |
| | | net | | net | | |
| | USD m | sales | USD m | sales | USD | lc |
|----------------------+--------+-------+--------+-------+-----+----|
| Total Group | | | | | | |
|----------------------+--------+-------+--------+-------+-----+----|
| - Net sales | 39 800 | | 37 020 | | 8 | 3 |
|----------------------+--------+-------+--------+-------+-----+----|
| - Operating income | | | | | | |
| and divestment | | | | | | |
| gains[1] | 12 933 | 32.5 | 8 174 | 22.1 | 58 | |
|----------------------+--------+-------+--------+-------+-----+----|
| - Net income | 11 968 | 30.1 | 7 202 | 19.5 | 66 | |
|----------------------+--------+-------+--------+-------+-----+----|
| - Basic earnings per | USD | | USD | | | |
| share | 5.15 | | 3.06 | | 68 | |
+-------------------------------------------------------------------+
[1] Operating income includes charge for Corporate environmental
provision increase of USD 590 million in the 2007
third quarter and a USD 444 million restructuring charge in the
2007 fourth quarter for the "Forward" initiative as
well as pre-tax divestment gains of USD 5.8 billion from Medical
Nutrition and Gerber.
Summary
Novartis achieved record results for the total Group in 2007, with
net sales rising 8% (+3% in local currencies) and net income
advancing 66% to USD 12.0 billion. Sandoz and Vaccines and
Diagnostics led the expansion with double-digit net sales growth and
strong contributions to operating income, while Consumer Health
provided additional support with a solid performance. The slowdown in
Pharmaceuticals in 2007 reflected the negative impact of generic
competition in the US for some products and the loss of Zelnorm.
Included in total Group results for 2007 were contributions from
Medical Nutrition (until June 30) and Gerber (until August 31) before
divestments in separate transactions. These were the final
divestments as part of the Group's strategy to focus solely on growth
areas of healthcare with innovative medicines as well as generic
pharmaceuticals, preventive vaccines and diagnostics, and targeted
consumer health products.
The 2007 results further include significant charges of approximately
USD 1 billion for a Corporate environmental provision increase of USD
590 million, including costs for the related share of any potential
remediation costs for historical landfills in the Basel region as
well as restructuring charges for "Forward" of USD 444 million. This
strategic initiative was launched in December 2007 to improve
competitiveness and help Novartis more rapidly meet the needs of
patients and customers. This initiative, which is now underway and
will be implemented in 2008 and 2009, will simplify organizational
structures, accelerate and decentralize decision-making processes,
redesign the way Novartis operates and provide productivity gains.
Pre-tax annual cost savings of approximately USD 1.6 billion are
targeted in 2010.
CONTINUING OPERATIONS
Full year
Key figures
+-------------------------------------------------------------------+
| | 2007 | 2006 | % change |
|-----------------------+--------------------------------+----------|
| | | % of | | % of | | |
| | | net | | net | | |
| | USD m | sales | USD m | sales | USD | lc |
|-----------------------+--------+-------+-------+-------+-----+----|
| | | | 34 | | | |
| Net sales | 38 072 | | 393 | | 11 | 6 |
|-----------------------+--------+-------+-------+-------+-----+----|
| Operating income | | | | | | |
| excl. environmental | | | | | | |
| provision and | | | | | | |
| "Forward" charges[1] | 7 815 | 20.5 | 7 642 | 22.2 | 2 | |
|-----------------------+--------+-------+-------+-------+-----+----|
| Operating income | 6 781 | 17.8 | 7 642 | 22.2 | -11 | |
|-----------------------+--------+-------+-------+-------+-----+----|
| Net income | 6 540 | 17.2 | 6 825 | 19.8 | -4 | |
|-----------------------+--------+-------+-------+-------+-----+----|
| Basic earnings per | USD | | USD | | | |
| share | 2.81 | | 2.90 | | -3 | |
+-------------------------------------------------------------------+
[1] Excludes approximately USD 1 billion in charges (USD 590 million
for Corporate environmental provision increase and USD 444 million
for the "Forward" initiative)
Net sales
+-------------------------------------------------------------------+
| | 2007 | 2006 | % change |
|---------------------------------+--------+--------+---------------|
| | USD m | USD m | USD | lc |
|---------------------------------+--------+--------+--------+------|
| Pharmaceuticals | 24 025 | 22 576 | 6 | 2 |
|---------------------------------+--------+--------+--------+------|
| Vaccines and Diagnostics | 1 452 | 956 | 52 | 47 |
|---------------------------------+--------+--------+--------+------|
| Sandoz | 7 169 | 5 959 | 20 | 13 |
|---------------------------------+--------+--------+--------+------|
| Consumer Health continuing | 5 426 | 4 902 | 11 | 6 |
| operations | | | | |
|---------------------------------+--------+--------+--------+------|
| Net sales from continuing | 38 072 | 34 393 | 11 | 6 |
| operations | | | | |
+-------------------------------------------------------------------+
Group
Sandoz and Vaccines and Diagnostics led the expansion with
double-digit growth in local currencies, along with support from
Consumer Health. The Pharmaceuticals slowdown reflected the impact of
generic competition in the US and the loss of Zelnorm. Higher volumes
accounted for five percentage points of the increase in net sales
from continuing operations, acquisitions added two percentage points
and currencies provided five percentage points to net sales growth.
However, net prices declined one percentage point.
Pharmaceuticals
Europe, Latin America and key emerging markets generated double-digit
growth as many top products strengthened their leading positions. The
high blood pressure medicine Diovan (USD 5.0 billion, +16% lc)
exceeded USD 5 billion for the first time, while the cancer therapy
Gleevec/Glivec (USD 3.1 billion, +14% lc) topped USD 3 billion. US
net sales fell 8% after the loss of Lotrel, Lamisil, Trileptal and
Famvir to generics and the suspension of Zelnorm. However, worldwide
net sales rose 10% for the unaffected product portfolio. The rollout
of recently approved products made progress, including Exforge,
Tekturna/Rasilez, Lucentis, Aclasta/Reclast, Exelon Patch, Exjade and
Xolair.
Vaccines and Diagnostics
Excellent performance driven by a rise in sales of TBE (tick-borne
encephalitis), pediatric and seasonal influenza vaccines as well as
NAT (nucleic acid test) blood testing products. On a comparable
full-year basis, net sales rose 25% (including unaudited net sales
from Chiron for four months in the year-ago period before the April
2006 acquisition).
Sandoz
Dynamic growth in the US and other fast-growing markets, particularly
Eastern Europe, provided an incremental contribution of more than USD
1 billion to annual net sales. Recent launches for various
"difficult-to-make" and authorized generics underpinned growth.
Consumer Health continuing operations
OTC and Animal Health led the performance, driven by a focus on
strategic brands, new product launches and geographic expansion. CIBA
Vision net sales were higher, supported mainly by improved supplies
of contact lenses and lens-care products.
Operating income
+-------------------------------------------------------------------+
| | 2007 | 2006 | Change |
|--------------------------+---------------+---------------+--------|
| | | % of | | % of | |
| | | net | | net | |
| | USD m | sales | USD m | sales | In % |
|--------------------------+-------+-------+-------+-------+--------|
| Pharmaceuticals | 6 086 | 25.3 | 6 703 | 29.7 | -9 |
|--------------------------+-------+-------+-------+-------+--------|
| Vaccines and Diagnostics | 72 | 5.0 | -26 | | |
|--------------------------+-------+-------+-------+-------+--------|
| Sandoz | 1 039 | 14.5 | 736 | 12.4 | 41 |
|--------------------------+-------+-------+-------+-------+--------|
| Consumer Health | | | 761 | | |
| continuing operations | 812 | 15.0 | | 15.5 | 7 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate income & | -1 | | -532 | | |
| expense, net | 228 | | | | 131 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | 6 781 | 17.8 | 7 642 | 22.2 | -11 |
+-------------------------------------------------------------------+
Operating income excluding environmental provision and "Forward"
charges
+-------------------------------------------------------------------+
| | 2007 | 2006 | Change |
|--------------------------+---------------+---------------+--------|
| | | % of | | % of | |
| | | net | | net | |
| | USD m | sales | USD m | sales | In % |
|--------------------------+-------+-------+-------+-------+--------|
| Pharmaceuticals[1] | 6 393 | 26.6 | 6 703 | 29.7 | -5 |
|--------------------------+-------+-------+-------+-------+--------|
| Vaccines and Diagnostics | 72 | 5.0 | -26 | | |
|--------------------------+-------+-------+-------+-------+--------|
| Sandoz | 1 039 | 14.5 | 736 | 12.4 | 41 |
|--------------------------+-------+-------+-------+-------+--------|
| Consumer Health | | | 761 | | |
| continuing operations[1] | 909 | 16.8 | | 15.5 | 19 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate income & | | | -532 | | |
| expense, net[1],[2] | -598 | | | | 12 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | | | | | |
| excluding Corporate | | | | | |
| environmental charge | | | | | |
| and "Forward" | | | | | |
| restructuring charge | 7 815 | 20.5 | 7 642 | 22.2 | 2 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate environmental | | | | | |
| provision increase | -590 | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| "Forward" restructuring | | | | | |
| charges | -444 | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | 6 781 | 17.8 | 7 642 | 22.2 | -11 |
+-------------------------------------------------------------------+
[1] Excludes respective component of the "Forward" restructuring
charge in the 2007 fourth quarter of USD 444
million (Pharmaceuticals: USD 307 million, Consumer Health: USD 97
million and Corporate: USD 40 million)
[2] Excludes Corporate environmental provision increase of USD 590
million in the 2007 third quarter
Group
Operating income from continuing operations was affected
significantly by one-time charges in 2007 that included approximately
USD 1 billion in total for Corporate environmental provisions (USD
590 million) and restructuring charges for the "Forward" initiative
(USD 444 million). Excluding these two charges, operating income from
continuing operations rose 2%.
Pharmaceuticals
Among the factors contributing to the decline were lost operating
income in the US due to the entry of generic competition for four
products and the suspension of Zelnorm, major investments in
late-stage development compounds, new product launches and
restructuring charges. The operating margin declined to 25.3% of net
sales (or to 26.7% of net sales excluding total restructuring
charges) from 29.7% in 2006. Research & Development investments rose
19% to USD 5.1 billion and represented 21% of net sales, mainly to
support the rich late-stage pipeline that includes the projects
FTY720, QAB149, MFF258, ACZ885, ABF656, RAD001 and Exforge.
Marketing & Sales expenses were up 9% to support many new product
launches and rollouts, which was partly offset by productivity
initiatives. Cost of Goods Sold was higher due mainly to a USD 320
million intangible asset impairment charge for Famvir product rights.
Vaccines and Diagnostics
The strong business performance supported significant investments in
R&D, particularly for late-stage trials involving meningococcal
meningitis vaccine candidates and a new strategic alliance with
Intercell. The adjusted operating margin was 21.3% of net sales
excluding legal settlement gains of USD 83 million in 2007 as well as
restructuring and amortization charges for intangible assets.
Sandoz
Advancing broadly twice as fast as net sales, operating income
expansion was driven by efficiency improvements throughout the
division, economies of scale in marketing and productivity gains in
R&D. As a result, the operating margin improved to 14.5% of net sales
from 12.4% in 2006. Excluding one-time items and acquisition-related
amortization of intangible assets in both periods, adjusted operating
income rose 20% and the adjusted operating margin reached 20.0%.
Consumer Health continuing operations
Excluding the charge for "Forward," operating income rose 19% and
supported continued investments in R&D and marketing for new product
launches and geographic expansion.
CONTINUING OPERATIONS
Fourth quarter
Key figures
+-------------------------------------------------------------------+
| | Q4 2007 | Q4 2006 | % change |
|-------------------+------------------------------------+----------|
| | | | | % of | | |
| | | % of | | net | | |
| | USD m | net sales | USD m | sales | USD | lc |
|-------------------+--------+-----------+-------+-------+-----+----|
| Net sales | 9 931 | | 9 398 | | 6 | -1 |
|-------------------+--------+-----------+-------+-------+-----+----|
| Operating income | | | | | | |
| excl. | | | | | | |
| "Forward"[1] | 1 341 | 13.5 | 1 725 | 18.4 | -22 | |
|-------------------+--------+-----------+-------+-------+-----+----|
| Operating income | 897 | 9.0 | 1 725 | 18.4 | -48 | |
|-------------------+--------+-----------+-------+-------+-----+----|
| Net income | 931 | 9.4 | 1 596 | 17.0 | -42 | |
|-------------------+--------+-----------+-------+-------+-----+----|
| Basic earnings | USD | | USD | | | |
| per share | 0.41 | | 0.67 | | -39 | |
+-------------------------------------------------------------------+
[1] Excludes USD 444 million in restructuring charges for the
"Forward" initiative
Net sales
+-------------------------------------------------------------------+
| | Q4 2007 | Q4 2006 | % change |
|-------------------------------+---------+---------+---------------|
| | USD m | USD m | USD | lc |
|-------------------------------+---------+---------+-------+-------|
| Pharmaceuticals | 6 152 | 6 049 | 2 | -5 |
|-------------------------------+---------+---------+-------+-------|
| Vaccines and Diagnostics | 398 | 455 | -13 | -18 |
|-------------------------------+---------+---------+-------+-------|
| Sandoz | 1 971 | 1 653 | 19 | 9 |
|-------------------------------+---------+---------+-------+-------|
| Consumer Health continuing | 1 410 | 1 241 | 14 | 6 |
| operations | | | | |
|-------------------------------+---------+---------+-------+-------|
| Net sales from continuing | 9 931 | 9 398 | 6 | -1 |
| operations | | | | |
+-------------------------------------------------------------------+
Group
Overall good net sales growth in reported US dollars was achieved as
Sandoz and Consumer Health offset the negative developments in
Pharmaceuticals in the US and a weaker quarter in Vaccines and
Diagnostics. Sales volumes and price changes each resulted in a loss
of one percentage point in net sales, but were offset by acquisitions
that provided one percentage point and currency translation that
added seven percentage points to net sales.
Pharmaceuticals
Europe, Latin America and key emerging markets generated
high-single-digit growth, but US net sales fell 21% due to generic
competition for four products - Lotrel, Lamisil, Trileptal and Famvir
- and the suspension of Zelnorm. However, worldwide net sales rose 8%
for the unaffected product portfolio. Diovan (USD 1.4 billion, +12%
lc) and Gleevec/Glivec (USD 0.8 billion, +12% lc) both improved their
leadership positions as the Oncology, Cardiovascular and Neuroscience
franchises all delivered solid performances. The continued rollout of
many new products - including Tekturna/Rasilez, Exforge, Exjade,
Lucentis, Aclasta/Reclast, Exelon Patch and Xolair - in key markets
around the world provided combined net sales of USD 427 million for
the quarter.
Vaccines and Diagnostics
The net sales decline reflected deliveries of seasonal influenza
vaccines occurring mainly in the third quarter of 2007 due to earlier
availability as a result of high viral strain production yields for
the vaccine. In comparison, poor production yields for vaccines last
year led to more shipments occurring in the fourth quarter of 2006
than in the third quarter. Further expansion in Europe of the blood
testing business supported the ongoing positive performance in
Diagnostics.
Sandoz
Ongoing dynamic expansion as US net sales increased at a fast pace,
while contributions from Eastern Europe, Asia and Latin America
underpinned the performance. Key drivers were solid growth in the
base retail generics business as well as recent launches of
difficult-to-make and authorized generics.
Consumer Health continuing operations
Animal Health led the division with double-digit growth, reflecting
the benefits of new product launches, recent sales force investments
and the integration of Sankyo Lifetech in Japan. OTC grew at a slower
pace, mainly due to the weak "cough and cold" season in the US. CIBA
Vision was supported by new product launches, including Air Optix
Toric contact lenses in Europe, with the year-ago period negatively
impacted by a product recall.
Operating income
+-------------------------------------------------------------------+
| | Q4 2007 | Q4 2006 | Change |
|--------------------------+---------------+---------------+--------|
| | | % of | | % of | |
| | | net | | net | |
| | USD m | sales | USD m | sales | In % |
|--------------------------+-------+-------+-------+-------+--------|
| Pharmaceuticals | 925 | 15.0 | 1 621 | 26.8 | -43 |
|--------------------------+-------+-------+-------+-------+--------|
| Vaccines and Diagnostics | -107 | | 2 | 0.4 | |
|--------------------------+-------+-------+-------+-------+--------|
| Sandoz | 250 | 12.7 | 204 | 12.3 | 23 |
|--------------------------+-------+-------+-------+-------+--------|
| Consumer Health | | | 74 | | |
| continuing operations | 85 | 6.0 | | 6.0 | 15 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate income & | | | -176 | | |
| expense, net | -256 | | | | 45 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | 897 | 9.0 | 1 725 | 18.4 | -48 |
+-------------------------------------------------------------------+
Operating income excluding "Forward" charge
+-------------------------------------------------------------------+
| | Q4 2007 | Q4 2006 | Change |
|--------------------------+---------------+---------------+--------|
| | | % of | | % of | |
| | | net | | net | |
| | USD m | sales | USD m | sales | In % |
|--------------------------+-------+-------+-------+-------+--------|
| Pharmaceuticals[1] | 1 232 | 20.0 | 1 621 | 26.8 | -24 |
|--------------------------+-------+-------+-------+-------+--------|
| Vaccines and Diagnostics | -107 | | 2 | 0.4 | |
|--------------------------+-------+-------+-------+-------+--------|
| Sandoz | 250 | 12.7 | 204 | 12.3 | 23 |
|--------------------------+-------+-------+-------+-------+--------|
| Consumer Health | | | 74 | | |
| continuing operations[1] | 182 | 12.9 | | 6.0 | 146 |
|--------------------------+-------+-------+-------+-------+--------|
| Corporate income & | | | -176 | | |
| expense, net[1] | -216 | | | | 23 |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | | | 1 725 | | |
| excluding "Forward"[1] | 1 341 | 13.5 | | 18.4 | -22 |
|--------------------------+-------+-------+-------+-------+--------|
| "Forward" restructuring | | | | | |
| charge | -444 | | | | |
|--------------------------+-------+-------+-------+-------+--------|
| Operating income from | | | | | |
| continuing operations | 897 | 9.0 | 1 725 | 18.4 | -48 |
+-------------------------------------------------------------------+
[1] Excludes a USD 444 million restructuring charge in the 2007
fourth quarter for the "Forward" initiative
(Pharmaceuticals: USD 307 million, Consumer Health: USD 97 million
and Corporate: USD 40 million)
Group
Operating income from continuing operations declined 22% excluding
the restructuring charge of USD 444 million for the "Forward"
initiative.
Pharmaceuticals
The significant decline reflected reduced income contributions from
the US due to the loss of sales from products that have been
suspended or face generic competition as well as ongoing investments
in R&D, new product launches and restructuring charges. Excluding
total restructuring charges, operating income fell 22% and the
operating margin was 20.4% of net sales. Research & Development rose
19% in the fourth quarter of 2007 to represent 23% of net sales,
mainly based on investments in late-stage development projects but
also reflecting partial impairments of in-process R&D assets.
Marketing & Sales expenses rose 3% as productivity initiatives helped
offset some of the major investments being made in new product
launches. Cost of Goods Sold was affected by the unfavorable product
mix resulting from the loss of products in the US to generic
competition and the suspension of Zelnorm.
Vaccines and Diagnostics
The results reflected the timing of seasonal influenza vaccine
shipments, with more occurring in the third quarter of 2007 than in
the fourth quarter. In contrast, poor production yields in 2006 led
to more seasonal influenza vaccine sales in the fourth quarter than
in the third quarter of 2006. Increased investments were made during
the fourth quarter of 2007 in Research & Development in the
meningitis vaccine portfolio and in technical infrastructure.
Sandoz
Operating income expanded largely in line with net sales, with the
operating margin rising to 12.7% of net sales while supporting
significant additional investments for expansion in emerging markets
and product development. Excluding one-time items and the
amortization of intangible assets in both periods, adjusted operating
income advanced 22% and the corresponding operating margin reached
17.8%.
Consumer Health continuing operations
The improvement in operating income reflected improvements in Cost of
Goods Sold due to a better product mix as well as a reduction in
total operating costs. General & Administrative expenses declined,
while Marketing & Sales investments benefited from targeted spending
to support new product launches and geographic expansion. The
year-ago quarter included a provision for a CIBA Vision recall of
contact lenses.
Corporate
Full year
+-------------------------------------------------------------------+
| | 2007 | 2006 | Change | % |
| | USD m | USD m | USD m | change |
|-------------------------------+--------+--------+--------+--------|
| Operating income from | | | | |
| continuing operations | | | | |
| excl. environmental | | | | |
| provision and "Forward"[1] | 7 815 | 7 642 | 173 | 2 |
|-------------------------------+--------+--------+--------+--------|
| Corporate environmental | | | | |
| provision increase | -590 | | -590 | |
|-------------------------------+--------+--------+--------+--------|
| "Forward" restructuring | | | | |
| charge | -444 | | -444 | |
|-------------------------------+--------+--------+--------+--------|
| Operating income from | | | | |
| continuing operations | 6 781 | 7 642 | -861 | -11 |
|-------------------------------+--------+--------+--------+--------|
| Income from associated | | | | |
| companies | 412 | 264 | 148 | 56 |
|-------------------------------+--------+--------+--------+--------|
| Financial income | 531 | 354 | 177 | 50 |
|-------------------------------+--------+--------+--------+--------|
| Interest expense | -237 | -266 | 29 | -11 |
|-------------------------------+--------+--------+--------+--------|
| Taxes | -947 | -1 169 | 222 | -19 |
|-------------------------------+--------+--------+--------+--------|
| Net income from continuing | | | | |
| operations | 6 540 | 6 825 | -285 | -4 |
|-------------------------------+--------+--------+--------+--------|
| Net income from | | | | |
| discontinued Consumer | | | | |
| Health operations | 5 428 | 377 | 5 051 | |
|-------------------------------+--------+--------+--------+--------|
| Total net income | 11 968 | 7 202 | 4 766 | 66 |
+-------------------------------------------------------------------+
[1] Excludes a Corporate environmental provision increase of USD 590
million in the 2007 third quarter and
a USD 444 million restructuring charge in the 2007 fourth quarter
for the "Forward" initiative
Fourth quarter
+-------------------------------------------------------------------+
| | Q4 | Q4 | | |
| | 2007 | 2006 | Change | % |
| | USD m | USD m | USD m | change |
|---------------------------------+-------+-------+--------+--------|
| Operating income from | | | | |
| continuing operations | | | | |
| excl. "Forward"[1] | 1 341 | 1 725 | -384 | -22 |
|---------------------------------+-------+-------+--------+--------|
| "Forward" restructuring charge | -444 | | -444 | |
|---------------------------------+-------+-------+--------+--------|
| Operating income from | | | | |
| continuing operations | 897 | 1 725 | -828 | -48 |
|---------------------------------+-------+-------+--------+--------|
| Income from associated | | | | |
| companies | 104 | 71 | 33 | 46 |
|---------------------------------+-------+-------+--------+--------|
| Financial income | 245 | 95 | 150 | 158 |
|---------------------------------+-------+-------+--------+--------|
| Interest expense | -61 | -57 | -4 | 7 |
|---------------------------------+-------+-------+--------+--------|
| Taxes | -254 | -238 | -16 | 7 |
|---------------------------------+-------+-------+--------+--------|
| Net income from continuing | | | | |
| operations | 931 | 1 596 | -665 | -42 |
|---------------------------------+-------+-------+--------+--------|
| Net income from | | | | |
| discontinued Consumer Health | | | | |
| operations | -18 | 67 | -85 | -127 |
|---------------------------------+-------+-------+--------+--------|
| Total net income | 913 | 1 663 | -750 | -45 |
+-------------------------------------------------------------------+
[1] Excludes a USD 444 million restructuring charge in the 2007
fourth quarter for the "Forward" initiative
Income from associated companies
Income from associated companies rose to USD 412 million in 2007,
nearly double the
USD 264 million in 2006 that included exceptional charges for Chiron.
The investment in Roche provided income in 2007 of USD 391 million,
up 35% from 2006. This represented USD 509 million in anticipated
2007 income from Roche that includes a positive prior-year adjustment
of USD 13 million, which was offset by USD 118 million for
amortization of intangible assets. Other associated companies added
USD 21 million in income for 2007. In the fourth quarter, income rose
46% to USD 104 million from the comparable 2006 period.
Financial income, net
Net financial income more than tripled to USD 294 million in 2007
from USD 88 million in 2006, reflecting increased liquidity due to
divestment proceeds and excellent currency management in very
challenging conditions. In the fourth quarter, net financial income
rose to USD 184 million from USD 38 million in the 2006 period,
benefiting from improved liquidity and currency gains.
Taxes
The tax rate for continuing operations fell to 12.6% in 2007 from
14.6% in 2006 due to several factors that included the restructuring
and environmental provision increases, a reduced corporate tax rate
in Germany and a benefit from the restructuring of the Chiron
business on integration into the Novartis Group. The Chiron
restructuring, however, had a negative impact on the fourth quarter
of 2007 as the tax rate rose to 21.4%, up from 13.0% in the
comparable 2006 period.
Net income
Net income from continuing operations declined 4% to USD 6.5 billion
in 2007, with basic earnings per share down 3% to USD 2.81 from USD
2.90 in 2006. Higher contributions of income from associated
companies, improved net financial income and a lower tax rate all
helped to mitigate the decline.
In the fourth quarter of 2007, net income from continuing operations
fell 42% to USD 931 million, while basic earnings per share was down
41% to USD 0.40. The sharp reduction in net income was largely in
line with reduced operating income, which was adversely impacted by
lost income contributions from the US pharmaceuticals business and
the "Forward" restructuring charge taken in the quarter.
Balance sheet
The Group's equity rose to USD 49.4 billion at December 31, 2007,
from USD 41.3 billion at December 31, 2006. The net increase of USD
8.1 billion included USD 14.8 billion in total recognized income and
expenses (comprised of USD 12.0 billion in net income, USD 2.2
billion in currency translation gains, USD 0.4 billion in actuarial
gains on pension plans and USD 0.2 billion in other net movements)
that were offset by USD 6.7 billion in transactions with shareholders
(mainly a payment of USD 2.6 billion for the dividend and USD 4.1
billion in net share repurchases and share-based compensation).
Thanks to divestment proceeds and the strong cash flow from
continuing operations, net liquidity rose sharply to USD 7.4 billion
at the end of 2007 from USD 0.7 billion at the end of 2006. The
debt/equity ratio at the end of 2007 improved to 0.12:1 compared to
0.18:1 at the end of 2006.
Novartis is one of the few non-financial services companies worldwide
with the highest credit ratings from Standard & Poor's, Moody's and
Fitch, the three benchmark rating agencies. S&P has rated Novartis as
AAA for long-term maturities and as A1+ for short-term maturities.
Moody's has rated the Group as Aaa and P1 for long- and short-term,
while Fitch has rated Novartis as AAA for long-term maturities and
F1+ for short-term maturities.
Cash flow
Cash flow from continuing operating activities was USD 9.2 billion in
2007, an increase of USD 0.9 billion from 2006 due mainly to the
underlying business expansion and continued strict control of working
capital. Net cash used for investing activities in continuing
operations was USD 6.2 billion, mainly the result of USD 2.9 billion
in net investments for intangible and tangible assets and USD 3.3
billion in financial assets (including marketable securities). Free
cash flow from continuing operations after dividends was USD 3.8
billion, a decline from USD 4.0 billion in 2006 due to the larger
dividend payment and higher capital expenditures. Among the reasons
for the increased capital expenditures, which were USD 2.5 billion
and represented 6.7% of net sales from continuing operations, were
capacity expansion projects in Vaccines and Diagnostics, Sandoz and
Pharmaceuticals.
Dividend proposal for 2007
The Board of Directors has proposed a dividend payment of CHF 1.60
per share for 2007, a 19% increase from the dividend of CHF 1.35 per
share in 2006. Shareholders will vote on this proposal at the next
Annual General Meeting on February 26, 2008. This proposal marks the
eleventh consecutive year of a higher dividend payout since the
creation of Novartis in December 1996. If approved by shareholders,
dividends paid for 2007 on outstanding shares are expected to total
approximately USD 3.2 billion. The dividend payout ratio for 2007
will be 49% of the Group's net income from continuing operations.
Based on the year-end 2007 share price of CHF 62.10, the dividend
yield is 2.6% compared to 1.9% in 2006. The payment date for the 2007
dividend is set for February 29, 2008. All issued shares are dividend
bearing, with the exception of 272.7 million treasury shares.
Proposal for new CHF 10 billion share repurchase program
Utilizing the Group's strong free cash flow and proceeds from recent
divestments, Novartis completed its fourth and fifth share repurchase
programs during 2007, with a total of 85.3 million shares worth CHF
4.7 billion repurchased via a second trading line on the SWX Swiss
Stock Exchange where Novartis is the exclusive buyer. Shareholders
will also be asked to approve the cancellation of these shares
acquired in 2007 along with a corresponding reduction of 3.1% in the
Group's registered share capital. The Board of Directors will propose
to shareholders the approval of a new CHF 10 billion repurchase
program at the next Annual General Meeting in February 2008.
Preparing for a new growth cycle
Novartis believes it has an excellent portfolio to address a
dynamically changing healthcare environment - one that is
diversified, yet focused solely on healthcare and in businesses with
dynamic growth potential going beyond patented prescription
pharmaceuticals to include generic pharmaceuticals, preventive
vaccines and diagnostics, and targeted consumer health products.
The Sandoz, Vaccines and Diagnostics and Consumer Health Divisions
are expected to again deliver strong performances in 2008. These
businesses are expanding quickly and compete in some areas that are
expected to grow faster than the global market for patented
pharmaceuticals.
Thanks to leading positions for many top products and the ongoing
launches for many new medicines, the Pharmaceuticals Division is
expected to return to dynamic growth in the second half of 2008.
Launches are progressing well for recently approved products,
including Exforge, Tekturna/Rasilez, Lucentis, Tasigna, Exelon Patch
and Aclasta/Reclast, following 15 major regulatory approvals in 2007
in the US and Europe.
However, the results of Pharmaceuticals in the first two quarters of
2008 will be negatively affected by the full-year effect of having
lost significant sales contributions from five products in the US
during 2007. These products - Zelnorm, Lotrel, Trileptal, Lamisil and
Famvir - had combined total net sales in the US of USD 3.1 billion in
2006, and net sales for this group fell to USD 1.7 billion in 2007,
mainly from the entry of generic competition. The year-on-year impact
of lost sales from these products will only diminish later in 2008.
At the same time, underlying growth of the unaffected product
portfolio - driven by launches of many new products and further
expansion of flagship products such as Diovan and Gleevec/Glivec -
are expected to support high-single digit net sales growth in the
Pharmaceuticals Division by the fourth quarter of 2008, and for net
sales growth at a low-single-digit rate for the full year, both in
local currencies.
To help Novartis more rapidly meet the needs of patients and
customers, the "Forward" initiative was launched in December 2007 to
improve competitiveness. This initiative, which is now underway and
will be implemented in 2008 and 2009, will simplify organizational
structures, accelerate and decentralize decision-making processes,
redesign the way Novartis operates and provide productivity gains.
Pre-tax annual cost savings of USD 1.6 billion are expected in 2010,
with a pre-tax restructuring charge of USD 444 million taken in the
2007 fourth quarter. Approximately 2,500 full-time positions are
expected to be reduced from among the currently nearly 100,000
full-time positions within the Group. Many reductions will be handled
through normal fluctuation in staffing levels, which has
traditionally averaged about 8% of the Group's annual workforce, as
well as through vacancy management and social programs.
Ranked as having one of the industry's best pharmaceutical product
pipelines, Novartis will continue making major investments in drug
discovery, particularly biologic therapies. The Novartis Biologics
unit was created in 2007 as a dedicated innovation unit with a strong
biotech culture in the areas of discovery and development unique to
biologics, and with full access to the extensive Novartis
organization. These types of therapies are increasingly a priority
and now total approximately 25% of the pre-clinical research
pipeline.
Group outlook
(Barring any unforeseen events)
Given the outlook for strong contributions from most of its
healthcare businesses, Novartis continuing operations expect another
year of record net sales and earnings in 2008. Net sales from
continuing operations for the Group are expected to rise at a
mid-single-digit rate, and at a low-single-digit growth rate in the
Pharmaceuticals Division, both in local currencies.
Pharmaceuticals products performance review
Note: All net sales growth figures refer to 2007 worldwide
performance in local currencies
Diovan (USD 5.0 billion, +16% lc) reached another important milestone
in 2007 as net sales reached USD 5 billion for the first time. Diovan
has consistently grown thanks to new indications and clinical data
underpinning its status as the world's No. 1 branded high blood
pressure medicine. Many key countries, particularly the US, Japan and
Germany, delivered double-digit growth. Diovan held in the US a 40%
share among angiotensin receptor blockers (ARBs), the fastest-growing
segment of the antihypertensive market. Co-Diovan/Diovan HCT, a
single-tablet combination with a diuretic, was driven by growing use
of multiple therapies.
Gleevec/Glivec (USD 3.1 billion, +14% lc), a therapy for certain
forms of chronic myeloid leukemia (CML) and gastrointestinal stromal
tumors (GIST), reinforced its leadership in helping patients with
these and other often-fatal forms of cancer. New data from the IRIS
study in patients with newly diagnosed Philadelphia
chromosome-positive CML (Ph+ CML) showed Gleevec/Glivec halted
disease progression to more advanced stages completely in the sixth
year of treatment and that 88% of Gleevec/Glivec patients in the
trial were still alive. Gleevec/Glivec has also benefited from wider
use in patients with GIST and in various rare diseases. Competition
in the CML market in 2007 had little impact on underlying demand.
Zometa (USD 1.3 billion, -2% lc), an intravenous bisphosphonate
therapy for patients with cancer that has spread to the bones,
delivered a steady performance amid signs that demand stabilized
during 2007 in the US and Europe. Overall growth for this class of
medicines has slowed with many patients receiving treatment less
frequently and for a shorter course of therapy. However, this trend
was balanced by increasing use in patients with lung cancer as well
as rapid growth in Japan and markets outside the US and Europe. In
December, the US Food and Drug Administration granted Zometa an
additional six months of marketing exclusivity until 2013 following
the completion of pediatric studies.
Sandostatin (USD 1.0 billion, +7% lc), for acromegaly and various
neuroendocrine and carcinoid tumors, reached annual net sales of USD
1 billion for the first time thanks to increasing use of the
long-acting-release Sandostatin LAR version given once a month that
accounts for 85% of net sales. The once-daily Sandostatin version
faces generic competition.
Neoral/Sandimmun (USD 944 million, -2% lc), for organ
transplantation, has maintained generally stable worldwide net sales
despite ongoing generic competition thanks to its pharmacokinetic
profiles and reliability.
Femara (USD 937 million, +25% lc), an oral treatment for women with
hormone-sensitive breast cancer, delivered ongoing dynamic growth
primarily from expanded use in patients immediately after surgery
(early adjuvant) in the US and Europe as well as from the 2006 launch
in Japan. Femara has outpaced competitors and gained market share in
the aromatase inhibitor segment due to its unique benefits.
Lotrel (USD 748 million, -45% lc, only in US) has been negatively
affected since May 2007 following the "at risk" launch of a generic
copy by Teva Pharmaceuticals despite a valid US patent until 2017.
Sandoz also launched an authorized generic version of this high blood
pressure medicine. A trial date has not been set for the ongoing
lawsuit against Teva, which risks potentially significant damages if
Novartis prevails.
Voltaren (USD 747 million, +3% lc), a therapy for inflammation and
pain, showed steady growth, primarily in Latin America and Asia,
based on long-term trust in the brand. Patent protection for Voltaren
in many key markets around the world has expired.
Trileptal (USD 692 million, -6% lc), a treatment for epilepsy
seizures, generated growth until the expected entry of US generic
competition in October 2007, which led to a sharp decline in US net
sales in the fourth quarter of 2007.
Lescol (USD 665 million, -12% lc), a statin drug used to reduce
cholesterol, was primarily impacted by decisions to reduce reference
prices in Europe, while the introduction of generic simvastatin and a
highly competitive market for this class weighed on US net sales.
Exelon (USD 632 million, +14% lc), for mild to moderate forms of
Alzheimer's disease and dementia associated with Parkinson's disease,
delivered solid growth. Several launches are underway for Exelon
Patch in the US and Europe following regulatory approvals in 2007.
This once-daily skin patch provides a novel treatment approach with a
smooth and continuous delivery of Exelon to patients. Exelon Patch
provides equivalent efficacy to the highest doses of capsules, but
with three times fewer reports of nausea or vomiting.
Lamisil (USD 595 million, -40% lc), a therapy for fungal nail
infections, fell sharply after the entry of US generic competition in
July 2007. Basic patent protection for Lamisil's active ingredient
has now expired worldwide, with generics already available in Europe
and Japan.
Lucentis (USD 393 million), for treatment of the eye disease "wet"
age-related macular degeneration (AMD), experienced dynamic growth in
Europe and other markets in its first year after EU approval in
January 2007. Lucentis is the only treatment proven in clinical
trials to maintain and improve vision in these patients with this
form of AMD, which is the leading cause of blindness in people over
age 50. Genentech holds the US rights.
Exjade (USD 357 million, +141% lc) delivered strong growth based on
its unique status as the first once-daily oral therapy for iron
overload associated with various blood disorders. First launched in
the US in November 2005 and in Europe starting in August 2006, Exjade
is now approved in over 85 countries. In 2007 Exjade was submitted in
Japan, a year ahead of schedule. About half of patients being given
this medicine are new to iron chelation.
Xolair (USD 140 million, +30% lc), a biotechnology drug that offers a
new approach for the treatment of moderate to severe allergic asthma,
has benefited from rapid acceptance and is now available in 54
countries after EU approval in October 2005. Xolair is administered
as an injection every two to four weeks and is proven to target a
root cause of allergic asthma. Novartis co-promotes Xolair with
Genentech in the US and shares a portion of operating income.
Genentech reported US sales of USD 472 million for Xolair in 2007.
Zelnorm/Zelmac (USD 88 million, -84% lc), for irritable bowel
syndrome and chronic constipation, was suspended in the US in March
2007, and subsequently in many other countries, to comply with a
request from the FDA to review cardiovascular safety data. A
treatment access program was started in the US to provide Zelnorm to
appropriate patients. Novartis continues to believe Zelnorm/Zelmac
offers important benefits to appropriate patients, and discussions
continue with various health authorities.
Prexige (USD 91 million), an oral COX-2 inhibitor for osteoarthritic
pain, was withdrawn in the European Union and many other countries in
2007. These actions were taken after the first withdrawal in August
in Australia based on post-marketing reports of serious liver
side-effects allegedly associated with long-term use of higher doses,
including the deaths of two patients. In September, the FDA issued a
"not approvable" letter for the 100 mg once-daily dose, which is the
lowest available formulation. Novartis believes Prexige, which
continues to be available in some countries, is a valuable therapy
option for appropriate patients, particularly those at risk of
serious gastrointestinal complications, and will continue discussions
with health authorities.
Exforge (USD 103 million), a single-tablet combination of two proven
high blood pressure medicines, the angiotensin receptor blocker
Diovan and the calcium channel blocker amlodipine, delivered the
strongest launch performance of any Novartis anti-hypertensive
medicine thanks to rapid growth in the US and Europe following
approvals in 2007. Clinical data have shown nine of ten patients
treated with Exforge reached treatment goals, confirming strong
efficacy coupled with improved convenience.
Aclasta/Reclast (USD 41 million) was launched in September 2007 in
the US as a 15-minute, once-yearly infusion for women with
postmenopausal osteoporosis, while initial launches were started in
Europe in Germany and the UK after European Union approval in October
2007. The New England Journal of Medicine published in September the
results of the first-ever clinical study involving more than 2,100
men and women with osteoporosis who had suffered a hip fracture,
showing that Aclasta/Reclast reduces the risk of further fractures.
Tekturna/Rasilez (USD 40 million), the first new type of high blood
pressure medicine in more than a decade, has performed well in a
highly competitive US marketplace following its approval and launch
in March 2007. Launches are also underway after European approval in
August 2007. Known as Tekturna in the US and as Rasilez in other
markets, key drivers have been broad clinical data demonstrating
efficacy in lowering blood pressure, its safety profile and rising
reimbursement rates in US formulary plans. Initial results of trials
related to the ASPIRE HIGHER program showed potential benefits of
Tekturna/Rasilez in reducing a key biomarker of kidney disease
(AVOID) and in reducing the severity of heart failure (ALOFT).
Rasilez HCT, a single-tablet combination with a diuretic, was
submitted for EU approval in late 2007, while US approval of Tekturna
HCT is expected in early 2008. This medicine was discovered by
Novartis and developed in collaboration with Speedel.
Tasigna was launched during the fourth quarter of 2007 in the US and
Europe following regulatory approvals as a new therapy for patients
with Philadelphia chromosome-positive chronic myeloid leukemia (Ph+
CML) who are resistant or intolerant to treatment with Gleevec/Glivec
(imatinib). Tasigna is now approved in about 40 countries, and was
also submitted for approval in Japan in June. Tasigna was designed to
be a more potent and selective inhibitor of Bcr-Abl, the cause of Ph+
CML, and its mutations than Gleevec/Glivec. Separate Phase III
studies are underway comparing Tasigna and Gleevec/Glivec in newly
diagnosed CML patients as well as those with sub-optimal responses to
previous therapy. A registration study is also underway in patients
with gastrointestinal stromal tumors (GIST) who are resistant or
intolerant to prior treatment.
Research & Development update
Pharmaceuticals
Galvus (vildagliptin), a new oral treatment for type 2 diabetes, is
expected to be first made available in Europe in the first half of
2008. European health authorities announced in November 2007 their
support for changes proposed by Novartis to prescribing information
that would reduce the recommended daily doses to 50 mg once-daily or
50 mg twice-daily in combination with various other oral
anti-diabetes medicines. EU approval was granted in November 2007 for
Eucreas, a single-tablet combination of Galvus with the oral
anti-diabetes medicine metformin. In the US, Novartis is continuing
discussions with the FDA on steps needed for approval after having
received an "approvable letter" in February 2007 that included a
request for additional clinical trial data. A resubmission for US
regulatory approval is not expected before 2010.
FTY720 (fingolimod) is on track for regulatory submissions at the end
of 2009 after clinical trial enrollment required for global
submissions was completed in 2007. FTY720, an oral therapy, is
currently being investigated in the largest worldwide Phase III
program to be conducted in relapsing-remitting multiple sclerosis
(MS) to further evaluate its efficacy and safety. The program
includes FREEDOMS and FREEDOMS II, two-year placebo-controlled trials
measuring reductions in relapse rates and disability progression, and
the one-year TRANSFORMS trial comparing FTY720 with interferon
beta-1a (Avonex®). FTY720 has the potential to be the first in a new
class of disease-modifying MS therapies that action on inflammation
and could potentially have a direct impact on the Central Nervous
System.
QAB149 (indacaterol), a once-daily long-acting beta-agonist with
24-hour bronchodilation and a fast onset of action, completed
enrollment in 2007 in a pivotal Phase III monotherapy trial as a
treatment for chronic obstructive pulmonary disease (COPD), a
condition in which the lungs have been damaged, usually from smoking.
QAB149 is also being developed for use in combination with other
respiratory medicines and development compounds in patients with
COPD. Other combination trials are being done in asthma.
RAD001 (everolimus), a once-daily oral inhibitor of the mTOR pathway
that has demonstrated broad clinical activity in multiple tumors, is
progressing toward a potential first regulatory submission in 2008.
Enrollment has been completed in the registration trial involving
metastatic renal cell carcinoma, a form of kidney cancer.
Registration trials are also underway in chemotherapy-refractory
pancreatic islet cell tumors (pICT) in the first- and second-line
setting and for chemotherapy-refractory carcinoid (slow growing)
tumors. RAD001 acts by directly inhibiting tumor cell growth and
metabolism as well as the formation of new blood vessels
(angiogenesis).
SOM230 (pasireotide), a next-generation somatostatin analogue
therapy, has completed Phase II studies for acromegaly, carcinoid
tumors and Cushing's disease. A Phase III registration study is
enrolling patients with Cushing's disease, a rare disorder
characterized by excessive excretion of the hormone cortisol from a
pituitary adenoma (tumor) and a condition for which there is no
approved medical therapy. Additional registration studies for
acromegaly and refractory carcinoid patients are set to begin in the
first quarter of 2008.
Vaccines and Diagnostics
Menveo (MenACWY-CRM), in development as a vaccine against four common
types of meningococcal meningitis, showed in a Phase II trial that it
may protect infants as young as two months old. Menveo was well
tolerated and showed high immunogenicity against four types - A, C,
W135 and Y. Infants and adolescents have the highest rate of this
disease, with the highest attack rates in infants from age three to
12 months. This rare, but potentially fatal, bacterial disease causes
an infection of membranes around the brain and spinal cord. Existing
vaccines have not worked in very young children.
Disclaimer
These materials contain certain forward-looking statements relating
to the Group's business, which can be identified by the use of
forward-looking terminology such as "proposed," "expects," "outlook",
"to show," "set," "strategy", "expected", "designed to," "confident,"
"will", "well-positioned," "future trends," "potential", "targeted,"
"proposal," "believes," "pipelines", "approvable," "may," or similar
expressions, or by express or implied discussions regarding potential
new products, potential new indications for existing products, or
regarding potential future revenues from any such products, or
potential future sales or earnings of the Novartis Group or any of
its divisions or business units; or by discussions of strategy,
plans, expectations or intentions. Such forward-looking statements
reflect the current views of the Group regarding future events, and
involve known and unknown risks, uncertainties and other factors that
may cause actual results to be materially different from any future
results, performance or achievements expressed or implied by such
statements. There can be no guarantee that any new products will be
approved for sale in any market, or that any new indications will be
approved for existing products in any market, or that such products
will achieve any particular revenue levels. Nor can there be any
guarantee that the Novartis Group, or any of its divisions or
business units, will achieve any particular financial results. In
particular, management's expectations could be affected by, among
other things, uncertainties involved in the development of new
pharmaceutical products; unexpected clinical trial results, including
additional analysis of existing clinical data or unexpected new
clinical data; unexpected regulatory actions or delays or government
regulation generally; the Group's ability to obtain or maintain
patent or other proprietary intellectual property protection,
including the uncertainties involved in the US litigation process;
competition in general; government, industry, and general public
pricing and other political pressures; and other risks and factors
referred to in Novartis AG's current Form 20-F on file with the US
Securities and Exchange Commission. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
herein as anticipated, believed, estimated or expected. Novartis is
providing the information in these materials as of this date and does
not undertake any obligation to update any forward-looking statements
as a result of new information, future events or otherwise.
About Novartis
Novartis AG provides healthcare solutions that address the evolving
needs of patients and societies. Focused solely on growth areas in
healthcare, Novartis offers a diversified portfolio to best meet
these needs: innovative medicines, cost-saving generic
pharmaceuticals, preventive vaccines and diagnostic tools, and
consumer health products. Novartis is the only company with leading
positions in these areas. In 2007, the Group's continuing operations
(excluding divestments in 2007) achieved net sales of USD 38.1
billion and net income of USD 6.5 billion. Approximately USD 6.4
billion was invested in R&am
