aaaq2 2015 ir presentation
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Aaaq2 2015 Ir PresentationTRANSCRIPT
Second Quarter 2015 Results
Investor Presentation
July 21, 2015
Disclaimer
This presentation contains forward-looking statements that can be identified by words such as “potential,” “expected,” “will,” “planned,” or similar terms, 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; potential shareholder
returns or credit ratings; or regarding the potential completion of the announced transaction with CSL, or regarding the potential financial or other impact on Novartis of the transactions
with GSK, Lilly or CSL, or regarding any potential strategic benefits, synergies or opportunities as a result of these transactions; or regarding potential future sales or earnings of the
Novartis Group or its divisions and associated companies; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements.
Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and
uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in
the forward-looking 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 any existing
products in any market, or that any approvals which are obtained will be obtained at any particular time, or that any such products will achieve any particular revenue levels. Nor can
there be any guarantee that the announced transaction with CSL will be completed in the expected form or within the expected time frame or at all. Neither can there be any guarantee
that Novartis will be able to realize any of the potential strategic benefits, synergies or opportunities as a result of the transactions with GSK, Lilly or CSL. Neither can there be any
guarantee that the Novartis Group or any of its divisions or associated companies will achieve any particular financial results in the future. Nor can there be any guarantee that
shareholders will achieve any particular level of shareholder returns. Neither can there be any guarantee that the Novartis Group, or any of its divisions, will be commercially successful
in the future, or achieve any particular credit rating. In particular, management’s expectations could be affected by, among other things, unexpected regulatory actions or delays or
government regulation generally, including an unexpected failure to obtain necessary government approvals for the announced transaction with CSL, or unexpected delays in obtaining
such approvals; the potential that the strategic benefits, synergies or opportunities expected from the transactions with GSK, Lilly or CSL may not be realized or may take longer to
realize than expected; the inherent uncertainties involved in predicting shareholder returns or credit ratings; the uncertainties inherent in research and development, including
unexpected clinical trial results and additional analysis of existing clinical data; the Company’s ability to obtain or maintain proprietary intellectual property protection, including the
ultimate extent of the impact on the Company of the loss of patent protection and exclusivity on key products which will continue this year; unexpected manufacturing or quality issues;
global trends toward health care cost containment, including ongoing pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or
potential product liability litigation, litigation and investigations regarding sales and marketing practices, government investigations and intellectual property disputes; general economic
and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries; uncertainties regarding future
global exchange rates; uncertainties regarding future demand for our products; uncertainties involved in the development of new healthcare products; uncertainties regarding potential
significant breaches of data security or disruptions of the Company’s information technology systems; and other risks and factors referred to in Novartis AG’s current Form 20-F on file
with the US Securities and Exchange Commission. Novartis is providing the information in this presentation 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.
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 2
Agenda
Group overview Joseph Jimenez, Chief Executive Officer
Financial review Harry Kirsch, Chief Financial Officer
Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals
Closing Joseph Jimenez, Chief Executive Officer
Q&A session Executive team
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 3
In Q2 2015, financial and innovation momentum continues
Sales of USD 12.7 billion, up +6% versus PY in cc1
Core operating income +6% in cc1
Pharmaceuticals momentum, strong Sandoz performance and weak Alcon quarter
Entresto™ and Glatopa™ launched in the US2
1 All growth shown vs. PY in constant currencies (cc), rounded. All numbers refer to continuing operations (incl. the newly acquired oncology assets and the OTC JV in 2015) and do not include divested businesses. An
explanation of continuing operations can be found on page 42 of the Condensed Interim Financial Report 2 Entresto launched July 7, not in Q2 2015
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 4
Summary of Q2 2015 financial results
1 Continuing operations are defined on page 42 of the Condensed Interim Financial Report. Constant currencies (cc), core results, and free cash flow are non-IFRS measures. An explanation of these measures and
reconciliation tables can be found beginning on page 52 of the Condensed Interim Financial Report.
Q2 Continuing operations1
(in USD bn) 2015 % USD % cc
Net Sales 12.7 -5 6
Core Operating Income 3.6 -7 6
Operating Income 2.3 -28 -14
Net Income 1.9 -32 -18
Core EPS (USD) 1.27 -7 7
EPS (USD) 0.77 -31 -16
Free Cash Flow 2.1 -23
Change vs. PY
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 5
Deliver strong
Financial Results
Complete the
Portfolio Transformation
Capture
Cross-Divisional Synergies
Strengthen
Innovation
Build a
High-Performing Organization
Our priorities for 2015 are clear
1
4
2
3
5
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 6
Deliver strong
Financial
Results1 1
Pharmaceuticals: Strong sales growth and margin expansion in Q2
4
2
3
5
+6%
Sales
+9%
Core operating
income
Growth Products2 sales +38%
Emerging Growth Markets3 sales +10%
Absorbed generic impact e.g., Diovan®, Exforge®
+
+ +
1 All growth shown vs. PY in constant currencies (cc) 2 “Growth Products” comprise products launched in a key market (EU, US, Japan) in 2010 or later, or products with exclusivity in key markets until at least 2019. They include
the acquisition effect of the GSK oncology assets. 3 “Emerging Growth Markets” comprise all markets except the US, Canada, Western Europe, Japan, Australia and New Zealand
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 7
US sales +23%, driven by Glatopa™, Dermatology
Biopharmaceuticals2 sales +57%
Margin Accretion: ROS improvement of 2.6 ppts
Deliver strong
Financial
Results1 1
Sandoz: Very strong performance in Q2
4
2
3
5
+11%
Sales
+30%
Core operating
income
+
+ +
1 All growth shown vs. PY in constant currencies (cc) 2 Includes biosimilars, biopharmaceutical contract manufacturing and Glatopa™
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 8
Deliver strong
Financial
Results1 1
Alcon: Weak Q2
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 9
4
2
3
5
-10%
1 All growth shown vs. PY in constant currencies (cc)
0%
Emerging markets slowdown
IOL competitive pressure
Contact lens care decline
-
-
-
Sales Core operating
income
Next-Gen pre-loaded IOL
New IOL platform: best-
in-class material, optics,
and mechanics
Short-term Mid- to long-term
Alcon is taking short and long term actions to turn performance,
but will take time
1
4
3
5
2 Strengthen
Innovation
AcrySof®
PanOptix®
Dailies Total1®
RTH258: Positive Ph II data
in wet AMD
UltraSertTM
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 10
Entresto™ approved and launched in US
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 11
Strengthen
Innovation
1
4
3
5
2
1 McMurray et al. NEJM 2014;371:993–1004; Packer et al. Circulation 2015;131:54-61
2 Individual components of primary endpoint
3 Mozaffarian D, Benjamin EJ, Go AS, et al. Heart Disease and Stroke Statistics – 2015 Update: A Report from the American Heart Association. Circulation. 2015;131:e242-e248
4 Decision Resources Patient Base 2012
5 LEK research and LCZ696 Dual Workstream Plan in HFrEF and HFpEF, Marketing Sciences. Oct 2012
20% 21%
Reduction in
CV mortality1,2
First hospitalizations
for HF1,2
~6m Americans with HF3
~2m eligible patients4,5
20%
Progress in immuno-oncology continues
1
4
3
5
2 Strengthen
Innovation
PD-1, LAG-3 entered clinic, CSF-1 dosing
imminently, TIM-3 expected in 2015
STING and GITR first-in-human expected 2016
CTL019: >150 patients dosed; first cells
processed at commercial facility
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 12
First FDA approved substitutable generic
version of Copaxone® 20 mg1
Launched June 18, 2015 with positive
reception
Glatopa™ joins Novartis’ strong MS portfolio
(e.g., Gilenya®, Extavia®)
Glatopa™ US launch strengthens our Multiple Sclerosis portfolio
1
4
3
5
2
Glatopa™
Multiple sclerosis
1 20 mg one-time-daily injection. Copaxone® is a registered trademark of Teva
Strengthen
Innovation
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 13
1
4
2
5
Portfolio changes on track
3
Oncology sales grew 30% (cc) vs. PY in Q2
Transfer of marketing authorizations complete for ~75% of sales
Field forces operational in over 50 markets Complete the
Portfolio Transformation
Separations on track, ~13,000 associates transferred
Influenza Vaccines divestment to CSL on track for H2 2015
Oncology
OTC JV, Vaccines, Animal Health
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 14
1
2
3
5
NBS is executing on its objectives
4
9,000 people transferred as of end of Q2
5 locations selected for Global Service Centers; offshoring scaling up
Implementation underway to reduce IT applications by 40%
Capture
Cross-Divisional Synergies
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 15
1
4
2
3
Strong Quality performance across divisions
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 16
5 1 Results status as of June 30, 2015, for continuing operations: Pharmaceuticals, Alcon and Sandoz. The outcome of two FDA inspections of manufacturing sites in India, which
were conducted in August 2014, are still pending.
Build a High-Performing Organization
Sandoz
Alcon
Pharmaceuticals 100%
100%
100%
Number of inspections
% Inspections good or acceptable1
35
17
27
Agenda
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 17
Group overview Joseph Jimenez, Chief Executive Officer
Financial review Harry Kirsch, Chief Financial Officer
Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals
Closing Joseph Jimenez, Chief Executive Officer
Q&A session Executive team
Q2 Change vs. PY H1 Change vs. PY
(in USD m) 2015 % USD % cc 2015 % USD % cc
Net Sales 12 694 -5 6 24 629 -6 4
Core Operating Income 3 593 -7 6 7 244 -5 8
Operating Income 2 281 -28 -14 5 066 -16 -1
Net Income 1 856 -32 -18 4 162 -20 -5
Core EPS (USD) 1.27 -7 7 2.60 -4 9
EPS (USD) 0.77 -31 -16 1.72 -18 -3
Free Cash Flow 2 064 -23 3 529 -8
Net sales grew 6% in the quarter, with core operating leverage
in both Q2 and H1
1 An explanation of continuing operations can be found on page 42 of the Condensed Interim Financial Report
Continuing operations1
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 18
-5
6
11
12
USD growth
Currency -11
CC growth
Generics impact1 -5
Growth before Gx
Price -1
Volume before Gx
-7
6
19
21
-13
-2
-13
Sales volume more than offsetting generic impact
Continuing operations Q2 2015 (growth vs. PY in %)
Core operating income Net sales
1 Generics impact on sales amounted to USD 0.7 billion for Q2 2015
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 19
-9-11-10
-6
-10-2
Negative currency impact in Q2 from strong USD
Net sales Core operating income
Currency impact vs. PY (in % pts)
2014
Q1 Q2 Q3 Q4
FY impact: -2%
FY1
2015
Q1
2014
Q1 Q2 Q3 Q4
FY impact: -5%
FY1
-13-13
-8
-3-3-6
-13 to -14
Q1 Q2
2015
Q2
1 Assuming mid-July exchange rates prevail for the remainder of the year
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 20
Q2 2015
Net sales
change vs. PY
Core operating
income
change vs. PY Core ROS
Core margin
change vs. PY
(in % cc) (in % cc) (%) (% pts cc)
Pharmaceuticals 6 9 31.6 1.0
Alcon 0 -10 31.1 -3.7
Sandoz 11 30 18.5 2.6
Q2 continuing operations 6 6 28.3 0.3
H1 continuing operations 4 8 29.4 0.9
Core margin improved due to Pharmaceuticals and Sandoz
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 21
Alcon Q2 key performance drivers and full-year outlook
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 22
Alcon Division net sales growth
(% in cc)
Phasing Pharma seasonal products
Trade inventory reduction
IOL competitive pressure
Contact lens care decline
Lower surgical equipment
Full-year Alcon sales guidance lowered to “low single-digit” growth (in cc)
2%
Prior 4 Quarter
average
5.5%
Q2 2015
underlying
Q2 2015
reported
0%
1
1 Average of Alcon Division Q2 2014 to Q1 2015 growth (in cc)
Q2 2015
underlying
2%
Q2 core margin significantly above prior year due to both
portfolio transformation and productivity improvements
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 23
0.3
3.0
Portfolio
Transformation
Fx Q2 2014 Total
Group Core ROS
Sales and Productivity
28.3
Q2 2015 Continuing
Operations Core ROS
-0.9
25.9
+2.4pts
Core margin USD at period rates (in % pts)
H1 free cash flow was USD 3.5 bn
Key drivers vs. PY
Negative currency impact
Hedging gains
Favorable net working capital1
3.5
-0.3
H1 2015 H1 2014
3.8
1 Free cash flow from net working capital defined as free cash flow from changes in inventory, trade receivables and trade payables
Continuing operations free cash flow (in USD bn)
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 24
Net debt increased mainly due to GSK oncology acquisition
(in USD bn)
1 Total Group including discontinued operations 2 Related to employee participation programs 3 Mainly from tax payments on divestments
-0.9-2.1
-16.0
-6.6
-17.4
-6.5
Free Cash Flow 1
3.2
Dec 31,
2014
-10.9
Jun 30,
2015
Others3 Share
repurchases
Proceeds
from options
exercised2
1.6
Net proceeds
from portfolio
transformation
transactions
9.9
Acquired GSK
oncology
assets
Dividends
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 25
Full year outlook for continuing operations confirmed
Barring unforeseen events
Continuing operations net sales expected to grow mid-single digit (cc):
• Pharmaceuticals: confirmed at mid-single digit growth (cc)
• Alcon: revised downward to low-single digit growth (cc)
• Sandoz: revised upward to high-single digit growth (cc)
Continuing operations core operating income expected to grow ahead of sales at a high-single digit rate (cc)
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 26
Agenda
Group overview Joseph Jimenez, Chief Executive Officer
Financial review Harry Kirsch, Chief Financial Officer
Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals
Closing Joseph Jimenez, Chief Executive Officer
Q&A session Executive team
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 27
Q2 Q2 Change vs. PY
(in USD m) 2015 2014 % USD % cc
Net Sales 7 847 8 199 -4 6
Core Operating Income 2 477 2 593 -4 9
Operating Income 1 986 2 406 -17 -4
Core Operating Income Margin 31.6% 31.6%
Operating Income Margin 25.3% 29.3%
Pharmaceuticals Division delivered leverage with solid growth (cc)
in both sales and core operating income
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 28
Pharmaceuticals Growth Products net sales in Q2 (in USD bn, growth in % cc)
% of total division sales
34% 44%
Q2 2015
+38% cc
Q2 2014
3.5
2.8
Growth Products now represent 44% of total division sales
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 29
Emerging Growth Markets represented 26% of total division sales
Pharmaceuticals Division net sales in Q2 (share in %, growth in % cc)
26%
74%
Established Markets Emerging Growth Markets1
+10% vs. PY in Q2
+5% vs. PY in Q2
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 30
1 All markets excluding the US, Canada, Western Europe, Japan, Australia, and New Zealand
Indication
Q2 2015
Net sales
(USD m)
Q2 2015
Growth vs. PY
(% cc)
MS 700 26
wAMD, DME, RVO, mCNV 537 2
aRCC, TSC/SEGA, pNET, HR+/HER2 aBC 423 19
CML 412 21
Type 2 diabetes mellitus 273 -1
Severe allergic asthma and CSU/CIU 194 18
aRCC 165 n/a
COPD 151 57
BRAF V600+ metastatic melanoma 131 n/a
Thrombocytopenia6 and SAA 116 n/a
MF and PV 98 68
Unparalleled growth platform1 with exclusivity to 2019 and beyond
1 Selected key products for growth of Pharmaceuticals Division 2 Impacted by Galvus® in Germany, where distribution was stopped July 1, 2014; excluding Germany, Q2 2015 growth vs. PY was +5% (cc) 3 Onbrez® Breezhaler® approved as Arcapta® Neohaler® in the US
2
4 4
4 Net sales and growth of Onbrez®, Seebri® and Ultibro®
5 Net sales of Tafinlar® and Mekinist® 6 cITP and thrombocytopenia associated with hepatitis C
5
3
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 31
Oncology achieved strong growth momentum
Oncology Franchise net sales (in USD m, growth in % cc)
Sales grew 30% vs. PY in Q2
Base business grew 11% vs. PY in Q2
New assets sales (USD 0.5 bn) represented 15% of total Oncology sales
Integration of new assets and onboarding of new associates progressing well
Base business1 New assets2
1 Continuing Oncology assets unaffected by the GSK transaction 2 Assets acquired in the GSK transaction which closed on March 2, 2015. These include among others Votrient®, Promacta®, Tafinlar® and Mekinist®
3 536
Q2 2015
Q2 2014
2 951
+30% cc
+11% cc
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 32
Tafinlar® / Mekinist®: Sales growth, new data in melanoma
and breakthrough designation in NSCLC
EU & JP submissions completed
in melanoma3
Regulatory
milestones
Breakthrough therapy designation
in BRAF V600E+ NSCLC4
Compelling clinical data in
BRAF V600+ metastatic melanoma1
Low (11%) discontinuation
rate
25.1 months median overall
survival
1 COMBI-d results in BRAF V600E/K+ metastatic melanoma. Ph III study with 423 patients. Long et al. Lancet 31 May 2015 (on-line publication http://dx.doi.org/10.1016/S0140-6736(15)60898-4) 2 Net sales of Tafinlar® and Mekinist®
3 Submission of 1st line combination therapy (Tafinlar® + Mekinist®) in unresectable or metastatic melanoma with BRAF V600E or V600K mutations in both EU and Japan achieved in Q2 4 FDA Breakthrough Therapy designation for combination therapy in BRAF V600E+ NSCLC obtained in July 2015; Tafinlar® monotherapy received FDA Breakthrough Therapy designation in this indication in January 2014
USD 131 m net sales2
in Q2 2015
Strong commercial
performance
Jan 2014 combination
launched in US
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 33
Increased usage
of Tasigna® in 1st
line CML patients
in the US
ENEST1st results
confirmed the
benefit of 1st line
Tasigna® in newly-
diagnosed CML
Growth driven by
US launch of
Jadenu™
ECLIPSE study
(Exjade® vs.
Jadenu™)
expected in H2
2016
Growth in MF
indication across
geographies
Jakavi® launched
in PV in Germany
(Apr)
US approval in
pediatric cITP
(Jun)
EU approval in
SAA expected in
H2 2015
Farydak™
approved in US
(Feb) and Japan
(Jul)
CHMP positive
opinion (Jun)
Hematology portfolio: Sales growth, launches and approvals
1 Net sales in Q2 in USD million and growth in cc vs. PY 2 Jakavi® is in-licensed from Incyte Corporation ex-US; Incyte markets product as Jakafi® in the US
USD 262m USD 98m USD 116m nm
2
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 34
USD 412m +21%1 n/a +68%1 +17%1
Afinitor® delivered double-digit growth
Sales grew 19% vs. PY in Q2
RADIANT-4 met its primary endpoint1
• Regulatory filings expected in H2 2015
• Prevalence of advanced GI / Lung NET is estimated at appr. 80k patients2,3
• Pending final label 30-40% of these patients are expected to be eligible3
RECORD-4 results (Ph II)4 reinforce efficacy (PFS) in 2nd line aRCC
Afinitor® net sales (in USD m, growth in % cc)
8% 5%
Q2 2014
384
54%
26%
7% 10%
4%
+19% cc
Q2 2015
423
54%
22%
10%
pNET
RCC
TSC/SEGA
BC
Other
+21%
+80%
+4%
+5%
+29% 5
1 The primary endpoint was met: significant extension of PFS compared to placebo plus best supportive care (Novartis Press Release, 21 May 2015) 2 Estimated prevalence in US, Top-5 EU, Japan 3 Novartis estimate 4 Motzer R, Alyasova A, Ye D, et al. RECORD-4: A multicenter, phase II trial of second-line everolimus in patients with mRCC. J Clin Oncol 33, 2015 (suppl; abstract # 4518) 5 Indeterminate usage
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 35
COPD portfolio3 grew 57% vs. PY in Q2
Ultibro® was the first to market dual
bronchodilator (LABA/LAMA) in the EU
and Japan
Most recent launches included Italy (May)
Value share uptake since launch1,2
(in %)
Ultibro® Breezhaler® outperformed competitors1,2
Months Since Launch
1 IMS Midas Monthly, April 2015; Value share calculated in LABA, LAMA, ICS/LABA, LABA/LAMA, PDE-IV drug classes (note: includes sales from asthma as well) 2 Only markets where both Ultibro® and its LABA/LAMA competitors have launched. These six markets in the EU include Germany and the UK 3 COPD portfolio consists of Onbrez®, Seebri® and Ultibro® Breezhaler®
2.8%
2.6%
1.7%
1.3%
0.8%
0.4%0.2%
0.4%
0.1%
0%
1%
2%
3%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
0.1%
2.0% Competitor 2
Ultibro® Breezhaler®
Competitor 1
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 36
Cosentyx® built further momentum in psoriasis
Worldwide sales of USD 30 m in Q2
US launch2
• Cumulatively >6,500 SRFs3 in process / processed
• Patient support programs bridge gap between demand and access
• Around 130k moderate-to-severe psoriasis patients are estimated to be on biologics4
New data in difficult-to-treat psoriasis (which affects ~50% of patients), strengthen clinical profile5,6
Regulatory filings in US and EU completed for AS and PsA in Q2
4 Novartis estimate for the segment of patients on biologics (Bx) based on IMS and Decision Resources
5 Gottlieb A, et al. Oral presentation 23rd World Congress of Dermatology 2015, 11 June 2015 6 Reich K, et al. Poster presented at 23rd World Congress of Dermatology 2015. Poster # 3086561
0
1,000
2,000
3,000
Feb Mar Apr May Jun
Dispensed Rx (IMS)
1 Dispensed Rx’s as per IMS 2 Approval on 23 January 2015 and product commercially available since March 2015 3 Service Request Forms (SRFs)
Cosentyx® demand in the US (Monthly Rx1)
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 37
Entresto™: First major approval achieved
Entresto™ achieved first
approval in the US on July 7
Product shipped and Field
Force is interacting with
customers
Indication includes “reduce[s]
the risk of cardiovascular death
and hospitalization for heart
failure”
Superiority vs. enalapril also
included in label
CHMP opinion expected in Q4
Submission for HFpEF
expected in 2019, based on
outcome of ongoing
PARAGON trial
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 38
Arzerra®
BKM120
LDE225
Afinitor®
Entresto™
LCZ696
QVA149 / NVA237
Submission for CLL maintenance and CLL relapse in US and EU1
Submission for mBC ER+ (Al resistant / mTOR naive) in US, EU & Japan
FDA action and CHMP opinion2 in advanced basal cell carcinoma
Submission for advanced non-functional GI and lung NET in US, EU & Japan
FDA action in chronic heart failure with reduced ejection fraction3
CHMP opinion in chronic heart failure with reduced ejection fraction
FDA action in chronic obstructive pulmonary disease (COPD)
H1 2015
Cosentyx®
Cosentyx®
Jakavi®
Cosentyx®
Zykadia™
Jadenu™
Tafinlar® + Mekinist®
Farydak®
FDA action in psoriasis
EU approval in psoriasis
CHMP opinion in polycythemia vera
Regulatory filings in US and EU for ankylosing spondylitis and psoriatic arthritis
CHMP opinion in ALK+ NSCLC
FDA action in new formulation film-coated tablets
Submission in EU and Japan for metastatic melanoma
Multiple myeloma FDA approval, PMDA approval, CHMP positive opinion
H2 2015
Achieved and expected highlights from Pharmaceuticals newsflow
1 Arzerra® submitted in EU for CLL maintenance in July 2 Positive CHMP opinion for LDE225 (Odomzo®) obtained in June 3 EntrestoTM approval obtained in July
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 39
Agenda
Group overview Joseph Jimenez, Chief Executive Officer
Financial review Harry Kirsch, Chief Financial Officer
Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals
Closing Joseph Jimenez, Chief Executive Officer
Q&A session Executive team
40 | Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation
Financial and innovation momentum continues
On track for full year guidance
EntrestoTM and GlatopaTM launches
Strong pipeline progress
41 | Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation
Agenda
Group overview Joseph Jimenez, Chief Executive Officer
Financial review Harry Kirsch, Chief Financial Officer
Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals
Closing Joseph Jimenez, Chief Executive Officer
Q&A session Executive team
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 42
Appendix
Cosentyx®**
Ankylosing spondylitis
Cosentyx®** Psoriatic arthritis
Afinitor® TSC7 seizures
PKC412 ASM5
PKC412 AML2
BKM120 + fulv mBC1 ER+ AI resistant/mTOR naive 2nd line
Afinitor® Non-functioning GI and Lung NET3
Gilenya® CIDP17
Lucentis®
CNV and ME8
BYM338 sIBM6
Ilaris®
Hereditary periodic fevers
CTL019
Acute lymphoblastic leukemia
Tasigna® CML11 treatment free remission
ACZ885 Sec. prev. cv events14
KAE609 Malaria
LCI699 Cushing’s disease
Afinitor®
DLBCL16
BGS649 OHH21
BYM338 Hip fracture
CAD106 Alzheimer’s disease
BAF312 Multiple sclerosis
QGE031 Asthma
QAW039 Asthma
BCT197 COPD20
LCZ696
Heart failure (PEF)22
QAX576 Allergic diseases
HSC835 Stem cell transplantation
BYL719 Solid tumors
BGJ398 Solid tumors
LJM716 Solid tumors
BKM120 Solid tumors
LEE011 Solid tumors
Lucentis®
ROP19
Tekturna®
Heart failure12
Signifor® LAR13 Cushing’s disease
2017 2019 2015 2016
RLX030 Acute heart failure
E10030***
Wet AMD
FCR001 Renal transplantation
BKM120 + fulv mBC1 ER+ post Al and mTOR inhibitor
3rd line
CTL019 DLBCL16
INC280 NSCLC10
2018
EGF816 Solid tumors
KAF156 Malaria
BYM338 Sarcopenia
LEE011 + ltz HR+, HER2 (-) postmenopausal
Adv. BC1 1st line
CJM112 Immune disorders
PIM447 Hematological tumors
Arzerra®
CLL4 (relapse)
Arzerra®*
CLL4 (maintenance)
Tafinlar® + Mekinist®
BRAF V600+ NSCLC10
Promacta®/ Revolade® MDS9/AML2 assoc. thrombocytopenia
Arzerra®
NHL15 (refractory)
Votrient®
Renal cell carcinoma (adjuvant)
Promacta®/ Revolade®
MDS9
Tafinlar® + Mekinist® BRAF V600+ Melanoma (adjuvant)
Arzerra®
NHL15 (relapse)
ABL001 CML11
ASB183 Solid and hematological tumors
Planned filings 2015 to 2019
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 44
QVM149 Asthma
QMF149 Asthma
LEE011+ fulv HR+, HER2(-) postmenopausal
Adv. BC1 1st /2nd line
LEE011+ tmx + gsn/or NSAI + gsn HR+, HER2(-) premenopausal
Adv. BC1 1st line
QAW039 Atopic dermatitis
Tafinlar® + Mekinist®
BRAF V600+ Colorectal cancer
EMA401**** Neuropathic pain
Zykadia™ ALK+ NSCLC10
(1st line, treatment naive)
Zykadia™ ALK+ NSCLC10
(Brain metastasis)
Cosentyx®
nrAxSpA18
New molecule
New indication
New formulation
1. Breast Cancer 2. Acute myeloid leukemia 3. Neuroendocrine tumors 4. Chronic lymphocytic leukemia 5. Aggressive systemic mastocytosis
6. Sporadic inclusion body myositis 7. Tuberous sclerosis complex 8. Choroidal neovascularization (CNV) and
macular edema (ME) secondary to conditions other than macular degeneration, diabetic macular edema retinal vein occlusion and pathologic myopia
9. Myelodysplastic syndrome 10. Non-small cell lung cancer 11. Chronic myeloid leukemia
Combination Abbreviations: fulv fulvestrant ltz letrozole tmx tamoxifen gsn goserelin NSAI Non-steroidal aromatase inhibitor
12. Reduction of CV death/hospitalization in chronic heart failure patients
13. Long-acting release
14. Secondary prevention of cardiovascular events
15. Non-Hodgkins lymphoma
16. Diffuse large B-cell lymphoma 17. Chronic inflammatory demyelinating
polyradiculoneuropathy 18. Non-radiographic axial spondyloarthritis 19. Retinopathy of prematurity 20. Chronic obstructive pulmonary disease 21. Obese hypogonadotropic hypogonadism
22. Preserved ejection fraction
Regulatory application submitted in EU July 2015
Regulatory submissions filed in EU and US in Q2
2015
Also known as OAP030. E10030 (Fovista®) is
being developed by Ophthotech Corp.
Ophthotech has licensed ex-US
commercialization rights to Novartis under a
Licensing and Commercialization Agreement
Spinifex transaction signed on June 27; closing
pending and expected in the second half of 2015
* **
***
****
CNP520 Alzheimer’s disease
Key Definitions
This presentation contains several important words or phrases that we define as below:
aBC: advanced Breast Cancer
AI: Aromatase Inhibitor
ALK+ NSCLC: Anaplastic Lymphoma Kinase positive (ALK+) Non-Small Cell Lung Cancer (NSCLC)
Approval: In Pharmaceuticals, Alcon and Vaccines in US and EU; each indication and regulator
combination counts as approval; excludes label updates, CHMP opinions alone, and minor approvals
aRCC: advanced Renal Cell Cancer
ASH: American Society of Hematology
Base business: Continuing Oncology assets unaffected by the GSK transaction
BC: Breast Cancer
cITP: chronic Immune ThrombocytoPenia
CML: Chronic Myeloid Leukemia
COPD: Chronic Obstructive Pulmonary Disease
CHMP: Committee for Medicinal Products for Human Use
CSU / CIU: Chronic Spontaneous Urticaria / Chronic Idiopathic Urticaria
DME: Diabetic Macular Edema
Emerging Growth Markets (EGM): All markets excluding the US, Canada, Western Europe, Japan,
Australia, and New Zealand
ER+: Estrogen Receptor positive
FDA: US Food and Drug Administration
Growth Products: Products launched in a key markets (EU, US, Japan) in 2010 or later, or products with
exclusivity in key markets until at least 2019 (except Sandoz, which includes only products launched in the
last 24 months). They include the acquisition effect of the GSK oncology assets
HFpEF: Heart Failure with preserved Ejection Fraction
HR+/HER2-: Hormone Receptor positive / Human Epidermal growth factor Receptor 2 negative
In cc: In constant currencies
LABA: Long-Acting Beta-adrenoceptor Agonists (β2-agonists)
LAMA: Long-Acting Muscarinic receptor Antagonist
mBC: metastatic Breast Cancer
mCNV: Choroidal Neovascularization (CNV) secondary to pathologic myopia (myopic CNV)
MF: MyeloFibrosis
mRCC: metastatic Renal Cell Carcinoma
mTOR: mammalian Target Of Rapamycin
MS: Multiple Sclerosis
NEJM: New England Journal of Medicine
New assets: Assets acquired in the GSK transaction which closed on March 2, 2015
NSCLC: Non-small cell lung cancer
OS: Overall Survival
PFS: Progression Free Survival
PMDA: Pharmaceuticals and Medical Devices Agency (Japan)
pNET: pancreatic NeuroEndocrine Tumor
PV: Polycythemia Vera
RCC: Renal Cell Carcinoma
RVO: Retinal Vein Occlusion
SAA: Severe Aplastic Anemia
TSC/SEGA: Tuberous Sclerosis Complex Subependymal Giant Cell Astrocytoma
wAMD: Wet (neovascular) Age-related Macular Degeneration
| Novartis Q2 2015 Results | July 21, 2015 | Novartis Investor Presentation 45