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First Quarter 2016 Results
Investor Presentation
April 21, 2016
Disclaimer This presentation contains forward-looking statements that can be identified by terminology such as such as “potential,” “expected,” “will,” “planned,” 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; potential shareholder returns or credit ratings; or regarding any potential financial or other impact on Novartis or any of our divisions of the
strategic actions announced in January 2016 to focus our divisions, integrate certain functions and leverage our scale; or regarding any potential financial or other impact
on Novartis as a result of the creation and operation of NBS; or regarding the potential financial or other impact on Novartis of the transactions with GSK, Lilly or CSL; or
regarding potential future sales or earnings of the Novartis Group or any of its divisions; 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 Novartis will be able to
realize any of the potential strategic benefits, synergies or opportunities as a result of the strategic actions announced in January 2016, the creation and operation of
NBS, or the transactions with GSK, Lilly and CSL. Neither can there be any guarantee that Novartis or any of the businesses involved in the transactions will achieve any
particular financial results in the future. Neither can there be any guarantee that shareholders will achieve any particular level of shareholder returns. Nor can there be
any guarantee that the 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; the potential that the strategic
benefits, synergies or opportunities expected from the strategic actions announced in January 2016, the creation and operation of NBS, or the transactions with GSK,
Lilly and 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; our ability to obtain or
maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products
which commenced in prior years and continues this year; unexpected safety, quality or manufacturing issues; global trends toward health care cost containment,
including ongoing pricing pressures, in particular from increased publicity on pharmaceuticals pricing; 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, including the continued increases in value of the US dollar, our reporting currency,
against a number of currencies; 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 our 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 Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 2
Agenda
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 3
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
Solid quarter as we absorb Gleevec® LoE impact and invest for long-term growth1
Net sales up +1% (cc), with growth products offsetting Gleevec® impact
Core operating income down (-5% in cc), reflecting generic erosion as well as
growth investments behind new launches and Alcon
Launches progressing: Cosentyx® ahead of expectations; encouraging
Entresto™ launches in Europe
Alcon: growth plan being executed, on track
LoE: Loss of exclusivity 1 All growth shown vs. prior year (PY) in constant currencies (cc). All numbers refer to continuing operations (incl. the newly acquired oncology assets and the OTC JV formed in 2015)
and do not include divested businesses. An explanation of continuing operations can be found on page 32 of the Condensed Financial Report.
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 4
Deliver strong
Financial Results
Improve
Alcon performance
Capture
Cross-Divisional Synergies
Strengthen
Innovation
Build a
Higher-Performing Organization
Our priorities for 2016
1
4
2
3
5
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 5
Divisional performance
Sales +1% despite Gleevec® LoE (+4% ex.
Gleevec®)2
1
4
2
3
5
Deliver strong
Financial
Results1
1 All growth shown vs. PY in constant currencies (cc). All figures reflect the transfers of certain products between divisions, as announced on January 27, 2016.
See page 34 of the Condensed Interim Financial Report for a full explanation. 2 In the US, Gleevec® lost exclusivity on February 1, 2016. +4% vs. PY excl. Glivec®, excludes all Gleevec® / Glivec® sales worldwide
Sales +4% driven by Biopharmaceuticals
(+50%, mainly GlatopaTM US)
Sales -3% growth plan being executed
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 6
Cosentyx® and Entresto™ launches are progressing
1 Value share in biologics segment of PsO (IMS PADDS, Feb. 2016)
1
4
3
5
2 Strengthen
Innovation
US key focus areas
• Access: 65% Medicare low co-pay
• Commercial: Physician reach and frequency increased
Encouraging launches in Europe: Germany, Switzerland
Confident in peak sales
Q1 Sales: USD 176 m
Growing share: US 7%, Germany 17%, Switzerland 15%1
New launches in PsA and AS
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 7
Pipeline has exciting near-term milestones
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 8
1
4
3
5
2
Molecule Indication MoA Expected
Readout
Potential
blockbuster?
LEE011
(ribociclib)
HR+ HER2- advanced
breast cancer CDK4/6 inhibitor
Q4 2016
(PIII) ✓ OAP030
(Fovista®) Neovascular AMD Aptamer anti-PDGF
Q4 2016
(PIII) ✓
AMG 3341 Prophylaxis of
migraine
CGRP receptor
antagonist
H2 2016
(PIIb, PIII)2 ✓ RLX030
(serelaxin) Acute heart failure
Relaxin receptor
agonist
H1 2017
(PIII) ✓
1 In collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan 2 PIIb for chronic migraine, PIII for episodic migraine
Strengthen
Innovation
Molecule Indication1 Originator2 Agency Expected
Filing
Epoetin alfa Anemia3 FDA 2016
Adalimumab Rheumatoid arthritis FDA 2016
Rituximab Non-Hodgkin’s
lymphoma EMA 2016
Adalimumab Rheumatoid arthritis EMA 2017
Rituximab Non-Hodgkin’s
lymphoma FDA 2017
And we are working to expand patient access to biologics with our
biosimilar pipeline
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 9
1
4
3
5
2
1 Main indication only 2 All trademarks are the property of their respective owners 3 In chemotherapy induced anemia, chronic kidney disease and others
Strengthen
Innovation
Top talent named to lead future of R&D
Prof. Jay Bradner Dr. Vas Narasimhan
Research Development 1
4
3
5
2
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 10
Strengthen
Innovation
Alcon growth plan underway, with clear focus on fixing the basics
1
4
2
5
3 Improve
Alcon performance
Reinforce strong customer relationships Hiring underway for additional customer service roles
Actions underway to improve customer experience
Extensive physician discussions to define future state
Improve basic operations Projects underway to improve Surgical manufacturing agility
Deployed global pricing initiatives across all regions
Further engaging and building confidence with associates
Accelerate innovation and sales UltraSertTM and PanOptix® launched in EU and UltraSertTM in US
Transcend Medical acquisition
Executing promotional programs in Vision Care
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 11
Increasing cross-divisional synergies
Focus the divisions Transferred Ophtha Pharma from Alcon to Pharma
Transferred 19 mature products from Pharma to Sandoz
Integrate drug development Integration planning for safety, pharmacovigilance and regulatory
Transferred Alcon Pharma development to new global function
1
2
3
5
4 Capture
Cross-Divisional Synergies
Centralize manufacturing Appointed single Global Head of Technical Operations
Organizing by technology platform; global support functions
New organization to be in place by July 1st
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 12
These changes also expected to generate significant savings
USD 1 billion savings annually by 2020
Savings to be used to:
Support margin expansion
Free up resources for growth priorities
1
2
3
5
4 Capture
Cross-Divisional Synergies
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 13
1
2
3
5
NBS continues to execute on its objectives
4
Consolidation of Facility Services, from >100 suppliers to 3
Selective offshoring ongoing to 5 Global Service Centers
Expansion of NBS to improve in-country commercial efficiency
Capture
Cross-Divisional Synergies
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 14
1
4
2
3
Strong Quality performance across our ~80 sites, with 100% of
inspections good or acceptable
5
100%
100%
100%
Sandoz
Alcon
Pharmaceuticals
Number of inspections
% Inspections good or acceptable1
8
5
19
1 Results status March 31, 2016. Ongoing MHRA inspection in the UK is still pending. Final outcome to be reported upon closure.
Build a Higher-Performing Organization
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 15
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 Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 16
Summary of Q1 2016 financial results
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 17
1 An explanation of continuing operations can be found on page 32 of the Condensed Interim Financial Report
Q1 Continuing Operations1
(in USD m) 2016 % USD % cc
Net Sales 11 600 -3 1
Core Operating Income 3 261 -11 -5
Operating Income 2 451 -12 -5
Net Income 2 011 -13 -4
Core EPS (USD) 1.17 -12 -5
EPS (USD) 0.85 -11 -3
Free Cash Flow 1 362 -7
Change vs. PY
7
1
-3
Price1 -2
Volume before Gx
USD growth
Currency
CC growth
Gx volume impact -4
15
-5
-11
-8
-12
Sales volume more than offset generic impact
Continuing operations Q1 2016 (growth vs. PY in %)
Core operating income Net sales
-4 -6
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 18
1 Includes the price impact of generic entries
Currency impact -4% and -6% in Q1, FY outlook -2% and -3%
Net sales Core operating income
Currency impact vs. PY (in % pts)
2015
Q1 Q2 Q3 Q4
FY impact: -10%
FY
20161
Q1
-2-3-4
-8
-12-11-10
2015
Q1 Q2 Q3 Q4
FY impact: -15%
FY
20161
Q1
-3-4-6
-14-17
-13-13
1 Assuming March average rates prevail for the reminder of the year
Q2 Q2
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 19
Q1 2016
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 1 -3 33.7 -1.5
Sandoz 4 6 19.8 0.5
Alcon -3 -26 17.0 -5.9
Q1 continuing operations 1 -5 28.1 -1.8
Core margin decline mainly due to LoE and growth investments
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 20
-0.6-0.4
-23.0-0.2
-6.5
-16.5
-0.4-24
-22
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
-6.5
Mar 31,
2016
Others Share
repurchases
Proceeds
from options
exercised1
0.2
Portfolio
transformation
transactions
costs
Acquisitions &
divestments
of businesses
Dividends Free Cash
Flow
1.4
Dec 31,
2015
Net debt increased by USD 6.5 billion to USD 23.0 billion in Q1
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 21
(in USD bn)
1 Related to equity-based participation plans of associates
Core OpInc expected to decline in H1 due to higher investments,
with growth expected in H2 from sales uptake
Core OpInc vs. PY in cc (in % pts)
H1 2016: expected mid to
high single digit decline
H2 2016: expected mid to
high single digit growth
Launch and growth
investments
Alcon slowdown
versus prior year
Cosentyx® and EntrestoTM
sales uptake
Growth products uptake
Productivity programs
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 22
Full year outlook confirmed
Barring unforeseen events
Continuing operations net sales expected to be broadly in line with PY (cc)
• Pharmaceuticals: broadly in line with PY to a slight decline (cc)
• Sandoz: low to mid-single digit growth (cc)
• Alcon: low single digit growth (cc)
Continuing operations core operating income expected to be broadly in line with PY (cc)
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 23
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 Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 24
Q1 Q1 Change vs. PY
2016 2015 % USD % cc
Net Sales 7 729 7 960 -3 1
Core Operating Income 2 602 2 855 -9 -3
Operating Income 2 180 2 450 -11 -4
Core Operating Income Margin 33.7% 35.9%
Operating Income Margin 28.2% 30.8%
Pharmaceuticals Division net sales +1% and Core OpInc -3% vs. PY1
(in USD bn)
1 All figures reflect the transfers of certain products between divisions, as announced on January 27, 2016. See page 34 of the Condensed Interim Financial Report for a full explanation. Pharmaceuticals Division financials
without the adjustment to the new divisional structure would have yielded net sales growth (+3%), core operating income (0%) and operating income (-1%); all in cc vs. PY.
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 25
Indication
Q1 2016
Net sales
(USD m)
Q1 2016
Growth vs. PY
(% cc)
MS 698 12%
CML 382 6%
Type 2 diabetes mellitus 283 4%
Severe allergic asthma, CSU/CIU 192 14%
aRCC 166 n/a
PsO, PsA, AS 176 n/a
COPD 146 15%
BRAF V600+ metastatic melanoma 150 n/a
MF, PV 124 44%
Thrombocytopenia6, SAA 131 n/a
HFrEF 17 n/a
Key growth drivers1 with exclusivity to 2020 and beyond
1 Selected key products for growth of Pharmaceuticals Division 2 In the US, Onbrez® Breezhaler® is approved as Arcapta® Neohaler®, Seebri® Breezhaler® as Seebri® Neohaler® and Ultibro®
Breezhaler® as Utibron® Neohaler®
3 Net sales and growth of Onbrez®, Seebri® and Ultibro®
3 3
4 Net sales of Tafinlar® + Mekinist®
5 Approved as Promacta® in the US 6 cITP and thrombocytopenia associated with hepatitis C
4
2
5
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 26
Oncology base business1 ex-Glivec® grew 7% vs. PY (in cc)
Oncology net sales (in USD m, growth in % cc)
Total Oncology sales grew 9% vs. PY in Q1, with base business1 growing 7%
In the US, Gleevec® volume share remains >50%3 with volume retention ahead of benchmark
Main growth drivers included Tasigna®, Jakavi® and Jadenu® / Exjade®
504
834
1 630
+9%
Q1 2016
3 030
Q1 2015
2 856
156
1 070
1 692
+7%
Base business1
New assets2
1 Continuing Oncology assets unaffected by the GSK transaction and excluding Gleevec® / Glivec® 2 Assets acquired in the GSK transaction which closed on March 2, 2015. These include, among others, Votrient®, Promacta®, Tafinlar® + Mekinist®
3 Volume share in the imatinib segment, i.e. Gleevec® and Gx imatinib (Source: Symphony APLD with data up to week of March 18, 2016)
Gleevec® / Glivec®
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 27
Jakavi® demonstrated promising efficacy in GvHD patients
Up to 80% of patients with HSCT develop
GvHD
JAK1/2 signaling is a key pathway leading to
inflammation and tissue damage in GvHD
Promising efficacy results incl. high ORR and
OS in both acute and chronic SR GvHD1
Pivotal trial planned (starting by Q1 2017)
Before ruxolitinib 3 weeks after ruxolitinib
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 28
Reprinted by permission from Macmillan Publishers Ltd: Zeiser R, et al. Leukemia. 2015;29(10):2062-2068, copyright 2015 (data from a trial with 95 patients with SR GvHD)
Ruxolitinib is in-licensed from Incyte Corp. ex-US for hematology, oncology and GvHD indications 1 ORR was 81.5%; 6-months OS was 79.0% and 97.4% in acute and chronic SR GvHD respectively (Leukemia 2015)
Gilenya® share in MS segment1 steadily increasing
1 Value share defined as % share of the MS segment incl. Aubagio®, Copaxone®, Gilenya®, Glatopa®,
Lemtrada®, Tecfidera®, Tysabri® and approved interferons. Source: IMS PADDS. All trademarks are the
property of their respective owners
Gilenya® value share in MS segment (US)¹ (%)
9%
10%
11%
12%
13% Sales grew 12% vs. PY in Q1
Both US and ex-US sales grew double digit
Leading ex-US value share2
Over 148,000 patients treated to date3
Gilenya® is increasingly recognized for early
efficacy switch in RMS4
2 Leading share in the MS segment (as per footnote 1) defined as global sales excl. US (Source: Evaluate Pharma) 3 Worldwide Novartis estimate in clinical trials and in post-marketing setting 4 Gilenya® Physician Attitude Trial Usage market research study (March 2016)
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 29
Entresto™: US formularies now open after being almost
fully blocked before January – but PAs remain a challenge
PA = Prior Authorization 1 Patient access calculated based on EntrestoTM inclusion in national insurance plan formularies. Patient access is total number of patients whose insurance plan includes EntrestoTM on formulary (whether or not a heart failure
patient). Percentage shown is calculated as number of patients covered by an insurance plan with EntrestoTM on formulary, divided by all patients covered by insurance plans (Medicare and Commercial respectively)
Patient access1 – Medicare
(% coverage over time)
Patient access1 – Commercial insurance (% coverage over time)
Not covered (i.e. not listed on formulary) On formulary; higher co-pay On formulary; lower co-pay
100 91
30
9
26
26
9
44
65
0%
25%
50%
75%
100%
Jul 15 Oct 15 Jan 16 Apr 16
81
35 23
22
23
44
19
43 54 56
0%
25%
50%
75%
100%
Jul 15 Oct 15 Jan 16 Apr 16
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 30
Entresto™ launch in Europe off to a much faster start than US
0.0%
0.4%
0.8%
1.2%
1.6%US
CH
DE
FR
Relative uptake (US and Europe)2
(% patient penetration)
2 Monthly patient penetration calculated as number of patients on EntrestoTM divided by pool of HFrEF
patients in country. Estimates based on sales (treated) and prevalence (pool). Data per March 31, 2016
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
TRxs NRxs
Weekly Rx trend (US only)1
(#)
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 31
1 Source: IMS TM-1 NPA (data till week ending April 1, 2016)
Entresto™ has significant potential across indications
PARAGON3
PARADISE3
PARADIGM
- ILLUSTRATIVE -
Eligible and potentially eligible patients1,2
(patient potential over time)
Post acute MI at risk of HF
(planned filing 2020+)
HFpEF (planned filing 2019)
Estimated 2016 sales of ~USD 200 m; Confident in peak sales of ~USD 5 bn in HFrEF
3 Pivotal trials with outcomes endpoints to support new indications 4 Novartis press release (April 2, 2016)
1 Currently eligible patients are defined by the label in each geography 2 Potentially eligible patients are defined by the indications studied in the ongoing / planned trials in HFpEF and post acute MI
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 32
Approved in US and Europe1
HFrEF, NYHA II-IV
CH only: QoL / symptom benefit
New analyses4 showed benefits:
In both clinically stable and least-stable patients
Vs. enalapril regardless of background therapy
With formulary access addressed, now scaling up to
deliver on Entresto™ for appropriate patients in the US
Expand promotion and SoV
Field force expanded by 50%
Evaluating further PCP field force expansion
Launched “Tomorrow” direct to consumer campaign
3
Inform patients and practices about reimbursement process
Continue EntrestoTM Central1 platform and CoverMyMeds1 services as well as the distribution of blank plan specific
PA forms directly to the HCP offices
Educate on office challenges with PA process and managed care issues, given most cardiology practices have
limited experience with PA process; each payer issues its own PA2
Expand and execute the clinical program “FortiHFy”
Two pivotal trials with outcomes endpoints to support new indications (HFpEF 2019, HF post acute MI 2020)
Broaden data in HFrEF beyond PARADIGM population
Generate additional data regarding symptomatic / QoL benefits
Generate real world evidence
1 http://www.entresto.com/info/entresto-central.jsp?usertrack.filter_applied=true&NovaId=4029462161607648418 and https://www.covermymeds.com/main/ (accessed April 11, 2016) 2 Different insurers have different PAs for the same medicine (e.g. EntrestoTM); cardiology practices face various brands which recently launched and require PAs, like EntrestoTM, PCKS9s and Corlanor®. All trademarks
are the property of their respective owners
2
1
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 33
Cosentyx®: Above expectations, outpacing competition
through strong gains in PsO
0
1000
2000
3000
4000
Cosentyx® Stelara®
0%
15%
30%
45%
Feb-15 Mar 15 Apr-15 May 15 Jun-15 Jul-15 Aug-15 Sep-15 Oct 15 Nov-15 Dec 15 Jan-16 Feb-16
Cosentyx® Humira® Stelara® Otezla®
Value share in biologics segment2
(%; office based dermatologists only)
Weekly TRx1
(#; US across indications and specialties)
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 34
1 Total TRx data across indications and specialties incl. dermatologists and rheumatologists. (Source: NPA weekly data; data till week ending April 1, 2016) 2 Biologics segment defined as Humira®, Enbrel®, Simponi®, Stelara®, Cimzia®, Cosentyx®, Otezla®, Infliximab (Source: IMS). All trademarks are the property of their respective owners
Cosentyx®: Early use in PsO ex-US expected to further expand opportunity
0% 20% 40% 60% 80% 100%
Patients naive to conventional systemics Patients naive to biologics Patients switched from biologics
1 Patients who have not been treated with a biologic therapy (i.e. anti TNFs or Stelara®) prior to starting Cosentyx® 2 Patients who have been treated with one or several biologic therapies prior to starting Cosentyx®
Note: Novartis analysis based on IMS prescription data and Service Request Forms (SRFs) in the US
1 2
Prior treatment (by treatment class)
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 35
Cosentyx®: Building a mega-blockbuster across three indications
Sales of USD 176 m in Q1
>25,000 patients on Cosentyx® worldwide3
Combined industry sales of >USD 15 bn; sales
grew >20% (MAT Nov. 2015 vs PY)4
Rheumatology launch
Encouraging early uptake in AS/PsA indications
Anti-IL17A included in GRAPPA and EULAR
treatment guidelines
Head to head superiority studies planned in PsA
and AS with Cosentyx® vs. Humira®
1 Blauvelt A et al. 52-week results from the CLEAR study. Late breaking abstract (AAD March 5, 2016) 2 ≥ 90% improvement from baseline psoriasis area & severity index score. Missing data calculated using
multiple imputation 3 Novartis analysis based on sales force reports
PASI 90 response at Week 521,2
0
10
20
30
40
50
60
70
80
90
0 4 8 12 16 20 24 28 32 36 40 44 48 52
Secukinumab 300 mg (n = 334)
Ustekinumab (n = 335)
60.6%
76.2%
p<0.0001
Week
Pe
rce
nta
ge R
esp
on
de
rs
4 Estimated worldwide industry sales in PsO/PsA/AS. PsO (US, EU, JP) was USD 7.9 bn; PsA (US, EU) was
USD 3.6 bn; AS (US, EU) was USD 3.0 bn (Source: IMS). Novartis estimates the rest of world (and JP in PsA and
AS) to account for at least USD 0.5 bn, making the total segment >USD 15 bn. The vast majority of sales comes
from biologics, incl. anti-TNFs and Stelara®
All trademarks are the property of their respective owners
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 36
H1 2016
Cosentyx®
Cosentyx®
Ilaris®
Afinitor®
PKC412
Tafinlar® + Mekinist®
FDA action in ankylosing spondylitis
FDA action in psoriatic arthritis
Regulatory filings in EU and US for hereditary periodic fevers1
FDA action for advanced non functional NET (GI / lung origin)
Regulatory filings in US and EU for both ASM and AML
PMDA action in BRAF V600+ metastatic melanoma
H2 2016
BYM338
Tafinlar® + Mekinist®
Votrient®
Afinitor®
LEE011 (+ letrozole)
Regulatory filings in EU and US for sporadic inclusion body myositis
Regulatory filings in US and EU for BRAF V600+ NSCLC
Regulatory filings in US and EU for adjuvant RCC
EU and PMDA action in advanced non functional NET
Submission2 in US 1st line HR+ HER2(-) mBC
1 Submission of Ilaris® in HPF completed in the US; EU not submitted yet 2 Submission late 2016 or early 2017 with final analysis based on the predefined progression free survival (PFS) data of the MONALEESA-2 trial, provided that events occur no later than early Q3, 2016
Achieved and expected highlights from Pharmaceuticals
regulatory newsflow
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 37
( )
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 Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 38
Solid Q1, on track for full year guidance
Absorbing Gleevec® loss of exclusivity
Delivering key launches
Alcon plan being executed
On track for full year guidance
| Novartis Q1 2016 Results | April 21, 2016 | 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
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 40
Appendix
KAE609 Malaria
CAD106 Alzheimer’s disease
HSC835 Stem cell transplantation
BGJ398 Solid tumors
LJM716 Solid tumors
FCR001 Renal transplantation
CJM112 Immune disorders
ABL001 CML9
ASB183 Solid and hematologic tumors
EMA401
Neuropathic pain
CNP520 Alzheimer’s disease
LJN452 NASH22
QGE031 CSU/IU23
QAX576 Allergic diseases
BYM338 Hip fracture
BYM338 Sarcopenia
PIM447 Hematologic tumors
BYL719 Solid tumors
VAY736 Primary Sjoegren’s syndrome
Entresto™
Post-acute myocardial infarction
LEE011 Solid tumors
QAW039 Atopic dermatitis
Tafinlar® + Mekinist®
BRAF V600+ Colorectal cancer
RTH258
DME24
Jakavi®
Early myelofibrosis
BKM120 Solid tumors
PKC412 ASM7
CTL019 Pediatric acute lymphoblastic leukemia
Tasigna® CML9 treatment free remission
LCI699 Cushing’s disease
BAF312 SPMS17
QAW039 Asthma
Entresto™
Heart failure (PEF)18
Lucentis®
ROP20
Signifor® LAR10
Cushing’s disease
INC280 NSCLC8
KAF156 Malaria
Tafinlar® + Mekinist®
BRAF V600+ NSCLC8
Votrient®
Renal cell carcinoma (adjuvant)
QVM149 Asthma
QMF149 Asthma
LEE011+ fulv HR+, HER2 (-) postmenopausal
adv. BC2 1st /2nd line
LEE011+ tmx + gsn/or NSAI + gsn HR+, HER2 (-) premenopausal
Adv. BC2 1st line
Zykadia™ ALK+ adv. NSCLC8
(Brain metastases)
Cosentyx®
nrAxSpA16
BYL719 + fulv HR+, HER2 (-) postmenopausal
Adv. BC2 2nd line
Ilaris®d Hereditary periodic fevers
Afinitor® TSC4 seizures
LEE011 + ltzb
HR+, HER2 (-) postmenopausal adv. BC2 1st line
Arzerra®c
CLL5 (relapse)
PKC412 AML3
OMB157
RMS21
ACZ885 Sec. prev. CV events12
RLX030 Acute heart failure
OAP030f
nAMD11
CTL019 DLBCL14
Arzerra®
NHL13 (refractory)
Tafinlar® + Mekinist® BRAF V600+ Melanoma (adjuvant)
Zykadia™ ALK+ adv. NSCLC8
(1st line, treatment naive)
RTH258 nAMD11
Lucentis®e
CNV6
2020 2018 2017 2016
Planned filings 2016 to 2020a
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 42
2019
New molecule
New indication
New formulation
Combination Abbreviations: fulv fulvestrant ltz letrozole tmx tamoxifen gsn goserelin NSAI Non-steroidal aromatase inhibitor
1. Sporadic inclusion body myositis
2. Breast cancer
3. Acute myeloid leukemia
4. Tuberous sclerosis complex
5. Chronic lymphocytic leukemia
6. Choroidal neovascularization (CNV) secondary to
conditions other than macular degeneration and
pathologic myopia
7. Aggressive systemic mastocytosis
8. Non-small cell lung cancer
9. Chronic myeloid leukemia
10. Long-acting release
11. Neovascular age-related macular degeneration
12. Secondary prevention of cardiovascular events
13. Non-Hodgkin’s lymphoma
14. Diffuse large B-cell lymphoma
15. Multiple Sclerosis
16. Non-radiographic axial spondyloarthritis
17. Secondary progressive multiple sclerosis
18. Preserved ejection fraction
19. Graft-Versus-Host Disease
20. Retinopathy of prematurity
21. Relapsing multiple sclerosis
22. Non-alcoholic steatohepatitis
23. Chronic spontaneous urticaria / Inducible urticaria
24. Diabetic macular edema
a) AMG 334 is not included in this view. AMG 334 is part of the global collaboration
with Amgen to commercialize and develop neuroscience treatments
b) Submission anticipated late 2016 or early 2017
c) Submitted in US and EU in Q1 2016
d) Submitted in US in Q1 2016
e) Submitted in EU in Q1 2016
f) Also known as Fovista® (pegpleranib) and E10030. This product is being
developed by Ophthotech Corp. Ophthotech has licensed ex-US
commercialization rights to Novartis under a Licensing and Commercialization
Agreement
Jakavi®
GVHD19
Gilenya® Pediatric MS15
Key definitions and trademarks
This presentation contains several important words or phrases that we define as below: AML: Acute myeloid leukemia
AS: Ankylosing spondylitis
ASM: Aggressive systemic mastocytosis
Approval: In Pharmaceuticals and Alcon 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
AS: Ankylosing Spondylitis
Base business: continuing Oncology assets unaffected by the GSK transaction
cc: constant currencies
cITP: chronic immune thrombocytopenia
CML: Chronic myeloid leukemia
COPD: Chronic Obstructive Pulmonary Disease
CSU / CIU: Chronic spontaneous urticaria / Chronic idiopathic urticaria
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
GvHD: Graft vs. Host Disease
GI: Gastrointestinal
HF: Heart Failure
HFrEF: Heart failure with reduced ejection fraction
HR+/HER2- mBC: Hormone Receptor positive / Human Epidermal growth factor Receptor 2 negative
metastatic breast cancer
HSCT: Hematopoietic stem cell transplantation
LoE: Loss of exclusivity
MAT: Moving annual total
MF: Myelofibrosis
MI: Myocardial infarction
MS: Multiple sclerosis
New assets: Assets acquired in the GSK transaction which closed on March 2, 2015
NET: Neuroendocrine tumor
NYHA: New York Heart Association (functional classification class I – IV)
NSCLC: Non-small cell lung cancer
ORR: Overall response rate
OS: Overall Survival
PA: Prior authorization
PASI 90: 90% reduction in Psoriasis Area Severity Index from baseline
PsA: Psoriatic arthritis
PsO: Psoriasis
PY: Prior Year
PV: Polycythemia Vera
QoL: Quality of life
RCC: Renal cell cancer
SAA: Severe aplastic anemia
SR GvHD: Steroid resistant graft vs host disease
Trademarks
Aubagio® and Lemtrada® are registered trademarks of Genzyme Corporation
Cimzia® is a registered trademark of UCB Group of Companies
Copaxone® is a registered trademark of Teva Pharmaceutical Industries Ltd
Corlanor® and Enbrel® are registered trademarks of Amgen Inc.
Humira® is a registered trademark of AbbVie Ltd.
Jardiance® is a registered trademark of Boehringer Ingelheim
Otezla® is a registered trademark of Celgene Corporation
Stelara® and Simponi® are registered trademarks of Janssen Biotech, Inc.
Tecfidera® and Tysabri® are registered trademarks of Biogen MA Inc.
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation 43