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2020-10-27

Novartis delivers solid Q3 performance with 11% core operating income growth, net sales in line with prior year, strong pipeline progression. Upgrades full year core operating income guidance.

  • Q3 net sales from continuing operations1 were in line with prior year (cc2, +1% USD):
    • Growth drivers included Entresto USD 632 million (+45% cc), Zolgensma USD 291 million (+79% cc), Cosentyx USD 1 012 million (+7% cc), Kisqali USD 183 million (+50% cc) and Promacta/Revolade USD 442 million (+16% cc)
    • Sandoz Biopharmaceuticals grew 13% (cc, +16% USD), with strong growth across all regions
    • COVID-19 negatively impacted demand, particularly: dermatology, ophthalmology and Sandoz retail
  • Q3 core operating income grew 11% (cc, +9% USD) due to lower spending and improved gross margin
  • Q3 net income in line with prior year (cc, -5% USD) mainly due to legal provisions
  • Q3 free cash flow2 of USD 2.7 billion (-32%) mainly due to payments related to legal settlements
  • Key innovation milestones:
    • Kesimpta approved and launched in the US for treatment of relapsing forms of multiple sclerosis
    • Piqray received EC approval for HR+/HER2- advanced breast cancer with a PIK3CA mutation
    • Leqvio (Inclisiran) received positive CHMP opinion for hypercholesterolemia/mixed dyslipidemia (Oct)
    • Adakveo received positive CHMP opinion for prevention of vaso-occlusive crises in sickle cell disease
  • Issued the healthcare industry’s first sustainability-linked bond to increase access to medicines
  • Received upgrades to ESG scores from third party ratings agencies including MSCI
  • YTD net sales from continuing operations1 grew 4% (cc2, +2% USD) and core2 operating income grew 16% (cc, 12% USD):
    • Innovative Medicines grew sales 5% (cc, +4% USD) and core operating income 13% (cc, +9% USD)
    • Sandoz sales were in line (cc, -2% USD) and core operating income grew 19% (cc, +15% USD)
  • 2020 guidance3 for continuing operations1 Net sales expected to grow mid single digit; core operating income upgraded to low double digit to mid teens (upgraded from low double digit)

Basel, October 27, 2020 - commenting on the quarter, Vas Narasimhan, CEO of Novartis, said:

Novartis continues to deliver solid performance with double digit increases in core operating income and expanding margins, despite the impact of COVID-19 on healthcare systems. Our key growth drivers and launches are performing well. The strength of Novartis’ underlying operations enables us to upgrade our Full Year 2020 core operating income guidance. We are excited about the progress of our pipeline including the recent US approval of Kesimpta for the treatment of relapsing forms of multiple sclerosis. We continue to integrate ESG across all our operations, with commitments to ambitious climate and access to medicines targets, as we strive for more sustained impact on our journey to become an ESG leader.

Key Figures                                                                    Continuing Operations                             
  Q3 2020 Q3 2019 % change 9M 2020 9M 2019 % change
  USD m USD m USD cc USD m USD m USD cc
Net sales 12 259 12 172 1 0 35 889 35 042 2 4
Operating income 2 412 2 358 2 9 7 508 7 263 3 11
Net income 1 932 2 041 -5 0 5 972 6 018 -1 6
EPS (USD) 0.85 0.90 -6 0 2.62 ...

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