October 26, 2021 – commenting on the quarter, Vas Narasimhan, CEO of Novartis, said:
“Novartis delivered strong Innovative Medicines performance, driven by the continued momentum of Cosentyx and Entresto, allowing us to raise peak sales guidance for these products.
Rejuvenation of our portfolio continues, from our key brands which include Kesimpta, Leqvio, Zolgensma and the oncology portfolio.
We are also commencing a strategic review of Sandoz to maximize shareholder value. We remain confident in the strength of our pipeline and launch brands to fuel the growth of our company in the mid to longer term.”
| Key figures¹ | ||||||||
| Q3 2021 | Q3 2020 | % change | 9M 2021 | 9M 2020 | % change | |||
| USD m | USD m | USD | cc | USD m | USD m | USD | cc | |
| Net sales | 13 030 | 12 259 | 6 | 5 | 38 397 | 35 889 | 7 | 4 |
| Operating income | 3 233 | 2 412 | 34 | 32 | 9 127 | 7 508 | 22 | 18 |
| Net income | 2 758 | 1 932 | 43 | 41 | 7 712 | 5 972 | 29 | 26 |
| EPS (USD) | 1.23 | 0.85 | 45 | 44 | 3.44 | 2.62 | 31 | 28 |
| Free cash flow | 4 423 | 2 697 | 64 | 10 255 | 8 349 | 23 | ||
| Core operating income | 4 467 | 4 069 | 10 | 9 | 12 769 | 11 915 | 7 | 4 |
| Core net income | 3 830 | 3 467 | 10 | 9 | 10 959 | 10 124 | 8 | 5 |
| Core EPS (USD) | 1.71 | 1.52 | 13 | 11 | 4.88 | 4.44 | 10 | 7 |
Strategic review of the Sandoz Division
Novartis has commenced a strategic review of the Sandoz Division. The review will explore all options, ranging from retaining the business to separation, in order to determine how to best maximize value for our shareholders.
Sandoz is a global leader in generic pharmaceuticals and biosimilars. Its global portfolio covers all major therapeutic areas with a global market leadership position in biosimilars, generic antibiotics and oncology medicines.
Financials
Third quarter
Net sales were USD 13.0 billion (+6%, +5% cc) in the third quarter. Volume contributed 9 percentage points to sales growth, driven by Entresto, Cosentyx, Kesimpta and Jakavi.
Volume growth was partly offset by price erosion of 2 percentage points and generic competition of 2 percentage points.
Operating income was USD 3.2 billion (+34%, +32% cc) predominately from higher sales and lower impairment charges, partly offset by higher investments in M&S and R&D.
Net income was USD 2.8 billion (+43%, +41% cc). EPS was USD 1.23 (+45%, +44% cc), growing faster than net income benefiting from lower weighted average number of shares outstanding.
Core operating income was USD 4.5 billion (+10%, +9% cc) benefiting from higher sales and productivity programs, partly offset by higher investments in M&S and R&D.
Core operating income margin was 34.3% of net sales, increasing by 1.1 percentage points (+1.0 percentage point cc).
Core net income was USD 3.8 billion (+10%, +9% cc). Core EPS was USD 1.71 (+13%, +11% cc), growing faster than core net income benefiting from lower weighted average number of shares outstanding.
Net cash flows from operating activities amounted to USD 4.9 billion.
Free cash flow amounted to USD 4.4 billion (+64%). This increase was driven by higher operating income adjusted for non-cash items, favorable changes in working capital and lower payments out of provisions, mainly due to legal matters in the prior year quarter.
Innovative Medicines net sales were USD 10.6 billion (+8%, +7% cc). Volume contributed 10 percentage points to sales growth. Pharmaceuticals BU sales grew +8% (cc), with continued strong growth from Entresto, Cosentyx, Kesimpta and Zolgensma.
Oncology BU grew +5% (cc) driven by strong performance from Jakavi, Promacta/Revolade and Kisqali.
Generic competition had a negative impact of 3 percentage points, mainly due to Diovan, Ciprodex and Exjade. Net pricing had a negligible impact on sales growth. Operating income was USD 2.8 billion (+40%, +38% cc).
Core operating income was USD 4.0 billion (+14%, +13% cc). Core operating income margin was 37.8% of net sales, increasing 2.0 percentage points (+1.9 percentage points cc).
Sandoz net sales were USD 2.4 billion (-1%, -2% cc). Volume increased by 7 percentage points more than offset by a negative price effect of 9 percentage points.
Sales in Europe grew +2% (cc), while sales in the US declined -20%. Global sales of Biopharmaceuticals grew +5% (cc).
Operating income was USD 440 million (+11%, +9% cc). Core operating income was USD 571 million (-13%, -15% cc). Core Operating income margin was 23.8%, decreasing 3.4 percentage points (-3.6 percentage points cc).”
