Novartis delivers strong full year performance, 10% net sales and 18% core operating income growth (cc¹), with margin expansion. Continuing innovation momentum with multiple positive Ph3 readouts
Ad hoc announcement pursuant to Art. 53 LR
Full year (continuing operations2)
- Net sales grew +10% (cc, +8% USD) with core operating income growing +18% (cc, +11% USD)
- Sales growth was mainly driven by continued strong performance from Entresto (+31% cc), Kesimpta (+99% cc), Kisqali (+75% cc), Pluvicto (+261% cc) and Scemblix (+179% cc)
- Operating income increased +39% (cc, +23% USD). Net income increased +62% (cc, +42% USD). Free cash flow from continuing operations was USD 13.2 billion (+9% USD)
- EPS grew +70% (cc, +49% USD) to USD 4.13. Core EPS was USD 6.47 growing +25% (cc, +18% USD)
Fourth quarter (continuing operations)
- Net sales grew +10% (cc, +8% USD) with core operating income growing +13% (cc, +5% USD),
- Sales growth was mainly driven by continued strong performance from Entresto (+26% cc), Kisqali (+76% cc), Kesimpta (+73% cc), Cosentyx (+21% cc) and Pluvicto (+53% cc)
- Q4 selected innovation milestones:
- Fabhalta FDA approval for treatment of adults with PNH (both previously treated and treatment-naïve)
- Cosentyx FDA approval for the treatment of moderate to severe HS in adults
- Cosentyx FDA approval for intravenous formulation in three indications (PsA, AS, nr-axSpA)
- Iptacopan Ph3 APPLAUSE-IgAN met its primary endpoint in IgAN patients
- Atrasentan Ph3 ALIGN study met its primary endpoint in IgAN patients
- Iptacopan Ph3 APPEAR-C3G met its primary endpoint in C3G patients
- Scemblix Ph3 ASC4FIRST study met its primary endpoints in 1L Ph+ CML-CP patients (January)
Dividend, 2024 guidance; updated mid-term guidance
- Dividend of CHF 3.30 per share, an increase of 3.1%, proposed for 2023
- 2024 guidance3 – Net sales expected to grow mid single digit and core operating income expected to grow high single digit
- Updated mid-term guidance – Net sales expected to grow 5% cc CAGR 2023-2028 with core operating income margin expanding to ~40%+ by 2027
1 Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 49 of the Condensed Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. .
2 As defined on page 37 of the Condensed Financial Report, Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing Corporate activities and Discontinued operations include operational results from the Sandoz business.
3 Please see detailed guidance assumptions on page 7
Basel, January 31, 2024 - commenting on 2023 results, Vas Narasimhan, CEO of Novartis, said: “Novartis completed its strategic transformation into a pure-play innovative medicines company and continued its relentless pursuit of sustainable shareholder value creation. Our robust operational performance continues, with strong double-digit top and bottom-line growth, for the quarter and full year. We delivered ten positive Ph3 readouts on assets with significant sales potential, over the past year. The very strong performance of our key growth drivers and pipeline underscores the confidence in our growth (5% cc CAGR 2023-2028) and margin (40%+ by 2027) mid-term guidance.”
Key figures1
Continuing operations | |||||||||
Q4 2023 | Q4 2022 | % change | FY 2023 | FY 2022 | % change | ||||
USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||
Net sales | 11 423 | 10 576 | 8 | 10 | 45 440 | 42 206 | 8 | 10 | |
Operating income | 2 582 | 1 755 | 47 | 68 | 9 769 | 7 946 | 23 | 39 | |
Net income | 2 638 | 1 315 | 101 | 130 | 8 572 | 6 049 | 42 | 62 | |
EPS (USD) | 1.29 | 0.62 | 108 | 140 | 4.13 | 2.77 | 49 | 70 | |
Free cash flow | 2 141 | 3 462 | -38 | 13 160 | 12 123 | 9 | |||
Core operating income | 3 821 | 3 645 | 5 | 13 | 16 372 | 14 794 | 11 | 18 | |
Core net income | 3 126 | 2 963 | 6 | 11 | 13 446 | 11 946 | 13 | 19 | |
Core EPS (USD) | 1.53 | 1.39 | 10 | 16 | 6.47 | 5.48 | 18 | 25 |
Strategy Update
Our focus
During 2023, Novartis completed our transformation into a “pure-play” innovative medicines business. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies - the US, China, Germany and Japan.
Our priorities
- Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
- Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
- Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.
Financials
Following the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz business the Company reported its consolidated financial statements for the current and prior years as “continuing operations” and “discontinued operations.”
Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing corporate activities. Discontinued operations include the Sandoz Division and selected portions of corporate activities attributable to Sandoz’s business, as well as certain expenses related to the spin-off.
Following the spin-off of the Sandoz business, Novartis operates as a single global operating segment focused innovative medicines company.
The commentary below focuses on continuing operations. We also provide information on discontinued operations, which mainly includes Sandoz and allocated corporate activities.
Continuing operations
Fourth quarter
Net sales were USD 11.4 billion (+8%, +10% cc) in the fourth quarter driven by volume growth of 13 percentage points. Generic competition had a negative impact of 3 percentage points and pricing had no impact.
Operating income was USD 2.6 billion (+47%, +68% cc), mainly driven by higher net sales and lower restructuring charges, partly offset by higher SG&A and R&D investments.
Net income was USD 2.6 billion (+101%, +130% cc), mainly driven by higher operating income and non-recurring favorable tax impacts. EPS was USD 1.29 (+108%, +140% cc), benefiting from lower weighted average number of shares outstanding.
Core operating income was USD 3.8 billion (+5%, +13% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income growth in USD was impacted by negative 2 percentage points from the effect of mid-December currency devaluation in Argentina1. Core operating income margin was 33.5% of net sales, decreasing 1.0 percentage point (+1.0 percentage point cc).
Core net income was USD 3.1 billion (+6%, +11% cc), mainly due to higher core operating income. Core EPS was USD 1.53 (+10%, +16% cc), benefiting from lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 2.1 billion (-38% USD), compared with USD 3.5 billion in the prior year quarter driven by lower net cash flows from operating activities.
1 IFRS® Accounting Standards requires for our Argentina subsidiary, as it operates in a hyperinflation economy, to translate for consolidation purposes their full year income statement to our USD presentation currency using the ARS closing rate, and not using the average exchange rate for the period. This results in the 9-months and the Q4 devaluation impact being recognized in Q4.
Full year
Net sales were USD 45.4 billion (+8%, +10% cc) in the full year, driven by volume growth of 16 percentage points, partly offset by price erosion of 2 percentage points and the negative impact from generic competition of 4 percentage points.
Operating income was USD 9.8 billion (+23%, +39% cc), mainly driven by higher net sales, lower restructuring charges, and income from legal matters, partly offset by higher impairments and higher SG&A and R&D investments.
Net income was USD 8.6 billion (+42%, +62% cc), mainly driven by higher operating income and non-recurring favorable tax impacts. EPS was USD 4.13 (+49%, +70% cc).
Core operating income was USD 16.4 billion (11%, +18% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income margin was 36.0% of net sales, increasing 0.9 percentage points (+2.4 percentage points cc).
Core net income was USD 13.4 billion (+13%, +19% cc), mainly due to higher core operating income. Core EPS was USD 6.47 (+18%, +25% cc), benefiting from lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 13.2 billion (+9% USD), compared with USD 12.1 billion in 2022 driven by higher net cash flows from operating activities.
Discontinued operations
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz prior to the spin-off up to the distribution date of October 3, 2023, and certain other expenses related to the spin-off. Included in 2023 is also the IFRS Accounting Standards non-cash, non-taxable net gain on the distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, representing mainly the excess amount of the IFRS Accounting Standards distribution liability, which is the estimated fair value of the Sandoz business distributed to Novartis AG shareholders, over the then carrying value of Sandoz business net assets. There were no operating results for the fourth quarter 2023 following the distribution date. The prior year includes the results for the full period.
Fourth quarter
Net income from discontinued operations amounted to USD 5.8 billion, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, compared to USD 151 million in prior year.
Full year
Discontinued operations net sales in 2023 were USD 7.4 billion, compared to USD 9.4 billion in 2022 and operating income amounted to USD 265 million compared to USD 1.3 billion in 2022.
Net income from discontinued operations in 2023 amounted to USD 6.3 billion, compared to USD 906 million in 2022, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders, which amounted to USD 5.9 billion.
Total Company
Fourth quarter
Total Company net income was USD 8.5 billion in 2023, compared to USD 1.5 billion in 2022 and basic EPS was USD 4.14 compared to USD 0.69 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for total Company amounted to USD 2.5 billion and free cash flow amounted to USD 2.1 billion.
Full year
Total Company, net income amounted to USD 14.9 billion in 2023, compared to USD 7.0 billion in 2022, and basic earnings per share was USD 7.15 compared to USD 3.19 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for the total company amounted to USD 14.5 billion, and free cash flow amounted to USD 13.2 billion.
Q4 key growth drivers
Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q4 growth) including:
Entresto | (USD 1 635 million, +26% cc) sustained robust demand-led growth, with increased patient share across all geographies |
Kisqali | (USD 610 million, +76% cc) sales grew strongly across all regions, based on increasing recognition of consistently reported overall survival in HR+/HER2- advanced breast cancer |
Kesimpta | (USD 641 million, +73% cc) sales grew across all regions driven by increased demand and strong access |
Cosentyx | (USD 1 303 million, +21% cc) US sales grew (+17%) and ex-US sales (+26% cc), benefitting from lower prior year base (including revenue deduction adjustments in the US) |
Pluvicto | (USD 273 million, +53% cc) continued sales growth in the US. Supply now unconstrained, focusing on initiating new patients |
Ilaris | (USD 376 million, +29% cc) sales grew across all regions |
Leqvio | (USD 123 million, +190% cc) launch is ongoing, with focus on patient on-boarding, removing access hurdles and enhancing medical education |
Scemblix | (USD 125 million, +143% cc) continued its strong launch uptake demonstrating the high unmet need in CML |
Jakavi | (USD 444 million, +14% cc) sales grew in emerging growth markets, Europe and Japan, driven by strong demand in both myelofibrosis and polycythemia vera indications |
Xolair | (USD 378 million, +16% cc) sales grew across all regions |
Tafinlar + Mekinist | (USD 486 million, +7% cc) sales grew mainly in the US and emerging growth markets, partly offset by decline in Europe |
Promacta/Revolade | (USD 563 million, +4% cc) sales grew mainly in the US driven by increased use in chronic ITP and severe aplastic anemia |
Piqray | (USD 131 million, +18% cc) sales grew mainly in the US |
Lutathera | (USD 147 million, +13% cc) sales grew across all regions due to increased demand |
Emerging Growth Markets* | Grew +18% (cc) overall. China grew (+38% cc) to USD 0.8 billion, due to lower prior year base. For the full year, China grew +17% (cc) *All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand |
Net sales of the top 20 brands in 2023
Q4 2023 | % change | FY 2023 | % change | |||
USD m | USD | cc | USD m | USD | cc | |
Entresto | 1 635 | 27 | 26 | 6 035 | 30 | 31 |
Cosentyx | 1 303 | 21 | 21 | 4 980 | 4 | 5 |
Promacta/Revolade | 563 | 4 | 4 | 2 269 | 9 | 10 |
Kesimpta | 641 | 74 | 73 | 2 171 | 99 | 99 |
Kisqali | 610 | 71 | 76 | 2 080 | 69 | 75 |
Tafinlar + Mekinist | 486 | 5 | 7 | 1 922 | 9 | 11 |
Tasigna | 446 | -6 | - 6 | 1 848 | -4 | -3 |
Jakavi | 444 | 14 | 14 | 1 720 | 10 | 12 |
Lucentis | 301 | -24 | - 25 | 1 475 | -21 | -20 |
Xolair | 378 | 17 | 16 | 1 463 | 7 | 9 |
Ilaris | 376 | 25 | 29 | 1 355 | 20 | 22 |
Sandostatin | 316 | 4 | 5 | 1 314 | 6 | 8 |
Zolgensma | 286 | -7 | - 4 | 1 214 | -11 | -9 |
Pluvicto | 273 | 53 | 53 | 980 | 262 | 261 |
Gilenya | 154 | -55 | - 55 | 925 | -54 | -54 |
Exforge Group | 156 | -2 | - 1 | 713 | -4 | -1 |
Galvus Group | 153 | -27 | - 17 | 692 | -19 | -11 |
Diovan Group | 147 | 4 | 6 | 613 | -6 | -1 |
Lutathera | 147 | 15 | 13 | 605 | 28 | 28 |
Gleevec/Glivec | 128 | -27 | - 25 | 561 | -25 | -22 |
Top 20 brands total | 8 943 | 13 | 14 | 34 935 | 10 | 12 |
R&D update - key developments from the fourth quarter
New approvals
Fabhalta (iptacopan) | Approved in the US as the first oral monotherapy for the treatment of adults (both previously treated and treatment-naïve patients) with paroxysmal nocturnal hemoglobinuria (PNH) |
Cosentyx | Approved in the US as the first new biologic therapy for the treatment of moderate to severe hidradenitis suppurativa (HS) in adults in nearly a decade Approved in the US as an intravenous formulation in three indications: psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial SpA |
Results from ongoing trials and other highlights
Scemblix (asciminib) |
By: GlobeNewswire
- 31 Jan 2024
Return to news
Upcoming Life Sciences Events
|