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Novartis continues strong momentum in Q3 with 10% sales growth, 20% core operating income growth, and important innovation milestones; raises FY 2024 guidance
Ad hoc announcement pursuant to Art. 53 LR
- Q3 net sales grew +10% (cc1, +9% USD) with core operating income up +20% (cc, +17% USD)
- Sales growth driven by continued strong performance from Entresto (+26% cc), Cosentyx (+28% cc), Kisqali (+43% cc), Kesimpta (+28% cc), Pluvicto (+50% cc) and Leqvio (+119% cc)
- Core operating income margin 40.1%, +340 basis points (cc), mainly driven by higher net sales
- Q3 operating income grew +123% (cc, +106% USD); net income up +121% (cc, +111% USD)
- Q3 core EPS grew +20% (cc, +18% USD) to USD 2.06
- Q3 free cash flow1 of USD 6.0 billion (+18% USD) driven by higher net cash flows from operating activities
- Strong nine months performance with sales up +11% (cc, +9% USD) and core operating income up +20% (cc, +17% USD)
- Q3 selected innovation milestones:
- Kisqali FDA approval and positive CHMP opinion for HR+/HER2- stage II and III eBC
- Fabhalta FDA accelerated approval for IgAN
- Pluvicto FDA filing for pre-taxane mCRPC
- Full-year 2024 guidance raised2
- Net sales expected to grow low double-digit (from high single to low double-digit)
- Core operating income expected to grow high teens (from mid to high teens)
Basel, October 29, 2024 – commenting on Q3 2024 results, Vas Narasimhan, CEO of Novartis, said:
“Novartis delivered another quarter of strong operational performance in Q3, with sales up 10% and core operating income up 20%. All key growth drivers contributed to the momentum. We achieved important indications expansions for Kisqali in early breast cancer and Fabhalta in IgA nephropathy, and we completed our PSMAfore filing for Pluvicto in the US. With the momentum in our business and pipeline, we were able to once again upgrade our full-year guidance and remain highly confident in our mid-term outlook.”
| Key figures | Continuing operations3 | ||||||||
| Q3 2024 | Q3 2023 | % change | 9M 2024 | 9M 2023 | % change | ||||
| USD m | USD m | USD | cc | USD m | USD m | USD | cc | ||
| Net sales | 12 823 | 11 782 | 9 | 10 | 37 164 | 34 017 | 9 | 11 | |
| Operating income | 3 627 | 1 762 | 106 | 123 | 11 014 | 7 187 | 53 | 61 | |
| Net income | 3 185 | 1 513 | 111 | 121 | 9 119 | 5 934 | 54 | 62 | |
| EPS (USD) | 1.58 | 0.73 | 116 | 127 | 4.50 | 2.84 | 58 | 67 | |
| Free cash flow | 5 965 | 5 043 | 18 | 12 618 | 11 019 | 15 | |||
| Core operating income | 5 145 | 4 405 | 17 | 20 | 14 635 | 12 551 | 17 | 20 | |
| Core net income | 4 133 | 3 585 | 15 | 17 | 11 822 | 10 320 | 15 | 18 | |
| Core EPS (USD) | 2.06 | 1.74 | 18 | 20 | 5.83 | 4.95 | 18 | 21 | |
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 46 of the Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2. Please see detailed guidance assumptions on page 7. 3. As defined on page 35 of the Interim 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.
Strategy
Our focus
In 2023, Novartis completed its 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, shareholder approval of the spin-off of Sandoz, Novartis reported its consolidated financial statements 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.
While the commentary below focuses on continuing operations, we also provide information on discontinued operations.
Continuing operations
Third quarter
Net sales were USD 12.8 billion (+9%, +10% cc), with volume contributing 12 percentage points to growth. Generic competition had a negative impact of 2 percentage points and pricing was flat.
Operating income was USD 3.6 billion (+106%, +123% cc), mainly driven by lower impairments and higher net sales, partly offset by higher R&D investments.
Net income was USD 3.2 billion (+111%, +121% cc), mainly driven by higher operating income. EPS was USD 1.58 (+116%, +127% cc), benefiting from the lower weighted average number of shares outstanding.
Core operating income was USD 5.1 billion (+17%, +20% cc), mainly driven by higher net sales, partly offset by higher R&D investments. Core operating income margin was 40.1% of net sales, increasing 2.7 percentage points (+3.4 percentage points cc).
Core net income was USD 4.1 billion (+15%, +17% cc), mainly due to higher core operating income. Core EPS was USD 2.06 (+18%, +20% cc), benefiting from the lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 6.0 billion (+18% USD), compared with USD 5.0 billion in the prior-year quarter, driven by higher net cash flows from operating activities from continuing operations.
Nine months
Net sales were USD 37.2 billion (+9%, +11% cc) with volume contributing 14 percentage points to growth. Generic competition had a negative impact of 2 percentage points and pricing had a negative impact of 1 percentage point.
Operating income was USD 11.0 billion (+53%, +61% cc), mainly driven by higher net sales, lower impairments and restructuring charges, partly offset by prior-year one-time income from legal matters and higher R&D investments.
Net income was USD 9.1 billion (+54%, +62% cc), mainly driven by higher operating income. EPS was USD 4.50 (+58%, +67% cc), benefiting from the lower weighted average number of shares outstanding.
Core operating income was USD 14.6 billion (+17%, +20% cc), mainly driven by higher net sales, partly offset by higher R&D investments. Core operating income margin was 39.4% of net sales, increasing 2.5 percentage points (+3.2 percentage points cc).
Core net income was USD 11.8 billion (+15%, +18% cc), mainly due to higher core operating income. Core EPS was USD 5.83 (+18%, +21% cc), benefiting from the lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 12.6 billion (+15% USD), compared with USD 11.0 billion in the prior-year period, driven by higher net cash flows from operating activities from continuing operations.
Discontinued operations
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz and certain other expenses related to the spin-off of the Sandoz business.
Third quarter
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the third quarter of 2024 related to discontinued operations. In the third quarter of 2023, discontinued operations net sales were USD 2.5 billion, operating loss amounted to USD 86 million and net income from discontinued operations was USD 250 million. For further details see Note 3 “Significant acquisition of businesses and spin-off of Sandoz business” and Note 11 “Discontinued operations” to the condensed interim consolidated financial statements.
Nine months
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the first nine months of 2024 related to discontinued operations. In the first nine months of 2023, discontinued operations net sales were USD 7.4 billion, operating income amounted to USD 265 million and net income from discontinued operations was USD 440 million. For further details see Note 3 “Significant acquisition of businesses and spin-off of Sandoz business” and Note 11 “Discontinued operations” to the condensed interim consolidated financial statements.
Total Company
Third quarter
Total Company net income was USD 3.2 billion in 2024, compared to USD 1.8 billion in 2023 and basic EPS was USD 1.58 compared to USD 0.85 in prior year quarter. Net cash flows from operating activities for total Company amounted to USD 6.3 billion and free cash flow amounted to USD 6.0 billion.
Nine months
Total Company net income was USD 9.1 billion in 2024, compared to USD 6.4 billion in 2023 and basic EPS was USD 4.50 compared to USD 3.05 in prior year. Net cash flows from operating activities for total Company amounted to USD 13.4 billion and free cash flow amounted to USD 12.6 billion.
Q3 key growth drivers
Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q3 growth) including:
| Entresto | (USD 1 865 million, +26% cc) sustained robust, demand-led growth, with increased penetration in the US and Europe following guideline-directed medical therapy in heart failure, as well as in China with increased penetration in hypertension |
| Cosentyx | (USD 1 693 million, +28% cc) sales grew mainly in the US, Europe and emerging growth markets, driven by recent launches (including the HS indication and the IV formulation in the US) and volume growth in core indications |
| Kisqali | (USD 787 million, +43% cc) sales grew strongly across all regions, based on increasing recognition of its overall survival benefit in HR+/HER2- advanced breast cancer and Category 1 NCCN guidelines recommendation |
| Kesimpta | (USD 838 million, +28% cc) sales grew reflecting increased demand for a high efficacy product with convenient self-administered dosing; the prior-year period benefited from a one-time revenue deduction adjustment in Europe |
| Pluvicto | (USD 386 million, +50% cc) sales grew in the US and Europe. Q3 sales benefited from a one-time revenue deduction adjustment in Europe. With supply now unconstrained, the focus is on increasing share in established RLT sites, while opening new sites and referral pathways, and initiating new patients |
| Leqvio | (USD 198 million, +119% cc) continued to show steady growth, with a focus on increasing account and patient adoption, and continuing medical education |
| Jakavi | (USD 500 million, +18% cc) sales grew across all regions driven by strong demand across indications |
| Scemblix | (USD 182 million, +72% cc) sales grew across all regions demonstrating the continued high unmet need in CML |
| Tafinlar + Mekinist | (USD 534 million, +12% cc) sales grew mainly in the US and emerging growth markets, driven by increased demand |
| Xolair | (USD 418 million, +15% cc) grew mainly in emerging growth markets and Europe |
| Fabhalta | (USD 44 million) launch continues in PNH with an approval in IgAN in Q3 |
| Ilaris | (USD 372 million, +12% cc) sales grew across all regions, led by the US and Europe |
| Lutathera | (USD 190 million, +19% cc) sales grew across all regions due to increased demand and earlier line adoption (within indication) in the US and Japan |
| Emerging Growth Markets* | Grew +12% (cc) overall. China grew +18% (cc) to USD 1.0 billion, mainly driven by Entresto, Cosentyx and Leqvio |
*All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand
Net sales of the top 20 brands in the third quarter and nine months
| Q3 2024 | % change | 9M 2024 | % change | |||
| USD m | USD | cc | USD m | USD | cc | |
| Entresto | 1 865 | 26 | 26 | 5 642 | 28 | 30 |
| Cosentyx | 1 693 | 27 | 28 | 4 545 | 24 | 25 |
| Kesimpta - excl. PY revenue deduction adjust. | 838 | 28 55 | 28 56 | 2 274 | 49 61 | 49 62 |
| Kisqali | 787 | 40 | 43 | 2 131 | 45 | 48 |
| Promacta/Revolade | 569 | -1 | 0 | 1 633 | -4 | -3 |
| Tafinlar + Mekinist | 534 | 11 | 12 | 1 531 | 7 | 9 |
| Jakavi | 500 | 17 | 18 | 1 449 | 14 | 16 |
| Tasigna | 419 | -10 | -9 | 1 260 | -10 | -9 |
| Xolair | 418 | 13 | 15 | 1 244 | 15 | 17 |
| Ilaris | 372 | 11 | 12 | 1 096 | 12 | 16 |
| Pluvicto - excl. revenue deduction adjust. | 386 | 51 37 | 50 36 | 1 041 | 47 42 | 47 42 |
| Sandostatin Group | 305 | -10 | -8 | 973 | -3 | -1 |
| Zolgensma | 308 | 0 | 1 | 952 | 3 | 4 |
| Lucentis | 245 | -33 | -32 | 834 | -29 | -28 |
| Exforge Group | 174 | -7 | -4 | 544 | -2 | 1 |
| Lutathera | 190 | 19 | 19 | 534 | 17 | 17 |
| Leqvio | 198 | 120 | 119 | 531 | 129 | 130 |
| Scemblix | 182 | 72 | 72 | 482 | 67 | 69 |
| Galvus Group | 159 | -12 | -6 | 458 | -15 | -8 |
| Diovan Group | 150 | -2 | 2 | 450 | -3 | 1 |
| Top 20 brands total | 10 292 | 17 | 18 | 29 604 | 17 | 19 |
R&D update - key developments from the third quarter
New approvals
| Kisqali (ribociclib) | FDA approved Kisqali with a broad indication for HR+/HER2- stage II and III early breast cancer (eBC) at high risk of recurrence, approximately doubling the population eligible for CDK4/6 inhibitor adjuvant therapy, with the inclusion of those without nodal involvement. In addition, the CHMP issued a positive opinion for Kisqali in eBC in October. |
| Fabhalta (iptacopan) | FDA granted accelerated approval to Fabhalta for the reduction of proteinuria in adults with primary immunoglobulin A nephropathy (IgAN) at risk of rapid disease progression. |
Regulatory updates
| Pluvicto (lutetium Lu177 vipivotide tetraxetan) | Completed FDA submission for Pluvicto pre-taxane mCRPC label expansion based on the positive Phase III PSMAfore study. |
| Scemblix (asciminib) | FDA granted Priority Review status to Scemblix for the treatment of newly diagnosed adult patients with Philadelphia chromosome-positive CML in chronic phase (Ph+ CML-CP). Scemblix is also under regulatory review in this indication in key international markets worldwide, including in China and Japan. |
| Fabhalta (iptacopan) | Submissions for the treatment of C3 glomerulopathy (C3G) completed in the EU, China and Japan. |
Results from ongoing trials and other highlights
| Kisqali (ribociclib) | Results from a four-year post-hoc analysis of the pivotal Phase III NATALEE trial showed the addition of Kisqali to endocrine therapy (ET) in patients with stage II and III HR+/HER2- eBC reduced the risk of recurrence by 28.5% compared to ET alone. This invasive disease-free survival benefit was consistent across all pre-specified patient subgroups, including those with node-negative disease. Results were also consistent across secondary efficacy endpoints, with a trend for improvement in overall survival. Safety and tolerability remained consistent with previously reported results. Data presented at ESMO Congress 2024. |
| Leqvio (inclisiran) | In the Phase III V-MONO study, Leqvio demonstrated clinically meaningful and statistically significant low-density lipoprotein cholesterol (LDL-C) lowering versus both placebo and ezetimibe in patients who were at low or moderate risk of developing atherosclerotic cardiovascular disease (ASCVD) and not receiving lipid-lowering therapy. Novartis plans to present results from this trial at an upcoming medical meeting and share with regulatory agencies including FDA. |
| Kesimpta (ofatumumab) | Data from the ALITHIOS open-label extension study showed first-line Kesimpta treatment for up to six years led to less disability and disease progression in recently diagnosed (≤3 years) and treatment-naïve people with relapsing multiple sclerosis (RMS), compared to those who switched from teriflunomide. In the separate US-based single-arm OLIKOS Phase IIIb study, all clinically stable RMS patients who switched from intravenous anti-CD20 therapy to Kesimpta showed no new gadolinium-enhancing (Gd+) T1 lesions at 12 months. Data from both studies were presented at the ECTRIMS 2024 Annual Meeting. |
| Pelabresib | Based on Novartis review of 48-week data from the Phase III MANIFEST-2 study, longer follow-up time is needed to determine, in consultation with Health Authorities, the regulatory path for pelabresib in myelofibrosis. We will continue to follow patients in MANIFEST-2 and evaluate the potential for additional studies to support registration. The 48-week data will be presented at an upcoming medical meeting. |
| XXB750 | Novartis will not advance further development of XXB750 in resistant hypertension and heart failure, following current scientific assessment and review of available data from early investigational studies. |
| BD&L |
By: GlobeNewswire
- 29 Oct 2024
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