Novartis healthcare portfolio generates strong growth in first quarter of 2010

NovartisNovartis delivered a strong performance in the first quarter of 2010 - particularly the rapid expansion of recently launched products and important regulatory approvals achieved for new medicines and vaccines - as the Group made progress with a sharp focus on innovation, growth and productivity.

Net sales rose 25% (+18% cc) to USD 12.1 billion on improvements in all businesses, particularly sales of A (H1N1) pandemic flu vaccines and rapid growth of recently launched products across the Group (USD 1.9 billion). Currency movements contributed seven percentage points to reported growth. Pharmaceuticals (USD 7.3 billion, +7% cc) advanced in all regions and maintained solid volume growth. Vaccines and Diagnostics (USD 1.4 billion, +436% cc) provided USD 1.1 billion from recognition of A (H1N1) pandemic vaccine sales. Sandoz (USD 2.0 billion, +9% cc) grew on successful new product launches and integration of EBEWE Pharma following the September 2009 acquisition. All Consumer Health businesses (USD 1.5 billion, +7% cc) had good performances and grew faster than their markets.

Operating income rose 50% (+42% cc) to USD 3.5 billion on the volume-driven sales expansion and significant contributions from Vaccines and Diagnostics, while also benefitting from eight percentage points of favorable currency movements. The operating income margin improved 4.7 percentage points to 28.9% of net sales from 24.2% in the 2009 period. Core operating income, which excludes exceptional items and amortization of intangible assets in both periods, rose 48% (+41% cc) to USD 3.9 billion, and the core operating income margin rose 5.0 percentage points to 31.9% of net sales from 26.9% in the year-ago quarter.

Net income advanced 49% (+41% cc) to USD 2.9 billion as contributions from associated companies and financial income more than offset increased interest expenses and a higher tax rate. Earnings per share (EPS) rose largely in line with net income to USD 1.29 from USD 0.87 in the 2009 period. Core net income grew 44% (+36% cc) to USD 3.3 billion, while core EPS was up 44% (+36% cc) in the first quarter to USD 1.45 from USD 1.01 in the year-ago period.

Commenting on the results, Joseph Jimenez, CEO of Novartis, said: "I am pleased with the strong growth generated in the first quarter of 2010 across our entire healthcare portfolio. All of our businesses are making good progress, particularly the sustained expansion in Pharmaceuticals and the strong contributions from supply contracts for A (H1N1) pandemic flu vaccines. We are focusing on extending our lead in innovation, driving growth and improving productivity, which we believe will generate greater sustainable value from our portfolio. The growing contributions from products launched since 2007 are rejuvenating our portfolio and are the result of our commitment to innovation and successful R&D investments. We are intensifying productivity efforts to improve profitability as well as to enable continued investments in drug discovery and expansion into new markets. As we prepare for the integration of Alcon, which will create a new growth platform in eye care, we are building momentum in 2010 and achieving continued success."

About Novartis
Novartis provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and consumer health products. Novartis is the only company with leading positions in these areas. In 2009, the Group's continuing operations achieved net sales of USD 44.3 billion, while approximately USD 7.5 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 100,000 full-time-equivalent associates and operate in more than 140 countries around the world. For more information, please visit http://www.novartis.com.

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