Novartis delivers record earnings in first nine months of 2007

Novartis AGStrong operational performance for Group continuing operations:
  • Nine-month net sales up 13% to USD 28.1 billion (+9% local currencies) driven by all divisions, particularly Vaccines and Diagnostics and Sandoz
  • Operating income rises 9% to USD 6.5 billion, excluding a one-time incremental environmental provision of USD 590 million to cover worldwide remediation plans
14 positive US and EU regulatory decisions so far in 2007; launches underway for Tekturna/Rasilez, Exforge, Lucentis, Galvus, Exelon Patch, Aclasta/Reclast and Tasigna
To expand management experience and provide fresh impetus, Joe Jimenez becomes CEO of Pharmaceuticals and Thomas Ebeling named as CEO of Consumer Health
Group net income for first nine months doubles to USD 11.1 billion thanks to after-tax gains of USD 5.2 billion from Medical Nutrition and Gerber divestments
  • Novartis now focused solely on healthcare
Group on track for record operating and net income from continuing operations in 2007 (excluding environmental provision)
Elimination of 1,260 positions in US Pharma marketing and sales organization to adapt to new product portfolio, generating annual savings of USD 230 million

Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis said: "Following the successful divestments of the Medical Nutrition and Gerber businesses we are now strategically focused on healthcare products. Despite the anticipated weak quarter in Pharmaceuticals, we showed a strong operational performance driven by our other businesses. I am especially pleased that Vaccines and Diagnostics and Sandoz grew dynamically and improved profitability. This demonstrates that our focused diversification at least partially balances the risks recently seen in the pharmaceutical industry with heightened FDA demands and a more aggressive and risk-taking generics industry in the US. After losing several products to generics, Pharmaceuticals succeeded in launching many new medicines, including Lucentis, Exforge, Tekturna/Rasilez, Exelon Patch, Tasigna, Galvus and Aclasta/Reclast, creating the foundation for a new growth phase that will be visible starting in the second half of 2008. Our overall objective to bring new medicines to patients is reflected in the 14 positive US and European regulatory decisions already received in 2007. The announced changes at the divisional leadership level will not just broaden management experience but also bring fresh impetus and efficiency after a long and strong growth period."

About Novartis
Novartis AG (NYSE: NVS) is a world leader in offering medicines to protect health, cure disease and improve well-being. Our goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. We are strengthening our medicine-based portfolio, which is focused on strategic growth platforms in innovation-driven pharmaceuticals, high-quality and low-cost generics, human vaccines and leading self-medication OTC brands. Novartis is the only company with leadership positions in these areas. In 2006, the Group's businesses achieved net sales of USD 37.0 billion and net income of USD 7.2 billion. Approximately USD 5.4 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 100,000 associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

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