IMS Company Profiles - Report Buyer

IMS COM PANY PRO FILES NOVARTIS
with its $5.7 bil lion in an nual sales that has been high lighted by the com pany as fuel ing its strat egy over
the next few years (see In tro duc tion). Diovan loses pat ent protection in Europe in 2011 and in the USA in
2012.
Fu ture Pros pects
• Re cord Year Ex pected for 2009
In Jan u ary 2009 Novartis noted that it ex pects an other year of re cord net sales and earn ings in 2009. The
Group’s net sales are ex pected to grow at a mid sin gle-digit rate in 2009, while Pharmaceuticals net sales
are ex pected to grow at a mid-to high sin gle-digit rate (in lo cal cur ren cies).
Novartis faces a ma jor chal lenge over the next few years, mak ing up for the po ten tial loss of $5 bil lion in
sales from its lead ing drug Diovan when its pat ent ex pires in the USA in 2012. The chal lenge might even
come ear lier than that, as in 2010 the ri val drug Merck & Co’s Cozaar (losartan) loses pat ent pro tec tion
and a ge neric ver sion of losartan will ap pear, giv ing in sur ers a cheaper op tion than Diovan. In ad di tion,
sev eral other of Novartis’ lead ing drugs lose pat ent pro tec tion at ap prox i mately the same time, af fect ing
about 21% of the com pany’s rev e nue. Novartis notes that it is tak ing a multi-fac eted ap proach, in clud ing
de vel op ment of its pipe line of on col ogy drugs and ex pand ing in the high growth emerg ing mar kets. It is
also, how ever, in vest ing a lot in de vel op ment of its new car dio vas cu lar drug Tekturna (aliskiren), which is
be ing rolled out world wide, but is also in a large global clin i cal tri als pro gram and be ing de vel oped as a
com po nent of com bi na tion prod ucts, with two of these close to the mar ket — Tekturna plus Diovan and
Tekturna plus the di uretic HCTZ. De spite the in vest ment, Joe Jimenez, noted in De cem ber 2008 that
even if the data on Tekturna is pos i tive, it is un likely to be pos si ble to build a Diovan-sized brand, but
Novartis does be lieve the drug can achieve sales of more than $1 bil lion a year. In 2009 Novartis an tic i -
pates seven ap prov als in 2009 (in clud ing ad di tional in di ca tions), seven sub mis sions for ap proval (in clud -
ing ad di tional in di ca tions) and a con sid er able amount of phase III data. Novartis is hop ing for ap proval of
the on col ogy prod uct Afinitor (everolimus), the men in gi tis vac cine Menveo, two com bi na tion prod ucts
with Tekturna (with Diovan and with HCTZ) and Exforge plus HCTZ, as well as ap proval of Glivec for ad di -
tional in di ca tions. No ta ble sub mis sions should be fingolimod (FTY 720), an oral treat ment of multiple
sclerosis, MFF 258 (formoterol + mometasone) for asthma and COPD, Albuferon (albinterferon alfa-2b)
for hepatitis C.
Novartis’ re mains among an a lysts fa vor ites in the Pharmaceuticals sec tor, as it has im pressed with cost
con trols and its strong prod uct pipe line. An drew Weiss of the Swiss Bank Vontobel noted that com pared
to its peers Novartis has one of the full est pipe lines of new drugs in de vel op ment, but a ques tion hangs
over whether the pipe line will ma te ri al ize in time be fore the pat ent ex pi ries be gin. Of in ter est to Mor gan
Stan ley an a lysts is the com pany’s on col ogy pipe line, its new oral drug for MS, FTY 720, and the po ten tial
for Zometa to show sig nif i cant growth with new indications.
In vest ing heavily in the emerg ing mar kets is a strat egy that many of the com pany’s peers are also tak ing,
how ever me dia com men ta tors have noted that growth is be gin ning to slow in these mar kets, af fected by
the slow down in the de vel oped mar kets and these mar kets may not of fer the same kind of growth po ten -
tial as they once did.
In Jan u ary 2009, an a lysts at Cowen & Co and Mor gan Stan ley were dis ap pointed by Novartis’ Q4 re sults
as Novartis had re ported sig nif i cantly lower-than-ex pected EPS and lack lus ter rev e nues, both sets of an -
a lysts, how ever, were more pos i tive about the lon ger term, with those at Cowen & Co not ing that the
“out look re mains ro bust” and that they “con tinue to be lieve that NVS should de liver top-tier growth
through 2015.” Cowen & Co noted that the Phar ma ceu ti cal and Vac cines busi nesses dem on strated good
mo men tum, but that Sandoz and Consumer “continue to face headwinds.”
© 2009 IMS Health In cor po rated or its af fil i ates Page 13