Ad hoc announcement pursuant to Art. 53 LR
FINANCIAL RESULTS | RÉSULTATS FINANCIERS | FINANZERGEBNISSE
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Novartis International AG
Novartis Global Communications
CH-4002 Basel
Switzerland
https://www.novartis.com
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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
Full year (continuing operations2)
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Net sales grew +10% (cc, +8% USD) with core operating income growing +18% (cc, +11% USD)
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•
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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)
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•
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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)
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•
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EPS grew +70% (cc, +49% USD) to USD 4.13. Core EPS was USD 6.47 growing +25% (cc, +18% USD)
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Fourth quarter (continuing operations)
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Net sales grew +10% (cc, +8% USD) with core operating income growing +13% (cc, +5% USD),
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•
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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)
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•
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Q4 selected innovation milestones:
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o
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Fabhalta FDA approval for treatment of adults with PNH (both previously treated and treatment-naïve)
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o
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Cosentyx FDA approval for the treatment of moderate to severe HS in adults
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o
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Cosentyx FDA approval for intravenous formulation in three indications (PsA, AS, nr-axSpA)
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o
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Iptacopan Ph3 APPLAUSE-IgAN met its primary endpoint in IgAN
patients
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o
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Atrasentan Ph3 ALIGN study met its primary endpoint in IgAN patients
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o
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Iptacopan Ph3 APPEAR-C3G met its primary endpoint in C3G
patients
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o
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Scemblix Ph3 ASC4FIRST study met its primary endpoints in 1L
Ph+ CML-CP patients (January)
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Dividend, 2024 guidance; updated mid-term guidance
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Dividend of CHF 3.30 per share, an increase of 3.1%, proposed for 2023
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•
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2024 guidance3 – Net
sales expected to grow mid single digit and core operating income expected to grow high single digit
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•
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Updated mid-term guidance – Net sales expected to grow 5% cc CAGR 2023-2028 with core operating income margin expanding to ~40%+ by 2027
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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
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Continuing operations
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Q4 2023
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Q4 2022
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% change
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FY 2023
|
FY 2022
|
% change
|
|
USD m
|
USD m
|
USD
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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
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0.62
|
108
|
140
|
|
4.13
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2.77
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49
|
70
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Free cash flow
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2 141
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3 462
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-38
|
|
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13 160
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12 123
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9
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Core operating income
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3 821
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3 645
|
5
|
13
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16 372
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14 794
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11
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18
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Core net income
|
3 126
|
2 963
|
6
|
11
|
|
13 446
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11 946
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13
|
19
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Core EPS (USD)
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1.53
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1.39
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10
|
16
|
|
6.47
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5.48
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18
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25
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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
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
1.
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Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch
excellence, with a rich pipeline across our core therapeutic areas.
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2.
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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.
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3.
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Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to
build trust with society.
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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).
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.
2
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.
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.
3
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
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(USD 1 635 million, +26% cc) sustained robust demand-led growth, with increased patient share across all geographies
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Kisqali
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(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
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Kesimpta
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(USD 641 million, +73% cc) sales grew across all regions driven by increased demand and strong access
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Cosentyx
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(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)
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Pluvicto
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(USD 273 million, +53% cc) continued sales growth in the US. Supply now unconstrained, focusing on initiating new patients
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Ilaris
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(USD 376 million, +29% cc) sales grew across all regions
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Leqvio
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(USD 123 million, +190% cc) launch is ongoing, with focus on patient on-boarding, removing access hurdles and enhancing medical education
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Scemblix
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(USD 125 million, +143% cc) continued its strong launch uptake demonstrating the high unmet need in CML
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Jakavi
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(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
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Xolair
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(USD 378 million, +16% cc) sales grew across all regions
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Tafinlar + Mekinist
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(USD 486 million, +7% cc) sales grew mainly in the US and emerging growth markets, partly offset by decline in Europe
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Promacta/Revolade
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(USD 563 million, +4% cc) sales grew mainly in the US driven by increased use in chronic ITP and severe aplastic anemia
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Piqray
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(USD 131 million, +18% cc) sales grew mainly in the US
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Lutathera
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(USD 147 million, +13% cc) sales grew across all regions due to increased demand
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Emerging Growth Markets*
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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
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4
Net sales of the top 20 brands in 2023
|
Q4 2023
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% change
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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
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8 943
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13
|
14
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34 935
|
10
|
12
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R&D update - key developments from the fourth quarter
New approvals
Fabhalta
(iptacopan)
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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)
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Cosentyx
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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
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Results from ongoing trials and other highlights
Scemblix
(asciminib)
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Ph3 ASC4FIRST study met both primary endpoints (major molecular response rate vs. imatinib or investigator-selected tyrosine kinase inhibitors) with clinically
meaningful and statistically significant results in newly diagnosed patients with Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase (Ph+ CML-CP). Additionally, Scemblix
showed a favorable safety and tolerability profile. Data will be presented at an upcoming medical conference and submitted to regulatory authorities in 2024
|
5
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Ph3 ASCEMBL study, median follow-up of almost 4 years, in patients with Ph+ CML-CP continue to support the efficacy, safety and tolerability profile compared
with bosutinib in 3L+ setting. Data presented at ASH 2023
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Fabhalta
(iptacopan)
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Ph3 APPLAUSE-IgAN study interim analysis demonstrated clinically meaningful and highly statistically significant proteinuria reduction in patients with IgA
nephropathy. The trial met its pre-specified interim analysis (9 months) primary endpoint, demonstrating superiority vs. placebo in proteinuria reduction, with safety consistent with previously reported data. Novartis plans to
review interim data with regulatory authorities for accelerated approval; study continues with final readout at 24 months
Ph3 APPEAR-C3G study met its primary endpoint, demonstrating superiority of iptacopan vs placebo in proteinuria reduction at six-month analysis and provided
clinically meaningful and statistically significant proteinuria reduction in patients with C3G on top of background therapy. Iptacopan’s safety profile was consistent with previously reported data. Data to be presented at an
upcoming medical meeting. Study continues with all patients receiving active therapy for six-months
Ph3 APPLY-PNH extension data showed sustained efficacy and long-term safety of Fabhalta in adults with paroxysmal
nocturnal hemoglobinuria (PNH). Data showed sustained clinically meaningful hemoglobin-level increases to near-normal (≥12 g/dL), blood transfusion avoidance, and improved patient-reported fatigue in the majority of patients.
Comparable benefits were seen in those patients switching from anti-C5 therapy to Fabhalta. Safety profile at 48 weeks was similar to 24 week data. Data presented at ASH 2023
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atrasentan
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Ph3 ALIGN study met its primary endpoint, demonstrating superiority of atrasentan vs placebo in proteinuria reduction at 36-week interim analysis with
clinically meaningful and highly statistically significant reduction in proteinuria in IgAN patients receiving supportive care. Safety profile of atrasentan was consistent with previously reported data. Data to be presented at
an upcoming medical meeting. Study continues with final readout expected in 2026
|
remibrutinib
|
Ph3 REMIX-1 and REMIX-2 trials showed clinically meaningful and statistically significant reduction in weekly urticaria activity (UAS7), itch (ISS7) and hives
(HSS7) at Week 12 vs placebo in patients with CSU. Significant improvement in symptom control was seen as early as Week 2 and sustained up to Week 12. Remibrutinib was well-tolerated and demonstrated a favorable safety profile
with rates of overall adverse events comparable to placebo and balanced liver function tests across both studies. Studies are ongoing with final (52-week) readout and regulatory submissions in 2024. Data presented at AAAI 2023
|
Kisqali
(ribociclib)
|
Final protocol-specified iDFS analysis of Ph3 NATALEE trial (with a median follow-up of 33.3 months and 78.3% of patients having completed ribociclib)
reinforces 25% reduction in risk of recurrence across broad population of patients with HR+/HER2- early breast cancer and continues to support regulatory submissions. iDFS benefit remains consistent across key patient subgroups,
with stability in secondary endpoints including overall survival (OS). Among patients with stage II and stage III tumors, ribociclib lowered risk of disease recurrence by 30% and 24.5%, respectively. Safety profile was in line
with previously reported results. Data presented at SABCS 2023. NATALEE data submitted to the FDA in December 2023
|
Early-stage business development in core therapeutic areas and technologies
|
Cardiovascular-Renal-Metabolic:
• Chong Kun Dang (LMW, lead asset CKD-510 for diseases in which the enzyme HDAC6 is thought to play a role, including some cardiovascular diseases)
• SanReno (LMW and mAb, securing worldwide rights for Atrasentan/Zigakibart)
• Argo Biopharma (xRNA, undisclosed targets)
Neuroscience:
• Voyager Therapeutics (Gene therapy, strategic collaboration and capsid license agreement for potential Huntington’s Disease and spinal muscular atrophy therapies)
|
6
|
• Calypso (Biotherapeutics, lead asset CALY-002 a promising anti-IL-15 mAB, to be investigated in a range of autoimmune indications)
• Legend Biotech (Cell Therapy, targeting DLL3, a ligand highly expressed in several cancers)
Isomorphic Labs – Leveraging AI including next generation AlphaFold model, to discover novel
small molecule therapeutics against undisclosed targets
|
Capital structure and net debt
Retaining a good balance between investment in the business, a strong capital structure and attractive shareholder returns remains a
priority.
In 2023, Novartis repurchased a total of 87.5 million shares for USD 8.4 billion on the SIX Swiss Exchange second trading line. These
repurchases included 52.8 million shares (USD 4.9 billion) under the USD 15 billion share buyback (announced in December 2021 and completed in June 2023) and 23.0 million shares (USD 2.3 billion) under the new up-to USD 15 billion share
buyback announced in July 2023 (which is continuing as planned, with up-to USD 12.7 billion remaining). In addition, 11.7 million shares (USD 1.2 billion) were repurchased to mitigate dilution related to participation plans of associates.
Furthermore, 1.6 million shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 13.5 million shares (for an equity value of USD 1.1 billion) were delivered as a result of options exercised and
share deliveries related to participation plans of associates. Consequently, the total number of shares outstanding decreased by 75.6 million versus December 31, 2022. These treasury share transactions resulted in an equity decrease of USD
7.4 billion and a net cash outflow of USD 8.6 billion.
As of December 31, 2023, net debt increased to USD 10.2 billion compared to USD 7.2 billion at December 31, 2022. The increase was
mainly due to the USD 7.3 billion annual dividend payment, net cash outflow for treasury share transactions of USD 8.6 billion and net cash outflow for M&A / intangible assets transactions of USD 3.3 billion. This increase in net debt
was partially offset by USD 13.2 billion free cash flow and a USD 3.0 billion reduction in the net debt position of Novartis related to the Sandoz spin-off.
As of Q4 2023, the long-term credit rating for the Company is A1 with Moody’s Investors Service and AA- with S&P Global Ratings.
2024 outlook
Barring unforeseen events; growth vs prior year in cc
Net sales
|
Expected to grow mid single digit
|
Core operating income
|
Expected to grow high single digit
|
Key assumptions:
•
|
Our guidance assumes that no Entresto generics launch in the US in 2024
|
Foreign exchange impact
If late-January exchange rates prevail for the remainder of 2024, the foreign exchange impact for the year would be negative 1 percentage point on net
sales and negative 3 percentage points on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.
Dividend proposal
The Novartis Board of Directors proposes a dividend payment of CHF 3.30 per share for 2023, up 3.1% from CHF 3.20 per share in the prior year,
representing the 27th consecutive dividend increase since the creation of Novartis in December 1996. Shareholders will vote on this proposal at the Annual General Meeting on March 5, 2024.
Reduction of share Capital
The Novartis Board of Directors proposes to cancel 87 547 255 shares (repurchased under the authorization of March 4, 2022) and to reduce the share
capital accordingly by CHF 42.9 million, from CHF 1 115 964 098.48 to CHF 1 073 065 943.53.
Elections of the Board Chair and the members of the Board of Directors
The Board of Directors proposes the re-election of all current members of the Board of Directors (including the Board Chair).
8
Key figures1
Continuing operations2 |
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
|
|
Net sales
|
45 440
|
42 206
|
8
|
10
|
Operating income
|
2 582
|
1 755
|
47
|
68
|
|
Operating income
|
9 769
|
7 946
|
23
|
39
|
As a % of sales
|
22.6
|
16.6
|
|
|
|
As a % of sales
|
21.5
|
18.8
|
|
|
Net income
|
2 638
|
1 315
|
101
|
130
|
|
Net income
|
8 572
|
6 049
|
42
|
62
|
EPS (USD)
|
1.29
|
0.62
|
108
|
140
|
|
EPS (USD)
|
4.13
|
2.77
|
49
|
70
|
Cash flows from
operating activities
|
2 547
|
3 768
|
-32
|
|
|
Cash flows from
operating activities
|
14 220
|
13 039
|
9
|
|
Non-IFRS measures
|
|
|
|
|
|
Non-IFRS measures
|
|
|
|
|
Free cash flow
|
2 141
|
3 462
|
-38
|
|
|
Free cash flow
|
13 160
|
12 123
|
9
|
|
Core operating income
|
3 821
|
3 645
|
5
|
13
|
|
Core operating income
|
16 372
|
14 794
|
11
|
18
|
As a % of sales
|
33.5
|
34.5
|
|
|
|
As a % of sales
|
36.0
|
35.1
|
|
|
Core net income
|
3 126
|
2 963
|
6
|
11
|
|
Core net income
|
13 446
|
11 946
|
13
|
19
|
Core EPS (USD)
|
1.53
|
1.39
|
10
|
16
|
|
Core EPS (USD)
|
6.47
|
5.48
|
18
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations2
|
Q4 2023
|
Q4 2022
|
% change |
|
|
FY 2023
|
FY 2022
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
|
USD m
|
USD m
|
USD
|
cc
|
Net sales
|
|
2 374
|
nm
|
nm
|
|
Net sales
|
7 428
|
9 372
|
nm
|
nm
|
Operating income
|
|
194
|
nm
|
nm
|
|
Operating income
|
265
|
1 251
|
nm
|
nm
|
As a % of sales
|
|
8.2
|
|
|
|
As a % of sales
|
3.6
|
13.3
|
|
|
Net income
|
5 842
|
151
|
nm
|
nm
|
|
Net income
|
6 282
|
906
|
nm
|
nm
|
Non-IFRS measures
|
|
|
|
|
|
Non-IFRS measures
|
|
|
|
|
Core operating
income
|
|
385
|
nm
|
nm
|
|
Core operating
income
|
1 185
|
1 871
|
nm
|
nm
|
As a % of sales
|
|
16.2
|
|
|
|
As a % of sales
|
16.0
|
20.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
Q4 2023
|
Q4 2022
|
% change
|
|
|
FY 2023
|
FY 2022
|
% change
|
|
USD m
|
USD m
|
USD
|
cc
|
|
|
USD m
|
USD m
|
USD
|
cc
|
Net income
|
8 480
|
1 466
|
nm
|
nm
|
|
Net income
|
14 854
|
6 955
|
nm
|
nm
|
EPS (USD)
|
4.14
|
0.69
|
nm
|
nm
|
|
EPS (USD)
|
7.15
|
3.19
|
nm
|
nm
|
Cash flows from
operating activities
|
2 547
|
4 111
|
nm
|
nm
|
|
Cash flows from
operating activities
|
14 458
|
14 236
|
nm
|
nm
|
Non-IFRS measures
|
|
|
|
|
|
Non-IFRS measures
|
|
|
|
|
Free cash flow
|
2 141
|
3 713
|
nm
|
nm
|
|
Free cash flow
|
13 179
|
13 038
|
nm
|
nm
|
Core net income
|
3 127
|
3 251
|
nm
|
nm
|
|
Core net income
|
14 336
|
13 352
|
nm
|
nm
|
Core EPS (USD)
|
1.53
|
1.52
|
nm
|
nm
|
|
Core EPS (USD)
|
6.90
|
6.12
|
nm
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
nm= not meaningful
|
|
|
|
|
|
|
|
|
|
|
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.
Detailed financial results accompanying this press release are included in the Condensed Financial Report at the link below:
https://ml-eu.globenewswire.com/resource/download/a507329c-1dd6-43c6-8a9b-9d0b86d9bf20/
|
9
Disclaimer
This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that
can generally be identified by words such as “may,” “continue,” “ongoing,” “grow,” “launch,” “expect,” “deliver,” “transformation,” “focus,” “address,” “accelerate,” “remain,” “scaling,” “guidance,” “outlook,” “long-term,” “driven,”
“priority,” “potential,” “can,” “will,” “propose,” or similar expressions, or by express or implied discussions regarding potential new products, potential new indications for existing products, potential product launches, or regarding
potential future revenues from any such products; or regarding results of ongoing clinical trials; or regarding ongoing or future share repurchases; or regarding potential future, pending or announced transactions; regarding potential
future sales or earnings; or by discussions of strategy, plans, expectations or intentions, including discussions regarding our continued investment into new R&D capabilities and manufacturing; or regarding our capital structure; or
regarding the consequences of the spin-off of Sandoz and our transformation into a “pure-play” innovative medicines company. Such forward-looking statements are based on the current beliefs and expectations of management regarding future
events and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those
set forth in the forward-looking statements. You should not place undue reliance on these statements. In particular, our expectations could be affected by, among other things: uncertainties regarding the success of key products, commercial
priorities and strategy; uncertainties in the research and development of new products, including clinical trial results and additional analysis of existing clinical data; uncertainties regarding the use of new and disruptive technologies,
including artificial intelligence; global trends toward healthcare cost containment, including ongoing government, payer and general public pricing and reimbursement pressures and requirements for increased pricing transparency;
uncertainties regarding our ability to realize the strategic benefits, operational efficiencies or opportunities expected from our external business opportunities; our ability to realize the intended benefits of our separation of Sandoz
into a new publicly traded standalone company; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key
products; uncertainties in the development or adoption of potentially transformational digital technologies and business models; uncertainties surrounding the implementation of our new IT projects and systems; uncertainties regarding
potential significant breaches of information security or disruptions of our information technology systems; uncertainties regarding actual or potential legal proceedings, including regulatory actions or delays or government regulation
related to the products and pipeline products described in this press release; safety, quality, data integrity, or manufacturing issues; our performance on and ability to comply with environmental, social and governance measures and
requirements; major political, macroeconomic and business developments, including impact of the war in certain parts of the world; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products;
and other risks and factors referred to in Novartis AG’s current Form 20-F on file with the US Securities and Exchange Commission. Novartis is providing the information in this press release as of this date and does not undertake any
obligation to update any forward-looking statements as a result of new information, future events or otherwise.
All product names appearing in italics are trademarks owned by or licensed to Novartis.
10
About Novartis
Novartis is an innovative medicines company. Every day, we work to reimagine medicine to improve and extend people’s lives so that patients,
healthcare professionals and societies are empowered in the face of serious disease. Our medicines reach more than 250 million people worldwide.
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with us on LinkedIn,
Facebook, X/Twitter and Instagram.
Novartis will conduct a conference call with investors to discuss this news release today at 14:00 Central European time and 8:00 Eastern Time. A
simultaneous webcast of the call for investors and other interested parties may be accessed by visiting the Novartis website. A replay will be available after the live webcast by visiting https://www.novartis.com/investors/event-calendar.
Detailed financial results accompanying this press release are included in the condensed financial report at the link below. Additional information is
provided on our business and pipeline of selected compounds in late stage development. A copy of today's earnings call presentation can be found at https://www.novartis.com/investors/event-calendar.
Important dates
March 5, 2024 |
Annual General Meeting |
April 23, 2024 |
First quarter 2024 results |
May 15-16, 2024 |
Meet Novartis Management 2024 (Cambridge, MA, USA) |
July 18, 2024 |
Second quarter & Half year 2024 results
|
October 29, 2024 |
Third quarter & Nine months 2024 results |
11
Novartis Fourth Quarter and Full Year 2023 Condensed Financial Report – Supplementary Data
COMPANY OPERATING PERFORMANCE REVIEW
Discontinued operations
11
COMPANY CASH FLOW AND BALANCE SHEET
12
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements
18
Consolidated statements of comprehensive income
20
Consolidated balance sheets
21
Consolidated statements of changes in equity
22
Consolidated statements of cash flows
24
Notes to condensed consolidated financial statements, including update on legal proceedings
26
SUPPLEMENTARY INFORMATION
49
CORE RESULTS - Reconciliation from IFRS® Accounting Standards results to non-IFRS measure core results
51
Discontinued operations
54
ADDITIONAL INFORMATION
Effects of currency fluctuations
60
Company
Key figures
Fourth quarter and full year
(USD millions unless indicated otherwise)
|
|
Q4 2023 USD m
|
|
Q4 2022 USD m
|
|
% change USD
|
|
% change cc 1
|
|
FY 2023 USD m
|
|
FY 2022 USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Net sales from continuing operations
|
|
11 423
|
|
10 576
|
|
8
|
|
10
|
|
45 440
|
|
42 206
|
|
8
|
|
10
|
|
|
Other revenues
|
|
353
|
|
390
|
|
-9
|
|
-11
|
|
1 220
|
|
1 255
|
|
-3
|
|
-3
|
|
|
Cost of goods sold
|
|
-3 022
|
|
-3 041
|
|
1
|
|
3
|
|
-12 472
|
|
-11 582
|
|
-8
|
|
-6
|
|
|
Gross profit from continuing operations
|
|
8 754
|
|
7 925
|
|
10
|
|
14
|
|
34 188
|
|
31 879
|
|
7
|
|
11
|
|
|
Selling, general and administration
|
|
-3 444
|
|
-3 183
|
|
-8
|
|
-8
|
|
-12 517
|
|
-12 193
|
|
-3
|
|
-3
|
|
|
Research and development
|
|
-2 567
|
|
-2 216
|
|
-16
|
|
-12
|
|
-11 371
|
|
-9 172
|
|
-24
|
|
-22
|
|
|
Other income
|
|
450
|
|
155
|
|
190
|
|
172
|
|
1 772
|
|
696
|
|
155
|
|
147
|
|
|
Other expense
|
|
-611
|
|
-926
|
|
34
|
|
36
|
|
-2 303
|
|
-3 264
|
|
29
|
|
31
|
|
|
Operating income from continuing operations
|
|
2 582
|
|
1 755
|
|
47
|
|
68
|
|
9 769
|
|
7 946
|
|
23
|
|
39
|
|
|
% of net sales
|
|
22.6
|
|
16.6
|
|
|
|
|
|
21.5
|
|
18.8
|
|
|
|
|
|
|
Loss from associated companies
|
|
-6
|
|
-3
|
|
-100
|
|
-66
|
|
-13
|
|
-11
|
|
-18
|
|
1
|
|
|
Interest expense
|
|
-217
|
|
-207
|
|
-5
|
|
-12
|
|
-855
|
|
-800
|
|
-7
|
|
-11
|
|
|
Other financial income and expense
|
|
18
|
|
24
|
|
-25
|
|
nm
|
|
222
|
|
42
|
|
nm
|
|
nm
|
|
|
Income before taxes from continuing operations
|
|
2 377
|
|
1 569
|
|
51
|
|
74
|
|
9 123
|
|
7 177
|
|
27
|
|
45
|
|
|
Income taxes
|
|
261
|
|
-254
|
|
203
|
|
219
|
|
-551
|
|
-1 128
|
|
51
|
|
44
|
|
|
Net income from continuing operations
|
|
2 638
|
|
1 315
|
|
101
|
|
130
|
|
8 572
|
|
6 049
|
|
42
|
|
62
|
|
|
Net income from discontinued operations
|
|
5 842
|
|
151
|
|
nm
|
|
nm
|
|
6 282
|
|
906
|
|
nm
|
|
nm
|
|
|
Net income
|
|
8 480
|
|
1 466
|
|
nm
|
|
nm
|
|
14 854
|
|
6 955
|
|
nm
|
|
nm
|
|
|
Basic earnings per share from continuing operations (USD)
|
|
1.29
|
|
0.62
|
|
108
|
|
140
|
|
4.13
|
|
2.77
|
|
49
|
|
70
|
|
|
Basic earnings per share from discontinued operations (USD)
|
|
2.85
|
|
0.07
|
|
nm
|
|
nm
|
|
3.02
|
|
0.42
|
|
nm
|
|
nm
|
|
|
Total basic earnings per share (USD)
|
|
4.14
|
|
0.69
|
|
nm
|
|
nm
|
|
7.15
|
|
3.19
|
|
nm
|
|
nm
|
|
|
Net cash flows from operating activities from continuing operations
|
|
2 547
|
|
3 768
|
|
-32
|
|
|
|
14 220
|
|
13 039
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS measures 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash-flow from continuing operations 2
|
|
2 141
|
|
3 462
|
|
-38
|
|
|
|
13 160
|
|
12 123
|
|
9
|
|
|
|
|
Core operating income from continuing operations
|
|
3 821
|
|
3 645
|
|
5
|
|
13
|
|
16 372
|
|
14 794
|
|
11
|
|
18
|
|
|
% of net sales
|
|
33.5
|
|
34.5
|
|
|
|
|
|
36.0
|
|
35.1
|
|
|
|
|
|
|
Core net income from continuing operations
|
|
3 126
|
|
2 963
|
|
6
|
|
11
|
|
13 446
|
|
11 946
|
|
13
|
|
19
|
|
|
Core basic earnings per share (USD) from continuing operations
|
|
1.53
|
|
1.39
|
|
10
|
|
16
|
|
6.47
|
|
5.48
|
|
18
|
|
25
|
|
|
|
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. Unless otherwise noted,
all growth rates in this release refer to same period in prior year.
|
2 Effective January 1, 2023, Novartis revised its definition of free cash flow, to define
free cash flow as net cash flows from operating activities less purchases of property,
plant and equipment. To aid in comparability, the prior year free cash flow amounts
have been revised to conform with the new free cash flow definition. See page 49 of
the Condensed Financial Report.
|
nm = not meaningful
|
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 Division 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
Net sales were USD 11.4 billion (+8%, +10% cc) with volume contributing 13 percentage
points to growth. Generic competition had a negative impact of 3 percentage points
and pricing had no impact. Sales in the US were USD 4.8 billion (+13%) and in the
rest of the world USD 6.6 billion (+5%, +8% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 1.6 billion, +27%, +26% cc), Kisqali (USD 610 million, +71%, +76% cc), Kesimpta (USD 641 million, +74%, +73% cc), Cosentyx (USD 1.3 billion, +21%, +21% cc) and Pluvicto (USD 273 million, +53%, +53% cc), partly offset by generic competition mainly for
Gilenya and Xiidra divestment.
In the US (USD 4.8 billion, +13%), sales growth was mainly driven by Entresto, Kisqali, Kesimpta, Cosentyx and Pluvicto, partly offset by Xiidra divestment and the impact of generic competition on Gilenya. In Europe (USD 3.7 billion, +3%, +2% cc), sales growth was mainly driven by Kesimpta, Entresto and Kisqali, partly offset by increased generic competition for Lucentis and Gilenya. Sales in emerging growth markets were USD 2.8 billion (+7%, +18% cc) including 0.8
billion sales from China (+37%, +38% cc).
Operating income
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.
Operating income margin was 22.6% of net sales, increasing 6.0 percentage points (+8.7
percentage points in cc).
Core adjustments were USD 1.2 billion, mainly due to amortization and impairments,
compared to USD 1.9 billion in prior year. Core adjustments decreased compared to
prior year, mainly due to lower restructuring charges.
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). Other revenue as a percentage of sales increased by 0.1
percentage points (cc). Core cost of goods sold as a percentage of sales decreased
by 0.2 percentage points (cc). Core R&D expenses as a percentage of net sales decreased
by 1.1 percentage points (cc). Core SG&A expenses as a percentage of net sales decreased
by 0.1 percentage point (cc). Core other income and expense as a percentage of net
sales decreased the margin by 0.5 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 217 million and other financial income and expense
to an income of USD 18 million, both broadly in line with prior year.
Core other financial income and expense amounted to an income of USD 137 million compared
to USD 50 million in the prior year, mainly due to lower currency losses.
Income taxes
The tax rate for continuing operations in the fourth quarter was -11.0% compared to
16.2% in the prior year. The current year tax rate was favorably impacted by the effect
of tax benefits from the write-down in investments in subsidiaries, non-taxable net
gains on unrealized foreign currency results, recognition of deferred tax assets on
prior years tax loss carryforwards, other items including impact of tax rate changes,
and the effect of adjusting to the full year actual tax rate, which was lower than
previously estimated. Excluding these impacts the current year tax rate would have
been 14.5%. The decrease from the prior year was mainly the result of a change in
profit mix.
The core tax rate for continuing operations (core taxes as a percentage of core income
before tax) was 16.3% compared to 15.0% in the prior year. The current and prior year
core tax rates were both impacted by the effect of adjusting to the full year actual
core tax rate. Excluding these impacts, the current and prior year tax rate would
have been 15.7% and 15.6% respectively.
Net income, EPS and free cash flow
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),
growing faster than net income, benefiting from lower weighted average number of shares
outstanding.
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), growing faster than core net income
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
Net sales were USD 45.4 billion (+8%, +10% cc) with volume contributing 16 percentage
points to growth. Generic competition had a negative impact of 4 percentage points
and pricing had a negative impact of 2 percentage points. Sales in the US were USD
18.0 billion (+13%) and in the rest of the world USD 27.5 billion (+5%, +8% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 6.0 billion, +30%, +31% cc), Kesimpta (USD 2.2 billion, +99%, +99% cc), Kisqali (USD 2.1 billion, +69%, +75% cc), Pluvicto (USD 980 million, +262%, +261% cc) and Scemblix (USD 413 million, +177%, +179% cc), partly offset by generic competition mainly for
Gilenya.
In the US (USD 18.0 billion, +13%), sales growth was mainly driven by Entresto, Pluvicto, Kesimpta, Kisqali, Scemblix and Leqvio, partly offset by the impact of generic competition on Gilenya. In Europe (USD 15.0 billion, +4%, +4% cc), sales growth was driven by Kesimpta, Entresto, Kisqali, Cosentyx and Leqvio, partly offset by increased generic competition for Lucentis and Gilenya. Sales in emerging growth markets were USD 11.7 billion (+8%, +17% cc), including
USD 3.3 billion sales from China (+11%, +17% cc).
Operating income
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. Operating income margin was
21.5% of net sales, increasing 2.7 percentage points (+5.0 percentage points in cc).
Core adjustments were USD 6.6 billion, mainly due to amortization and impairments,
compared to USD 6.8 billion in prior year. Core adjustments decreased compared to
prior year, mainly due to lower restructuring charges, other income from legal matters,
partly offset by higher impairments.
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). Other revenue as a percentage of sales decreased by 0.2 percentage points (cc).
Core cost of goods sold as a percentage of sales increased by 0.1 percentage points
(cc). Core R&D expenses as a percentage of net sales decreased by 1.3 percentage points
(cc). Core SG&A expenses as a percentage of net sales decreased by 1.6 percentage
points (cc). Core other income and expense as a percentage of net sales decreased
the margin by 0.2 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 855 million, broadly in line with prior year.
Other financial income and expense amounted to an income of USD 222 million compared
to USD 42 million in the prior year, mainly due to higher interest income partly offset
by higher net losses from the impact of IAS 29 “Financial reporting in Hyperinflation
Economies.”
Core other financial income and expense amounted to an income of USD 430 million compared
to USD 140 million in the prior year, mainly due to higher interest income.
Income taxes
The tax rate was 6.0% compared to 15.7% in the prior year period. The current year
tax rate was favorably impacted by the effect of tax benefits from the write-down
of investments in subsidiaries, non-taxable net gains on unrealized foreign currency
results, recognition of deferred tax assets on prior years tax loss carryforwards,
non-taxable income related to legal matters, and other items including impact of tax
rate changes. Excluding these impacts, the current year tax rate would have been
15.3% compared with 15.7% in the prior year period. The decrease from the prior year
was mainly the result of a change in profit mix.
The core tax rate (core taxes as a percentage of core income before tax) was 15.6%
compared to 15.4% in the prior year period. The increase from the prior year was mainly
the result of a change in profit mix.
Net income, EPS and free cash flow
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),
growing faster than net income, benefiting from lower weighted average number of shares
outstanding.
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), growing faster than core net income,
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.
Product commentary (relating to Q4 performance)
Cardiovascular, RENAL and METABOLIC
|
|
Q4 2023
|
|
Q4 2022
|
|
% change
|
|
% change
|
|
FY 2023
|
|
FY 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Cardiovascular, renal and metabolic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
1 635
|
|
1 291
|
|
27
|
|
26
|
|
6 035
|
|
4 644
|
|
30
|
|
31
|
|
|
Leqvio
|
|
123
|
|
42
|
|
193
|
|
190
|
|
355
|
|
112
|
|
217
|
|
217
|
|
|
Other
|
|
1
|
|
|
|
nm
|
|
nm
|
|
1
|
|
|
|
nm
|
|
nm
|
|
|
Total cardiovascular, renal and metabolic
|
|
1 759
|
|
1 333
|
|
32
|
|
32
|
|
6 391
|
|
4 756
|
|
34
|
|
36
|
|
|
|
nm = not meaningful
|
Entresto (USD 1 635 million, +27%, +26% cc) sustained robust demand-led growth. In the US and
Europe, Entresto penetration grew through the continued adoption of guideline-directed medical therapy
in heart failure. In China and Japan, Entresto volume growth is fueled by heart failure as well as increased penetration in hypertension.
In the US, Novartis is in ANDA litigation with generic manufacturers. Novartis has
appealed to reverse the negative US district court decision to uphold the validity
of its combination patent covering Entresto and combinations of sacubitril and valsartan, which expires in 2025 (with pediatric
exclusivity). No generics have tentative or final approval in the US. Any US commercial
launch of a generic Entresto product prior to the final outcome of Novartis combination patent appeal, or ongoing
litigations involving other patents, may be at risk of later litigation developments.
Leqvio (USD 123 million, +193%, +190% cc) launch in the US and other markets is ongoing,
with focus on patient on-boarding, removing access hurdles and enhancing medical education.
Leqvio is now approved in 94 countries. Novartis obtained global rights to develop, manufacture
and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals.
Immunology
|
|
Q4 2023
|
|
Q4 2022
|
|
% change
|
|
% change
|
|
FY 2023
|
|
FY 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
1 303
|
|
1 080
|
|
21
|
|
21
|
|
4 980
|
|
4 788
|
|
4
|
|
5
|
|
|
Xolair 1
|
|
378
|
|
323
|
|
17
|
|
16
|
|
1 463
|
|
1 365
|
|
7
|
|
9
|
|
|
Ilaris
|
|
376
|
|
301
|
|
25
|
|
29
|
|
1 355
|
|
1 133
|
|
20
|
|
22
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total immunology
|
|
2 057
|
|
1 704
|
|
21
|
|
21
|
|
7 798
|
|
7 287
|
|
7
|
|
8
|
|
|
|
1 Net sales reflect Xolair sales for all indications.
|
nm = not meaningful
|
Cosentyx (USD 1 303 million, +21%, +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). US growth was also driven by recent new indication (HS) and formulation (IV)
launches in addition to volume growth of base business (PsO, SpA). Ex-US growth was
also driven by robust demand led volume growth, including a lower prior year base
in China, as well as the hidradenitis suppurativa (HS) indication launch. Since initial
approval in 2015, Cosentyx has shown sustained efficacy and a robust safety profile, treating more than 1 million
patients across six systemic inflammatory conditions. Cosentyx is now approved to treat HS in adults in more than 60 countries worldwide, including
the EU as of Q2
2023 and the US as of October 2023. FDA approved Cosentyx intravenous formulation for the treatment of adults with psoriatic arthritis, ankylosing
spondylitis, and non-radiographic axial spondyloarthritis in October 2023.
Xolair (USD 378 million, ex-US +17%, +16% cc) sales grew across all regions. In November
2023, Novartis received EU approval for the six new Xolair product configurations, including auto injectors and a new 300 mg strength. Novartis
co-promotes Xolair with Genentech in the US and shares a portion of revenue as operating income but does
not record any US sales.
Ilaris (USD 376 million, +25%, +29% cc) sales grew across all regions. Contributors to growth
include strong performance in the Periodic Fever Sydrome (PFS) and Still’s disease
indications (SJIA/AOSD) in the US, Europe and Japan, as well as in key markets worldwide.
Neuroscience
|
|
Q4 2023
|
|
Q4 2022
|
|
% change
|
|
% change
|
|
FY 2023
|
|
FY 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
641
|
|
369
|
|
74
|
|
73
|
|
2 171
|
|
1 092
|
|
99
|
|
99
|
|
|
Zolgensma
|
|
286
|
|
309
|
|
-7
|
|
-4
|
|
1 214
|
|
1 370
|
|
-11
|
|
-9
|
|
|
Mayzent
|
|
106
|
|
99
|
|
7
|
|
7
|
|
392
|
|
357
|
|
10
|
|
10
|
|
|
Aimovig
|
|
69
|
|
59
|
|
17
|
|
14
|
|
266
|
|
218
|
|
22
|
|
21
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total neuroscience
|
|
1 102
|
|
836
|
|
32
|
|
33
|
|
4 043
|
|
3 038
|
|
33
|
|
34
|
|
|
|
nm = not meaningful
|
Kesimpta (USD 641 million, +74%, +73% cc) sales grew across all regions driven by increased
demand and strong access. Kesimpta is a high efficacy B-cell therapy, with a favorable safety and tolerability profile
and an at home self-administration for a broad population of RMS patients. Kesimpta is now approved in 87 countries with more than 85,000 patients treated.
Zolgensma (USD 286 million, -7%, -4% cc). Established markets are treating mainly incident patients.
Sales declined due to fewer incident patient treatments. Zolgensma is now approved in 51 countries with more than 3,700 patients treated globally through
clinical trials, early access programs and in the commercial setting.
Mayzent (USD 106 million, +7%, +7% cc) sales grew mainly in Europe. Sales continued to grow
in patients with multiple sclerosis showing signs of progression despite being on
other treatments.
Aimovig (USD 69 million, ex-US, ex-Japan +17%, +14% cc) sales grew mainly in Europe driven
by increased demand in migraine prevention. Novartis commercializes Aimovig ex-US, ex-Japan, while Amgen retains all rights in the US and in Japan.
ONCOLOGY
|
|
Q4 2023
|
|
Q4 2022
|
|
% change
|
|
% change
|
|
FY 2023
|
|
FY 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Promacta/Revolade
|
|
563
|
|
540
|
|
4
|
|
4
|
|
2 269
|
|
2 088
|
|
9
|
|
10
|
|
|
Kisqali
|
|
610
|
|
357
|
|
71
|
|
76
|
|
2 080
|
|
1 231
|
|
69
|
|
75
|
|
|
Tafinlar + Mekinist 1
|
|
486
|
|
465
|
|
5
|
|
7
|
|
1 922
|
|
1 770
|
|
9
|
|
11
|
|
|
Tasigna
|
|
446
|
|
475
|
|
-6
|
|
-6
|
|
1 848
|
|
1 923
|
|
-4
|
|
-3
|
|
|
Jakavi
|
|
444
|
|
388
|
|
14
|
|
14
|
|
1 720
|
|
1 561
|
|
10
|
|
12
|
|
|
Pluvicto
|
|
273
|
|
179
|
|
53
|
|
53
|
|
980
|
|
271
|
|
262
|
|
261
|
|
|
Lutathera
|
|
147
|
|
128
|
|
15
|
|
13
|
|
605
|
|
471
|
|
28
|
|
28
|
|
|
Kymriah
|
|
120
|
|
139
|
|
-14
|
|
-14
|
|
508
|
|
536
|
|
-5
|
|
-5
|
|
|
Piqray/Vijoice
|
|
131
|
|
112
|
|
17
|
|
18
|
|
505
|
|
373
|
|
35
|
|
37
|
|
|
Scemblix
|
|
125
|
|
52
|
|
140
|
|
143
|
|
413
|
|
149
|
|
177
|
|
179
|
|
|
Votrient
|
|
77
|
|
103
|
|
-25
|
|
-26
|
|
390
|
|
474
|
|
-18
|
|
-17
|
|
|
Adakveo
|
|
45
|
|
51
|
|
-12
|
|
-11
|
|
195
|
|
194
|
|
1
|
|
0
|
|
|
Tabrecta
|
|
41
|
|
36
|
|
14
|
|
13
|
|
154
|
|
133
|
|
16
|
|
16
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
1
|
|
2
|
|
-50
|
|
nm
|
|
|
Total oncology
|
|
3 508
|
|
3 025
|
|
16
|
|
17
|
|
13 590
|
|
11 176
|
|
22
|
|
23
|
|
|
|
1 Majority of sales for Mekinist and Tafinlar are combination, but both
can be used as monotherapy.
|
nm = not meaningful
|
Promacta/Revolade (USD 563 million, +4%, +4% cc) sales grew mainly in the US driven by increased use
in second-line persistent and chronic immune thrombocytopenia and as first-line and/or
second-line treatment for severe aplastic anemia, according to the respective label
in the countries.
Kisqali (USD 610 million, +71%, +76% cc) sales grew strongly across all regions, based on
increasing recognition of its consistently reported overall survival in HR+/HER2-
advanced breast cancer. Positive, statistically significant interim and final efficacy
results of the iDFS analysis of the early breast cancer pivotal Phase III trial NATALEE
were presented at ASCO and SABCS 2023. Additional QOL information presented at ESMO
demonstrated that the addition of ribociclib to endocrine therapy did not compromise
the QOL of patients. Submissions for approval in early breast cancer were completed
in August to EMA and in December to the FDA. Submissions to other regulatory authorities
are ongoing. Novartis is in US ANDA litigation with a generic manufacturer.
Tafinlar + Mekinist (USD 486 million, +5%, +7% cc) sales grew mainly in the US and emerging growth markets,
partly offset by decline in Europe. Sales growth was driven by demand in BRAF+ adjuvant
melanoma and NSCLC indications, while maintaining demand in the highly competitive
BRAF+ metastatic melanoma market. In addition, the tumor agnostic indication contributed
to growth in the US. Sales in Europe declined mainly due to immune-oncology competition
in 1L metastatic setting.
Tasigna (USD 446 million, -6%, -6% cc) sales declined driven by lower demand in Europe.
Jakavi (USD 444 million, ex-US +14%, +14% cc) sales grew in emerging growth markets, Europe
and Japan, driven by strong demand in both myelofibrosis and polycythemia vera indications.
Incyte retains all rights to ruxolitinib (Jakafi®) in the US.
Pluvicto (USD 273 million, +53%, +53% cc) saw continued sales growth in the US. Pluvicto is the first and only radioligand therapy approved by the FDA for the treatment of
adult patients with progressive, PSMA-positive metastatic castration-resistant prostate
cancer, who have already been treated with other anticancer treatments (ARPI and taxane-based
chemotherapy). Data from the Phase III PSMAfore trial was presented at ESMO. Pluvicto met its primary endpoint with a clinically meaningful and statistically significant
benefit in radiographic progression-free survival (rPFS) in patients with prostate-specific
membrane antigen (PSMA)-positive metastatic castration-resistant prostate cancer (mCRPC)
after treatment with androgen receptor pathway inhibitor (ARPI) therapy, compared
to a change in ARPI. In January 2024, Novartis received approval from the FDA for
commercial manufacturing of Pluvicto at state-of-the-art radioligand therapy (RLT) manufacturing facility in Indianapolis.
Lutathera (USD 147 million, +15%, +13% cc) sales grew across all regions due to increased demand.
The Phase III NETTER-2 trial with Lutathera met its primary endpoint, showing Lutathera is the first radioligand therapy (RLT) to demonstrate clinically meaningful benefit
in a first line setting.
Kymriah (USD 120 million, -14%, -14% cc) sales declined mainly in the US and Europe, partly
offset by growth in follicular lymphoma indication launch across markets.
Piqray/Vijoice (USD 131 million, +17%, +18% cc) sales grew mainly in the US. In addition to PIK3CA-related
overgrowth spectrum (PROS), Piqray is the first therapy specifically developed for the approximately 40% of HR+/HER2-
advanced breast cancer patients who have a PIK3CA mutation, associated with a worse
prognosis.
Scemblix (USD 125 million, +140%, +143% cc) sales grew across all regions, demonstrating the
high unmet need for effective and tolerable treatment options for CML patients, who
have been treated with 2 or more tyrosine kinase inhibitors. Scemblix has now been approved in more than 60 countries for Philadelphia chromosome positive
(Ph+) CML patients in chronic phase treated with 2 or more TKIs. In January 2024,
Novartis announced that the ASC4FIRST trial met both primary endpoints, with clinically
meaningful and statistically significant results vs. standard-of-care TKIs in newly
diagnosed Ph+CML-CP patients while demonstrating a favorable safety and tolerability
profile. Data will be presented at an upcoming medical conference and submitted to
regulatory authorities in 2024.
Votrient (USD 77 million, -25%, -26% cc) sales declined due to increased competition, especially
from immune-oncology agents in metastatic renal cell carcinoma.
Adakveo (USD 45 million, -12%, -11% cc) sales declined due to withdrawal in Europe. Adakveo remains approved for use by the FDA for the reduction in frequency of vasoocclusive
crises (pain crises) in adults and pediatric patients aged 16 years or older with
sickle cell disease.
Tabrecta (USD 41 million, +14%, +13% cc) sales grew mainly in the US. Tabrecta is the first therapy approved by the FDA to specifically target metastatic NSCLC
with a mutation that leads to MET exon 14 (METex14) skipping in any line of treatment.
Novartis obtained global rights to develop, manufacture and commercialize Tabrecta under a license and collaboration agreement with Incyte Corporation.
Established BRANDS
|
|
Q4 2023
|
|
Q4 2022
|
|
% change
|
|
% change
|
|
FY 2023
|
|
FY 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
USD m
|
|
USD m
|
|
USD
|
|
cc
|
|
|
Established brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lucentis
|
|
301
|
|
398
|
|
-24
|
|
-25
|
|
1 475
|
|
1 874
|
|
-21
|
|
-20
|
|
|
Sandostatin
|
|
316
|
|
305
|
|
4
|
|
5
|
|
1 314
|
|
1 238
|
|
6
|
|
8
|
|
|
Gilenya
|
|
154
|
|
346
|
|
-55
|
|
-55
|
|
925
|
|
2 013
|
|
-54
|
|
-54
|
|
|
Exforge Group
|
|
156
|
|
159
|
|
-2
|
|
-1
|
|
713
|
|
743
|
|
-4
|
|
-1
|
|
|
Galvus Group
|
|
153
|
|
209
|
|
-27
|
|
-17
|
|
692
|
|
859
|
|
-19
|
|
-11
|
|
|
Diovan Group
|
|
147
|
|
142
|
|
4
|
|
6
|
|
613
|
|
652
|
|
-6
|
|
-1
|
|
|
Gleevec/Glivec
|
|
128
|
|
175
|
|
-27
|
|
-25
|
|
561
|
|
745
|
|
-25
|
|
-22
|
|
|
Afinitor/Votubia
|
|
97
|
|
106
|
|
-8
|
|
-7
|
|
408
|
|
512
|
|
-20
|
|
-18
|
|
|
Contract manufacturing 1
|
|
302
|
|
313
|
|
-4
|
|
-5
|
|
1 490
|
|
1 200
|
|
24
|
|
22
|
|
|
Other 1
|
|
1 243
|
|
1 525
|
|
-18
|
|
-11
|
|
5 427
|
|
6 113
|
|
-11
|
|
-6
|
|
|
Total established brands 1
|
|
2 997
|
|
3 678
|
|
-19
|
|
-15
|
|
13 618
|
|
15 949
|
|
-15
|
|
-12
|
|
|
|
1 Effective January 1, 2023, the discontinued operations Sandoz business transferred
to Novartis continuing operations its bio-technology manufacturing services to other
companies’ activities (included in Contract manufacturing) and the Coartem brand
(included in Other). The financial information of the Novartis continuing operations
and discontinued operations were adapted accordingly in 2022 and 2021, in compliance
with IFRS Accounting Standards. See Note 10 for additional information.
|
|
Lucentis (USD 301 million, ex-US -24%, -25% cc) sales declined in Europe, emerging growth markets
and Japan, mainly due to competition.
Sandostatin (USD 316 million, +4%, +5% cc) sales grew in emerging growth markets and Europe mainly
due to temporary generic supply shortages, partly offset by decline in the US.
Gilenya (USD 154 million, -55%, -55% cc) sales declined due to generic competition mainly
in the US and Europe. Novartis is in litigation against a generic manufacturer on
the method of treatment patent in the US, and against generic manufacturers on the
dosing regimen patent in Europe.
Exforge Group (USD 156 million, -2%, -1% cc) sales declined mainly in Europe.
Galvus Group (USD 153 million, -27%, -17% cc) sales declined mainly in Europe.
Diovan Group (USD 147 million, +4%, +6% cc) sales grew in emerging growth markets.
Gleevec/Glivec (USD 128 million, -27%, -25% cc) sales declined due to increased generic competition.
Afinitor/Votubia (USD 97 million, -8%, -7% cc) sales declined mainly in Europe and emerging growth
markets driven by generic competition.
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.
Company Cash Flow and Balance Sheet
Cash flow
Fourth quarter
Net cash flows from operating activities from continuing operations amounted to USD
2.5 billion, compared with USD 3.8 billion in the prior year quarter. This decrease
was driven by higher net income from continuing operations adjusted for non-cash items
and other adjustments, including divestment gains being more than offset by unfavorable
changes in working capital and higher income taxes paid, mainly due to the timing
of income tax payments.
Net cash flows from operating activities from discontinued operations decrease of
USD 0.3 billion was due to the distribution (spin-off) of the Sandoz business on October
3, 2023.
Net cash outflows used in investing activities from continuing operations amounted
to USD 1.0 billion, compared with USD 1.3 billion in the prior year quarter.
The current year quarter net cash outflows used in investing activities from continuing
operations were mainly driven by USD 0.5 billion for net purchases of marketable securities,
commodities and time deposits; USD 0.4 billion for purchases of property, plant and
equipment; and USD 0.4 billion for purchases of intangible assets. These cash outflows
were partly offset by cash inflows of USD 0.2 billion from the sale of property, plant
and equipment (including proceeds from the sale and leaseback of real estate); and
USD 0.1 billion from the sale of financial assets.
In the prior year quarter, net cash outflows used in investing activities from continuing
operations of USD 1.3 billion were driven by USD 0.9 billion for net purchases of
marketable securities, commodities and time deposits; USD 0.3 billion for purchases
of property, plant and equipment; and USD 0.2 billion for purchases of intangible
assets. These cash outflows were partly offset by cash inflows of USD 0.1 billion
from the sale of intangible assets.
The current year quarter net cash outflows used in investing activities from discontinued
operations amounted to USD 0.7 billion, compared with USD 0.1 billion in the prior
year quarter. The current year quarter mainly includes the cash outflow of USD 0.7
billion due to the derecognition of cash and cash equivalents of the Sandoz business,
following the distribution (spin-off) on October 3, 2023.
Net cash outflows used in financing activities from continuing operations amounted
to USD 0.5 billion, compared with USD 4.1 billion in the prior year quarter.
The current year quarter net cash outflows used in financing activities from continuing
operations were mainly driven by USD 1.3 billion for net treasury share transactions;
and USD 0.1 billion payments of lease liabilities. These cash outflows were partly
offset by cash inflows of USD 0.7 billion from the net increase in current financial
debts and other net financing cash inflows of USD 0.2 billion.
In the prior year quarter, net cash outflows used in financing activities from continuing
operations of USD 4.1 billion were mainly driven by USD 2.7 billion for net treasury
share transactions; and USD 1.2 billion from the net decrease in current financial
debts. Payments of lease liabilities and other financing cash flows resulted in a
net cash outflow of USD 0.2 billion.
The current year quarter net cash outflows used in financing activities from discontinued
operations amounted to USD 0.1 billion, compared with USD 0.1 billion net cash inflows
in the prior year quarter.
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 from continuing operations.
For the total Company, net cash flows from operating activities amounted to USD 2.5
billion, compared with USD 4.1 billion in the prior year quarter and free cash flow
amounted to USD 2.1 billion, compared with USD 3.7 billion in the prior year quarter.
Full year
Net cash flows from operating activities from continuing operations amounted to USD
14.2 billion, compared with USD 13.0 billion in 2022. This increase was mainly driven
by higher net income from continuing operations adjusted for non-cash items and other
adjustments, including divestment gains, which were partly offset by higher income
taxes paid, mainly due to the timing of payments.
Net cash flows from operating activities from discontinued operations amounted to
USD 0.2 billion, compared with USD 1.2 billion in 2022. This decrease was mainly driven
by lower net income from discontinued operations adjusted for non-cash items and other
adjustments, including divestment gains and the distribution (spin-off) of the Sandoz
business on October 3, 2023.
Net cash inflows from investing activities from continuing operations amounted to
USD 6.7 billion, compared with USD 1.9 billion in 2022.
The current year net cash inflows from investing activities from continuing operations
were driven by net proceeds of USD 10.6 billion from the sale of marketable securities,
commodities and time deposits; USD 2.0 billion from the sale of intangible assets
(including USD 1.75 billion cash proceeds from the divestment of the ‘front of eye’
ophthalmology assets to Bausch + Lomb); USD 0.3 billion from the sale of financial
assets; and USD 0.2 billion from the sale of property, plant and equipment (including
proceeds from the sale and leaseback of real estate). These cash inflows were partly
offset by cash outflows of USD 3.6 billion for acquisitions and divestments of businesses,
net (including the acquisition of Chinook Therapeutics, Inc. for USD 3.1 billion,
net of cash acquired USD 0.1 billion, and the acquisition of DTx Pharma Inc. for USD
0.5 billion, net of cash acquired USD 0.1 billion); USD 1.7 billion for purchases
of intangible assets; USD 1.1 billion for purchases of property, plant and equipment;
and USD 0.1 billion for purchases of financial assets.
In 2022, net cash inflows from investing activities from continuing operations of
USD 1.9 billion were mainly driven by net proceeds of USD 4.7 billion from the sale
of marketable securities, commodities and time deposits; and USD 0.5 billion from
the sale of intangible assets, financial assets and property, plant and equipment.
These cash inflows were partly offset by cash outflows of USD 1.3 billion for purchases
of intangible assets; USD 0.9 billion for purchases of property, plant and equipment;
USD 0.1 billion for purchases of financial assets; and USD 0.8 billion for acquisitions
and divestments of businesses, net (primarily the acquisition of Gyroscope Therapeutics
Holdings plc for USD 0.8 billion).
Net cash outflows used in investing activities from discontinued operations amounted
to USD 1.1 billion, compared with USD 0.4 billion in 2022. The current year mainly
includes the cash outflow of USD 0.7 billion due to the derecognition of cash and
cash equivalents of the Sandoz business, following the distribution (spin-off) on
October 3, 2023.
Net cash outflows used in financing activities from continuing operations amounted
to USD 17.6 billion, compared with USD 20.7 billion in 2022.
The current year net cash outflows used in financing activities from continuing operations
were mainly driven by USD 8.6 billion for net treasury share transactions; USD 7.3
billion for the dividend payment; USD 2.2 billion for the repayment of two EUR denominated
bonds (notional amounts of EUR 1.25 billion and of EUR 0.75 billion) at maturity.
Payments of lease liabilities amounted to USD 0.3 billion. These cash outflows were
partly offset by cash inflows of USD 0.5 billion from the net increase in current
financial debts.
In 2022, net cash outflows used in financing activities from continuing operations
of USD 20.7 billion were mainly driven by USD 10.6 billion for net treasury share
transactions; USD 7.5 billion for the dividend payment; USD 2.5 billion in aggregate
for the repayment of two US dollar bonds; and USD 0.3 billion payments of lease liabilities.
These cash outflows were partly offset by cash inflows of USD 0.3 billion from the
net increase in current financial debts.
The current year net cash inflows from financing activities from discontinued operations
of USD 3.3 billion were mainly driven by USD 3.6 billion cash inflows from bank borrowings
(including the USD 3.3 billion Sandoz business borrowings from a group of banks on
September 28, 2023) in connection with the distribution (spin-off) of the Sandoz business
to Novartis AG shareholders, partly offset by transaction cost payments of USD 0.2
billion. Net cash inflows from financing activities from discontinued operations in
2022 were USD 119 million.
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 from continuing operations.
For the total Company, net cash flows from operating activities amounted to USD 14.5
billion, compared with USD 14.2 billion in 2022 and free cash flow amounted to USD
13.2 billion, compared with USD 13.0 billion in 2022.
Balance sheet
There has been a significant change to the December 31, 2023 consolidated balance
sheet resulting from the presentation of the Sandoz business as a discontinued operations.
This follows the September 15, 2023 shareholders’ approval to spin-off of Sandoz business
through a dividend in kind distribution to the Novartis AG shareholders (for further
details see Note 1, Note 2 and Note 3).
The December 31, 2022 consolidated balance sheet includes the assets and liabilities
of the Sandoz business. The December 31, 2023 consolidated balance sheet excludes
the assets and liabilities of the Sandoz business in the individual lines, due to
the derecognition of the Sandoz business at the date of the October 3, 2023 distribution
(spin-off).
The consolidated balance sheet discussion and analysis that follows excludes the impacts
of the derecognition of the Sandoz business assets and liabilities at the date of
the distribution (spin-off). For information on the assets and liabilities of the
Sandoz business derecognized at October 3, 2023, the distribution (spin-off) date,
see Note 13.
Assets
Total non-current assets of USD 69.5 billion increased by USD 0.5 billion compared to December 31, 2022, excluding
the impact of the derecognition of the Sandoz business non-current assets related
to discontinued operations.
Intangible assets other than goodwill decreased by USD 3.3 billion mainly due to amortization
and impairments and the divestment of the ‘front of eye’ ophthalmology assets, partially
offset by the impact of acquisitions, including Chinook Therapeutics, Inc. and of
DTx Pharma Inc., additions, and favorable currency translation adjustments.
Goodwill increased by USD 1.5 billion mainly due to the acquisition of Chinook Therapeutics,
Inc and DTx Pharma Inc.
Deferred tax assets increased by USD 1.3 billion mainly due to higher deferred tax
assets on intangible assets, inventory and tax loss carryforwards. Property, plant
and equipment increased by USD 0.6 billion mainly as additions and favorable currency
translation adjustments exceeded depreciation charge and disposals. Right-of-use assets,
investments in associated companies, financial assets, and other non-current assets
were broadly in line with December 31, 2022.
Total current assets of USD 30.5 billion decreased by USD 1.7 billion compared to December 31, 2022, excluding
the impact of the derecognition of the Sandoz business non-current assets related
to discontinued operations.
Cash and cash equivalents, marketable securities, commodities, time deposits and derivative
financial instruments decreased by USD 4.4 billion mainly due to the dividend payment,
and net purchases of treasury shares and intangible assets, partially offset by the
cash generated through operating activities.
Inventories increased by USD 0.9 billion. Trade receivables increased by USD 1.3 billion,
mainly due to the increase in net sales. Other current assets and income tax receivables
were broadly in line with December 31, 2022
Liabilities
Total non-current liabilities of USD 26.8 billion decreased by USD 1.7 billion compared to December 31, 2022, excluding
the impact of the derecognition of the Sandoz business non-current liabilities related
to discontinued operations.
Non-current financial debts decreased by USD 1.8 billion mainly due to the reclassification
of USD 2.1 billion from non-current to current financial debts of a USD denominated
bond with notional amount of USD 2.2 billion maturing in 2024.
Non-current lease liabilities, deferred tax liabilities and provisions and other non-current
liabilities were broadly in line with December 31, 2022.
Total current liabilities of USD 26.4 billion increased by USD 1.5 billion compared to December 31, 2022 excluding
the impact of the derecognition of the Sandoz business non-current liabilities related
to discontinued operations.
Current financial debts and derivative financial instruments were broadly in line
with December 31, 2022, as the repayment of a 0.5% coupon bond with a notional amount
of EUR 750 million and a 0.125% coupon bond with a
notional amount of EUR 1.25 billion was largely offset by the reclassification of
USD 2.1 billion from non-current to current financial debts of a USD denominated bond
with notional amount of USD 2.2 billion maturing in 2024.
Provisions and other current liabilities increased by USD 0.6 billion, mainly driven
by an increase of the provisions for deductions from revenue. Trade payables increased
by USD 0.9 billion. Current income tax liabilities and current lease liabilities were
broadly in line with December 31, 2022.
Equity
The Company’s equity decreased by USD 12.7 billion to USD 46.8 billion compared to
December 31, 2022.
This decrease was mainly due to the dividend in kind to effect the distribution (spin-off)
of Sandoz Group AG to the Novartis AG shareholders’ of USD 14.0 billion, the cash-dividend
payment of USD 7.3 billion and the purchase of treasury shares of USD 8.5 billion.
This was partially offset by the net income of USD 14.9 billion, and equity-based
compensation of USD 0.9 billion.
Net debt and debt/equity ratio
The Company’s liquidity amounted to USD 14.4 billion as at December 31, 2023, compared
with USD 18.9 billion as at December 31, 2022. Total non-current and current financial
debts, including derivatives, amounted to USD 24.6 billion as at December 31, 2023,
compared with USD 26.2 billion as at December 31, 2022.
The debt/equity ratio increased to 0.53:1 as at December 31, 2023, compared with 0.44:1
as at December 31, 2022. The net debt increased to USD 10.2 billion as at December
31, 2023, compared with USD 7.2 billion as at December 31, 2022.
Innovation Review
Novartis continues to focus its R&D portfolio prioritizing high value medicines with
transformative potential for patients. We now focus on ~110 projects in clinical development.
Selected Innovative Medicines approvals
Product
|
|
Active ingredient/ Descriptor
|
|
Indication
|
|
Region
|
|
|
|
Fabhalta
|
|
iptacopan
|
|
Paroxysmal nocturnal hemoglobinuria
|
|
US
|
|
|
|
Cosentyx
|
|
secukinumab
|
|
Hidradenitis suppurativa
|
|
US
|
|
|
|
Selected Innovative Medicines projects awaiting regulatory decisions
|
|
|
|
Completed submissions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
Indication
|
|
US
|
|
EU
|
|
Japan
|
|
News update
|
|
|
Kisqali
|
|
Hormone receptor-positive / human epidermal growth factor receptor 2-negative early breast cancer (adjuvant)
|
|
Q4 2023
|
|
Q3 2023
|
|
|
|
– US filing
|
|
|
LNP023 (iptacopan)
|
|
Paroxysmal nocturnal hemoglobinuria
|
|
Approved
|
|
Q2 2023
|
|
Q3 2023
|
|
– US approval
|
|
|
Xolair
|
|
Food allergy
|
|
Q4 2023
|
|
|
|
|
|
– Genentech submission
|
|
|
Selected Innovative Medicines pipeline projects
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
Aimovig
|
|
Migraine, pediatrics
|
|
≥2027
|
|
3
|
|
|
|
|
AVXS-101 (OAV101)
|
|
Spinal muscular atrophy (IT formulation)
|
|
2025
|
|
3
|
|
|
|
|
Beovu
|
|
Diabetic retinopathy
|
|
2025
|
|
3
|
|
|
|
|
CFZ533 (iscalimab)
|
|
Sjögren's syndrome
|
|
≥2027
|
|
2
|
|
|
|
|
Coartem
|
|
Malaria, uncomplicated (<5 kg patients)
|
|
2024
|
|
3
|
|
– Submission will use the MAGHP procedure in Switzerland to facilitate rapid approvals in the developing countries who are included in the MAGHP procedure
|
|
|
Cosentyx
|
|
Giant cell arteritis
|
|
2025
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Polymyalgia rheumatica
|
|
2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rotator cuff tendinopathy
|
|
≥2027
|
|
3
|
|
|
|
|
EXV811 (atrasentan)
|
|
IgA nephropathy
|
|
2024
|
|
3
|
|
– Ph3 ALIGN met its primary endpoint
|
|
|
FUB523 (zigakibart)
|
|
IgA nephropathy
|
|
≥2027
|
|
3
|
|
|
|
|
JDQ443 (opnurasib)
|
|
Non-small cell lung cancer (mono/combos)
|
|
≥2027
|
|
3
|
|
–Asset submission plan revised following strategy update
|
|
|
KAE609 (cipargamin)
|
|
Malaria, uncomplicated
|
|
≥2027
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malaria, severe
|
|
≥2027
|
|
2
|
|
|
|
|
KLU156 (ganaplacide + lumefantrine)
|
|
Malaria, uncomplicated
|
|
2026
|
|
3
|
|
– FDA Orphan Drug designation – FDA Fast Track designation
|
|
|
Leqvio
|
|
Secondary prevention of cardiovascular events in patients with elevated levels of LDL-C
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary prevention CVRR
|
|
≥2027
|
|
3
|
|
|
|
|
LNA043
|
|
Osteoarthritis
|
|
≥2027
|
|
2
|
|
– FDA Fast Track designation
|
|
|
Compound/ product
|
|
Potential indication/ Disease area
|
|
First planned submissions
|
|
Current Phase
|
|
News update
|
|
|
LNP023 (iptacopan)
|
|
IgA nephropathy
|
|
2024
|
|
3
|
|
– EU Orphan Drug designation – Ph3 APPLAUSE-IgAN met its primary endpoint
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C3 glomerulopathy
|
|
2024
|
|
3
|
|
– EU Orphan Drug designation – EU PRIME designation – FDA Rare Pediatric designation – China Breakthrough Therapy designation – FDA Breakthrough Therapy designation – Ph3 APPEAR-C3G study met its primary endpoint
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IC-MPGN
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atypical haemolytic uraemic syndrome
|
|
≥2027
|
|
3
|
|
|
|
|
LOU064 (remibrutinib)
|
|
Chronic spontaneous urticaria
|
|
2024
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple sclerosis
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CINDU
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sjögren's syndrome
|
|
|
|
2
|
|
– Further development will not be pursued to prioritize other key programs in portfolio
|
|
|
Lutathera
|
|
Gastroenteropancreatic neuroendocrine tumors, 1L in G2/3 tumors
|
|
2024
|
|
3
|
|
|
|
|
177Lu-NeoB
|
|
Multiple solid tumors
|
|
≥2027
|
|
1
|
|
|
|
|
LXE408
|
|
Visceral leishmaniasis
|
|
≥2027
|
|
2
|
|
|
|
|
MBG453 (sabatolimab)
|
|
Myelodysplastic syndrome
|
|
|
|
3
|
|
– Ph3 STIMULUS MDS2 did not meet primary endpoint; Program discontinued to prioritize other key programs in portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfit acute myeloid leukemia
|
|
|
|
2
|
|
|
|
|
Pluvicto
|
|
Metastatic castration-resistant prostate cancer pre-taxane
|
|
2024
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metastatic hormone sensitive prostate cancer
|
|
2025
|
|
3
|
|
– Event driven trial endpoint
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oligometastatic prostate cancer
|
|
≥2027
|
|
3
|
|
|
|
|
QGE031 (ligelizumab)
|
|
Food allergy
|
|
≥2027
|
|
3
|
|
|
|
|
Scemblix
|
|
1L Chronic myeloid leukemia
|
|
2024
|
|
3
|
|
– Ph3 ASC4FIRST met both primary endpoints
|
|
|
TQJ230 (pelacarsen)
|
|
Secondary prevention of cardiovascular events in patients with elevated levels of lipoprotein(a)
|
|
2025
|
|
3
|
|
– FDA Fast Track designation – China Breakthrough Therapy designation
|
|
|
VAY736 (ianalumab)
|
|
Auto-immune hepatitis
|
|
≥2027
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sjögren’s syndrome
|
|
2026
|
|
3
|
|
– FDA Fast Track designation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lupus nephritis
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systemic lupus erythematosus
|
|
≥2027
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L Immune thrombocytopenia
|
|
2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2L Immune thrombocytopenia
|
|
2026
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warm Autoimmune hemolytic anemia
|
|
2026
|
|
3
|
|
|
|
|
Vijoyce
|
|
Lymphatic malformations
|
|
≥2027
|
|
3
|
|
– US, EU Orphan Drug designation granted – Ph3 Study EPIK-L1 recruiting
|
|
|
XXB750
|
|
Hypertension
|
|
≥2027
|
|
2
|
|
|
|
|
YTB323
|
|
sr Lupus nephritis / Systemic lupus erythematosus
|
|
≥2027
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1L High-risk large B-cell lymphoma
|
|
≥2027
|
|
2
|
|
|
|
|
Condensed Consolidated Financial Statements
Consolidated income statements
Fourth quarter (unaudited)
(USD millions unless indicated otherwise)
|
|
Note
|
|
Q4 2023
|
|
Q4 2022
|
|
|
Net sales from continuing operations
|
|
11
|
|
11 423
|
|
10 576
|
|
|
Other revenues
|
|
11
|
|
353
|
|
390
|
|
|
Cost of goods sold
|
|
|
|
-3 022
|
|
-3 041
|
|
|
Gross profit from continuing operations
|
|
|
|
8 754
|
|
7 925
|
|
|
Selling, general and administration
|
|
|
|
-3 444
|
|
-3 183
|
|
|
Research and development
|
|
|
|
-2 567
|
|
-2 216
|
|
|
Other income
|
|
|
|
450
|
|
155
|
|
|
Other expense
|
|
|
|
-611
|
|
-926
|
|
|
Operating income from continuing operations
|
|
|
|
2 582
|
|
1 755
|
|
|
Loss from associated companies
|
|
|
|
-6
|
|
-3
|
|
|
Interest expense
|
|
|
|
-217
|
|
-207
|
|
|
Other financial income and expense
|
|
|
|
18
|
|
24
|
|
|
Income before taxes from continuing operations
|
|
|
|
2 377
|
|
1 569
|
|
|
Income taxes
|
|
|
|
261
|
|
-254
|
|
|
Net income from continuing operations
|
|
|
|
2 638
|
|
1 315
|
|
|
Net (loss)/income from discontinued operations before gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
13
|
|
-18
|
|
151
|
|
|
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
3, 13
|
|
5 860
|
|
|
|
|
Net income from discontinued operations
|
|
|
|
5 842
|
|
151
|
|
|
Net income
|
|
|
|
8 480
|
|
1 466
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
|
|
8 480
|
|
1 466
|
|
|
Non-controlling interests
|
|
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic (million)
|
|
|
|
2 050
|
|
2 135
|
|
|
Basic earnings per share from continuing operations (USD) 1
|
|
|
|
1.29
|
|
0.62
|
|
|
Basic earnings per share from discontinued operations (USD) 1
|
|
|
|
2.85
|
|
0.07
|
|
|
Total basic earnings per share (USD) 1
|
|
|
|
4.14
|
|
0.69
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted (million)
|
|
|
|
2 065
|
|
2 150
|
|
|
Diluted earnings per share from continuing operations (USD) 1
|
|
|
|
1.28
|
|
0.61
|
|
|
Diluted earnings per share from discontinued operations (USD) 1
|
|
|
|
2.83
|
|
0.07
|
|
|
Total diluted earnings per share (USD) 1
|
|
|
|
4.11
|
|
0.68
|
|
|
|
1 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated income statements
Full year (audited)
(USD millions unless indicated otherwise)
|
|
Note
|
|
FY 2023
|
|
FY 2022
|
|
|
Net sales from continuing operations
|
|
11
|
|
45 440
|
|
42 206
|
|
|
Other revenues
|
|
11
|
|
1 220
|
|
1 255
|
|
|
Cost of goods sold
|
|
|
|
-12 472
|
|
-11 582
|
|
|
Gross profit from continuing operations
|
|
|
|
34 188
|
|
31 879
|
|
|
Selling, general and administration
|
|
|
|
-12 517
|
|
-12 193
|
|
|
Research and development
|
|
|
|
-11 371
|
|
-9 172
|
|
|
Other income
|
|
|
|
1 772
|
|
696
|
|
|
Other expense
|
|
|
|
-2 303
|
|
-3 264
|
|
|
Operating income from continuing operations
|
|
|
|
9 769
|
|
7 946
|
|
|
Loss from associated companies
|
|
|
|
-13
|
|
-11
|
|
|
Interest expense
|
|
|
|
-855
|
|
-800
|
|
|
Other financial income and expense
|
|
|
|
222
|
|
42
|
|
|
Income before taxes from continuing operations
|
|
|
|
9 123
|
|
7 177
|
|
|
Income taxes
|
|
|
|
-551
|
|
-1 128
|
|
|
Net income from continuing operations
|
|
|
|
8 572
|
|
6 049
|
|
|
Net income from discontinued operations before gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
13
|
|
422
|
|
906
|
|
|
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
3, 13
|
|
5 860
|
|
|
|
|
Net income from discontinued operations
|
|
|
|
6 282
|
|
906
|
|
|
Net income
|
|
|
|
14 854
|
|
6 955
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
|
|
14 850
|
|
6 955
|
|
|
Non-controlling interests
|
|
|
|
4
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic (million)
|
|
|
|
2 077
|
|
2 181
|
|
|
Basic earnings per share from continuing operations (USD) 1
|
|
|
|
4.13
|
|
2.77
|
|
|
Basic earnings per share from discontinued operations (USD) 1
|
|
|
|
3.02
|
|
0.42
|
|
|
Total basic earnings per share (USD) 1
|
|
|
|
7.15
|
|
3.19
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted (million)
|
|
|
|
2 092
|
|
2 197
|
|
|
Diluted earnings per share from continuing operations (USD) 1
|
|
|
|
4.10
|
|
2.75
|
|
|
Diluted earnings per share from discontinued operations (USD) 1
|
|
|
|
3.00
|
|
0.42
|
|
|
Total diluted earnings per share (USD) 1
|
|
|
|
7.10
|
|
3.17
|
|
|
|
1 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated statements of comprehensive income
Fourth quarter (unaudited)
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
|
Net income
|
|
8 480
|
|
1 466
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be recycled into the consolidated income statement
|
|
|
|
|
|
|
Net investment hedge, net of taxes
|
|
-59
|
|
-118
|
|
|
Currency translation effects, net of taxes
|
|
1 320
|
|
1 652
|
|
|
Total of items that are or may be recycled
|
|
1 261
|
|
1 534
|
|
|
|
|
|
|
|
|
Items that will never be recycled into the consolidated income statement
|
|
|
|
|
|
|
Actuarial gains/(losses) from defined benefit plans, net of taxes
|
|
-217
|
|
-1 920
|
|
|
Fair value adjustments on equity securities, net of taxes
|
|
56
|
|
-97
|
|
|
Total of items that will never be recycled
|
|
-161
|
|
-2 017
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
9 580
|
|
983
|
|
|
Total comprehensive income for the year attributable to:
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
9 578
|
|
980
|
|
|
Continuing operations
|
|
4 062
|
|
630
|
|
|
Discontinued operations
|
|
5 516
|
|
350
|
|
|
Non-controlling interests
|
|
2
|
|
3
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Full year (audited)
(USD millions)
|
|
FY 2023
|
|
FY 2022
|
|
|
Net income
|
|
14 854
|
|
6 955
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
Items that are or may be recycled into the consolidated income statement
|
|
|
|
|
|
|
Net investment hedge, net of taxes
|
|
-50
|
|
91
|
|
|
Currency translation effects, net of taxes
|
|
1 375
|
|
-450
|
|
|
Total of items that are or may be recycled
|
|
1 325
|
|
-359
|
|
|
|
|
|
|
|
|
Items that will never be recycled into the consolidated income statement
|
|
|
|
|
|
|
Actuarial gains from defined benefit plans, net of taxes
|
|
-160
|
|
-103
|
|
|
Fair value adjustments on equity securities, net of taxes
|
|
37
|
|
-382
|
|
|
Total of items that will never be recycled
|
|
-123
|
|
-485
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
16 056
|
|
6 111
|
|
|
Total comprehensive income for the year attributable to:
|
|
|
|
|
|
Shareholders of Novartis AG
|
|
16 050
|
|
6 116
|
|
|
Continuing operations
|
|
10 115
|
|
5 181
|
|
|
Discontinued operations
|
|
5 935
|
|
935
|
|
|
Non-controlling interests
|
|
6
|
|
-5
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated balance sheets
(USD millions)
|
|
Note
|
|
Dec 31, 2023 (audited)
|
|
Dec 31, 2022 (audited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
9 514
|
|
10 764
|
|
|
Right-of-use assets
|
|
|
|
1 410
|
|
1 431
|
|
|
Goodwill
|
|
|
|
23 341
|
|
29 301
|
|
|
Intangible assets other than goodwill
|
|
|
|
26 879
|
|
31 644
|
|
|
Investments in associated companies
|
|
|
|
205
|
|
143
|
|
|
Deferred tax assets
|
|
|
|
4 309
|
|
3 739
|
|
|
Financial assets
|
|
|
|
2 607
|
|
2 411
|
|
|
Other non-current assets
|
|
|
|
1 199
|
|
1 110
|
|
|
Total non-current assets
|
|
|
|
69 464
|
|
80 543
|
|
|
Current assets
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
5 913
|
|
7 175
|
|
|
Trade receivables
|
|
|
|
7 107
|
|
8 066
|
|
|
Income tax receivables
|
|
|
|
426
|
|
268
|
|
|
Marketable securities, commodities, time deposits and derivative financial instruments
|
|
|
|
1 035
|
|
11 413
|
|
|
Cash and cash equivalents
|
|
|
|
13 393
|
|
7 517
|
|
|
Other current assets
|
|
|
|
2 607
|
|
2 471
|
|
|
Total current assets
|
|
|
|
30 481
|
|
36 910
|
|
|
Total assets
|
|
|
|
99 945
|
|
117 453
|
|
|
|
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
825
|
|
890
|
|
|
Treasury shares
|
|
|
|
-41
|
|
-92
|
|
|
Reserves
|
|
|
|
45 883
|
|
58 544
|
|
|
Equity attributable to Novartis AG shareholders
|
|
|
|
46 667
|
|
59 342
|
|
|
Non-controlling interests
|
|
|
|
83
|
|
81
|
|
|
Total equity
|
|
|
|
46 750
|
|
59 423
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Financial debts
|
|
|
|
18 436
|
|
20 244
|
|
|
Lease liabilities
|
|
|
|
1 598
|
|
1 538
|
|
|
Deferred tax liabilities
|
|
|
|
2 248
|
|
2 686
|
|
|
Provisions and other non-current liabilities
|
|
|
|
4 523
|
|
4 906
|
|
|
Total non-current liabilities
|
|
|
|
26 805
|
|
29 374
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Trade payables
|
|
|
|
4 926
|
|
5 146
|
|
|
Financial debts and derivative financial instruments
|
|
|
|
6 175
|
|
5 931
|
|
|
Lease liabilities
|
|
|
|
230
|
|
251
|
|
|
Current income tax liabilities
|
|
|
|
1 893
|
|
2 533
|
|
|
Provisions and other current liabilities
|
|
|
|
13 166
|
|
14 795
|
|
|
Total current liabilities
|
|
|
|
26 390
|
|
28 656
|
|
|
Total liabilities
|
|
|
|
53 195
|
|
58 030
|
|
|
Total equity and liabilities
|
|
|
|
99 945
|
|
117 453
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated statements of changes in equity
Fourth quarter (unaudited)
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at September 30, 2023
|
|
|
|
825
|
|
-32
|
|
42 333
|
|
-4 962
|
|
38 164
|
|
81
|
|
38 245
|
|
|
Net income
|
|
|
|
|
|
|
|
8 480
|
|
|
|
8 480
|
|
0
|
|
8 480
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
1 098
|
|
1 098
|
|
2
|
|
1 100
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
8 480
|
|
1 098
|
|
9 578
|
|
2
|
|
9 580
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-10
|
|
-1 223
|
|
|
|
-1 233
|
|
|
|
-1 233
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
|
|
-5
|
|
|
|
-5
|
|
|
|
-5
|
|
|
Equity-based compensation
|
|
|
|
|
|
1
|
|
249
|
|
|
|
250
|
|
|
|
250
|
|
|
Shares delivered to Sandoz employees as a result of the Sandoz spin-off
|
|
|
|
|
|
|
|
30
|
|
|
|
30
|
|
|
|
30
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
Transaction costs, net of taxes
|
|
4.4
|
|
|
|
|
|
-140
|
|
|
|
-140
|
|
|
|
-140
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
-69
|
|
69
|
|
|
|
|
|
|
|
|
Value adjustments related to divestments
|
|
|
|
|
|
|
|
-29
|
|
29
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
20
|
|
|
|
20
|
|
|
|
20
|
|
|
Total of other equity movements
|
|
|
|
|
|
-9
|
|
-1 164
|
|
98
|
|
-1 075
|
|
|
|
-1 075
|
|
|
Total equity at December 31, 2023
|
|
|
|
825
|
|
-41
|
|
49 649
|
|
-3 766
|
|
46 667
|
|
83
|
|
46 750
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at October 1, 2022
|
|
|
|
890
|
|
-70
|
|
64 543
|
|
-4 543
|
|
60 820
|
|
78
|
|
60 898
|
|
|
Net income
|
|
|
|
|
|
|
|
1 466
|
|
|
|
1 466
|
|
0
|
|
1 466
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
-486
|
|
-486
|
|
3
|
|
-483
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
1 466
|
|
-486
|
|
980
|
|
3
|
|
983
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-22
|
|
-2 685
|
|
|
|
-2 707
|
|
|
|
-2 707
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
|
|
-1
|
|
|
|
-1
|
|
|
|
-1
|
|
|
Equity-based compensation
|
|
|
|
|
|
0
|
|
203
|
|
|
|
203
|
|
|
|
203
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
1
|
|
-1
|
|
|
|
|
|
|
|
|
Value adjustments related to divestments
|
|
|
|
|
|
|
|
-34
|
|
34
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
45
|
|
|
|
45
|
|
|
|
45
|
|
|
Total of other equity movements
|
|
|
|
|
|
-22
|
|
-2 469
|
|
33
|
|
-2 458
|
|
|
|
-2 458
|
|
|
Total equity at December 31, 2022
|
|
|
|
890
|
|
-92
|
|
63 540
|
|
-4 996
|
|
59 342
|
|
81
|
|
59 423
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated statements of changes in equity
Full year (audited)
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at January 1, 2023
|
|
|
|
890
|
|
-92
|
|
63 540
|
|
-4 996
|
|
59 342
|
|
81
|
|
59 423
|
|
|
Net income
|
|
|
|
|
|
|
|
14 850
|
|
|
|
14 850
|
|
4
|
|
14 854
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
1 200
|
|
1 200
|
|
2
|
|
1 202
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
14 850
|
|
1 200
|
|
16 050
|
|
6
|
|
16 056
|
|
|
Dividends
|
|
|
|
|
|
|
|
-7 255
|
|
|
|
-7 255
|
|
|
|
-7 255
|
|
|
Dividend in kind to effect the spin-off of Sandoz Group AG
|
|
3
|
|
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
|
-13 962
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-51
|
|
-8 466
|
|
|
|
-8 517
|
|
|
|
-8 517
|
|
|
Reduction of share capital
|
|
4.1
|
|
-65
|
|
94
|
|
-29
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
2
|
|
144
|
|
|
|
146
|
|
|
|
146
|
|
|
Equity-based compensation
|
|
|
|
|
|
6
|
|
898
|
|
|
|
904
|
|
|
|
904
|
|
|
Shares delivered to Sandoz employees as a result of the Sandoz spin-off
|
|
|
|
|
|
|
|
30
|
|
|
|
30
|
|
|
|
30
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
|
|
14
|
|
|
Transaction costs, net of taxes
|
|
4.4
|
|
|
|
|
|
-214
|
|
|
|
-214
|
|
|
|
-214
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-4
|
|
-4
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
-1
|
|
1
|
|
|
|
|
|
|
|
|
Value adjustments related to divestments
|
|
|
|
|
|
|
|
-29
|
|
29
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
129
|
|
|
|
129
|
|
|
|
129
|
|
|
Total of other equity movements
|
|
|
|
-65
|
|
51
|
|
-28 741
|
|
30
|
|
-28 725
|
|
-4
|
|
-28 729
|
|
|
Total equity at December 31, 2023
|
|
|
|
825
|
|
-41
|
|
49 649
|
|
-3 766
|
|
46 667
|
|
83
|
|
46 750
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Retained earnings
|
|
Total value adjustments
|
|
Issued share capital and reserves attributable to Novartis shareholders
|
|
Non- controlling interests
|
|
Total equity
|
|
|
Total equity at January 1, 2022
|
|
|
|
901
|
|
-48
|
|
70 989
|
|
-4 187
|
|
67 655
|
|
167
|
|
67 822
|
|
|
Net income
|
|
|
|
|
|
|
|
6 955
|
|
|
|
6 955
|
|
0
|
|
6 955
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
-839
|
|
-839
|
|
-5
|
|
-844
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
6 955
|
|
-839
|
|
6 116
|
|
-5
|
|
6 111
|
|
|
Dividends
|
|
|
|
|
|
|
|
-7 506
|
|
|
|
-7 506
|
|
|
|
-7 506
|
|
|
Purchase of treasury shares
|
|
|
|
|
|
-66
|
|
-10 844
|
|
|
|
-10 910
|
|
|
|
-10 910
|
|
|
Reduction of share capital
|
|
4.1
|
|
-11
|
|
15
|
|
-4
|
|
|
|
|
|
|
|
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
|
|
1
|
|
87
|
|
|
|
88
|
|
|
|
88
|
|
|
Equity-based compensation
|
|
|
|
|
|
6
|
|
848
|
|
|
|
854
|
|
|
|
854
|
|
|
Shares delivered to Alcon employees as a result of the Alcon spin-off
|
|
|
|
|
|
0
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
|
|
14
|
|
|
Decrease of treasury share repurchase obligation under a share buyback trading plan
|
|
4.3
|
|
|
|
|
|
2 809
|
|
|
|
2 809
|
|
|
|
2 809
|
|
|
Changes in non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-81
|
|
-81
|
|
|
Fair value adjustments on financial assets sold
|
|
|
|
|
|
|
|
4
|
|
-4
|
|
|
|
|
|
|
|
|
Value adjustments related to divestments
|
|
|
|
|
|
|
|
-34
|
|
34
|
|
|
|
|
|
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
217
|
|
|
|
217
|
|
|
|
217
|
|
|
Total of other equity movements
|
|
|
|
-11
|
|
-44
|
|
-14 404
|
|
30
|
|
-14 429
|
|
-81
|
|
-14 510
|
|
|
Total equity at December 31, 2022
|
|
|
|
890
|
|
-92
|
|
63 540
|
|
-4 996
|
|
59 342
|
|
81
|
|
59 423
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated statements of cash flows
Fourth quarter (unaudited)
(USD millions)
|
|
Note
|
|
Q4 2023
|
|
Q4 2022
|
|
|
Net income from continuing operations
|
|
|
|
2 638
|
|
1 315
|
|
|
Adjustments to reconcile net income from continuing operations to net cash flows from
operating activities from continuing operations
|
|
|
|
|
|
|
|
Reversal of non-cash items and other adjustments
|
|
7.1
|
|
1 791
|
|
2 756
|
|
|
Interest received
|
|
|
|
163
|
|
133
|
|
|
Interest paid
|
|
|
|
-238
|
|
-212
|
|
|
Change in other financial receipts
|
|
|
|
26
|
|
-18
|
|
|
Change in other financial payments
|
|
|
|
-3
|
|
-5
|
|
|
Income taxes paid
|
|
7.2
|
|
-1 093
|
|
-334
|
|
|
Net cash flows from operating activities from continuing operations before working capital and provision changes
|
|
|
|
3 284
|
|
3 635
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
|
|
-353
|
|
-323
|
|
|
Change in net current assets and other operating cash flow items
|
|
7.3
|
|
-384
|
|
456
|
|
|
Net cash flows from operating activities from continuing operations
|
|
|
|
2 547
|
|
3 768
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
|
|
343
|
|
|
Total net cash flows from operating activities
|
|
|
|
2 547
|
|
4 111
|
|
|
Purchases of property, plant and equipment
|
|
|
|
-406
|
|
-306
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
|
164
|
|
102
|
|
|
Purchases of intangible assets
|
|
|
|
-377
|
|
-192
|
|
|
Proceeds from sale of intangible assets
|
|
|
|
2
|
|
|
|
|
Purchases of financial assets
|
|
|
|
-29
|
|
-29
|
|
|
Proceeds from sale of financial assets
|
|
|
|
147
|
|
12
|
|
|
Acquisitions and divestments of interests in associated companies, net
|
|
|
|
-3
|
|
-2
|
|
|
Acquisitions and divestments of businesses, net
|
|
7.4
|
|
-8
|
|
-7
|
|
|
Purchases of marketable securities, commodities and time deposits
|
|
|
|
-544
|
|
-10 548
|
|
|
Proceeds from sale of marketable securities, commodities and time deposits
|
|
|
|
32
|
|
9 651
|
|
|
Net cash flows used in investing activities from continuing operations
|
|
|
|
-1 022
|
|
-1 319
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
13
|
|
-738
|
|
-148
|
|
|
Total net cash flows used in investing activities
|
|
|
|
-1 760
|
|
-1 467
|
|
|
Purchases of treasury shares
|
|
|
|
-1 251
|
|
-2 678
|
|
|
Proceeds from exercised options and other treasury share transactions, net
|
|
|
|
-5
|
|
|
|
|
Change in current financial debts
|
|
|
|
674
|
|
-1 196
|
|
|
Payments of lease liabilities
|
|
|
|
-64
|
|
-64
|
|
|
Other financing cash flows, net
|
|
|
|
150
|
|
-161
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
|
|
-496
|
|
-4 099
|
|
|
Net cash flows (used in)/from financing activities from discontinued operations
|
|
13
|
|
-111
|
|
105
|
|
|
Total net cash flows used in financing activities
|
|
|
|
-607
|
|
-3 994
|
|
|
Net change in cash and cash equivalents before effect of exchange rate changes
|
|
|
|
180
|
|
-1 350
|
|
|
Cash and cash equivalents from discontinued operations at September 30, 2023
|
|
|
|
648
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
160
|
|
141
|
|
|
Net change in cash and cash equivalents
|
|
|
|
988
|
|
-1 209
|
|
|
Cash and cash equivalents at October 1
|
|
|
|
12 405
|
|
8 726
|
|
|
Cash and cash equivalents at December 31
|
|
|
|
13 393
|
|
7 517
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Consolidated statements of cash flows
Full year (audited)
(USD millions)
|
|
Note
|
|
FY 2023
|
|
FY 2022
|
|
|
Net income from continuing operations
|
|
|
|
8 572
|
|
6 049
|
|
|
Adjustments to reconcile net income from continuing operations to net cash flows from
operating activities from continuing operations
|
|
|
|
|
|
|
|
Reversal of non-cash items and other adjustments
|
|
7.1
|
|
10 369
|
|
10 631
|
|
|
Dividends received from associated companies and others
|
|
|
|
2
|
|
1
|
|
|
Interest received
|
|
|
|
645
|
|
252
|
|
|
Interest paid
|
|
|
|
-751
|
|
-667
|
|
|
Other financial receipts
|
|
|
|
90
|
|
71
|
|
|
Other financial payments
|
|
|
|
-17
|
|
-26
|
|
|
Income taxes paid
|
|
7.2
|
|
-2 787
|
|
-1 702
|
|
|
Net cash flows from operating activities from continuing operations before working capital and provision changes
|
|
|
|
16 123
|
|
14 609
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
|
|
-1 534
|
|
-774
|
|
|
Change in net current assets and other operating cash flow items
|
|
7.3
|
|
-369
|
|
-796
|
|
|
Net cash flows from operating activities from continuing operations
|
|
|
|
14 220
|
|
13 039
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
238
|
|
1 197
|
|
|
Total net cash flows from operating activities
|
|
|
|
14 458
|
|
14 236
|
|
|
Purchases of property, plant and equipment
|
|
|
|
-1 060
|
|
-916
|
|
|
Proceeds from sale of property, plant and equipment
|
|
|
|
237
|
|
158
|
|
|
Purchases of intangible assets
|
|
|
|
-1 693
|
|
-1 323
|
|
|
Proceeds from sale of intangible assets
|
|
|
|
1 955
|
|
170
|
|
|
Purchases of financial assets
|
|
|
|
-106
|
|
-115
|
|
|
Proceeds from sale of financial assets
|
|
|
|
348
|
|
133
|
|
|
Purchases of other non-current assets
|
|
|
|
|
|
-1
|
|
|
Acquisitions and divestments of interests in associated companies, net
|
|
|
|
-11
|
|
-24
|
|
|
Acquisitions and divestments of businesses, net
|
|
7.4
|
|
-3 558
|
|
-840
|
|
|
Purchases of marketable securities, commodities and time deposits
|
|
|
|
-641
|
|
-34 695
|
|
|
Proceeds from sale of marketable securities, commodities and time deposits
|
|
|
|
11 248
|
|
39 357
|
|
|
Net cash flows from investing activities from continuing operations
|
|
|
|
6 719
|
|
1 904
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
13
|
|
-1 123
|
|
-436
|
|
|
Total net cash flows from investing activities
|
|
|
|
5 596
|
|
1 468
|
|
|
Dividends paid to shareholders of Novartis AG
|
|
|
|
-7 255
|
|
-7 506
|
|
|
Purchases of treasury shares
|
|
|
|
-8 719
|
|
-10 652
|
|
|
Proceeds from exercised options and other treasury share transactions, net
|
|
|
|
153
|
|
100
|
|
|
Repayments of the current portion of non-current financial debts
|
|
|
|
-2 223
|
|
-2 575
|
|
|
Change in current financial debts
|
|
|
|
546
|
|
252
|
|
|
Payments of lease liabilities
|
|
|
|
-258
|
|
-262
|
|
|
Other financing cash flows, net
|
|
|
|
192
|
|
-38
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
|
|
-17 564
|
|
-20 681
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
13
|
|
3 286
|
|
119
|
|
|
Total net cash flows used in financing activities
|
|
|
|
-14 278
|
|
-20 562
|
|
|
Net change in cash and cash equivalents before effect of exchange rate changes
|
|
|
|
5 776
|
|
-4 858
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
100
|
|
-32
|
|
|
Net change in cash and cash equivalents
|
|
|
|
5 876
|
|
-4 890
|
|
|
Cash and cash equivalents at January 1
|
|
|
|
7 517
|
|
12 407
|
|
|
Cash and cash equivalents at December 31
|
|
|
|
13 393
|
|
7 517
|
|
|
|
The accompanying Notes form an integral part of the condensed consolidated financial
statements
|
Notes to the Condensed Consolidated Financial Statements for the three month interim period (unaudited) and year ended December 31, 2023 (audited)
1. Basis of preparation
The consolidated financial statements of the Company are prepared in accordance with
IFRS Accounting Standards as issued by the International Accounting Standards Board.
They are prepared in accordance with the historical cost convention, except for items
that are required to be accounted for at fair value. These Condensed Consolidated
Financial Statements for the three month and year ended December 31, 2023, were prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and accounting policies set out in the 2023 Annual Report published on January 31,
2024.
At the Novartis AG Extraordinary General Meeting, held on September 15, 2023, our
shareholders approved the spin-off of the Sandoz business. Following the shareholder
approval IFRS Accounting Standards require the Sandoz Division and selected portions
of corporate activities attributable to Sandoz’s business, as well as certain expenses
related to the spin-off (the “Sandoz business”) to be reported as discontinued operations
in the consolidated financial statements. As a result, the Sandoz business has been
presented as discontinued operations in the consolidated financial statements. This
requires the three months and year ended December 31, 2023 consolidated income statement,
consolidated statement of comprehensive income and consolidated statement of cash
flows to present separately continuing operations from discontinued operations, with
comparative amounts in the prior years restated on a consistent basis. There is no
requirement for the restatement of the December 31, 2022 consolidated balance sheet
related to the assets and liabilities of the Sandoz business that were derecognized
in 2023 as at the October 3, 2023 distribution date. For further information and disclosures,
refer to Note 2, Note 3, and Note 13.
2. Selected critical accounting policies
The Company’s principal accounting policies are set out in Note 1 to the Consolidated
Financial Statements in the 2023 Annual Report and conform with IFRS Accounting Standards
as issued by the IASB.
The preparation of financial statements requires management to make certain estimates
and assumptions, either at the balance sheet date or during the period, which affect
the reported amounts of revenues, expenses, assets, liabilities, including the distribution
liability and the non-cash, non-taxable gain recognized in connection with the distribution
of Sandoz Group AG to Novartis AG shareholders, and contingent amounts.
Estimates are based on historical experience and other assumptions that are considered
reasonable under the given circumstances and are regularly monitored. Actual outcomes
and results could differ from those estimates and assumptions. Revisions to estimates
are recognized in the period in which the estimate is revised.
As disclosed in the 2023 Annual Report, goodwill, and acquired In-Process Research
& Development projects are reviewed for impairment at least annually and these, as
well as all other investments in intangible assets, are reviewed for impairment whenever
an event or decision occurs that raises concern about their balance sheet carrying
value. The amount of goodwill and other intangible assets on the Company’s consolidated
balance sheet has risen significantly in recent years, primarily from acquisitions.
Impairment testing may lead to potentially significant impairment charges in the future
that could have a materially adverse impact on the Company’s results of operations
and financial condition.
The Company’s activities are not subject to significant seasonal fluctuations.
Distribution of Sandoz Group AG to Novartis AG shareholders
At the Extraordinary General Meeting (EGM) of Novartis AG shareholders, held on September
15, 2023, the Novartis AG shareholders approved a special distribution by way of a
dividend in kind to effect the spin-off of Sandoz Group AG.
The September 15, 2023, shareholder approval for the spin-off required the Sandoz
Division and selected portions of corporate activities attributable to Sandoz’s business,
as well as certain expenses related to the spin-off (the “Sandoz business”) to be
reported as discontinued operations.
The shareholder approval on September 15, 2023, for the spin-off the Sandoz business,
required the recognition of a distribution liability at the fair value of the
Sandoz business. Novartis policy is to measure the distribution liability at the fair
value of the Sandoz business net assets taken as a whole. The distribution liability
was recognized through a reduction in retained earnings. It was required to be adjusted
at each balance sheet date for changes in its estimated fair value, up to the date
of the distribution to shareholders through retained earnings. Any resulting impairment
of the business assets to be distributed would have been recognized in the consolidated
income statements in “Other expense” of discontinued operations, at the date of initial
recognition of the distribution liability or at subsequent dates resulting from changes
of the distribution liability valuation.
At the October 4, 2023, distribution settlement date, the resulting gain, which is
measured as the excess amount of the distribution liability over the then-carrying
value of the net assets of the business distributed, was recognized on the line “Gain
on distribution of Sandoz Group AG to Novartis AG shareholders” within the income
statement of discontinued operations.
The recognition of the distribution liability required the use of valuation techniques
for the purposes of impairment testing of the Sandoz business’ assets to be distributed
and for the measurement of the fair value of the distribution liability. These valuations
required the use of management assumptions and estimates related to the Sandoz business’
future cash flows, market multiples, opening share price of Sandoz Group AG on the
first day of trading its shares on the SIX Swiss Exchange, to estimate day one market
value, and control premiums to apply in estimating the Sandoz business fair value.
These fair value measurements are classified as “Level 3” in the fair value hierarchy.
The section “—Goodwill and intangible assets other than goodwill” in Note 1 to the Consolidated
Financial Statements in the Annual Report 2023 provides additional information on
key assumptions that are highly sensitive in the estimation of fair values using valuation
techniques.
Transaction costs that are directly attributable to the Distribution (spin-off) of
the Sandoz business to Novartis AG shareholders by way of a dividend in kind, and
that would otherwise have been avoided, were accounted for as a deduction from equity
(within retained earnings). Prior to the recognition of the distribution liability,
these costs were recorded as prepaid expenses in the consolidated balance sheet.
For additional disclosures, refer to Note 3 and Note 13.
3. Significant transactions
The Company applied the acquisition method of accounting for businesses acquired,
and did not elect to apply the optional concentration test to account for acquired
business as an asset separately acquired.
Significant transactions 2023
Completion of the spin-off of the Sandoz business through a dividend in kind distribution
to Novartis AG shareholders
On July 18, 2023, Novartis announced that its Board of Directors had unanimously endorsed
the proposed separation of the Sandoz business to create an independent company by
way of a spin-off and to seek shareholder approval for the spin-off of the Sandoz
business into a separately traded standalone company, following the complete structural
separation of the Sandoz business into a standalone company (the Sandoz business or
Sandoz Group AG) and subject to the satisfaction of certain conditions and Novartis
AG shareholders’ approval.
At the EGM held on September 15, 2023, Novartis AG shareholders approved a special
distribution by way of a dividend in kind to effect the spin-off of Sandoz Group AG,
subject to the completion of certain conditions precedent to the distribution. Upon
shareholder approval, the Sandoz business was reported as discontinued operations
and the distribution liability was recognized at its fair value, which exceeded the
carrying value of the Sandoz business net assets.
The conditions precedent to the spin-off were met and on October 3, 2023 the spin-off
of the Sandoz business was effected by way of a distribution of a dividend in kind
of Sandoz Group AG shares to Novartis AG shareholders and American Depositary Receipt
(ADR) holders (the Distribution). Through the Distribution, each Novartis AG shareholder
received 1 Sandoz Group AG share for every 5 Novartis AG shares and each Novartis
ADR holder received 1 Sandoz ADR for every 5 Novartis ADR that they held at the close
of business on October 3, 2023. As of October 4, 2023, the shares of Sandoz Group
AG have been listed on the SIX Swiss Exchange (SIX) under the stock symbol “SDZ”.
On September 18, 2023, the Sandoz business entered into financing arrangements with
a group of banks under which on September 28, 2023, it borrowed a total amount of
USD 3.3 billion. These borrowings consisted of a bridge loan in EUR (EUR 2.4 billion)
and term loans in EUR (EUR 0.2 billion) and USD (USD 0.5 billion). In addition, the
Sandoz business borrowed approximately USD 0.4 billion under a number of local bilateral
facilities in different countries. This resulted in a total gross debt of USD 3.7
billion. These outstanding borrowings of the Sandoz business legal entities were recognized
in the September 30, 2023 consolidated balance sheet within Liabilities related to
discontinued operations and within financing activities cash flows from discontinued
operations. Prior to the Distribution on October 3, 2023, Sandoz business legal entities
paid approximately USD 3.3 billion in cash to Novartis and its affiliates through
a series of intercompany transactions.
At the Distribution date on October 3, 2023, the dividend in kind distribution liability
to effect the Distribution (spin-off) of the Sandoz business amounted to USD 14.0
billion, measured by reference to the October 4, 2023 opening Sandoz Group AG share
price and applying a control premium. The dividend in kind distribution liability
was recorded as a reduction to equity (retained earnings) and remained in excess of
the then carrying value of the Sandoz business net assets, which amounted to USD 8.6
billion (see Note 13).
Certain consolidated foundations own Novartis AG dividend-bearing shares that restricts
their availability for use by Novartis. These Novartis AG shares are accounted for
as treasury shares. Through the Distribution, these foundations received Sandoz Group
AG shares representing an approximate 4.31% equity interest in Sandoz Group AG. Upon
the loss of control of Sandoz Group AG through the Distribution on October 3, 2023,
the financial investment in Sandoz Group AG was recognized at its initial fair value
based on the opening traded share price of Sandoz Group AG on October 4, 2023 (a Level
1 hierarchy valuation). At initial recognition, on October 4, 2023, the Sandoz Group
AG financial investment had a fair value of USD 0.5 billion, and was reported in the
fourth quarter of 2023 on the consolidated balance sheet as a financial asset. Management
has designated this investment at fair value through other comprehensive income.
The total non-taxable, non-cash gain recognized at the Distribution date of the spin-off
of the Sandoz business amounted to USD 5.9 billion, which consists of:
(USD millions)
|
|
Oct 3, 2023
|
|
|
Net assets derecognized 1
|
|
-8 647
|
|
|
Derecognition of distribution liability
|
|
13 962
|
|
|
Difference between net assets and distribution liability
|
|
5 315
|
|
|
Recognition of Sandoz Group AG shares obtained through consolidated foundations
|
|
492
|
|
|
Currency translation gains recycled into the consolidated income statement
|
|
357
|
|
|
Transaction costs and other items recognized in the consolidated income statement
|
|
-304
|
|
|
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
5 860
|
|
|
|
1 See Note 13 for additional information.
|
For additional disclosures on discontinued operations, refer to Note 13.
Acquisition of DTx Pharma Inc.
In the second quarter of 2023, Novartis entered into an agreement to acquire all outstanding
shares of DTx Pharma Inc. (DTx), a San-Diego, California US based, pre-clinical stage
biotechnology company focused on leveraging its proprietary FALCON platform to develop
siRNA therapies for neuroscience indications. DTx’s lead program, DTx-1252 targets
the root cause of CMT1A—the overexpression of PMP22, a protein that causes the myelin sheath that supports
and insulates nerves in the peripheral nervous system to function abnormally. The
transaction also includes two additional pre-clinical programs for other neuroscience
indications. The transaction closed on July 14, 2023.
The purchase price consisted of a cash payment of USD 0.6 billion and potential additional
milestones of up to USD 0.5 billion, which the DTx shareholders are eligible to receive
upon the achievement of specified milestones.
The fair value of the total purchase consideration was USD 0.6 billion. The amount
consisted of a cash payment of USD 0.6 billion and the fair value of contingent consideration
of USD 309 million, which DTx shareholders are eligible to receive upon the achievement
of specified milestones. The purchase price allocation resulted in net identifiable
assets of USD 0.4 billion, consisting primarily of IPR&D intangible assets of USD
0.4 billion, cash of USD 0.1 billion and net deferred tax liabilities of 0.1 billion.
Goodwill amounted to USD 0.2 billion.
The results of operations since the date of acquisition were not material.
Acquisition of Chinook Therapeutics, Inc.
On June 12, 2023, Novartis entered into an agreement to acquire all outstanding shares
of Chinook Therapeutics, Inc. (Chinook Therapeutics), a Seattle, Washington based
clinical stage biopharmaceutical company with two late-stage medicines in development
for rare, severe chronic kidney diseases. The acquisition closed on August 11, 2023.
The purchase price consisted of a cash payment of USD 3.2 billion and potential additional
payments of up to USD 0.3 billion, which Chinook Therapeutics shareholders are eligible
to receive upon the achievement of specified milestones.
The fair value of the total purchase consideration was USD 3.3 billion. The amount
consisted of an upfront cash payment of USD 3.2 billion and the fair value of contingent
consideration of USD 0.1 billion, which Chinook Therapeutics shareholders are eligible
to receive upon achievement of specified milestones. The purchase price allocation
resulted in net identifiable assets of USD 2.4 billion, consisting primarily of IPR&D
intangible assets of USD 2.5 billion, net deferred tax liabilities of USD 0.4 billion
and other net assets of USD 0.3 billion, including cash of USD 0.1 billion. Goodwill
amounted to USD 0.9 billion.
The results of operations since the date of acquisition were not material.
Significant transactions in 2022
Acquisition of Gyroscope Therapeutics Holdings plc
On December 22, 2021, Novartis entered into an agreement to acquire all outstanding
shares of Gyroscope Therapeutics Holdings plc (Gyroscope), a UK-based ocular gene
therapy company. Gyroscope focuses on the discovery and development of gene therapy
treatments for retinal indications. The purchase price consisted of a cash payment
of USD 0.8 billion, subject to certain customary purchase price adjustments, and potential additional
milestone payments of up to USD 0.7 billion, which Gyroscope shareholders are eligible to receive upon achievement of
specified milestones. The acquisition closed on February 17, 2022.
The fair value of the total purchase consideration was USD 1.0 billion. The amount consisted of an upfront cash payment of USD 0.8 billion (including customary purchase price adjustments) and the fair value of contingent
consideration of USD 0.2 billion, which Gyroscope shareholders are eligible to receive upon achievement of
specified milestones. The purchase price allocation resulted in net identifiable assets
of USD 0.9 billion, consisting primarily of IPR&D intangible assets of USD 1.1 billion and net deferred tax liabilities of USD 0.2 billion. Goodwill amounted to USD 0.1 billion.
The 2022 results of operations since the date of acquisition were not material.
4. Summary of equity attributable to Novartis AG shareholders
|
|
|
|
Number of outstanding shares (in millions)
|
|
Issued share capital and reserves attributable to Novartis AG shareholders (in USD millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
2023
|
|
2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Balance at beginning of year
|
|
|
|
2 119.6
|
|
2 234.9
|
|
59 342
|
|
67 655
|
|
|
Shares acquired to be canceled
|
|
|
|
-87.5
|
|
-126.2
|
|
-8 369
|
|
-10 787
|
|
|
Other share purchases
|
|
|
|
-1.6
|
|
-1.4
|
|
-148
|
|
-123
|
|
|
Exercise of options and employee transactions
|
|
4.2
|
|
2.8
|
|
1.9
|
|
146
|
|
88
|
|
|
Equity-based compensation
|
|
|
|
10.4
|
|
10.4
|
|
904
|
|
854
|
|
|
Shares delivered to Alcon employees as a result of the Alcon spin-off
|
|
|
|
|
|
0.0
|
|
|
|
5
|
|
|
Shares delivered to Sandoz employees as a result of the Sandoz spin-off
|
|
|
|
0.3
|
|
|
|
30
|
|
|
|
|
Taxes on treasury share transactions
|
|
|
|
|
|
|
|
14
|
|
14
|
|
|
Decrease of treasury share repurchase obligation under a share buyback trading plan
|
|
4.3
|
|
|
|
|
|
|
|
2 809
|
|
|
Transaction costs, net of taxes
|
|
4.4
|
|
|
|
|
|
-214
|
|
|
|
|
Dividends
|
|
|
|
|
|
|
|
-7 255
|
|
-7 506
|
|
|
Dividend in kind
|
|
3
|
|
|
|
|
|
-13 962
|
|
|
|
|
Net income of the period attributable to shareholders of Novartis AG
|
|
|
|
|
|
|
|
14 850
|
|
6 955
|
|
|
Other comprehensive income attributable to shareholders of Novartis AG
|
|
|
|
|
|
|
|
1 200
|
|
-839
|
|
|
Other movements
|
|
4.5
|
|
|
|
|
|
129
|
|
217
|
|
|
Balance at December 31
|
|
|
|
2 044.0
|
|
2 119.6
|
|
46 667
|
|
59 342
|
|
|
|
4.1. In 2023 Novartis AG reduced its share capital by canceling the 126.2 million
of shares that were repurchased on the SIX Swiss Exchange second trading line during
the previous year.
In addition, in connection with the Distribution (spin-off) of Sandoz business, Novartis
AG shareholders approved at the 2023 EGM held on September 15, 2023, a decrease in
Novartis AG share capital in the amount of CHF 22.8 million (USD 17.1 million). The
capital decrease resulted in a reduction of the nominal value of the Novartis AG shares
by CHF 0.01 from CHF 0.50 per share to CHF 0.49 per share.
In 2022 Novartis AG reduced its share capital by canceling 30.7 million of shares
that were repurchased on the SIX Swiss Exchange second trading line during the previous
year.
4.2. At December 31, 2022, the market maker held 3 million written call options, originally issued as part of the share-based compensation
for employees, that had not yet been exercised. The weighted average exercise price
of these options at December 31, 2022, was USD 66.07, and they had contractual lives of 10 years, with remaining lives less than one year. In the first quarter of 2023, the market maker exercised 3 million written
call options and as a result there are no written call option outstanding at December 31, 2023.
4.3. In December 2021, Novartis entered into an irrevocable, non-discretionary arrangement
with a bank to repurchase Novartis shares on the second trading line under its up-to
USD 15.0 billion share buyback. The arrangement was updated in July 2022, December 2022, and
May 2023, and concluded in June 2023.
In June 2023, Novartis entered into an irrevocable, non-discretionary arrangement
with a bank to repurchase 11.7 million Novartis shares on the second trading line,
which concluded in July 2023.
In July 2023, Novartis entered into a new irrevocable, non-discretionary arrangement
with a bank to repurchase Novartis shares on the second trading line under its new
up-to USD 15.0 billion share buyback. Novartis is able to cancel this arrangement
but may be subject to a 90-day waiting period under certain conditions. As of December
31, 2023, these waiting period conditions were not applicable and as a result, there
was no requirement to record a liability under this arrangement as of December, 31
2023.
4.4. Transaction costs in 2023 of USD 214 million, net of tax of USD 29 million, that
are directly attributable to the Distribution (spin-off) of Sandoz business to Novartis
AG shareholders and that would otherwise have been avoided, are recorded as a deduction
from equity (retained earnings). See Note 2.
4.5. Other movements include, for subsidiaries in hyper- inflationary economies, the
impact of the application of IAS 29 “Financial reporting in Hyperinflation Economies”.
5. Income taxes
The Company applies the IFRS Accounting Standards exception to not recognize or disclose
information about deferred tax assets and deferred tax liabilities related to countries
that have enacted tax legislation that comply with the Organization for Economic Cooperation
and Development (OECD) Pillar Two income taxes.
In December 2021, the OECD issued model rules for a new global minimum tax framework
(Pillar Two). Novartis is within the scope of the OECD Pillar Two model rules. A number
of governments in countries in which Novartis operates are in the process of enacting
or have enacted tax legislation to comply with Pillar Two. Of the major countries
in which we operate, only the enactment of Pillar Two tax legislation in Switzerland
is expected to have an impact to our income tax provision as from 2024. In December
2023, Switzerland decided to partially implement Pillar Two, whereby effective from
January 1, 2024, a 15% minimum taxation will be assessed on Pillar Two qualifying
profits earned by companies domiciled in Switzerland (Qualified Domestic Minimum Top-Up
Tax). This Qualified Domestic Minimum Top-Up Tax will not be applied to the Pillar
Two qualifying profits earned by a company’s affiliates domiciled in tax jurisdictions
outside of Switzerland. The timing of implementation and the specific provisions of
any further Pillar Two tax regulations in Switzerland remains subject to further assessments
at both the Federal and Cantonal levels. The Company estimates that the impact of
these changes to tax legislation in the respective countries that have (substantively)
enacted Pillar Two tax legislation in 2023 would not be material to our consolidated
financial position, income statement and cash flows.
6. Financial instruments
Fair value by hierarchy
The following table illustrates the three hierarchical levels for valuing financial
instruments at fair value as of December 31, 2023, and December 31, 2022. For additional information on the hierarchies and other matters, please
refer to the Consolidated Financial Statements in the 2023 Annual Report, published
on January 31, 2024.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
Dec 31, 2023
|
|
Dec 31, 2022
|
|
Dec 31, 2023
|
|
Dec 31, 2022
|
|
Dec 31, 2023
|
|
Dec 31, 2022
|
|
Dec 31, 2023
|
|
Dec 31, 2022
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
|
|
|
Total cash and cash equivalents at fair value
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
|
|
|
Marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
9
|
|
|
Derivative financial instruments
|
|
|
|
|
|
355
|
|
204
|
|
|
|
|
|
355
|
|
204
|
|
|
Total marketable securities and derivative financial instruments at fair value
|
|
|
|
|
|
355
|
|
213
|
|
|
|
|
|
355
|
|
213
|
|
|
Current contingent consideration receivables
|
|
|
|
|
|
|
|
|
|
65
|
|
43
|
|
65
|
|
43
|
|
|
Current fund investments and equity securities
|
|
94
|
|
|
|
|
|
|
|
31
|
|
|
|
125
|
|
|
|
|
Long-term financial investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt and equity securities
|
|
796
|
|
473
|
|
20
|
|
10
|
|
616
|
|
699
|
|
1 432
|
|
1 182
|
|
|
Fund investments
|
|
7
|
|
20
|
|
|
|
|
|
183
|
|
261
|
|
190
|
|
281
|
|
|
Non-current contingent consideration receivables
|
|
|
|
|
|
|
|
|
|
553
|
|
607
|
|
553
|
|
607
|
|
|
Total long-term financial investments at fair value
|
|
803
|
|
493
|
|
20
|
|
10
|
|
1 352
|
|
1 567
|
|
2 175
|
|
2 070
|
|
|
Associated companies at fair value through profit or loss
|
|
|
|
|
|
|
|
|
|
101
|
|
129
|
|
101
|
|
129
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current contingent consideration liabilities
|
|
|
|
|
|
|
|
|
|
-14
|
|
-131
|
|
-14
|
|
-131
|
|
|
Current other financial liabilities
|
|
|
|
|
|
|
|
|
|
-88
|
|
|
|
-88
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
-91
|
|
-55
|
|
|
|
|
|
-91
|
|
-55
|
|
|
Total current financial liabilities at fair value
|
|
|
|
|
|
-91
|
|
-55
|
|
-102
|
|
-131
|
|
-193
|
|
-186
|
|
|
Non-current contingent consideration liabilities
|
|
|
|
|
|
|
|
|
|
-389
|
|
-704
|
|
-389
|
|
-704
|
|
|
Non-current other financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
-232
|
|
|
|
-232
|
|
|
Total non-current financial liabilities at fair value
|
|
|
|
|
|
|
|
|
|
-389
|
|
-936
|
|
-389
|
|
-936
|
|
|
|
In 2023, there were three transfers of equity securities from Level 3 to Level 1 for
USD 63 million mainly due to Initial Public Offering.
The fair value of straight bonds amounted to USD 19.2 billion at December 31, 2023
(USD 20.3 billion at December 31, 2022) compared with the carrying amount of USD 20.6 billion
at December 31, 2023 (USD 22.3 billion at December 31, 2022). For all other financial assets and liabilities, the
carrying amount is a reasonable approximation of the fair value.
The carrying amount of financial assets included in the line total long-term financial
investments of USD 2.2 billion at December 31, 2023 (USD 2.1 billion at December 31, 2022) is included in the line “Financial assets” of the consolidated
balance sheets. The carrying amount of financial assets included in the line current
financial investments - equity securities of USD 125 million at December 31, 2023
(nil at December 31, 2022) is included in the line “Other current assets” of the consolidated
balance sheets. The carrying amount of non-current contingent consideration liabilities
and non-current other financial liabilities included in the line total non-current
financial liabilities at fair value of USD 0.4 billion at December 31, 2023 (USD 0.9 billion at December 31, 2022) is included in the line “Provisions and other non-current
liabilities” of the consolidated balance sheet.
The Company’s exposure to financial risks has not changed significantly during the
period and there have been no major changes to the risk management department or in
any risk management policies.
7. Details to the consolidated statements of cash flows
7.1. Non-cash items and other adjustments from continuing operations
The following table shows the reversal of non-cash items and other adjustments in
the consolidated statements of cash flows.
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
|
Depreciation, amortization and impairments on:
|
|
|
|
|
|
Property, plant and equipment
|
|
246
|
|
349
|
|
|
Right-of-use assets
|
|
66
|
|
70
|
|
|
Intangible assets
|
|
1 276
|
|
1 403
|
|
|
Financial assets 1
|
|
37
|
|
-28
|
|
|
Change in provisions and other non-current liabilities
|
|
-171
|
|
483
|
|
|
Losses/(gains) on disposal and other adjustments on property, plant and equipment;
intangible assets; financial assets; and other non-current assets, net
|
|
101
|
|
-127
|
|
|
Equity-settled compensation expense
|
|
248
|
|
189
|
|
|
Loss from associated companies
|
|
6
|
|
3
|
|
|
Income taxes
|
|
-261
|
|
254
|
|
|
Net financial expense
|
|
199
|
|
183
|
|
|
Other
|
|
44
|
|
-23
|
|
|
Total
|
|
1 791
|
|
2 756
|
|
|
|
1 Includes fair value changes
|
(USD millions)
|
|
FY 2023
|
|
FY 2022
|
|
|
Depreciation, amortization and impairments on:
|
|
|
|
|
|
Property, plant and equipment
|
|
1 006
|
|
1 374
|
|
|
Right-of-use assets
|
|
263
|
|
270
|
|
|
Intangible assets
|
|
7 008
|
|
5 061
|
|
|
Financial assets 1
|
|
106
|
|
260
|
|
|
Change in provisions and other non-current liabilities
|
|
61
|
|
1 318
|
|
|
Gains on disposal and other adjustments on property, plant and equipment; intangible
assets; financial assets; and other non-current assets, net
|
|
-180
|
|
-308
|
|
|
Equity-settled compensation expense
|
|
865
|
|
791
|
|
|
Loss from associated companies
|
|
13
|
|
11
|
|
|
Income taxes
|
|
551
|
|
1 128
|
|
|
Net financial expense
|
|
633
|
|
758
|
|
|
Other
|
|
43
|
|
-32
|
|
|
Total
|
|
10 369
|
|
10 631
|
|
|
|
1 Includes fair value changes
|
In the fourth quarter of 2023 and 2022, there were no additions to intangible assets with deferred payments.
In the fourth quarter of 2023, there were USD 183 million (Q4 2022: USD 50 million)
additions to right-of-use assets recognized.
In 2023, other than through business combinations, there were no additions to intangible assets with deferred payments (2022: USD 635 million).
In 2023, there were USD 421 million (2022: USD 216 million) additions to right-of-use
assets recognized.
7.2. Total amount of income taxes paid
In 2023, the total amount of income taxes paid by continuing operations was USD 2
787 million (Q4 2023: USD 1 093 million) and by discontinued operations was USD 162
million (Q4 2023: nil), which was included within “Net cash flows from operating activities
from discontinued operations.” In 2023, the total amount of income taxes paid by the
Company was USD 2 949 million (Q4 2023: USD 1 093 million).
In 2022, the total amount of income taxes paid by continuing operations was USD 1
702 million (Q4 2022: USD 334 million) and by discontinued operations was USD 273
million (Q4 2022: USD 82 million), which was included within “Net cash flows from
operating activities from discontinued operations.” In 2022, the total amount of income
taxes paid by the Company was USD 1 975 million (Q4 2022: USD 416 million).
7.3. Cash flows from changes in working capital and other operating items included in the
net cash flows from operating activities from continuing operations
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
(Increase)/decrease in inventories
|
|
33
|
|
-46
|
|
-546
|
|
-560
|
|
|
(Increase)/decrease in trade receivables
|
|
-240
|
|
428
|
|
-1 504
|
|
-397
|
|
|
Increase/(decrease) in trade payables
|
|
564
|
|
144
|
|
479
|
|
-181
|
|
|
Change in other current and non-current assets
|
|
-41
|
|
2
|
|
-125
|
|
-84
|
|
|
Change in other current liabilities
|
|
-700
|
|
-72
|
|
1 327
|
|
426
|
|
|
Total
|
|
-384
|
|
456
|
|
-369
|
|
-796
|
|
|
7.4. Cash flows arising from acquisitions and divestments of businesses, net
The following table is a summary of the cash flow impact of acquisitions and divestments
of businesses. The most significant transactions are described in Note 3.
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Net assets recognized as a result of acquisitions of businesses
|
|
-3
|
|
|
|
-3 699
|
|
-1 077
|
|
|
Fair value of previously held equity interests
|
|
-1
|
|
-1
|
|
26
|
|
21
|
|
|
Contingent consideration payable, net
|
|
-7
|
|
|
|
146
|
|
224
|
|
|
Payments, deferred consideration and other adjustments, net
|
|
5
|
|
-1
|
|
-34
|
|
0
|
|
|
Cash flows used for acquisitions of businesses
|
|
-6
|
|
-2
|
|
-3 561
|
|
-832
|
|
|
Cash flows (used for)/from divestments of businesses, net 1
|
|
-2
|
|
-5
|
|
3
|
|
-8
|
|
|
Cash flows used for acquisitions and divestments of businesses, net
|
|
-8
|
|
-7
|
|
-3 558
|
|
-840
|
|
|
|
1 In 2023, USD 3 million (Q4 2023: USD 2 million net cash outflows) represented the net cash inflows from divestments in prior
years.
|
In 2022, USD 8 million (Q4 2022: USD 5 million) net cash outflows from divestments of businesses included USD 20 million (Q4 2022: nil) reduction to cash and cash equivalents due to the derecognized cash and cash equivalents
following a loss of control of a company upon expiry of an option to purchase the
company, partly offset by USD 12 million net cash inflows (Q4 2022: USD 5 million net cash outflows) from business divestments in 2022 and in prior years.
|
In 2022, the net identifiable assets of divested businesses amounted to USD 139 million (Q4 2022: USD 33 million), comprised of non-current assets of USD 127 million (Q4 2022: USD 14 million), current assets of USD 70 million (Q4 2022: USD 48 million), including USD 62 million (Q4 2022: USD 42 million) cash and cash equivalents and of non-current and current liabilities of
USD 58 million (Q4 2022: USD 29 million). The deferred sale price receivable and other adjustments amounted to USD
19 million (Q4 2022: USD 19 million).
|
Note 3 and Note 8 provide further information regarding acquisitions and divestments
of businesses. All acquisitions were for cash.
8. Acquisitions of businesses
Fair value of assets and liabilities arising from acquisitions of businesses:
(USD millions)
|
|
FY 2023
|
|
FY 2022
|
|
|
Property, plant and equipment
|
|
18
|
|
13
|
|
|
Right-of-use assets
|
|
16
|
|
12
|
|
|
Acquired research and development
|
|
2 931
|
|
1 209
|
|
|
Other intangible assets
|
|
15
|
|
|
|
|
Deferred tax assets
|
|
34
|
|
56
|
|
|
Non-current financial and other assets
|
|
164
|
|
|
|
|
Trade receivable and financial and other current assets
|
|
183
|
|
5
|
|
|
Cash and cash equivalents
|
|
226
|
|
89
|
|
|
Deferred tax liabilities
|
|
-474
|
|
-300
|
|
|
Current and non-current lease liabilities
|
|
-51
|
|
-12
|
|
|
Trade payables and other liabilities
|
|
-231
|
|
-67
|
|
|
Net identifiable assets acquired
|
|
2 831
|
|
1 005
|
|
|
Acquired cash and cash equivalents
|
|
-226
|
|
-89
|
|
|
Goodwill
|
|
1 094
|
|
161
|
|
|
Net assets recognized as a result of acquisitions of businesses 1
|
|
3 699
|
|
1 077
|
|
|
|
1 All net assets recognized relate to business combinations of continuing operations.
|
Note 3 details significant acquisitions of businesses, specifically the acquisition
of DTx Pharma and Chinook Therapeutics in the third quarter of 2023, and of Gyroscope
in 2022. The goodwill arising out of the acquisitions was mainly attributable to synergies,
the accounting for deferred tax liabilities on acquired assets and the assembled workforce.
None of the goodwill was tax deductible.
9. Legal proceedings update
A number of Novartis companies are, and will likely continue to be, subject to various
legal proceedings, including litigations, arbitrations and governmental investigations,
that arise from time to time. Legal proceedings are inherently unpredictable. As a
result, the Company may become subject to substantial liabilities that may not be
covered by insurance and may in the future incur judgments or enter into settlements
of claims that could have a material adverse effect on its results of operations or
cash flow. Note 20 to the Consolidated Financial Statements in our 2022 Annual Report
and 2022 Form 20-F contains a summary as of the date of these reports of significant
legal proceedings to which Novartis or its subsidiaries were a party. The following
is a summary as of January 30, 2024, of significant developments in those proceedings,
as well as any new significant proceedings commenced since the date of the 2022 Annual
Report and 2022 Form 20-F.
Investigations and related litigations
Lucentis/Avastin® matters
In connection with an investigation into whether Novartis entities, F. Hoffmann-La
Roche AG, Genentech Inc. and Roche S.p.A. colluded to artificially preserve the market
positions of Avastin® and Lucentis, in 2014 the Italian Competition Authority (ICA)
imposed a fine equivalent to USD 125 million on the Novartis entities. Novartis paid the fine, subject to the right to
later claim recoupment, and appealed before the Consiglio di Stato (CdS). In 2014
and 2015, the Italian Ministry of Health and the Lombardia region sent letters with
payment requests for a total equivalent of approximately USD 1.3 billion in damages from Novartis and Roche entities based on these allegations. In
2019, the CdS upheld the ICA decision and fine. Following that CdS decision, several
additional Italian regions and hospitals sent letters claiming damages for an aggregate
amount of approximately USD 330 million. None of these claims have been asserted in legal proceedings. Novartis filed
a revocation action before the CdS in 2019 and a further appeal before the Supreme
Court in 2020. Respectively in October 2021 and May 2023, the Supreme Court and the
CdS rejected Novartis’s actions.
The ICA decision is now final.
In 2019, the French Competition Authority (FCA) issued a Statement of Objections against
Novartis entities, alleging anti-competitive practices on the French market for anti-vascular
endothelial growth factor treatments for wet age-related macular degeneration from
2008 to 2013. In 2020, the FCA issued a decision
finding that the Novartis entities had infringed competition law by abusing a dominant
position and imposing a fine equivalent to approximately USD 452 million. Novartis paid the fine, again subject to recoupment, and appealed the FCA’s
decision. In February 2023, the Paris Court of Appeal (Court) overturned the FCA’s
decision which triggered the reimbursement of the originally paid fine (recorded as
“Other income” in the Company’s consolidated income statement), and, in March 2023,
the FCA appealed the Court’s decision. Novartis is the subject of similar investigations
and proceedings involving the competition authority in Greece and is currently in
an appeal process in Turkey. Novartis continues to vigorously contest all claims in
both countries. A similar matter involving the competition authority in Belgium is
concluded. Novartis is also challenging policies and regulations allowing off-label/unlicensed
use and reimbursement for economic reasons in Turkey.
Greece Investigation
The Greek authorities are investigating legacy allegations of potentially inappropriate
economic benefits to healthcare providers, government officials and others in Greece.
These authorities include the Greek Coordinating Body for Inspection and Control,
and the Greek Body of Prosecution of Financial Crime (SDOE), from which the Company
received a summons in 2018 and 2020. Novartis has cooperated in these investigations.
In 2021, SDOE imposed on Novartis Hellas a fine equivalent to approximately USD 1.2
million; Novartis Hellas appealed the fine and, in September 2023, the Court overturned
the decision and fine. The Greek State filed an appeal. In 2022, the Greek State served
a civil lawsuit on Novartis Hellas, seeking approximately USD 225 million for moral
damages allegedly arising from the conduct that was the subject of the Company’s 2020
settlement with the US Department of Justice (DOJ) regarding allegations of inappropriate
economic benefits in Greece that was disclosed in the 2020 Annual Report and the 2020
Form 20-F. The claims are being vigorously contested.
Inflation Reduction Act (IRA) litigation
In 2023, following the U.S. government’s selection of Entresto for the first round
of the IRA’s “Medicare Drug Price Negotiation Program,” NPC filed a complaint in the
U.S. District Court (USDC) for the District of New Jersey on the grounds that those
drug price-setting provisions are unconstitutional under the First, Fifth and Eighth
Amendments to the U.S. Constitution.
U.S. Government Foreign Corrupt Practices Act (FCPA) investigations – Concluded matter
As previously disclosed in Note 20 to the Consolidated Financial Statements in our
2020 Annual Report, Novartis reached settlements with the DOJ and the US Securities
and Exchange Commission (SEC) that resolved all FCPA investigations into historical
conduct by Novartis and its subsidiaries. To resolve the DOJ investigation, Novartis
Hellas S.A.C.I. entered into a deferred prosecution agreement (DPA) with the DOJ.
To resolve the SEC investigation, Novartis AG reached an agreement that resulted in
an Order issued by the SEC. The DPA and the Order each contained certain reporting
and compliance obligations for a three-year term, which ended on June 26, 2023. On
December 21, 2023, the court formally dismissed the Information filed against Novartis
Hellas S.A.C.I. at the request of the DOJ. This matter is now concluded.
Antitrust class actions
Exforge
Since 2018, Novartis Group companies as well as other pharmaceutical companies have
been sued by various direct and indirect purchasers of Exforge in multiple US individual and putative class action complaints. They claim that Novartis
made a reverse payment in the form of an agreement not to launch an authorized generic,
alleging violations of federal antitrust law and state antitrust, consumer protection
and common laws, and seeking damages as well as injunctive relief. The cases were
consolidated in the S.D.N.Y. In 2022, Novartis agreed to a settlement in principle
to pay USD 245 million to resolve these cases. In Q1 2023 Novartis paid USD 245 million to fund the required trust accounts. Certain of these settlements were subject
to court approval, a process that was completed in October 2023, which means the matters
are finally disposed of and completed.
Discontinued operations
On October 4, 2023, the separation and spin-off of the Sandoz business was completed
(see Note 2). Pursuant to the Separation and Distribution Agreement between Novartis
and Sandoz entered into in connection with that separation and spin-off, Sandoz and
Novartis agreed, subject to certain limitations, exclusions and conditions, that Sandoz
would retain or assume (as applicable) liabilities, including pending and future claims,
which relate to the spun-off Sandoz business (whether arising prior to, at or after
the date of execution of the Separation and Distribution Agreement), including the
matters described below (the description of which was accurate as at the time of the
spin-off). Additionally, pursuant to the Separation and Distribution Agreement, Sandoz
has agreed to indemnify Novartis and each of its directors, officers, managers, members,
agents and employees against liabilities incurred in connection with the spun-off
Sandoz business, including the matters described below.
Government generic pricing antitrust investigations, antitrust class actions in the
United States
Since 2016, Sandoz Inc. has been part of an investigation into alleged price fixing
and market allocation of generic drugs in the United States. In 2020, Sandoz Inc.
reached a resolution with the DOJ Antitrust Division, pursuant to which Sandoz Inc.
paid USD 195 million and entered into a deferred prosecution agreement (DPA). The
Sandoz Inc. resolution related to instances of misconduct at the Company between 2013
and 2015 with regard to certain generic drugs sold in the United States. The term
of the DPA concluded in March 2023 and the underlying matter has been dismissed. Sandoz
Inc. also finalized a resolution with the DOJ Civil Division and in 2021 paid USD
185 million to settle related claims arising under the False Claims Act, and entered
into a corporate integrity agreement with the Office of Inspector
General (OIG) of the US Department of Health and Human Services (HHS). This resolved
all federal government matters related to price fixing allegations.
Since the third quarter of 2016, Sandoz Inc. and Fougera Pharmaceuticals Inc. have
been sued alongside other generic pharmaceutical companies in numerous related individual
and putative class action complaints by direct and indirect private purchasers and
by over 50 US states and territories, represented by their respective Attorneys General.
Plaintiffs claim that defendants, including Sandoz Inc., engaged in price fixing and
market allocation of generic drugs in the United States, and seek damages and injunctive
relief. The litigation includes complaints alleging product-specific conspiracies,
as well as complaints alleging the existence of an overarching industry conspiracy,
and assert claims for damages and penalties under federal and state antitrust and
consumer protection acts. The cases have been consolidated for pretrial purposes in
the USDC for the Eastern District of Pennsylvania, and as at the date of the spin-off
of Sandoz the claims are being vigorously contested by Sandoz.
Government opioid litigation in the United States and Canada relating to Sandoz products
Sandoz and Novartis entities are named as defendants in opioids litigation in the
US and Canada. In the US, Sandoz is named in more than 600 complaints filed in multidistrict
litigation (MDL) in US federal court in the Northern District of Ohio and 149 of those
cases also name Novartis AG and/or NPC. In addition to the MDL, fewer than 10 lawsuits
have been filed against Sandoz and, in certain cases, certain Novartis entities in
US state and federal courts. The plaintiffs are various US political subdivisions
(including certain cities, counties, states, other governmental agencies and tribes),
school districts, hospitals and third-party payors, and they seek civil damages under
various state law grounds, including consumer protection and nuisance, allegedly arising
from the manufacture, promotion, sale and distribution of opioids. On August 31, 2023,
Sandoz entered into a settlement for the opioids litigation in the US. Under the settlement,
Sandoz will pay USD 100 million into a qualified settlement fund administered by a
third party within 30 days of the time when 85% of plaintiffs who filed cases against
Sandoz agree to participate in the settlement. The deadline for plaintiffs to elect
to participate in the settlement is January 31, 2024, although that date can be extended.
In Canada, Sandoz has been named in 6 class actions initiated in the provinces of
British Columbia, Ontario, Alberta, Saskatchewan, and Québec. As at the date of the
spin-off of Sandoz the claims are being vigorously contested by Sandoz.
In addition to the matters described above, there have been other non-material developments
in the other legal matters described in Note 20 to the Consolidated Financial Statements
contained in our 2022 Annual Report and 2022 Form 20-F.
Novartis believes that its total provisions for investigations, product liability,
arbitration and other legal matters are adequate based upon currently available information.
However, given the inherent difficulties in estimating liabilities, there can be no
assurance that additional liabilities and costs will not be incurred beyond the amounts
provided.
10. Operating segment
Prior to the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz
business (refer to Note 1, Note 2 and Note 3 for additional information), the businesses
of Novartis were divided operationally on a worldwide basis into two identified reporting segments: Innovative Medicines Division and the Sandoz Division.
In addition, we separately reported Corporate activities.
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” (see Note
1, Note 2 and Note 3).
Continuing operations include the retained business activities of Novartis, comprising
the innovative medicines business (previously the Innovative Medicines Division) and
the continuing corporate activities.
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars
business (the Sandoz Division) and certain corporate activities attributable to Sandoz’s
business, as well as certain 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. For further details and disclosures
on discontinued operations, refer to Note 2, Note 3 and Note 13.
Effective January 1, 2023, the Sandoz business bio-technology manufacturing services
to other companies’ activities and the Coartem brand were transferred to the Novartis continuing operations. The financial information
of the Novartis continuing operations and discontinued operations were accordingly
adapted in 2023 and prior years, in compliance with IFRS Accounting Standards. This
restatement had no impact on the reported financial results and consolidated balance
sheet of the total Company.
The Company’s continuing operations is engaged in the research, development, manufacturing,
distribution, and commercialization and sale of innovative medicines, with a focus
on the core therapeutic areas: cardiovascular, renal and metabolic; immunology; neuroscience;
oncology; and established brands.
Following the spin-off of the Sandoz business, on October 3, 2023, Novartis operates
as a single global operating segment innovative medicines company that is engaged
in the research, development,
manufacturing, distribution and commercialization and sale of innovative medicines.
The Company’s research, development manufacturing and supply of products and functional
activities are managed globally on a vertically integrated basis. Commercial efforts
that coordinate marketing, sales and distribution of these products are organized
by geographic region, therapeutic area and established brands.
The Executive Committee of Novartis (ECN), chaired by the CEO, is the governance body
responsible for allocating resources and assessing the business performance of the
operating segment of the Company on a global basis and is the chief operating decision-maker
(CODM) for the Company.
The determination of a single operating segment is consistent with the financial information
regularly reviewed by the CODM for purposes of assessing performance and allocating
resources.
See Note 11 for revenues and geographic information disclosures.
11. Revenues and geographic information
Net sales
Net sales information
Net sales from continuing operations comprise the following:
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Net sales to third parties from continuing operations
|
|
11 423
|
|
10 379
|
|
44 635
|
|
41 385
|
|
|
Sales to discontinued operations
|
|
|
|
197
|
|
805
|
|
821
|
|
|
Net sales from continuing operations
|
|
11 423
|
|
10 576
|
|
45 440
|
|
42 206
|
|
|
Net sales from continuing operations by region1
Fourth quarter
|
|
Q4 2023 USD m
|
|
Q4 2022 USD m
|
|
% change USD
|
|
% change cc 2
|
|
Q4 2023 % of total
|
|
Q4 2022 % of total
|
|
|
US
|
|
4 763
|
|
4 218
|
|
13
|
|
13
|
|
42
|
|
40
|
|
|
Europe
|
|
3 716
|
|
3 595
|
|
3
|
|
2
|
|
33
|
|
34
|
|
|
Asia/Africa/Australasia
|
|
2 231
|
|
2 034
|
|
10
|
|
13
|
|
20
|
|
19
|
|
|
Canada and Latin America
|
|
713
|
|
729
|
|
-2
|
|
22
|
|
5
|
|
7
|
|
|
Total
|
|
11 423
|
|
10 576
|
|
8
|
|
10
|
|
100
|
|
100
|
|
|
Of which in established markets
|
|
8 655
|
|
7 985
|
|
8
|
|
7
|
|
76
|
|
76
|
|
|
Of which in emerging growth markets
|
|
2 768
|
|
2 591
|
|
7
|
|
18
|
|
24
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Net sales from continuing operations by location of customer. Emerging growth markets
comprise all markets other than the established markets of the US, Canada, Western
Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes
Austria, Belgium, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg,
Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United
Kingdom.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 49.
|
Net sales from continuing operations by region1
Full year
|
|
FY 2023 USD m
|
|
FY 2022 USD m
|
|
% change USD
|
|
% change cc 2
|
|
FY 2023 % of total
|
|
FY 2022 % of total
|
|
|
US
|
|
17 959
|
|
15 935
|
|
13
|
|
13
|
|
40
|
|
38
|
|
|
Europe
|
|
14 997
|
|
14 371
|
|
4
|
|
4
|
|
33
|
|
34
|
|
|
Asia/Africa/Australasia
|
|
9 308
|
|
8 978
|
|
4
|
|
10
|
|
20
|
|
21
|
|
|
Canada and Latin America
|
|
3 176
|
|
2 922
|
|
9
|
|
20
|
|
7
|
|
7
|
|
|
Total
|
|
45 440
|
|
42 206
|
|
8
|
|
10
|
|
100
|
|
100
|
|
|
Of which in established markets
|
|
33 725
|
|
31 386
|
|
7
|
|
7
|
|
74
|
|
74
|
|
|
Of which in emerging growth markets
|
|
11 715
|
|
10 820
|
|
8
|
|
17
|
|
26
|
|
26
|
|
|
|
1 Net sales from continuing operations by location of customer. Emerging growth markets
comprise all markets other than the established markets of the US, Canada, Western
Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes
Austria, Belgium, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg,
Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United
Kingdom.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 49.
|
Net sales from continuing operations by core therapeutic area and established brands
Fourth quarter
|
|
Q4 2023
|
|
Q4 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m 1
|
|
USD
|
|
cc 2
|
|
|
Cardiovascular, renal and metabolic
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
1 635
|
|
1 291
|
|
27
|
|
26
|
|
|
Leqvio
|
|
123
|
|
42
|
|
193
|
|
190
|
|
|
Other
|
|
1
|
|
|
|
nm
|
|
nm
|
|
|
Total cardiovascular, renal and metabolic
|
|
1 759
|
|
1 333
|
|
32
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
1 303
|
|
1 080
|
|
21
|
|
21
|
|
|
Xolair 3
|
|
378
|
|
323
|
|
17
|
|
16
|
|
|
Ilaris
|
|
376
|
|
301
|
|
25
|
|
29
|
|
|
Total immunology
|
|
2 057
|
|
1 704
|
|
21
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
641
|
|
369
|
|
74
|
|
73
|
|
|
Zolgensma
|
|
286
|
|
309
|
|
-7
|
|
-4
|
|
|
Mayzent
|
|
106
|
|
99
|
|
7
|
|
7
|
|
|
Aimovig
|
|
69
|
|
59
|
|
17
|
|
14
|
|
|
Total neuroscience
|
|
1 102
|
|
836
|
|
32
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
Promacta/Revolade
|
|
563
|
|
540
|
|
4
|
|
4
|
|
|
Kisqali
|
|
610
|
|
357
|
|
71
|
|
76
|
|
|
Tafinlar + Mekinist
|
|
486
|
|
465
|
|
5
|
|
7
|
|
|
Tasigna
|
|
446
|
|
475
|
|
-6
|
|
-6
|
|
|
Jakavi
|
|
444
|
|
388
|
|
14
|
|
14
|
|
|
Pluvicto
|
|
273
|
|
179
|
|
53
|
|
53
|
|
|
Lutathera
|
|
147
|
|
128
|
|
15
|
|
13
|
|
|
Kymriah
|
|
120
|
|
139
|
|
-14
|
|
-14
|
|
|
Piqray/Vijoice
|
|
131
|
|
112
|
|
17
|
|
18
|
|
|
Scemblix
|
|
125
|
|
52
|
|
140
|
|
143
|
|
|
Votrient
|
|
77
|
|
103
|
|
-25
|
|
-26
|
|
|
Adakveo
|
|
45
|
|
51
|
|
-12
|
|
-11
|
|
|
Tabrecta
|
|
41
|
|
36
|
|
14
|
|
13
|
|
|
Total oncology
|
|
3 508
|
|
3 025
|
|
16
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total promoted brands
|
|
8 426
|
|
6 898
|
|
22
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
Established brands
|
|
|
|
|
|
|
|
|
|
Lucentis
|
|
301
|
|
398
|
|
-24
|
|
-25
|
|
|
Sandostatin
|
|
316
|
|
305
|
|
4
|
|
5
|
|
|
Gilenya
|
|
154
|
|
346
|
|
-55
|
|
-55
|
|
|
Exforge Group
|
|
156
|
|
159
|
|
-2
|
|
-1
|
|
|
Galvus Group
|
|
153
|
|
209
|
|
-27
|
|
-17
|
|
|
Diovan Group
|
|
147
|
|
142
|
|
4
|
|
6
|
|
|
Gleevec/Glivec
|
|
128
|
|
175
|
|
-27
|
|
-25
|
|
|
Afinitor/Votubia
|
|
97
|
|
106
|
|
-8
|
|
-7
|
|
|
Contract manufacturing 4
|
|
302
|
|
313
|
|
-4
|
|
-5
|
|
|
Other 4
|
|
1 243
|
|
1 525
|
|
-18
|
|
-11
|
|
|
Total established brands 4
|
|
2 997
|
|
3 678
|
|
-19
|
|
-15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales from continuing operations
|
|
11 423
|
|
10 576
|
|
8
|
|
10
|
|
|
|
1 In Q1 2023 Lucentis was reclassified from other promoted brands to established
brands and Gilenya was reclassified from neuroscience to established brands.
These reclassifications have been reflected in Q3 2022.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 49.
|
3 Net sales to from continuing operations reflect Xolair sales for all indications.
|
4 Effective January 1, 2023, the discontinued operations Sandoz business transferred
to Novartis continuing operations its bio-technology manufacturing services to other
companies’ activities (included in Contract manufacturing) and the Coartem brand
(included in Other). The financial information of the Novartis continuing operations
and discontinued operations were adapted accordingly in 2022 and 2021, in compliance
with IFRS Accounting Standards. See Note 10 for additional information.
|
|
nm = not meaningful
|
|
|
|
Net sales from continuing operations by core therapeutic area and established brands
Full year
|
|
FY 2023
|
|
FY 2022
|
|
% change
|
|
% change
|
|
|
|
USD m
|
|
USD m 1
|
|
USD
|
|
cc 2
|
|
|
Cardiovascular, renal and metabolic
|
|
|
|
|
|
|
|
|
|
Entresto
|
|
6 035
|
|
4 644
|
|
30
|
|
31
|
|
|
Leqvio
|
|
355
|
|
112
|
|
217
|
|
217
|
|
|
Other
|
|
1
|
|
|
|
nm
|
|
nm
|
|
|
Total cardiovascular, renal and metabolic
|
|
6 391
|
|
4 756
|
|
34
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
Immunology
|
|
|
|
|
|
|
|
|
|
Cosentyx
|
|
4 980
|
|
4 788
|
|
4
|
|
5
|
|
|
Xolair 3
|
|
1 463
|
|
1 365
|
|
7
|
|
9
|
|
|
Ilaris
|
|
1 355
|
|
1 133
|
|
20
|
|
22
|
|
|
Other
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total immunology
|
|
7 798
|
|
7 287
|
|
7
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
Neuroscience
|
|
|
|
|
|
|
|
|
|
Kesimpta
|
|
2 171
|
|
1 092
|
|
99
|
|
99
|
|
|
Zolgensma
|
|
1 214
|
|
1 370
|
|
-11
|
|
-9
|
|
|
Mayzent
|
|
392
|
|
357
|
|
10
|
|
10
|
|
|
Aimovig
|
|
266
|
|
218
|
|
22
|
|
21
|
|
|
Other
|
|
|
|
1
|
|
nm
|
|
nm
|
|
|
Total neuroscience
|
|
4 043
|
|
3 038
|
|
33
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
Oncology
|
|
|
|
|
|
|
|
|
|
Promacta/Revolade
|
|
2 269
|
|
2 088
|
|
9
|
|
10
|
|
|
Kisqali
|
|
2 080
|
|
1 231
|
|
69
|
|
75
|
|
|
Tafinlar + Mekinist
|
|
1 922
|
|
1 770
|
|
9
|
|
11
|
|
|
Tasigna
|
|
1 848
|
|
1 923
|
|
-4
|
|
-3
|
|
|
Jakavi
|
|
1 720
|
|
1 561
|
|
10
|
|
12
|
|
|
Pluvicto
|
|
980
|
|
271
|
|
262
|
|
261
|
|
|
Lutathera
|
|
605
|
|
471
|
|
28
|
|
28
|
|
|
Kymriah
|
|
508
|
|
536
|
|
-5
|
|
-5
|
|
|
Piqray/Vijoice
|
|
505
|
|
373
|
|
35
|
|
37
|
|
|
Scemblix
|
|
413
|
|
149
|
|
177
|
|
179
|
|
|
Votrient
|
|
390
|
|
474
|
|
-18
|
|
-17
|
|
|
Adakveo
|
|
195
|
|
194
|
|
1
|
|
0
|
|
|
Tabrecta
|
|
154
|
|
133
|
|
16
|
|
16
|
|
|
Other
|
|
1
|
|
2
|
|
-50
|
|
nm
|
|
|
Total oncology
|
|
13 590
|
|
11 176
|
|
22
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total promoted brands
|
|
31 822
|
|
26 257
|
|
21
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
Established brands
|
|
|
|
|
|
|
|
|
|
Lucentis
|
|
1 475
|
|
1 874
|
|
-21
|
|
-20
|
|
|
Sandostatin
|
|
1 314
|
|
1 238
|
|
6
|
|
8
|
|
|
Gilenya
|
|
925
|
|
2 013
|
|
-54
|
|
-54
|
|
|
Exforge Group
|
|
713
|
|
743
|
|
-4
|
|
-1
|
|
|
Galvus Group
|
|
692
|
|
859
|
|
-19
|
|
-11
|
|
|
Diovan Group
|
|
613
|
|
652
|
|
-6
|
|
-1
|
|
|
Gleevec/Glivec
|
|
561
|
|
745
|
|
-25
|
|
-22
|
|
|
Afinitor/Votubia
|
|
408
|
|
512
|
|
-20
|
|
-18
|
|
|
Contract manufacturing 4
|
|
1 490
|
|
1 200
|
|
24
|
|
22
|
|
|
Other 4
|
|
5 427
|
|
6 113
|
|
-11
|
|
-6
|
|
|
Total established brands 4
|
|
13 618
|
|
15 949
|
|
-15
|
|
-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales from continuing operations
|
|
45 440
|
|
42 206
|
|
8
|
|
10
|
|
|
|
1 In Q1 2023 Lucentis was reclassified from other promoted brands to established
brands and Gilenya was reclassified from neuroscience to established brands.These
reclassifications have been reflected in 9M 2022.
|
2 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 49.
|
3 Net sales from continuing operations reflect Xolair sales for all indications.
|
4 Effective January 1, 2023, the discontinued operations Sandoz business transferred
to Novartis continuing operations its bio-technology manufacturing services to other
companies’ activities (included in Contract manufacturing) and the Coartem brand
(included in Other). The financial information of the Novartis continuing operations
and discontinued operations were adapted accordingly in 2022 and 2021, in compliance
with IFRS Accounting Standards. See Note 10 for additional information.
|
|
nm = not meaningful
|
|
Net sales from continuing operations of the top 20 brands in 2023
Fourth quarter
|
|
|
|
|
|
US
|
|
Rest of world
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brands
|
|
Brand classification by therapeutic area or established brands
|
|
Key indications
|
|
USD m
|
|
% change USD/cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Entresto
|
|
Cardiovascular, renal and metabolic
|
|
Chronic heart failure, hypertension
|
|
880
|
|
27
|
|
755
|
|
26
|
|
26
|
|
1 635
|
|
27
|
|
26
|
|
|
Cosentyx
|
|
Immunology
|
|
Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS)
|
|
741
|
|
17
|
|
562
|
|
26
|
|
26
|
|
1 303
|
|
21
|
|
21
|
|
|
Promacta/Revolade
|
|
Oncology
|
|
Immune thrombocytopenia (ITP), severe aplastic anemia (SAA)
|
|
301
|
|
7
|
|
262
|
|
2
|
|
1
|
|
563
|
|
4
|
|
4
|
|
|
Kesimpta
|
|
Neuroscience
|
|
Relapsing-remitting multiple sclerosis (RRMS)
|
|
453
|
|
48
|
|
188
|
|
198
|
|
193
|
|
641
|
|
74
|
|
73
|
|
|
Kisqali
|
|
Oncology
|
|
HR+/HER2- metastatic breast cancer
|
|
332
|
|
123
|
|
278
|
|
34
|
|
42
|
|
610
|
|
71
|
|
76
|
|
|
Tafinlar + Mekinist
|
|
Oncology
|
|
BRAF V600+ metastatic adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication
|
|
200
|
|
14
|
|
286
|
|
-1
|
|
2
|
|
486
|
|
5
|
|
7
|
|
|
Tasigna
|
|
Oncology
|
|
Chronic myeloid leukemia (CML)
|
|
220
|
|
-1
|
|
226
|
|
-10
|
|
-10
|
|
446
|
|
-6
|
|
-6
|
|
|
Jakavi
|
|
Oncology
|
|
Myelofibrosis (MF), polycytomia vera (PV), graft-versus-host disease (GvHD)
|
|
|
|
|
|
444
|
|
14
|
|
14
|
|
444
|
|
14
|
|
14
|
|
|
Lucentis 2
|
|
Established brands
|
|
Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO)
|
|
|
|
|
|
301
|
|
-24
|
|
-25
|
|
301
|
|
-24
|
|
-25
|
|
|
Xolair 3
|
|
Immunology
|
|
Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps
|
|
|
|
|
|
378
|
|
17
|
|
16
|
|
378
|
|
17
|
|
16
|
|
|
Ilaris
|
|
Immunology
|
|
Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout)
|
|
200
|
|
21
|
|
176
|
|
29
|
|
38
|
|
376
|
|
25
|
|
29
|
|
|
Sandostatin
|
|
Established brands
|
|
Carcinoid tumors, acromegaly
|
|
199
|
|
-2
|
|
117
|
|
15
|
|
18
|
|
316
|
|
4
|
|
5
|
|
|
Zolgensma
|
|
Neuroscience
|
|
Spinal muscular atrophy (SMA)
|
|
90
|
|
-9
|
|
196
|
|
-7
|
|
-1
|
|
286
|
|
-7
|
|
-4
|
|
|
Pluvicto
|
|
Oncology
|
|
PSMA-positive mCRPC patients post-ARPI, post-Taxane
|
|
251
|
|
48
|
|
22
|
|
144
|
|
140
|
|
273
|
|
53
|
|
53
|
|
|
Gilenya 2
|
|
Established brands
|
|
Relapsing multiple sclerosis (RMS)
|
|
55
|
|
-71
|
|
99
|
|
-37
|
|
-35
|
|
154
|
|
-55
|
|
-55
|
|
|
Exforge Group
|
|
Established brands
|
|
Hypertension
|
|
2
|
|
0
|
|
154
|
|
-2
|
|
-1
|
|
156
|
|
-2
|
|
-1
|
|
|
Galvus Group
|
|
Established brands
|
|
Type 2 diabetes
|
|
|
|
|
|
153
|
|
-27
|
|
-17
|
|
153
|
|
-27
|
|
-17
|
|
|
Diovan Group
|
|
Established brands
|
|
Hypertension
|
|
14
|
|
-18
|
|
133
|
|
6
|
|
10
|
|
147
|
|
4
|
|
6
|
|
|
Lutathera
|
|
Oncology
|
|
GEP-NETs gastroenteropancreatic neuroendocrine tumors
|
|
103
|
|
12
|
|
44
|
|
22
|
|
15
|
|
147
|
|
15
|
|
13
|
|
|
Gleevec/Glivec
|
|
Established brands
|
|
Chronic myeloid leukemia (CML), gastrointestinal stromal tumors (GIST)
|
|
32
|
|
-35
|
|
96
|
|
-24
|
|
-20
|
|
128
|
|
-27
|
|
-25
|
|
|
Top 20 brands total
|
|
|
|
|
|
4 073
|
|
18
|
|
4 870
|
|
8
|
|
10
|
|
8 943
|
|
13
|
|
14
|
|
|
Rest of portfolio 4
|
|
|
|
|
|
690
|
|
-10
|
|
1 790
|
|
-4
|
|
2
|
|
2 480
|
|
-6
|
|
-2
|
|
|
Total net sales from continuing operations 4
|
|
|
|
|
|
4 763
|
|
13
|
|
6 660
|
|
5
|
|
8
|
|
11 423
|
|
8
|
|
10
|
|
|
|
1 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 49.
|
2 In the first quarter of 2023 Lucentis was reclassified from other promoted brands
to established brands and Gilenya was reclassified from neuroscience to established
brands.
|
3 Net sales reflect Xolair sales for all indications.
|
4 Effective January 1, 2023, the discontinued operations Sandoz business bio-technology
manufacturing services to other companies’ activities and the Coartem brand
were transferred to the Novartis continuing operations. The financial information
of the Novartis continuing operations and discontinued operations were adapted accordingly
in 2022, in compliance with IFRS Accounting Standards. See Note 10.
|
|
nm = not meaningful
|
Net sales from continuing operations of the top 20 brands in 2023
Full year
|
|
|
|
|
|
US
|
|
Rest of world
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brands
|
|
Brand classification by therapeutic area or established brands
|
|
Key indications
|
|
USD m
|
|
% change USD/cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
USD m
|
|
% change USD
|
|
% change cc 1
|
|
|
Entresto
|
|
Cardiovascular, renal and metabolic
|
|
Chronic heart failure, hypertension
|
|
3 067
|
|
30
|
|
2 968
|
|
30
|
|
32
|
|
6 035
|
|
30
|
|
31
|
|
|
Cosentyx
|
|
Immunology
|
|
Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS)
|
|
2 636
|
|
-5
|
|
2 344
|
|
16
|
|
19
|
|
4 980
|
|
4
|
|
5
|
|
|
Promacta/Revolade
|
|
Oncology
|
|
Immune thrombocytopenia (ITP), severe aplastic anemia (SAA)
|
|
1 205
|
|
11
|
|
1 064
|
|
6
|
|
8
|
|
2 269
|
|
9
|
|
10
|
|
|
Kesimpta
|
|
Neuroscience
|
|
Relapsing-remitting multiple sclerosis (RRMS)
|
|
1 528
|
|
66
|
|
643
|
|
276
|
|
272
|
|
2 171
|
|
99
|
|
99
|
|
|
Kisqali
|
|
Oncology
|
|
HR+/HER2- metastatic breast cancer
|
|
1 032
|
|
119
|
|
1 048
|
|
38
|
|
47
|
|
2 080
|
|
69
|
|
75
|
|
|
Tafinlar + Mekinist
|
|
Oncology
|
|
BRAF V600+ metastatic adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication
|
|
791
|
|
17
|
|
1 131
|
|
4
|
|
8
|
|
1 922
|
|
9
|
|
11
|
|
|
Tasigna
|
|
Oncology
|
|
Chronic myeloid leukemia (CML)
|
|
884
|
|
1
|
|
964
|
|
-8
|
|
-5
|
|
1 848
|
|
-4
|
|
-3
|
|
|
Jakavi
|
|
Oncology
|
|
Myelofibrosis (MF), polycytomia vera (PV), graft-versus-host disease (GvHD)
|
|
|
|
|
|
1 720
|
|
10
|
|
12
|
|
1 720
|
|
10
|
|
12
|
|
|
Lucentis 2
|
|
Established brands
|
|
Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO)
|
|
|
|
|
|
1 475
|
|
-21
|
|
-20
|
|
1 475
|
|
-21
|
|
-20
|
|
|
Xolair 3
|
|
Immunology
|
|
Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps
|
|
|
|
|
|
1 463
|
|
7
|
|
9
|
|
1 463
|
|
7
|
|
9
|
|
|
Ilaris
|
|
Immunology
|
|
Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout)
|
|
686
|
|
20
|
|
669
|
|
19
|
|
24
|
|
1 355
|
|
20
|
|
22
|
|
|
Sandostatin
|
|
Established brands
|
|
Carcinoid tumors, acromegaly
|
|
829
|
|
4
|
|
485
|
|
11
|
|
15
|
|
1 314
|
|
6
|
|
8
|
|
|
Zolgensma
|
|
Neuroscience
|
|
Spinal muscular atrophy (SMA)
|
|
372
|
|
-14
|
|
842
|
|
-10
|
|
-7
|
|
1 214
|
|
-11
|
|
-9
|
|
|
Pluvicto
|
|
Oncology
|
|
PSMA-positive mCRPC patients post-ARPI, post-Taxane
|
|
921
|
|
265
|
|
59
|
|
211
|
|
195
|
|
980
|
|
262
|
|
261
|
|
|
Gilenya 2
|
|
Established brands
|
|
Relapsing multiple sclerosis (RMS)
|
|
359
|
|
-69
|
|
566
|
|
-34
|
|
-33
|
|
925
|
|
-54
|
|
-54
|
|
|
Exforge Group
|
|
Established brands
|
|
Hypertension
|
|
13
|
|
-7
|
|
700
|
|
-4
|
|
-1
|
|
713
|
|
-4
|
|
-1
|
|
|
Galvus Group
|
|
Established brands
|
|
Type 2 diabetes
|
|
|
|
|
|
692
|
|
-19
|
|
-11
|
|
692
|
|
-19
|
|
-11
|
|
|
Diovan Group
|
|
Established brands
|
|
Hypertension
|
|
52
|
|
-5
|
|
561
|
|
-6
|
|
-1
|
|
613
|
|
-6
|
|
-1
|
|
|
Lutathera
|
|
Oncology
|
|
GEP-NETs gastroenteropancreatic neuroendocrine tumors
|
|
427
|
|
29
|
|
178
|
|
27
|
|
26
|
|
605
|
|
28
|
|
28
|
|
|
Gleevec/Glivec
|
|
Established brands
|
|
Chronic myeloid leukemia (CML), gastrointestinal stromal tumors (GIST)
|
|
150
|
|
-27
|
|
411
|
|
-24
|
|
-20
|
|
561
|
|
-25
|
|
-22
|
|
|
Top 20 brands total
|
|
|
|
|
|
14 952
|
|
15
|
|
19 983
|
|
6
|
|
9
|
|
34 935
|
|
10
|
|
12
|
|
|
Rest of portfolio 4
|
|
|
|
|
|
3 007
|
|
1
|
|
7 498
|
|
1
|
|
5
|
|
10 505
|
|
1
|
|
4
|
|
|
Total net sales from continuing operations 4
|
|
|
|
|
|
17 959
|
|
13
|
|
27 481
|
|
5
|
|
8
|
|
45 440
|
|
8
|
|
10
|
|
|
|
1 Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures
used by Novartis can be found starting on page 49.
|
2 In the first quarter of 2023 Lucentis was reclassified from other promoted brands
to established brands and Gilenya was reclassified from neuroscience to established
brands.
|
3 Net sales reflect Xolair sales for all indications.
|
4 Effective January 1, 2023, the discontinued operations Sandoz business bio-technology
manufacturing services to other companies’ activities and the Coartem brand
were transferred to the Novartis continuing operations. The financial information
of the Novartis continuing operations and discontinued operations were adapted accordingly
in 2022, in compliance with IFRS Accounting Standards. See Note 10.
|
|
nm = not meaningful
|
Other revenues
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Profit sharing income
|
|
245
|
|
247
|
|
941
|
|
921
|
|
|
Royalty income
|
|
24
|
|
14
|
|
87
|
|
35
|
|
|
Milestone income
|
|
10
|
|
98
|
|
45
|
|
145
|
|
|
Other 1
|
|
74
|
|
31
|
|
147
|
|
154
|
|
|
Total other revenues
|
|
353
|
|
390
|
|
1 220
|
|
1 255
|
|
|
|
1 Other includes revenue from activities such as manufacturing or other services rendered,
to the extent such revenue is not recorded under net sales.
|
12. Other interim disclosures
Restructuring provisions movements
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Balance at beginning of period
|
|
809
|
|
903
|
|
1 131
|
|
345
|
|
|
Provisions related to discontinued operations 1
|
|
|
|
|
|
-51
|
|
|
|
|
Additions to provisions 2
|
|
135
|
|
517
|
|
658
|
|
1 368
|
|
|
Cash payments 3
|
|
-171
|
|
-237
|
|
-816
|
|
-468
|
|
|
Releases of provisions 4
|
|
-78
|
|
-7
|
|
-193
|
|
-42
|
|
|
Transfers 5
|
|
-14
|
|
-52
|
|
-57
|
|
-53
|
|
|
Currency translation effects
|
|
22
|
|
7
|
|
31
|
|
-19
|
|
|
Balance at closing of period
|
|
703
|
|
1 131
|
|
703
|
|
1 131
|
|
|
|
1 Notes 2, 3 and 13 provide information related to discontinued operations.
|
2 Additions to provisions charged to the consolidated income statement from continuing
operations were USD 512 million in Q4 2022 and USD 1.3 billion in FY 2022.
|
3 Cash-payments from continuing operations were USD 224 million in Q4 2022 and USD 421
million in FY 2022
|
4 Releases of provisions credited to the consolidated income statement from continuing
operations were USD 8 million in Q4 2022 and USD 33 million in FY 2022.
|
5 Transfers from continuing operations were USD 51 million in Q4 2022 and USD 53 million
in FY 2022.
|
In 2023, additions to provisions of USD 658 million (Q4: USD 135 million) mainly related
to the continuation of the initiative announced in April 2022, to implement a new
streamlined organizational model designed to support innovation, growth and productivity.
In 2022, additions to provisions of USD 1.4 billion (Q4: USD 517 million) mainly related
to the initiative announced in April 2022, to implement a new streamlined organizational
model designed to support innovation, growth and productivity, as well as, to the
continuation of the 2021 restructuring initiatives.
Property, plant and equipment, Right-of-use assets and Intangible assets
The following table shows additional disclosures related to property, plant and equipment,
right-of-use assets and intangible assets for continuing operations:
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Property, plant and equipment impairment charges
|
|
-21
|
|
-91
|
|
-106
|
|
-411
|
|
|
Property, plant and equipment impairment reversal
|
|
5
|
|
1
|
|
16
|
|
4
|
|
|
Property, plant and equipment depreciation charge
|
|
-230
|
|
-259
|
|
-916
|
|
-967
|
|
|
Property, plant and equipment additions
|
|
417
|
|
305
|
|
1 065
|
|
930
|
|
|
Right-of-use assets impairment charges
|
|
-2
|
|
-3
|
|
-4
|
|
-3
|
|
|
Right-of-use assets depreciation charge
|
|
-64
|
|
-67
|
|
-259
|
|
-267
|
|
|
Right-of-use assets additions
|
|
183
|
|
50
|
|
421
|
|
216
|
|
|
Intangible assets impairment charges 1
|
|
-383
|
|
-443
|
|
-3 048
|
|
-1 301
|
|
|
Intangible assets amortization charge
|
|
-893
|
|
-960
|
|
-3 960
|
|
-3 760
|
|
|
Intangible assets additions
|
|
543
|
|
284
|
|
1 576
|
|
1 930
|
|
|
|
1 FY 2023 intangible assets impairment charges include the write-down of IPR&D on the
cessation of clinical development programs, including the clinical development programs
PPY988 (USD 1.0 billion), which was acquired with the 2022 acquistion of Gyroscope
Therapeutics Holdings plc (See Note 3), VDT482 (USD 0.4 billion) and MBG453 (USD 0.3
billion), and the clinical research program NIZ985 (USD 0.3 billion); as well as the
write-down of a currently marketed product by USD 0.3 billion to reflect reduction
in its recoverable amount.
|
FY 2022 intangible assets impairment charges include the write-down of IPR&D on the
cessation of clinical development programs, including UNR844 (USD 0.6 billion).
|
In full year and fourth quarter 2023, there were no reversals of prior-year impairment
charges on intangible assets and right-of-use assets.
Financial debt
In the third quarter of 2023, Novartis repaid the 0.5% coupon bond with a notional
amount of EUR 750 million issued in 2018 by Novartis Finance SA, Luxembourg, in accordance
with its terms.
In the third quarter of 2023, Novartis repaid the 0.125% coupon bond with a notional
amount of EUR 1.25 billion issued in 2016 by Novartis Finance SA, Luxembourg, in accordance
with its terms.
Other commitments
The Company has entered into various purchase commitments for services and materials
as well as for equipment in the ordinary course of business. These commitments are
generally entered into at current market prices and reflect normal business operations.
The Company routinely acquires businesses and interests in intellectual property focused
on key disease areas and indications that the Company expects to be growth drivers
in the future. The Company has commitments through to the date the consolidated financial
statements were approved for publication (see Note 14), totaling USD 3.8 billion (of
which USD 3.4 billion may become payable in 2024) related to the acquisition of businesses
and interests in intellectual property, the majority of which is subject to the satisfaction
of conditions precedent in the arrangements.
13. Discontinued operations
Discontinued operations include the operational results from the Sandoz generic pharmaceuticals
and biosimilars division and certain corporate activities attributable to the Sandoz
business, as well as certain other expenses related to the spin-off. Included in 2023
is also the IFRS Accounting Standards no-cash, non-taxable net gain on the distribution
of Sandoz Group AG to Novartis AG shareholders (refer to Notes 2 and 3 for further
details).
The Sandoz business operates in the off-patent medicines segment and specializes in
the development, manufacturing, and marketing of generic pharmaceuticals and biosimilars.
The Sandoz business is organized globally into two franchises: Generics and Biosimilars.
Net income from discontinued operations
(USD millions unless indicated otherwise)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023 1
|
|
FY 2022
|
|
|
Net sales to third parties from discontinued operations
|
|
|
|
2 311
|
|
7 128
|
|
9 160
|
|
|
Sales to continuing operations
|
|
|
|
63
|
|
300
|
|
212
|
|
|
Net sales from discontinued operations
|
|
|
|
2 374
|
|
7 428
|
|
9 372
|
|
|
Other revenues
|
|
|
|
7
|
|
19
|
|
28
|
|
|
Cost from goods sold
|
|
|
|
-1 292
|
|
-4 044
|
|
-4 937
|
|
|
Gross profit from discontinued operations
|
|
|
|
1 089
|
|
3 403
|
|
4 463
|
|
|
Selling, general and administration
|
|
|
|
-564
|
|
-1 728
|
|
-2 060
|
|
|
Research and development
|
|
|
|
-226
|
|
-671
|
|
-824
|
|
|
Other income
|
|
|
|
13
|
|
56
|
|
109
|
|
|
Other expense
|
|
|
|
-118
|
|
-795
|
|
-437
|
|
|
Operating income from discontinued operations
|
|
|
|
194
|
|
265
|
|
1 251
|
|
|
as % from net sales
|
|
|
|
8.2%
|
|
3.6%
|
|
13.3%
|
|
|
Income from associated companies
|
|
|
|
|
|
2
|
|
2
|
|
|
Interest expense
|
|
|
|
-12
|
|
-33
|
|
-37
|
|
|
Other financial income and expense
|
|
|
|
-10
|
|
-20
|
|
-22
|
|
|
Income before taxes from discontinued operations
|
|
|
|
172
|
|
214
|
|
1 194
|
|
|
Income taxes 2
|
|
-18
|
|
-21
|
|
208
|
|
-288
|
|
|
Net income from discontinued operations before gain on distribution from Sandoz Group AG to Novartis AG shareholders
|
|
-18
|
|
151
|
|
422
|
|
906
|
|
|
Gain on distribution from Sandoz Group AG to Novartis AG shareholders 3
|
|
5 860
|
|
|
|
5 860
|
|
|
|
|
Net income from discontinued operations
|
|
5 842
|
|
151
|
|
6 282
|
|
906
|
|
|
|
1 The net income from discontinued operations for 2023 is for the period from January
1, 2023, to the October 3, 2023, Distribution date.
|
2 The tax rate in 2023 was impacted by non-recurring items such as tax benefits arising
from intercompany transactions to effect the spin-off of the Sandoz business, net
decreases in uncertain tax positions of the Sandoz business and the favorable settlement
of a tax matter related to the Alcon business, which was spun-off in 2019. Excluding
these impacts, the tax rate would have been 31.2% in 2023, compared to 24.1% in 2022.
The tax rate in 2023 is higher than 2022 primarily due to a change in profit mix between
years. The tax expense in the fourth quarter 2023 mainly arose from transactions to
effect the spin-off of the Sandoz business.
|
3 See Note 3 for further details on the non-taxable, non-cash gain on distribution of
Sandoz Group AG to Novartis AG shareholders.
|
Net assets derecognized
The following table presents the Sandoz business net assets derecognized as at October
3, 2023 Distribution (spin-off) date:
(USD millions)
|
|
Oct 3, 2023
|
|
|
Property, plant and equipment
|
|
1 447
|
|
|
Right-of-use assets
|
|
133
|
|
|
Goodwill
|
|
7 424
|
|
|
Intangible assets other than goodwill
|
|
1 481
|
|
|
Deferred tax assets
|
|
624
|
|
|
Financial assets, investments in associated companies and other non-current assets
|
|
142
|
|
|
Inventories
|
|
2 565
|
|
|
Trade receivables and other current assets
|
|
2 935
|
|
|
Cash and cash equivalents
|
|
686
|
|
|
Deferred tax liabilities
|
|
-270
|
|
|
Current and non-current lease liabilities
|
|
-139
|
|
|
Current and non-current financial debts
|
|
-3 691
|
|
|
Trade payables, provisions, current income tax liabilities and other liabilities
|
|
-4 690
|
|
|
Net assets derecognized
|
|
8 647
|
|
|
|
|
|
|
Supplemental disclosures related to discontinued operations
Significant transactions in 2021
On February 10, 2021, Sandoz entered into an agreement with certain subsidiaries of
GlaxoSmithKline plc (GSK) for the acquisition of the GSK’s cephalosporin antibiotics
business.
Under the agreement, Sandoz acquired the global rights to three established brands
(Zinnat®, Zinacef® and Fortum®) in more than 100 markets. It excluded the rights in
the US, Australia and Germany to certain of those brands, which were previously divested
by GSK, and the rights in India, Pakistan, Egypt, Japan (to certain of the brands)
and China, which will be retained by GSK. The transaction closed on October 8, 2021.
The purchase price consisted of a USD 350 million upfront payment paid at closing
and potential milestone payments up to USD 150 million, which GSK is eligible to receive
upon the achievement of certain annual sales milestones for the portfolio.
The fair value of the total purchase consideration was USD 415 million. The amount
consisted of a payment of USD 351 million, including purchase price adjustments, and
the fair value of contingent consideration of USD 64 million, which GSK is eligible
to receive upon the achievement of specified milestones. The purchase price allocation
resulted in net identifiable assets of USD 308 million, consisting of USD 292 million
intangible assets and USD 16 million deferred tax assets. Goodwill amounted to USD
107 million.
The 2021 results of operations since the date of acquisition were not material.
Net income from discontinued operations
Included in net income from discontinued operations are:
(USD millions unless indicated otherwise)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023 1
|
|
FY 2022
|
|
|
Interest income
|
|
|
|
|
|
2
|
|
2
|
|
|
Depreciation of property, plant and equipment
|
|
|
|
-49
|
|
-144
|
|
-196
|
|
|
Depreciation of right-of-use assets
|
|
|
|
-8
|
|
-32
|
|
-33
|
|
|
Amortization of intangible assets
|
|
|
|
-54
|
|
-171
|
|
-222
|
|
|
Impairment charges on property, plant and equipment
|
|
|
|
-2
|
|
-5
|
|
-3
|
|
|
Impairment charges on right-of-use assets
|
|
|
|
1
|
|
-8
|
|
|
|
|
Impairment charges on intangible assets
|
|
|
|
-14
|
|
-44
|
|
-25
|
|
|
Impairment reversals of property, plant and equipment
|
|
|
|
|
|
1
|
|
3
|
|
|
Additions to restructuring provisions
|
|
|
|
-5
|
|
-27
|
|
-40
|
|
|
Equity-based compensation expense related to Novartis equity-based participation plans
|
|
|
|
-20
|
|
-60
|
|
-66
|
|
|
|
1 2023 amounts are for the period from January 1, 2023, to the October 3, 2023, Distribution
date.
|
In 2023 and 2022, there were no reversals of impairment charges on right-of-use assets
or on intangible assets of discontinued operations.
Balance sheet
The following shows for discontinued operations the additions to property, plant and
equipment, right-of-use assets and to goodwill and intangible assets:
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023 1
|
|
FY 2022
|
|
|
Additions to property, plant and equipment
|
|
|
|
75
|
|
245
|
|
289
|
|
|
Additions to right-of-use assets
|
|
|
|
11
|
|
66
|
|
32
|
|
|
Additions to goodwill and intangible assets
|
|
|
|
60
|
|
221
|
|
163
|
|
|
|
1 The additions for 2023 are for the period from January 1, 2023, to the October 3,
2023, Distribution date.
|
Financial debt
Sandoz business entered into financing agreements with a group of banks under which
it borrowed on September 28, 2023 a total amount of USD 3.3 billion. See Note 3 for
further disclosures.
Net cash flows used in investing activities from discontinued operations
Net cash flows used in investing activities from discontinued operations include the
investing activities of the Sandoz business.
In 2023, other cash flows used in investing activities, net includes cash outflows
of USD 22 million (Q4 2023: nil) for the acquisitions and divestments of business,
net (2022: USD 39 million, Q4 2022: USD 2 million).
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
Payments out of provisions for transaction costs attributable to the spin-off of the Sandoz business
|
|
-52
|
|
|
|
-52
|
|
|
|
|
Derecognized cash and cash equivalents attributable to the spin-off of the Sandoz business
|
|
-686
|
|
|
|
-686
|
|
|
|
|
Other cash flows used in investing activities, net
|
|
|
|
-148
|
|
-385
|
|
-436
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
-738
|
|
-148
|
|
-1 123
|
|
-436
|
|
|
Net cash flows from financing activities from discontinued operations
In 2023, the net cash inflows from financing activities from discontinued operations
of USD 3.3 billion (2022: USD 119 million, Q4 2023: USD 111 million net cash outflows,
Q4 2022: USD 105 million) were mainly driven by USD 3.6 billion cash inflows from
bank borrowings (including the USD 3.3 billion Sandoz business borrowings from a group
of banks on September 28, 2023, Q4 2023: nil) in connection with the Distribution
(spin-off) of the Sandoz business to Novartis AG shareholders, partly offset by transaction
cost payments of USD 0.2 billion (2022: nil, Q4 2023: USD 0.1 billion, Q4 2022: nil)
directly attributable to the Distribution (spin-off) of the Sandoz business (see Note
3).
For additional information related to the October 3, 2023 distribution (spin-off)
of the Sandoz business to Novartis AG shareholders, effected through a dividend in
kind distribution of Sandoz Group AG shares to Novartis AG shareholders and ADR holders,
refer to Note 2 and Note 3.
14. Events subsequent to the December 31, 2023, consolidated balance sheet
Dividend proposal for 2023 and approval of Novartis 2023 consolidated financial statements
On January 30, 2024, the Novartis AG Board of Directors proposed the acceptance of
the 2023 consolidated financial statements of Novartis for approval by the Annual
General Meeting on March 5, 2024. Furthermore, also on January 30, 2024, the Board
proposed a dividend of CHF 3.30 per share to be approved at the Annual General Meeting
on March 5, 2024. If approved, the total dividend payments would amount to approximately
USD 8.0 billion (2022: USD 7.3 billion), using the CHF/USD December 31, 2023, exchange
rate.
Supplementary information (unaudited)
Non-IFRS disclosures
Novartis uses certain non-IFRS Accounting Standards metrics when measuring performance,
especially when measuring current-year results against prior periods, including core
results, constant currencies and free cash flow. These are referred to by Novartis
as non-IFRS measures.
Despite the use of these measures by management in setting goals and measuring the
Company’s performance, these are non-IFRS measures that have no standardized meaning
prescribed by IFRS Accounting Standards. As a result, such measures have limits in
their usefulness to investors.
Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS
Accounting Standards measures) may not be comparable to the calculation of similar
measures of other companies. These non-IFRS measures are presented solely to permit
investors to more fully understand how the Company’s management assesses underlying
performance. These non-IFRS measures are not, and should not be viewed as, a substitute
for IFRS Accounting Standards measures and should be viewed in conjunction with the
consolidated financial statements presented in accordance with IFRS Accounting Standards.
As an internal measure of Company performance, these non-IFRS measures have limitations,
and the Company’s performance management process is not solely restricted to these
metrics.
Core results
The Company’s core results – including core operating income, core net income and core earnings per share – exclude fully the amortization and impairment charges of intangible assets, excluding
software, net gains and losses on fund investments and equity securities valued at
fair value through profit and loss, impact of IAS 29 “Financial reporting in Hyperinflation
Economies” to other financial income and expense, and certain acquisition- and divestment-related
items. The following items that exceed a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses;
divestment gains and losses; restructuring charges/releases and related items; legal-related
items; impairments of property, plant and equipment, software, and financial assets,
and income and expense items that management deems exceptional and that are or are
expected to accumulate within the year to be over a USD 25 million threshold.
Novartis believes that investor understanding of the Company’s performance is enhanced
by disclosing core measures of performance since, core measures exclude items that
can vary significantly from year to year, they enable better comparison of business
performance across years. For this same reason, Novartis uses these core measures
in addition to IFRS Accounting Standards and other measures as important factors in
assessing the Company’s performance.
The following are examples of how these core measures are utilized:
• In addition to monthly reports containing financial information prepared in accordance
with IFRS Accounting Standards, senior management receives a monthly analysis incorporating
these non-IFRS core measures.
• Annual budgets are prepared for both IFRS Accounting Standards and non-IFRS core measures.
As an internal measure of Company performance, the core results measures have limitations,
and the Company’s performance management process is not solely restricted to these
metrics. A limitation of the core results measures is that they provide a view of
the Company’s operations without including all events during a period, such as the
effects of an acquisition, divestment, or amortization/impairments of purchased intangible
assets, impairments to property, plant and equipment and restructurings and related
items.
Constant currencies
Changes in the relative values of non-US currencies to the US dollar can affect the
Company’s financial results and financial position. To provide additional information
that may be useful to investors, including changes in sales volume, we present information
about our net sales and various values relating to operating and net income that are
adjusted for such foreign currency effects.
Constant currency calculations have the goal of eliminating two exchange rate effects
so that an estimate can be made of underlying changes in the consolidated income statement
excluding the impact of fluctuations in exchanges rates:
• The impact of translating the income statements of consolidated entities from their
non-USD functional currencies to USD
• The impact of exchange rate movements on the major transactions of consolidated entities
performed in currencies other than their functional currency.
We calculate constant currency measures by translating the current year’s foreign
currency values for sales and other income statement items into USD (excluding the
IAS 29 “Financial Reporting in Hyperinflationary Economies” adjustments to the local
currency income statements of subsidiaries operating in hyperinflationary economies),
using the average exchange rates from the prior year and comparing them to the prior
year values in USD.
We use these constant currency measures in evaluating the Company’s performance, since
they may assist us in evaluating our ongoing performance from year to year. However,
in performing our evaluation, we also consider equivalent measures of performance
that are not affected by changes in the relative value of currencies.
Growth rate calculation
For ease of understanding, Novartis uses a sign convention for its growth rates such
that a reduction in
operating expenses or losses compared with the prior year is shown as a positive growth.
Free cash flow
Effective January 1, 2023, Novartis revised its definition of free cash flow, to define
free cash flow as net cash flows from operating activities less purchases of property,
plant and equipment. This new definition provides a simpler performance measure focusing
on core operating activities, and also excludes items that can vary significantly
from year to year, thereby enabling better comparison of business performance across
years. The prior year free cash flow amounts have been revised to conform with the
new free cash flow definition to aid in comparability.
Free cash flow is a non-IFRS measure and is not intended to be a substitute measure
for net cash flows from operating activities as determined under IFRS Accounting Standards.
Free cash flow is presented as additional information because management believes
it is a useful supplemental indicator of the Company’s ability to operate without
reliance on additional borrowing or use of existing cash. Free cash flow is a measure
of the net cash generated that is available for investment in strategic opportunities,
returning to shareholders and for debt repayment. Free cash flow is a non-IFRS measure,
which means it should not be interpreted as a measure determined under IFRS Accounting
Standards.
Additional information
Net debt
Novartis calculates net debt as current financial debts and derivative financial instruments
plus non-current financial debts less cash and cash equivalents and marketable securities,
commodities, time deposits and derivative financial instruments.
Net debt is presented as additional information because it sets forth how management
monitors net debt or liquidity and management believes it is a useful supplemental
indicator of the Company’s ability to pay dividends, to meet financial commitments,
and to invest in new strategic opportunities, including strengthening its balance
sheet.
See page 59 for additional disclosures related to net debt.
CORE RESULTS – Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
– Total Company
(USD millions unless indicated otherwise)
|
|
Q4 2023
|
|
Q4 2022
|
|
FY 2023
|
|
FY 2022
|
|
|
IFRS Accounting Standards operating income from continuing operations
|
|
2 582
|
|
1 755
|
|
9 769
|
|
7 946
|
|
|
Amortization of intangible assets
|
|
834
|
|
910
|
|
3 730
|
|
3 585
|
|
|
Impairments
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
380
|
|
438
|
|
3 044
|
|
1 293
|
|
|
Property, plant and equipment related to the company-wide rationalization of manufacturing sites
|
|
2
|
|
-23
|
|
5
|
|
286
|
|
|
Other property, plant and equipment
|
|
6
|
|
84
|
|
39
|
|
85
|
|
|
Total impairment charges
|
|
388
|
|
499
|
|
3 088
|
|
1 664
|
|
|
Acquisition or divestment of businesses and related items
|
|
|
|
|
|
|
|
|
|
|
- Income
|
|
-110
|
|
-1
|
|
-174
|
|
-4
|
|
|
- Expense
|
|
126
|
|
1
|
|
149
|
|
8
|
|
|
Total acquisition or divestment of businesses and related items, net
|
|
16
|
|
|
|
-25
|
|
4
|
|
|
Other items
|
|
|
|
|
|
|
|
|
|
|
Divestment gains
|
|
-3
|
|
-27
|
|
-225
|
|
-166
|
|
|
Financial assets - fair value adjustments
|
|
36
|
|
-28
|
|
105
|
|
260
|
|
|
Restructuring and related items
|
|
|
|
|
|
|
|
|
|
|
- Income
|
|
-75
|
|
-5
|
|
-229
|
|
-34
|
|
|
- Expense
|
|
229
|
|
668
|
|
1 180
|
|
1 856
|
|
|
Legal-related items
|
|
|
|
|
|
|
|
|
|
|
- Income
|
|
-124
|
|
|
|
-608
|
|
-51
|
|
|
- Expense
|
|
35
|
|
244
|
|
66
|
|
364
|
|
|
Additional income
|
|
-163
|
|
-401
|
|
-602
|
|
-698
|
|
|
Additional expense
|
|
66
|
|
30
|
|
123
|
|
64
|
|
|
Total other items
|
|
1
|
|
481
|
|
-190
|
|
1 595
|
|
|
Total adjustments
|
|
1 239
|
|
1 890
|
|
6 603
|
|
6 848
|
|
|
Core operating income from continuing operations
|
|
3 821
|
|
3 645
|
|
16 372
|
|
14 794
|
|
|
as % of net sales
|
|
33.5%
|
|
34.5%
|
|
36.0%
|
|
35.1%
|
|
|
(Loss)/income from associated companies
|
|
-6
|
|
-3
|
|
-13
|
|
-11
|
|
|
Interest expense
|
|
-217
|
|
-207
|
|
-855
|
|
-800
|
|
|
Other financial income and expense
|
|
18
|
|
24
|
|
222
|
|
42
|
|
|
Core adjustments to other financial income and expense
|
|
119
|
|
26
|
|
208
|
|
98
|
|
|
Income taxes, adjusted for above items (core income taxes)
|
|
-609
|
|
-522
|
|
-2 488
|
|
-2 177
|
|
|
Core net income from continuing operations
|
|
3 126
|
|
2 963
|
|
13 446
|
|
11 946
|
|
|
Core net income from discontinued operations 1
|
|
|
|
288
|
|
889
|
|
1 406
|
|
|
Core net income
|
|
3 126
|
|
3 251
|
|
14 335
|
|
13 352
|
|
|
Core net income attributable to shareholders of Novartis AG
|
|
3 126
|
|
3 251
|
|
14 331
|
|
13 352
|
|
|
Core basic EPS from continuing operations (USD) 2
|
|
1.53
|
|
1.39
|
|
6.47
|
|
5.48
|
|
|
Core basic EPS from discontinued operations (USD) 1, 2
|
|
|
|
0.13
|
|
0.43
|
|
0.64
|
|
|
Core basic EPS (USD) 2
|
|
1.53
|
|
1.52
|
|
6.90
|
|
6.12
|
|
|
|
1 For details on discontinued operations reconciliation from IFRS Accounting Standards
net income to core net income, please refer to page 54.
|
2 Core earnings per share (EPS) is calculated by dividing core net income attributable
to shareholders of Novartis AG by the weighted average number of shares used in the
basic EPS calculation outstanding in a reporting period.
|
CORE RESULTS – Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
– Total Company
Fourth quarter
(USD millions unless indicated otherwise)
|
|
Q4 2023 IFRS Accounting Standards results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items 3
|
|
Other items 4
|
|
Q4 2023 Core results
|
|
Q4 2022 Core results
|
|
|
Gross profit from continuing operations
|
|
8 754
|
|
790
|
|
|
|
|
|
35
|
|
9 579
|
|
8 908
|
|
|
Operating income from continuing operations
|
|
2 582
|
|
834
|
|
388
|
|
16
|
|
1
|
|
3 821
|
|
3 645
|
|
|
Income before taxes from continuing operations
|
|
2 377
|
|
834
|
|
388
|
|
16
|
|
120
|
|
3 735
|
|
3 485
|
|
|
Income taxes 5
|
|
261
|
|
|
|
|
|
|
|
|
|
-609
|
|
-522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
2 638
|
|
|
|
|
|
|
|
|
|
3 126
|
|
2 963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations 6
|
|
5 842
|
|
|
|
|
|
|
|
|
|
|
|
288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
8 480
|
|
|
|
|
|
|
|
|
|
3 126
|
|
3 251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from continuing operations (USD) 7
|
|
1.29
|
|
|
|
|
|
|
|
|
|
1.53
|
|
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS from discontinued operations (USD) 6, 7
|
|
2.85
|
|
|
|
|
|
|
|
|
|
|
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS (USD) 7
|
|
4.14
|
|
|
|
|
|
|
|
|
|
1.53
|
|
1.52
|
|
|
|
The following are adjustments to arrive at core gross profit from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-3 022
|
|
790
|
|
|
|
|
|
35
|
|
-2 197
|
|
-1 972
|
|
|
|
The following are adjustments to arrive at core operating income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
-2 567
|
|
44
|
|
381
|
|
14
|
|
-103
|
|
-2 231
|
|
-2 094
|
|
|
Other income
|
|
450
|
|
|
|
|
|
-110
|
|
-267
|
|
73
|
|
82
|
|
|
Other expense
|
|
-611
|
|
|
|
7
|
|
112
|
|
336
|
|
-156
|
|
-111
|
|
|
|
The following are adjustments to arrive at core income before taxes from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
18
|
|
|
|
|
|
|
|
119
|
|
137
|
|
50
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets; research and development includes the amortization of acquired rights to technologies
|
2 Impairments: research and development include net impairment charges related to intangible
assets; other expense includes net impairment charges related to property, plant and
equipment
|
3 Acquisition or divestment of businesses and related items, including restructuring
and integration charges: research and development inculde restructuring and integration
cost charges; other income and other expense include transitional service-fee income
and expenses related to the Sandoz distribution and integration costs charges
|
4 Other items: cost of goods sold, selling, general and administration, research and
development, other income and other expense include restructuring income and charges
related to the initiative to implement a new streamlined organizational model, the
Group-wide rationalization of manufacturing sites and other net restructuring charges
and related items; research and development and cost of goods sold also include contingent
consideration adjustments; other income and other expense include fair value adjustments,
divestment gains and losses on financial assets, legal related items, curtailment
gains and adjustments to environmental provisions; other expenses also includes a
fair value adjustment on a contingent receivable and other costs and items; other
financial income and expense includes the impact of IAS 29 "Financial reporting in
Hyperinflation Economies" for subsidiaries operating in hyperinflation economies and
foreign exchange losses
|
5 Taxes on the adjustments between IFRS Accounting Standards and core results, for
each item included in the adjustment, take into account the tax rate that will finally
be applicable to the item based on the jurisdiction where the adjustment will finally
have a tax impact. Generally, this results in amortization and impairment of intangible
assets and acquisition-related restructuring and integration items having a full tax
impact. There is usually a tax impact on other items, although this is not always
the case for items arising from legal settlements in certain jurisdictions. Adjustments
related to income from associated companies are recorded net of any related tax effect.
Due to these factors and the differing effective tax rates in the various jurisdictions,
the tax on the total adjustments of USD 1.4 billion to arrive at the core results
before tax amounts to USD 870 million and the average tax rate on the adjustments
was 64.1%.
|
6 For details on discontinued operations reconciliation from IFRS Accounting Standards
net income to core net income refer to page 54.
|
7 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
CORE RESULTS – Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
– Total Company
Full year
(USD millions unless indicated otherwise)
|
|
FY 2023 IFRS Accounting Standards results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items 3
|
|
Other items 4
|
|
FY 2023 Core results
|
|
FY 2022 Core results
|
|
|
Gross profit from continuing operations
|
|
34 188
|
|
3 319
|
|
310
|
|
|
|
142
|
|
37 959
|
|
35 591
|
|
|
Operating income from continuing operations
|
|
9 769
|
|
3 730
|
|
3 088
|
|
-25
|
|
-190
|
|
16 372
|
|
14 794
|
|
|
Income before taxes from continuing operations
|
|
9 123
|
|
3 730
|
|
3 088
|
|
-25
|
|
18
|
|
15 934
|
|
14 123
|
|
|
Income taxes 5
|
|
-551
|
|
|
|
|
|
|
|
|
|
-2 488
|
|
-2 177
|
|
|
Net income from continuing operations
|
|
8 572
|
|
|
|
|
|
|
|
|
|
13 446
|
|
11 946
|
|
|
Net income from discontinued operations 6
|
|
6 282
|
|
|
|
|
|
|
|
|
|
889
|
|
1 406
|
|
|
Net income
|
|
14 854
|
|
|
|
|
|
|
|
|
|
14 335
|
|
13 352
|
|
|
Basic EPS from continuing operations (USD) 7
|
|
4.13
|
|
|
|
|
|
|
|
|
|
6.47
|
|
5.48
|
|
|
Basic EPS from discontinued operations (USD) 7
|
|
3.02
|
|
|
|
|
|
|
|
|
|
0.43
|
|
0.64
|
|
|
Basic EPS (USD) 7
|
|
7.15
|
|
|
|
|
|
|
|
|
|
6.90
|
|
6.12
|
|
|
|
The following are adjustments to arrive at core gross profit from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-12 472
|
|
3 319
|
|
310
|
|
|
|
142
|
|
-8 701
|
|
-7 784
|
|
|
|
The following are adjustments to arrive at core operating income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
|
-12 517
|
|
|
|
|
|
|
|
28
|
|
-12 489
|
|
-12 143
|
|
|
Research and development
|
|
-11 371
|
|
411
|
|
2 737
|
|
32
|
|
-409
|
|
-8 600
|
|
-8 267
|
|
|
Other income
|
|
1 772
|
|
|
|
-10
|
|
-174
|
|
-1 196
|
|
392
|
|
291
|
|
|
Other expense
|
|
-2 303
|
|
|
|
51
|
|
117
|
|
1 245
|
|
-890
|
|
-678
|
|
|
|
The following are adjustments to arrive at core income before taxes from continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
222
|
|
|
|
|
|
|
|
208
|
|
430
|
|
140
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets; research and development includes the amortization of acquired rights to technologies
|
2 Impairments: cost of goods sold, research and development, other income and other
expense include net impairment charges related to intangible assets; other income
and other expense includes also net impairment charges related to property, plant
and equipment
|
3 Acquisition or divestment of businesses and related items, including restructuring
and integration charges: research and development include restructuring and integration
cost charges; other income includes a favorable stamp duties tax settlement related
to a prior periods acquisition; other income and other expense include also transitional
service-fee income and expenses related to the Sandoz distribution, restructuring
and integration costs charges and reversals
|
4 Other items: cost of goods sold, selling, general and administration, research and
development, other income and other expense include restructuring income and charges
related to the initiative to implement a new streamlined organizational model, the
company-wide rationalization of manufacturing sites and other net restructuring charges
and related items; cost of goods sold and research and development also include contingent
consideration adjustments; cost of goods sold and selling, general and administration
includes also adjustments to provisions; research and development also include a write-off
of prepaid expenses for a terminated development project; other income and other expense
include fair value adjustments, divestment gains, losses and gains on financial assets,
legal related items, adjustments to environmental provisions; other income includes
also gains from the divestment of products and curtailment gains; other expenses also
includes a fair value adjustment on a contingent receivable and other costs and items;
other financial income and expense includes the impact of IAS 29 "Financial reporting
in Hyperinflation Economies" for subsidiaries operating in hyperinflation economies
and foreign exchange losses
|
5 Taxes on the adjustments between IFRS Accounting Standards and core results, for
each item included in the adjustment, take into account the tax rate that will finally
be applicable to the item based on the jurisdiction where the adjustment will finally
have a tax impact. Generally, this results in amortization and impairment of intangible
assets and acquisition-related restructuring and integration items having a full tax
impact. There is usually a tax impact on other items, although this is not always
the case for items arising from legal settlements in certain jurisdictions. Adjustments
related to income from associated companies are recorded net of any related tax effect.
Due to these factors and the differing effective tax rates in the various jurisdictions,
the tax on the total adjustments of USD 6.8 billion to arrive at the core results
before tax amounts to USD 1.9 billion and the average tax rate on the adjustments
was 28.4%.
|
6 For details on discontinued operations reconciliation from IFRS Accounting Standards
net ncome to core net income refer to page 55.
|
7 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
CORE RESULTS – Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
– Discontinued operations
Fourth quarter
(USD millions unless indicated otherwise)
|
|
Q4 2023 IFRS Accounting Standards results
|
|
Amortization of intangible assets
|
|
Impairments
|
|
Acquisition or divestment of businesses and related items
|
|
Other items
|
|
Q4 2023 Core results
|
|
Q4 2022 Core results
|
|
|
Gross profit from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 178
|
|
|
Operating income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
385
|
|
|
Income before taxes from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377
|
|
|
Income taxes 1
|
|
-18
|
|
|
|
|
|
|
|
|
|
|
|
-89
|
|
|
Net income from discontinued operations before gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
-18
|
|
|
|
|
|
|
|
|
|
|
|
288
|
|
|
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
5 860
|
|
|
|
|
|
-5 860
|
|
|
|
|
|
|
|
|
Net income from discontinued operations
|
|
5 842
|
|
|
|
|
|
|
|
|
|
|
|
288
|
|
|
Basic EPS from discontinued operations (USD) 2
|
|
2.85
|
|
|
|
|
|
|
|
|
|
|
|
0.13
|
|
|
|
1 Taxes on the adjustments between IFRS and core results, for each item included in
the adjustment, take into account the tax rate that will finally be applicable to
the item based on the jurisdiction where the adjustment will finally have a tax impact.
Generally, this results in amortization and impairment of intangible assets and acquisition-related
restructuring and integration items having a full tax impact. There is usually a tax
impact on other items, although this is not always the case for items arising from
legal settlements in certain jurisdictions. Adjustments related to income from associated
companies are recorded net of any related tax effect.
|
2 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
|
|
CORE RESULTS – Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
– Discontinued operations
Full year
(USD millions unless indicated otherwise)
|
|
FY 2023 IFRS Accounting Standards results
|
|
Amortization of intangible assets 1
|
|
Impairments 2
|
|
Acquisition or divestment of businesses and related items
|
|
Other items 3
|
|
FY 2023 Core results
|
|
FY 2022 Core results
|
|
|
Gross profit from discontinued operations
|
|
3 403
|
|
165
|
|
34
|
|
|
|
57
|
|
3 659
|
|
4 801
|
|
|
Operating income from discontinued operations
|
|
265
|
|
165
|
|
43
|
|
|
|
712
|
|
1 185
|
|
1 871
|
|
|
Income before taxes from discontinued operations
|
|
214
|
|
165
|
|
43
|
|
|
|
718
|
|
1 140
|
|
1 837
|
|
|
Income taxes 4
|
|
208
|
|
|
|
|
|
|
|
|
|
-251
|
|
-431
|
|
|
Net income from discontinued operations before gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
422
|
|
|
|
|
|
|
|
|
|
889
|
|
1 406
|
|
|
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
|
|
5 860
|
|
|
|
|
|
-5 860
|
|
|
|
|
|
|
|
|
Net income from discontinued operations
|
|
6 282
|
|
|
|
|
|
|
|
|
|
889
|
|
1 406
|
|
|
Basic EPS from discontinued operations (USD) 5
|
|
3.02
|
|
|
|
|
|
|
|
|
|
0.43
|
|
0.64
|
|
|
|
The following are adjustments to arrive at core gross profit from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
-4 044
|
|
165
|
|
34
|
|
|
|
57
|
|
-3 788
|
|
-4 599
|
|
|
|
The following are adjustments to arrive at core operating income from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration
|
|
-1 728
|
|
|
|
|
|
|
|
25
|
|
-1 703
|
|
-2 047
|
|
|
Research and development
|
|
-671
|
|
|
|
10
|
|
|
|
|
|
-661
|
|
-821
|
|
|
Other income
|
|
56
|
|
|
|
-1
|
|
|
|
-24
|
|
31
|
|
93
|
|
|
Other expense
|
|
-795
|
|
|
|
|
|
|
|
654
|
|
-141
|
|
-155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following are adjustments to arrive at core income before taxes from discontinued
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income and expense
|
|
-20
|
|
|
|
|
|
|
|
6
|
|
-14
|
|
1
|
|
|
|
1 Amortization of intangible assets: cost of goods sold includes the amortization of
acquired rights to currently marketed products and other production-related intangible
assets
|
2 Impairments: cost of goods sold and research and development include impairment charges
related to intangible assets; other income includes a reversal of impairment charges
related to property, plant and equipment
|
3 Other items: cost of goods sold, selling, general and administration, other income
and other expense include charges related to the Sandoz distribution, the company-wide
rationalization of manufacturing sites and other net restructuring charges and related
items; cost of goods sold and selling, general and administration also include adjustments
to provisions; other expense includes legal-related items; other financial income
and expense includes the impact of IAS 29 "Financial reporting in Hyperinflation Economies"
for subsidiaries operating in hyperinflation economies
|
4 Taxes on the adjustments between IFRS Accounting Standards and core results, for each
item included in the adjustment, take into account the tax rate that will finally
be applicable to the item based on the jurisdiction where the adjustment will finally
have a tax impact. Generally, this results in amortization and impairment of intangible
assets and acquisition-related restructuring and integration items having a full tax
impact. There is usually a tax impact on other items, although this is not always
the case for items arising from legal settlements in certain jurisdictions. Adjustments
related to income from associated companies are recorded net of any related tax effect.
Due to these factors and the differing effective tax rates in the various jurisdictions,
the tax on the total adjustments of USD 926 million to arrive at the core results
before tax amounts to USD 459 million and the average tax rate on the adjustments
was 49.5%.
|
5 Earnings per share (EPS) is calculated on the amount of net income attributable to
shareholders of Novartis AG.
|
Free cash flow
The following table is a reconciliation of the three major categories of the IFRS
Accounting Standards consolidated statements of cash flows to the non-IFRS measure
free cash flow:
Fourth quarter
|
|
Q4 2023
|
|
Q4 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
IFRS Accounting Standards cash flow
|
|
Adjustments
|
|
Free cash flow
|
|
IFRS Accounting Standards cash flow
|
|
Adjustments 1
|
|
Revised Free cash flow 1
|
|
|
Net cash flows from operating activities from continuing operations
|
|
2 547
|
|
|
|
2 547
|
|
3 768
|
|
|
|
3 768
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
|
|
|
|
|
|
343
|
|
|
|
343
|
|
|
Total net cash flows from operating activities
|
|
2 547
|
|
|
|
2 547
|
|
4 111
|
|
|
|
4 111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities from continuing operations
|
|
-1 022
|
|
616
|
|
-406
|
|
-1 319
|
|
1 013
|
|
-306
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
-738
|
|
738
|
|
0
|
|
-148
|
|
56
|
|
-92
|
|
|
Total net cash flows used in investing activities 2
|
|
-1 760
|
|
1 354
|
|
-406
|
|
-1 467
|
|
1 069
|
|
-398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
-496
|
|
496
|
|
0
|
|
-4 099
|
|
4 099
|
|
0
|
|
|
Net cash flows from financing activities (used in)/from discontinued operations
|
|
-111
|
|
111
|
|
0
|
|
105
|
|
-105
|
|
0
|
|
|
Total net cash flows used in financing activities 3
|
|
-607
|
|
607
|
|
0
|
|
-3 994
|
|
3 994
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS measure free cash flow from continuing operations 1
|
|
|
|
|
|
2 141
|
|
|
|
|
|
3 462
|
|
|
Non-IFRS measure free cash flow from discontinued operations 1
|
|
|
|
|
|
|
|
|
|
|
|
251
|
|
|
Total non-IFRS measure free cash flow 1
|
|
|
|
|
|
2 141
|
|
|
|
|
|
3 713
|
|
|
|
1 To aid in comparability, the prior year adjustments and free cash flow amounts have
been revised to conform with the new free cash flow definition that was effective
as of January 1, 2023.
|
2 With the exception of purchases of property, plant and equipment, all net cash flows
from investing activities from continuing operations and from discontinued operations
are excluded from the free cash flow.
|
3 Net cash flows (used in)/from financing activities from continuing operations and
from discontinued operations are excluded from the free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
Full year
|
|
FY 2023
|
|
FY 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(USD millions)
|
|
IFRS Accounting Standards cash flow
|
|
Adjustments
|
|
Free cash flow
|
|
IFRS Accounting Standards cash flow
|
|
Adjustments 1
|
|
Revised Free cash flow 1
|
|
|
Net cash flows from operating activities from continuing operations
|
|
14 220
|
|
|
|
14 220
|
|
13 039
|
|
|
|
13 039
|
|
|
Net cash flows from operating activities from discontinued operations
|
|
238
|
|
|
|
238
|
|
1 197
|
|
|
|
1 197
|
|
|
Total net cash flows from operating activities
|
|
14 458
|
|
|
|
14 458
|
|
14 236
|
|
|
|
14 236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from/(used in) investing activities from continuing operations
|
|
6 719
|
|
-7 779
|
|
-1 060
|
|
1 904
|
|
-2 820
|
|
-916
|
|
|
Net cash flows used in investing activities from discontinued operations
|
|
-1 123
|
|
904
|
|
-219
|
|
-436
|
|
154
|
|
-282
|
|
|
Total net cash flows from/(used in) investing activities 2
|
|
5 596
|
|
-6 875
|
|
-1 279
|
|
1 468
|
|
-2 666
|
|
-1 198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in financing activities from continuing operations
|
|
-17 564
|
|
17 564
|
|
0
|
|
-20 681
|
|
20 681
|
|
0
|
|
|
Net cash flows from financing activities from discontinued operations
|
|
3 286
|
|
-3 286
|
|
0
|
|
119
|
|
-119
|
|
0
|
|
|
Total net cash flows used in financing activities 3
|
|
-14 278
|
|
14 278
|
|
0
|
|
-20 562
|
|
20 562
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS measure free cash flow from continuing operations 1
|
|
|
|
|
|
13 160
|
|
|
|
|
|
12 123
|
|
|
Non-IFRS measure free cash flow from discontinued operations 1
|
|
|
|
|
|
19
|
|
|
|
|
|
915
|
|
|
Total non-IFRS measure free cash flow 1
|
|
|
|
|
|
13 179
|
|
|
|
|
|
13 038
|
|
|
|
1 To aid in comparability, the prior year adjustments and free cash flow amounts have
been revised to conform with the new free cash flow definition that was effective
as of January 1, 2023.
|
2 With the exception of purchases of property, plant and equipment, all net cash flows
from/(used in) investing activities from continuing operations and from discontinued
operations are excluded from the free cash flow.
|
3 Net cash flows (used in)/from financing activities from continuing operations and
from discontinued operations are excluded from the free cash flow.
|
|
The following table is a summary of the non-IFRS measure free cash flow:
Fourth quarter
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
|
Operating income from continuing operations
|
|
2 582
|
|
1 755
|
|
|
Adjustments for non-cash items
|
|
|
|
|
|
Depreciation, amortization and impairments
|
|
1 625
|
|
1 794
|
|
|
Change in provisions and other non-current liabilities
|
|
-171
|
|
483
|
|
|
Other
|
|
393
|
|
39
|
|
|
Operating income adjusted for non-cash items from continuing operations
|
|
4 429
|
|
4 071
|
|
|
Interest received and change in other financial receipts
|
|
189
|
|
115
|
|
|
Interest paid and change in other financial payments
|
|
-241
|
|
-217
|
|
|
Income taxes paid
|
|
-1 093
|
|
-334
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
-353
|
|
-323
|
|
|
Change in inventories and trade receivables less trade payables
|
|
357
|
|
526
|
|
|
Change in other net current assets and other operating cash flow items
|
|
-741
|
|
-70
|
|
|
Net cash flows from operating activities from continuing operations
|
|
2 547
|
|
3 768
|
|
|
Purchases of property, plant and equipment
|
|
-406
|
|
-306
|
|
|
Non-IFRS measure free cash flow from continuing operations 1
|
|
2 141
|
|
3 462
|
|
|
Non-IFRS measure free cash flow from discontinued operations 1, 2
|
|
|
|
251
|
|
|
Total non-IFRS measure free cash flow 1
|
|
2 141
|
|
3 713
|
|
|
|
1 To aid in comparability, the prior year free cash flow amounts have been revised to
conform with the new free cash flow definition that was effective as of January 1,
2023
|
2 In the fourth quarter of 2022 the free cash flow from discontinued operations was
a cash inflow of USD 251 million consisting of USD 343 million net cash inflows from
operating activities from discontinued operations, less purchases of property, plant
and equipment by discontinued operations of USD 92 million.
|
Full year
(USD millions)
|
|
FY 2023
|
|
FY 2022
|
|
|
Operating income from continuing operations
|
|
9 769
|
|
7 946
|
|
|
Adjustments for non-cash items
|
|
|
|
|
|
Depreciation, amortization and impairments
|
|
8 383
|
|
6 965
|
|
|
Change in provisions and other non-current liabilities
|
|
61
|
|
1 318
|
|
|
Other
|
|
728
|
|
451
|
|
|
Operating income adjusted for non-cash items from continuing operations
|
|
18 941
|
|
16 680
|
|
|
Dividends received from associated companies and others
|
|
2
|
|
1
|
|
|
Interest received and other financial receipts
|
|
735
|
|
323
|
|
|
Interest paid and other financial payments
|
|
-768
|
|
-693
|
|
|
Income taxes paid
|
|
-2 787
|
|
-1 702
|
|
|
Payments out of provisions and other net cash movements in non-current liabilities
|
|
-1 534
|
|
-774
|
|
|
Change in inventories and trade receivables less trade payables
|
|
-1 571
|
|
-1 138
|
|
|
Change in other net current assets and other operating cash flow items
|
|
1 202
|
|
342
|
|
|
Net cash flows from operating activities from continuing operations
|
|
14 220
|
|
13 039
|
|
|
Purchases of property, plant and equipment
|
|
-1 060
|
|
-916
|
|
|
Non-IFRS measure free cash flow from continuing operations 1
|
|
13 160
|
|
12 123
|
|
|
Non-IFRS measure free cash flow from discontinued operations 1, 2
|
|
19
|
|
915
|
|
|
Total non-IFRS measure free cash flow 1
|
|
13 179
|
|
13 038
|
|
|
|
1 To aid in comparability, the prior year free cash flow amounts have been revised to
conform with the new free cash flow definition that was effective as of January 1,
2023
|
2 In 2023, the free cash flow from discontinued operations was a cash inflow of USD
19 million (2022: USD 915 million) consisting of USD 238 million (2022: USD 1 197
million) net cash inflows from operating activities from discontinued operations,
less purchases of property, plant and equipment by discontinued operations of USD
219 million (2022: USD 282 million).
|
|
Additional information
Net debt
Condensed consolidated changes in net debt
Fourth quarter
(USD millions)
|
|
Q4 2023
|
|
Q4 2022
|
|
|
Net change in cash and cash equivalents
|
|
988
|
|
-1 209
|
|
|
Change in marketable securities, commodities, time deposits, financial debts and derivatives financial instruments
|
|
-340
|
|
1 648
|
|
|
Change in net debt
|
|
648
|
|
439
|
|
|
Net debt at October 1
|
|
-10 831
|
|
-7 684
|
|
|
Net debt at December 31
|
|
-10 183
|
|
-7 245
|
|
|
|
Full year
(USD millions)
|
|
FY 2023
|
|
FY 2022
|
|
|
Net change in cash and cash equivalents
|
|
5 876
|
|
-4 890
|
|
|
Change in marketable securities, commodities, time deposits, financial debts and derivatives financial instruments
|
|
-8 814
|
|
-1 487
|
|
|
Change in net debt
|
|
-2 938
|
|
-6 377
|
|
|
Net debt at January 1
|
|
-7 245
|
|
-868
|
|
|
Net debt at December 31
|
|
-10 183
|
|
-7 245
|
|
|
|
Components of net debt
(USD millions)
|
|
Dec 31, 2023
|
|
Dec 31, 2022
|
|
|
Non-current financial debts
|
|
-18 436
|
|
-20 244
|
|
|
Current financial debts and derivative financial instruments
|
|
-6 175
|
|
-5 931
|
|
|
Total financial debts
|
|
-24 611
|
|
-26 175
|
|
|
Less liquidity
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
13 393
|
|
7 517
|
|
|
Marketable securities, commodities, time deposits and derivative financial instruments
|
|
1 035
|
|
11 413
|
|
|
Total liquidity
|
|
14 428
|
|
18 930
|
|
|
Net debt at end of period
|
|
-10 183
|
|
-7 245
|
|
|
|
Share information
|
|
Dec 31, 2023
|
|
Dec 31, 2022
|
|
|
Number of shares outstanding
|
|
2 044 033 986
|
|
2 119 609 057
|
|
|
Registered share price (CHF)
|
|
84.87
|
|
83.59
|
|
|
ADR price (USD)
|
|
100.97
|
|
90.72
|
|
|
Market capitalization (USD billions) 1
|
|
206.3
|
|
191.5
|
|
|
Market capitalization (CHF billions) 1
|
|
173.5
|
|
177.2
|
|
|
|
1 Market capitalization is calculated based on the number of shares outstanding (excluding
treasury shares). Market capitalization in USD is based on the market capitalization
in CHF converted at the quarter end CHF/USD exchange rate.
|
Effects of currency fluctuations
Principal currency translation rates
(USD per unit)
|
|
Average rates Q4 2023
|
|
Average rates Q4 2022
|
|
Average rates FY 2023
|
|
Average rates FY 2022
|
|
Period-end rates Dec 31, 2023
|
|
Period-end rates Dec 31, 2022
|
|
|
1 CHF
|
|
1.127
|
|
1.038
|
|
1.113
|
|
1.048
|
|
1.189
|
|
1.081
|
|
|
1 CNY
|
|
0.138
|
|
0.141
|
|
0.141
|
|
0.149
|
|
0.141
|
|
0.144
|
|
|
1 EUR
|
|
1.076
|
|
1.020
|
|
1.082
|
|
1.054
|
|
1.107
|
|
1.065
|
|
|
1 GBP
|
|
1.241
|
|
1.173
|
|
1.243
|
|
1.237
|
|
1.275
|
|
1.207
|
|
|
100 JPY
|
|
0.676
|
|
0.708
|
|
0.713
|
|
0.766
|
|
0.707
|
|
0.757
|
|
|
100 RUB
|
|
1.079
|
|
1.589
|
|
1.185
|
|
1.481
|
|
1.111
|
|
1.380
|
|
|
Currency impact on key figures
The following table provides a summary of the currency impact on key Company figures
due to their conversion into US dollars, the Company’s reporting currency, of the
financial data from entities reporting in non-US dollars. Constant currency (cc) calculations
apply the exchange rates of the prior year period to the current period financial
data for entities reporting in non-US dollars.
Fourth quarter
|
|
Change in USD % Q4 2023
|
|
Change in constant currencies % Q4 2023
|
|
Percentage point currency impact Q4 2023
|
|
|
Net sales from continuing operations
|
|
8
|
|
10
|
|
-2
|
|
|
Operating income from continuing operations
|
|
47
|
|
68
|
|
-21
|
|
|
Net income from continuing operations
|
|
101
|
|
130
|
|
-29
|
|
|
Basic earnings per share (USD) from continuing operations
|
|
108
|
|
140
|
|
-32
|
|
|
Core operating income from continuing operations
|
|
5
|
|
13
|
|
-8
|
|
|
Core net income from continuing operations
|
|
6
|
|
11
|
|
-5
|
|
|
Core basic earnings per share (USD) from continuing operations
|
|
10
|
|
16
|
|
-6
|
|
|
|
|
|
|
|
|
|
|
|
Full year
|
|
Change in USD % FY 2023
|
|
Change in constant currencies % FY 2023
|
|
Percentage point currency impact FY 2023
|
|
|
Net sales from continuing operations
|
|
8
|
|
10
|
|
-2
|
|
|
Operating income from continuing operations
|
|
23
|
|
39
|
|
-16
|
|
|
Net income from continuing operations
|
|
42
|
|
62
|
|
-20
|
|
|
Basic earnings per share (USD) from continuing operations
|
|
49
|
|
70
|
|
-21
|
|
|
Core operating income from continuing operations
|
|
11
|
|
18
|
|
-7
|
|
|
Core net income from continuing operations
|
|
13
|
|
19
|
|
-6
|
|
|
Core basic earnings per share (USD) from continuing operations
|
|
18
|
|
25
|
|
-7
|
|
|
|
|
|
|
|
|
|
|
|
Disclaimer
This press release contains forward-looking statements within the meaning of the United
States Private Securities Litigation Reform Act of 1995, that can generally be identified
by words such as “may,” “continue,” “ongoing,” “grow,” “launch,” “expect,” “deliver,”
“transformation,” “focus,” “address,” “accelerate,” “remain,” “scaling,” “guidance,”
“outlook,” “long-term,” “driven,” “priority,” “potential,” “can,” “will,” “propose,”
or similar expressions, or by express or implied discussions regarding potential new
products, potential new indications for existing products, potential product launches,
or regarding potential future revenues from any such products; or regarding results
of ongoing clinical trials; or regarding ongoing or future share repurchases; or regarding
potential future, pending or announced transactions; regarding potential future sales
or earnings; or by discussions of strategy, plans, expectations or intentions, including
discussions regarding our continued investment into new R&D capabilities and manufacturing;
or regarding our capital structure; or regarding the consequences of the spin-off
of Sandoz and our transformation into a “pure-play” innovative medicines company.
Such forward-looking statements are based on the current beliefs and expectations
of management regarding future events and are subject to significant known and unknown
risks and uncertainties. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary materially
from those set forth in the forward-looking statements. You should not place undue
reliance on these statements. In particular, our expectations could be affected by,
among other things: uncertainties regarding the success of key products, commercial
priorities and strategy; uncertainties in the research and development of new products,
including clinical trial results and additional analysis of existing clinical data;
uncertainties regarding the use of new and disruptive technologies, including artificial
intelligence; global trends toward healthcare cost containment, including ongoing
government, payer and general public pricing and reimbursement pressures and requirements
for increased pricing transparency; uncertainties regarding our ability to realize
the strategic benefits, operational efficiencies or opportunities expected from our
external business opportunities; our ability to realize the intended benefits of our
separation of Sandoz into a new publicly traded standalone company; our ability to
obtain or maintain proprietary intellectual property protection, including the ultimate
extent of the impact on Novartis of the loss of patent protection and exclusivity
on key products; uncertainties in the development or adoption of potentially transformational
digital technologies and business models; uncertainties surrounding the implementation
of our new IT projects and systems; uncertainties regarding potential significant
breaches of information security or disruptions of our information technology systems;
uncertainties regarding actual or potential legal proceedings, including regulatory
actions or delays or government regulation related to the products and pipeline products
described in this press release; safety, quality, data integrity, or manufacturing
issues; our performance on and ability to comply with environmental, social and governance
measures and requirements; major political, macroeconomic and business developments,
including impact of the war in certain parts of the world; uncertainties regarding
future global exchange rates; uncertainties regarding future demand for our products;
and other risks and factors referred to in Novartis AG’s current Form 20-F on file
with the US Securities and Exchange Commission. Novartis is providing the information
in this press release as of this date and does not undertake any obligation to update
any forward-looking statements as a result of new information, future events or otherwise.
All product names appearing in italics are trademarks owned by or licensed to Novartis.
About Novartis
Novartis is an innovative medicines company. Every day, we work to reimagine medicine
to improve and extend people’s lives so that patients, healthcare professionals and
societies are empowered in the face of serious disease. Our medicines reach more than
250 million people worldwide.
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with
us on LinkedIn, Facebook, X/Twitter and Instagram.
Novartis will conduct a conference call with investors to discuss this news release
today at 14:00 Central European time and 8:00 Eastern Time. A simultaneous webcast
of the call for investors and other interested parties may be accessed by visiting
the Novartis website. A replay will be available after the live webcast by visiting
https://www.novartis.com/investors/event-calendar.
Additional information is provided on our business and pipeline of selected compounds
in late stage development. A copy of today's earnings call presentation can be found at https://www.novartis.com/investors/event-calendar.
Important dates
March 5, 2024
Annual General Meeting
April 23, 2024
First quarter 2024 results
May 15-16, 2024
Meet Novartis Management 2024 (Cambridge, MA, USA)
July 18, 2024
Second quarter & Half year 2024 results
October 29, 2024
Third quarter & Nine months 2024 results
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