SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated April 18, 2002
Novartis AG
(Name of Registrant)
Lichtstrasse 35
4056 Basel
Switzerland
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F_
---
Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--- ---
Enclosure: Investor Relations Release dated April 18, 2002: " Novartis
continues on dynamic growth path as Pharmaceuticals increases
market share".
Novartis International AG
Novartis Communication
CH-4002 Basel
Switzerland
Tel + 41 61 324 2200
[NOVARTIS LOGO OMITTED] Fax + 41 61 324 3300
Internet Address:
http://www.novartis.com
MEDIA RELEASE o COMMUNIQUE AUX MEDIAS o MEDIENMITTEILUNG
Novartis continues on dynamic growth path as Pharmaceuticals increases market
share
o First-quarter Group sales up 13% in local currencies (10% in Swiss francs)
o Pharmaceuticals extends double-digit sales growth (+16% in local currencies;
+14% in Swiss francs), driven by strong demand for cardiovascular, oncology
and ophthalmic products in all regions
o Net profits surge 20% in Swiss francs driven by sharp rises in operational
performance and financial income
Consolidated key figures
First quarter 2002 First quarter 2001 Change
USD m CHF m % CHF m % CHF m %
----------------------------------------------------------------------------------------------------
Sales 4,742 7,967 7,224 743 10
Operating income 1,085 1,822 1,545 277 18
in % of sales 22.9 21.4
Net income 1,064 1,788 1,485 303 20
in % of sales 22.4 20.6
----------------------------------------------------------------------------------------------------
Number of employees 72,631 69,491 3,140 5
----------------------------------------------------------------------------------------------------
USD CHF CHF CHF
Earnings per share/ADS 0.42 0.70 0.57 0.13 23
----------------------------------------------------------------------------------------------------
Basel, 18 April 2002 - For the first time Novartis is reporting full financial
results on a quarterly basis, further increasing transparency.
Dr. Daniel Vasella Chairman and CEO commented: "Our consistent strategy of
investing in innovation and growth resulted in the continued dynamic
performance. We gained segment share in the critical US market and strengthened
our leadership in the cardiovascular and oncology fields. In 2002, we plan to
further invest in R&D to enhance our competitive edge over the long-term, and
will focus our resources on growing our strategic brands". In February, the
reorganization of Consumer Health into business units was announced together
with plans to divest the Health and Functional Food business with annual sales
of about CHF 850 million.
1/12
All USD figures are convenience translations of CHF into USD at a rate of 1.68.
These translations should not be construed as representations that the CHF
amounts actually represent, or could have been converted into, such USD amounts
at the rate indicated or any other rate.
All product names appearing in italics are registered trademarks of the Novartis
Group
Group sales up 10% to CHF 8.0 billion (USD 4.7 billion)
Group sales rose 13% in local currencies (10% in Swiss francs) above the
previous first-quarter level. Sustained dynamic sales growth in Pharmaceuticals,
strong sales in Generics and the superior performance in the US were the main
contributors to the overall growth.
Operating income climbs 18% to CHF 1.8 billion (USD 1.1 billion)
On a Group level, Marketing & Distribution investments increased at a lower rate
than sales. Investments in Research & Development increased 12% and were
maintained at 13% of sales. General & Administration costs increased slightly as
a percentage of sales owing to joint venture termination costs in OTC and
additional intangible charges. As a result, operating income increased
substantially by 18% to CHF 1.8 billion (USD 1.1 billion), with the Group's
operating margin improving to 22.9% versus 21.4% for the same period last year.
Net income rises 20% to CHF 1.8 billion (USD 1.1 billion)
This record level of net income resulted from a strong growth in operating
income paired with a higher net financial income, up 74% to CHF 378 million (USD
225 million). Taxes amounted to CHF 398 million (USD 238 million), corresponding
to a tax rate of 18.2% up 1.2 percentage points from the prior period.
Outlook
Growth momentum is expected to continue in Pharmaceuticals based on the
performance of key brands, new product roll-outs and new indications. The strong
start in the first quarter of 2002 underscores Novartis' forecasts of full-year
Pharmaceuticals sales growth in the 10% range, with top-line growth driving an
equivalent rise in operating income, resulting in a stable operating margin -
assuming no unexpected product approvals.
The remaining sectors are expected to develop in line with their respective
markets, with the non-pharmaceutical operating margins on average maintained.
Barring any unforeseen events, Group sales are expected to increase in the mid
to high single-digit range in 2002, with operating income growing in line with
sales. Net financial income, which is still difficult to predict, is expected to
be lower than last year but net income is expected to reach a new record level.
Sector reviews
Sales by sector
First quarter 2002 First quarter 2001 Change
in local
currencies
USD m CHF m CHF m in CHF m in CHF % %
--------------------------------------------------------------------------------------------------
Pharmaceuticals 3,067 5,153 4,538 615 14 16
Generics 384 646 528 118 22 26
OTC 340 571 601(1) -30 -5 -3
Animal Health 150 252 240 12 5 8
Medical Nutrition(2) 223 375 373(1) 2 1 3
Infant & Baby 323 542 521(1) 21 4 3
CIBA Vision 255 428 423 5 1 4
--------------------------------------------------------------------------------------------------
Total 4,742 7,967 7,224 743 10 13
--------------------------------------------------------------------------------------------------
1 Restated to reflect a change in the classification of certain sales
incentives and discounts to retailers. In the first quarter of 2001, sales
have been reduced by CHF 30 million, CHF 11 million and CHF 55 million for
OTC, Medical Nutrition, and Infant & Baby, respectively, with a
corresponding reduction in marketing and distribution expenses.
2 Including Health & Functional Food
2/12
Operating income by sector
First quarter 2002 First quarter 2001 Change
% of % of
USD m CHF m sales CHF m sales in CHF m in %
---------------------------------------------------------------------------------------------------
Pharmaceuticals 862 1,448 28.1 1,244 27.4 204 16
Generics 55 92 14.2 65 12.3 27 42
OTC 32 54 9.5 58 9.7 -4 -7
Animal Health 25 42 16.7 44 18.3 -2 -5
Medical Nutrition1 14 23 6.1 18 4.8 5 28
Infant & Baby 59 99 18.3 90 17.3 9 10
CIBA Vision2 23 38 8.9 6 1.4 32 --
Corporate income, net 15 26 20 -- 6 30
---------------------------------------------------------------------------------------------------
Total 1,085 1,822 22.9 1,545 21.4 277 18
---------------------------------------------------------------------------------------------------
1 Including Health & Functional Food
2 Excluding exceptionals in the first quarter of 2001 associated with the
Wesley Jessen acquisition (CHF 28 million), operating income would have been
CHF 34 million, producing a 2002 increase of 12% in Swiss francs and a 2001
operating margin of 8%.
Pharmaceuticals
Sales
Pharmaceuticals first-quarter sales climbed 16% in local currencies (+14% in
Swiss francs) to CHF 5.2 billion (USD 3.1 billion), with all countries
performing well. In the US, sales surged 23%, driven by strong demand for
cardiovascular, oncology and ophthalmics products.
Operating income
Strong top line growth driven by increased volumes lifted Pharmaceuticals'
operating income by 16%. Research & Development investments increased 10% as a
result of the new research strategy initiated in the second part of 2001 and to
advance projects in the final stages of development.
Highlights
Primary Care
Diovan/CoDiovan (+80%, US: +102%; hypertension) sales continued to grow
dynamically. The brand extended its leadership of the angiotensin II receptor
blocker category in the US, where more than half of its sales are generated and
where its share of total prescriptions at the quarter-end reached 36.8% (IMS
weekly TRx data). In the US, the tablet formulation and the 320mg strength were
rolled out, offering greater choice and flexibility in terms of dosage strength
than any other product in the class. Further data published in March from the
Val-HeFT study showed that Diovan reduced mortality by 33% and morbidity by 44%
in heart failure patients who did not take ACE inhibitors.
The Cibacen (hypertension) range posted sales growth of 39% (US: +49%), driven
by the continuing strong performance of Lotrel (Cibacen combined with
amlodipine; US: +55%), which extended its share of new prescriptions in the US
amlodipine segment to 22.7% at the quarter-end.
Lescol (+31%, US: +39%; cholesterol reduction) sales were up markedly on the
prior period due to the XL (extended-release) formulation and the product's
particularly favorable proven safety/efficacy profile compared with other
statins. This was underscored by positive new data
----------------------
Percentages indicating changes in product sales refer to local currencies
3/12
from an analysis of 9000 patients published in January and the landmark LIPS
clinical trial, published in March, which demonstrated the protective effect of
Lescol against future fatal and non-fatal cardiac events.
Lamisil (-16%, US: -42%; fungal infections) sales dropped reflecting increased
inventories in the US at the end of 2001. The product's success in gaining
market segment share from its major competitor was further supported by clinical
results, published in March, from the L.I.ON. I.E.S. study, showing higher
long-term cure with Lamisil compared with itraconazole in treating fungal
toenail infections.
Famvir (+26%, US: +31%; viral infections) performed very well thanks to its
unique benefit in reducing the duration of painful, post-herpetic neuralgia.
Exelon (+23%, US: +37%; Alzheimer's disease) continued to grow dynamically in
spite of increased competition in its fast-growing segment. Results were
published in January showing for the first time that Exelon is beneficial for
patients with subcortical vascular dementia.
Trileptal (+82%, US: +105%; epilepsy) sales were driven by the roll-out in the
US, where the product is also now being launched in the additional indication of
monotherapy in childhood epilepsy. The new oral suspension formulation offering
more convenient administration for young patients is being introduced in Europe.
Recently launched products and pipeline update
Elidel, the new non-steroid cream for treating eczema was launched in its first
market, the US. It gained its first EU approval, in Denmark, in March and was
approved more recently in Mexico and Columbia. The clinical data released in the
first quarter showed that eczema improved in 82% of adults treated with Elidel
cream.
Starlix (CHF 32 million; USD 19 million, type 2 diabetes) is progressing slowly
in the very competitive oral anti-diabetics market; its uptake is expected to
increase as post-prandial glucose monitoring becomes standard clinical practice.
Zelmac/Zelnorm, for irritable bowel syndrome (IBS), gained further market
approvals, including Australia, Canada and Brazil, bringing the total number of
countries in which this novel treatment is approved to 27. The response from
patients and physicians has been very positive. Survey results published in
March emphasize that IBS is under-diagnosed and has a negative economic impact
worldwide. Novartis has provided further data to the FDA and is continuing to
work with regulatory authorities in the US and the EU to bring the product to
female patients who are in need of a safe and effective treatment for IBS.
Phase III trials of zoledronic acid for treatment of postmenopausal osteoporosis
and Paget's disease were initiated. New data were published in the February
edition of the New England Journal of Medicine demonstrating the drug's efficacy
in increasing bone mineral density in post-menopausal women with osteoporosis
after a once-yearly dose.
Oncology
Novartis Oncology sales grew strongly (+28% in local currencies), thanks in
particular to the introduction of Glivec/Gleevec and the strong performances of
Femara, Zometa and Sandostatin.
Glivec/Gleevec (chronic myeloid leukemia) first-quarter sales topped CHF 183
million (USD 109 million). Now approved in more than 60 countries, this
innovative cancer therapy was awarded the prestigious Prix Galien in France last
month. The February 2002 issue of New
----------------------------
Percentages indicating changes in product sales refer to local currencies
4/12
England Journal of Medicine reported that 95% of Glivec/Gleevec-treated patients
with late chronic phase CML were alive at 18 months. Novartis plans to apply, by
mid 2002, for a label change to include newly-diagnosed CML patients. In
February, the product gained US approval for use in gastrointestinal stromal
tumors; it has also received approval in Switzerland and a positive opinion from
the CPMP bringing it closer to European approval for this rare life-threatening
disease.
Zometa (bone cancer complications) achieved sales of CHF 112 million (USD 66
million) and, in February, gained broad FDA approval for treating patients with
multiple myeloma and patients with documented bone metastases from lung cancer,
breast cancer, other solid tumor types and prostate cancer - a large market with
high need for effective treatment. Promotion to urologists was initiated in the
US in March. Approval for bone metastases is expected in the EU in the third
quarter.
Aredia (bone metastases; -40%, US: -52%), sales reflected the impact of first
generics and the introduction of Zometa, the new generation, more convenient and
more potent successor compound. Aredia and Zometa posted combined sales of CHF
306 million (USD 182 million), down 6% from the first quarter of 2001.
Femara, the first-line treatment for advanced breast cancer in hormone sensitive
post-menopausal women posted a sales increase of 63% over the prior period,
benefiting from the rapid expansion of the global market for aromatase
inhibitors. Data were published demonstrating Femara's (in vivo) superiority to
anastrazole in suppressing estrogen levels, and a head-to-head comparison of the
two drugs in the second line setting will be presented at the American Society
of Clinical Oncology meeting in May.
Sandostatin (+30%; US: +47%; acromegaly/carcinoid syndrome) continued strong
growth in its market segments, thanks to the success of the more convenient,
long-acting, once-a-month LAR formulation.
Ophthalmics
Ophthalmics posted a 25% rise in sales in local currencies (22% in Swiss francs)
above the first quarter of last year, due mainly to the performance of Visudyne.
Visudyne (+47%; US: +40%; treatment for forms of choroidal neovascularization
secondary to age related macular degeneration) sales continued to grow strongly
due to increased usage in newly approved indications, reimbursement in major
European markets and geographical expansion. Visudyne therapy is now available
in some 60 countries for its main indication and is also approved in more than
35 countries including the EU, US and Canada for additional indications. A
direct-to-consumer marketing campaign was launched in the US in February to
increase awareness of Visudyne therapy.
The remaining Ophthalmics business including anti-allergy, dry-eye and glaucoma
treatments posted solid sales growth.
Transplantation
Sales of Neoral/Sandimmun, the cornerstone of immunosuppression, eased down just
1% from the prior period level, owing mainly to strong US (+7%) and European
performances.
Simulect, the induction immunosuppressant designed to complement Neoral and
optimize clinical outcomes, posted a 28% rise in sales (US: +72%) as it gained
market segment share from established competitor brands in most geographic
regions.
--------------------------
Percentages indicating changes in product sales refer to local currencies
5/12
Mature Products
The slow-down in sales erosion of mature brands continued in the first quarter
of 2002 as a result of steps taken to further drive marketing and sales force
productivity across key markets. The sales decline rate of Voltaren (-3%; US:
-33%; anti-inflammatory) developed as anticipated.
Generics
Sales
Novartis Generics sales jumped 26% in local currencies million (22% in Swiss
francs) to CHF 646 million (USD 384 million), reflecting a slower start in the
previous year, new product launches, increased volumes and, to some extent,
recent acquisitions.
The Retail Business posted exceptionally strong gains, particularly in the US
and Mexico, fuelled by recent launches including the anti-depressant fluoxetine
(a generic form of Prozac(R)), the diabetes drug metformin (a generic form of
Glucophage(R)), and the anti-inflammatory nabumetone (a generic form of
Relifex(R)/Relafen(R)). The latter two were launched in January and February
respectively.
The Industrial Business benefited from sustained strong sales of bulk
antibiotics. Production is currently focussed on various high-value compounds,
the sales of which are expected to occur in the second half of the year. The
contract manufacturing business showed further favorable growth.
Operating income
Operating income soared 42%, mainly as a result of the high margin fluoxetine
business, the benefits of restructuring in the US, and acquisition synergies.
Costs related to the latter items did not in recur in the first quarter of 2002.
The operating margin increased 1.9 percentage points to 14.2%.
OTC
Sales
First-quarter sales of OTC (over-the-counter) medicines reached CHF 571 million
(USD 340 million).
Excluding terminated businesses, sales grew 3%, driven by the key brands Lamisil
Cream (antifungal), Nicotinell/Habitrol (smoking cessation), Maalox (heart burn,
indigestion), and Denavir (herpes), which was recently transferred from
Pharmaceuticals. Additional impetus came from Benefiber, a natural fiber
laxative developed by Novartis and recently launched in the US.
The expiry of two licensing/distribution agreements at the end of last year
combined with a weak season for cough and cold products in the US, led to an
overall decline in sales of 3% in local currencies (-5% in Swiss Francs).
Operating income
Operating income dropped 7% to CHF 54 million owing to lower volumes and
provisions for the expected impact of the Kao joint venture in Japan, which was
terminated in March. The operating margin eased down 0.2 of a percentage point
to 9.5%.
------------------------
Percentages indicating changes in product sales refer to local currencies
6/12
Animal Health
Sales
In an overall stagnating market, Animal Health sales were up from the same
period of last year by 8% in local currencies (5% in Swiss francs) to CHF 252
million (USD 150 million). The US vaccine business acquired in January
contributed 6 percentage points to sales growth, the remainder coming
principally from a pick-up in European sales combined with good performances in
the Latam and Asia/Pacific regions. First-quarter revenues in the US were lower,
owing to a shift of the Spring sales offer to the second quarter this year.
The farm animals business, delivered strong sales growth, led by the therapeutic
antimicrobials Tiamutin and Econor for pigs and poultry. The Vaccines and
Aquahealth businesses continued to perform well and were strengthened by the US
launch of a novel vaccine for dairy cattle. The companion animal business faced
increased competition particularly in the flea treatment area, but benefited
from the solid performance of Interceptor (worm treatment) and the strong growth
of Fortekor, the cardio/renal drug for dogs and cats.
Operating income
Animal Health's operating income reached CHF 42 million, 5% lower than in the
first quarter of last year, owing mainly to acquisition-related costs. The
operating margin was 16.7%, 1.6 percentage points off the previous period's high
level.
Medical Nutrition (including Health & Functional Food)
Sales
Combined Medical Nutrition and Health & Functional Food sales grew 3% in local
currencies (1% in Swiss francs) to CHF 375 million (USD 223 million).
Medical Nutrition posted solid sales growth in all regions as a result of
continued focus on the umbrella brands Isosource and Novasource (tube feeding
products), Resource (medical food supplements) and Impact (immunonutrition), a
concentration on specific disease segments, and the expansion of the home-care
channel.
Health & Functional Food (HF&F) sales were slightly lower than in the prior
period owing mainly to the continued weak performance of the juice business in
Poland and lower-than-expected Food and Beverage sales in China due to a change
of distributors. Plans to divest the HF&F business by year-end are proceeding on
track.
Operating Income
Operating income was up 28% to CHF 23 million, owing to lower R&D costs in HF&F.
Marketing & Distribution investments increased in Medical Nutrition to enhance
sales force activities. The operating margin climbed 1.3 percentage points to
6.1%.
Infant & Baby
Sales
The Infant & Baby sector continued to outpace its segments, posting
first-quarter sales growth of 3% in local currencies (4% in Swiss francs) to CHF
542 million (USD 323 million) despite only moderate birth rate increases.
In the largest segment, US baby/toddler food, Gerber continued to build its
share through innovative marketing programs and initiatives. The Gerber Wellness
line posted record quarterly growth as US sales jumped 40% above the first
quarter of last year.
----------------------------
Percentages indicating changes in product sales refer to local currencies
7/12
Performance outside the US was good with Latam sales growing 11%. Asia also
turned in a good overall performance, whilst Europe and the Middle East had to
contend with increased competition.
Operating Income
Operating income rose 10% to CHF 99 million (USD 59 million) as a result of
continued productivity gains and lower investments for development and product
introductions than in the previous period. As a result, the operating margin
improved by one percentage point to 18.3%.
CIBA Vision
Sales
First-quarter sales at CIBA Vision increased 4% in local currencies (1% in Swiss
francs) to CHF 428 million (USD 255 million), driven by the Focus range of
contact lenses and the FreshLook brand of cosmetic lenses, which were introduced
in Japan.
In the ophthalmic surgical business, Vivarte, the anterior chamber phakic
refractive lens, was launched in Europe and the company signed an agreement with
Presby Corp. for a worldwide license to innovative ophthalmic surgical products.
The lens-care business continued to contend with a declining market by rolling
out new improved-convenience products including SOLO-care PLUS, which gained FDA
approval in January.
Operating income
First-quarter operating income increased by CHF 32 million to CHF 38 million
(USD 23 million) and the operating margin increased from 1.4% to 8.9%. The
improvement was mainly due to non-recurring costs of CHF 28 million in the first
quarter of 2001 related to the integration of Wesley Jessen. Adjusting for this,
the operating margin increased from 8.0% in 2001 to 8.9% in 2002.
Novartis AG (NYSE: NVS) is a world leader in healthcare with core businesses in
pharmaceuticals, consumer health, generics, eye-care, and animal health. In
2001, the Group's businesses achieved sales of CHF 32.0 billion (USD 19.1
billion) and a net income of CHF 7.0 billion (USD 4.2 billion). The Group
invested approximately CHF 4.2 billion (USD 2.5 billion) in R&D. Headquartered
in Basel, Switzerland, Novartis Group companies employ about 72 600 people and
operate in over 140 countries around the world. For further information please
consult http://www.novartis.com.
Further reporting dates in 2002
First half and second quarter sales and results 22 July 2002
Nine months and third quarter sales and results 17 October 2002
8/12
Condensed consolidated financial statements
Consolidated income statements (unaudited)
First quarter 2002 First quarter 2001 Change in
USD CHF CHF CHF %
millions millions millions millions
---------------------------------------------------------------------------------------------
Total sales 4,742 7,967 7,224 743 10
Cost of goods sold -1,179 -1,983 -1,874 -109 6
Gross profit 3,563 5,984 5,350 634 12
Marketing & Distribution -1,596 -2,681 -2,499 -182 7
Research & Development -620 -1,041 -929 -112 12
General & Administration -262 -440 -377 -63 17
Operating income 1,085 1,822 1,545 277 18
Result from associated
companies -7 -12 31 -43 --
Financial income, net 225 378 217 161 74
Income before taxes and
minority interests 1,303 2,188 1,793 395 22
Taxes -238 -398 -305 -93 30
Minority interests -1 -2 -3 1 -33
---------------------------------------------------------------------------------------------
Net income 1,064 1,788 1,485 303 20
---------------------------------------------------------------------------------------------
Condensed consolidated balance sheets
31 March 31 Dec. Change 31 March
2002 2001 2001
(unaudited) (unaudited)
CHF m CHF m CHF m CHF m
-----------------------------------------------------------------------------------------------
Assets
Total long-term assets 32,961 32,585 376 27,038
Cash, short-term deposits and
marketable securities 20,222 21,844 -1,622 20,945
Other current assets 12,387 12,356 31 12,522
-----------------------------------------------------------------------------------------------
Total assets 65,570 66,785 -1,215 60,505
-----------------------------------------------------------------------------------------------
Total equity 41,421 42,245 -824 36,670
Financial debts 6,616 7,566 -950 6,273
Other liabilities and minority
interests 17,533 16,974 559 17,562
-----------------------------------------------------------------------------------------------
Total equity and liabilities 65,570 66,785 -1,215 60,505
-----------------------------------------------------------------------------------------------
All USD figures are convenience translations of CHF into USD at a rate of 1.68.
These translations should not be construed as representations that the CHF
amounts actually represent, or could have been converted into, such USD amounts
at the rate indicated or any other rate.
9/12
Condensed consolidated cash flow statement and change in liquidity (unaudited)
3 months ended 31 March Change
2002 2001
CHF m CHF m CHF m
--------------------------------------------------------------------------------------------
Cash flow from operating activities 2,041 2,005 36
Cash flow from investing activities -923 700 -1,623
Cash flow from financing activities -3,207 -2,631 -576
Translation effect on cash and
cash equivalents -9 192 -201
--------------------------------------------------------------------------------------------
Change in cash and cash equivalents -2,098 266 -2,364
Change in short- and long-term
marketable securities 476 156 320
Change in short- and long-term
financial debt 950 -211 1,161
--------------------------------------------------------------------------------------------
Change in net liquidity -672 211 -883
Net liquidity at 1 January 14,278 14,461 -183
--------------------------------------------------------------------------------------------
Net liquidity at 31 March 13,606 14,672 -1,066
--------------------------------------------------------------------------------------------
Free cash flow after dividend -508 -368 -140
--------------------------------------------------------------------------------------------
Condensed consolidated changes in shareholders' equity (unaudited)
First quarter First quarter Change
2002 2001
CHF m CHF m CHF m
----------------------------------------------------------------------------------------------
Consolidated equity at 1 January 42,245 38,908 3,337
Dividends to third parties -2,297 -2,194 -103
Disposal / acquisition of treasury shares 66 -1,164 1,230
Translation effects -380 -76 -304
Net income for first three months 1,788 1,485 303
Other equity movements -1 -289 288
----------------------------------------------------------------------------------------------
Consolidated equity at 31 March 41,421 36,670 4,751
----------------------------------------------------------------------------------------------
Share information
First quarter 2002 First quarter
2001
----------------------------------------------------------------------------------------------
Average number of shares outstanding (million) 2,548.7 2,601.5
Basic earnings per share (CHF) 0.70 0.57
Diluted earnings per share (CHF) 0.70 0.57
31 March 2002 31 March 2001
----------------------------------------------------------------------------------------------
Registered share price (CHF) 66.15 67.72
ADS price (USD) 39.60 39.33
Market capitalization (CHF billion) 168.6 175.3
US GAAP information
First quarter 2002 First quarter 2001
CHF m CHF m
----------------------------------------------------------------------------------------------
US GAAP net income 1,592 891
US GAAP equity at 31 March 51,221 44,629
10/12
Notes to the interim financial report for the three months ended 31 March 2002
1. Basis of preparation
The unaudited interim financial report for the three months ended 31 March 2002
has been prepared in accordance with the accounting policies set out in the
Financial Report for the year ended 31 December 2001 and International
Accounting Standard 34 on Interim Financial Reporting.
There were no significant changes in accounting policies or estimates or in any
contingent liabilities from those disclosed in the 2001 Financial Report.
2. Changes in the scope of consolidation and other significant acquisitions
The following significant changes were made during the three months to 31 March
2002 and in 2001:
2002
Animal Health
In January, the sector completed the acquisition of two US farm animal vaccine
companies, Grand Laboratories Inc., Iowa and ImmTech Biologies Inc., Kansas. The
combined 2001 revenues were approximately CHF 55 million (USD 33 million) and
the combined purchase price is a minimum of CHF 160 million of which CHF 140
million was settled in Novartis American Depositary Shares. The final purchase
price may increase depending on whether certain future sales and other targets
are met.
Medical Nutrition (including Health & Functional Food)
In February, Novartis announced its intention to divest the Health & Functional
Food businesses by the end of 2002.
2001
Generics
In January, the sector acquired the generic business line in the USA of
Apothecon Inc., from Bristol Myers Squibb. In April, the sector acquired Labinca
SA, Buenos Aires, Argentina and Lagap Pharmaceuticals Ltd., UK.
Corporate
During 2001, the Group acquired 21.3% of the voting shares of Roche Holding AG,
which represents approximately 4% of its total shares and equity securities.
This release contains certain "forward-looking statements", relating to the
Group's business, which can be identified by the use of forward-looking
terminology such as "plan", "expect", "estimates", "forecasts", "will", or
similar expressions, or by discussions of strategy, plans or intentions. Such
statements include descriptions of new products and new indications to be
approved for existing products, expected to be introduced or have been
introduced by the Group and anticipated customer demand for such products. Such
statements reflect the current views of the Group with respect to future events
and are subject to certain risks, uncertainties and assumptions. Many factors
could cause the actual results, performance or achievements of the Group to be
materially different from any future results, performances or achievements that
may be expressed or implied by such forward-looking statements. Some of these
are uncertainties relating to clinical trials and product development,
unexpected regulatory delays or government regulation generally, and obtaining
and protecting intellectual property, as well as factors discussed in the
Group's Form 20-F filed with the Securities and Exchange Commission. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected.
11/12
Sales of top twenty pharmaceutical products
US Rest of World Total % change
% change % change
in local in local in local
Brands Therapeutic Area CHF m currencies CHF m currencies CHF m USD m in CHF currencies
-----------------------------------------------------------------------------------------------------------------------------------
Diovan/Co-Diovan Hypertension 315 102 286 62 601 358 76 80
Neoral/Sandimmun Transplantation 136 7 315 -4 451 269 -4 -1
Cibacen/Lotensin Hypertension 368 49 49 -7 417 248 40 39
(of which Lotrel) (223 55 0 223 133 56 55)
Sandostatin (group) Acromegaly 122 47 128 18 250 149 29 30
Lamisil (group)* Fungal infections 97 -42 140 16 237 141 -19 -16
Voltaren (group)* Inflammation/pain 6 -33 230 -2 236 141 -9 -3
Lescol Cholesterol reduction 106 39 111 25 217 129 28 31
Aredia (group) Cancer complications 102 -52 92 -18 194 116 -40 -40
Glivec/Gleevec Chronic myeloid 79 n.a. 104 n.a. 183 109 n.a. n.a.
Tegretol Epilepsy 65 16 97 3 162 97 5 8
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Top ten products 1,396 23 1,552 18 2,948 1,757 18 20
Miacalcic Osteoporosis 86 -19 63 -3 149 89 -13 -13
HRT Range** Hormone replacement 68 79 57 -6 125 75 24 25
Leponex/Clozaril Schizophrenia 49 -14 75 1 124 74 -7 -5
Exelon Alzheimer's disease 71 37 50 8 121 72 22 23
Visudyne A form of wet AMD 72 40 43 60 115 69 44 47
Zometa Cancer complications 88 n.a. 24 n.a. 112 66 n.a. n.a.
Foradil Asthma 9 n.a. 99 6 108 64 13 15
Famvir * Antivirals 78 31 25 13 103 61 26 26
Trileptal Epilepsy 59 105 23 44 82 49 82 82
Femara Breast cancer 26 138 43 37 69 41 60 63
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Top twenty total 2,002 30 2,054 17 4,056 2,417 21 23
Rest of portfolio 236 -17 861 1 1,097 650 -7 -3
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Total 2,238 23 2,915 12 5,153 3,067 14 16
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*First quarter 2001 restated because of transfers to other sectors
**Including Clima / Meri range
All USD figures are convenience translations of CHF into USD at a rate of
1.68. These translations should not be construed as representations that the CHF
amounts actually represent, or could have been converted into, such USD amounts
at the rate indicated or any other rate.
12/12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Novartis AG
Date: April 18, 2002 By: /s/ RAYMUND BREU
----------------------------
Name: Raymund Breu
Title: Chief Financial Officer