Novartis AG · SIX:NOVN
Novartis — Pictet Swiss Larger Cap Seminar 2004
24 slides from Novartis's conference presentation, Jan 15, 2004
Slide 1: New Pathways, Innovative Medicines
New Pathways Innovative Medicines R. Breu CFO Novartis AG Pictet Swiss Larger Cap Seminar 15 January, 2004 The following information contains certain "Forward-looking Statements" relating to the Company's business, which can be identified by the use of forward-looking terminology such as "will" or "
Slide 2: Agenda
Agenda • Novartis strategy • Pharmaceutical market environment • Pharma performance - building blockbusters • Development pipeline • Outlook 3 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Strategic Investments for Building World Class Key Functions and Sustainable Growth Phase 3 P
Slide 3: Focus on Medicines
Focus on Medicines 1996 2001 2002 9M/2003 42% 18% 16% 14% Non-drug % of Group sales 86% Drugs 84% 82% 58% Source: Annual report, Strategic Plans 5 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Strategic Investments for Building World Class Key Functions and Sustainable Growth Phase
Slide 4: Building Strong Sales and Marketing Skills
Building Strong Sales and Marketing Skills 2003 • Focus on quality of Reps / FLM 2001 - 2002 • DTC excellence • More sophisticated ROI models • Improve targeting and frequency of calls 9 1999 - 2001 • Upgrade training 9 • Establish SOV models 9 • Differential detailing 9 • Focus on field force size
Slide 5: And Leading Physician Encounter Rating
... And Leading Physician Encounter Rating Visits resulting in encounters recalled by US physicians % Lilly 63 Novartis 61 Forest 61 GSK 60 BMS 60 Aventis 60 Pfizer 59 Janssen 58 AstraZeneca 58 Abbott 58 Source: Impact Rx MAT September 2003 9 Pictet larger cap seminar Zürich, 15 January 2004/ Raymun
Slide 6: Improving its Rank in the World-Wide Healthcare Market
… Improving its Rank in the World-Wide Healthcare Market … Market share Jan-Sept 2002 Jan-Sept 2003 Pfizer 10.6 10.6 Pfizer GSK 7.1 6.8 GSK Merck & Co 5.2 5.0 Merck & Co J&J 4.8 5.0 J&J AstraZeneca 4.7 4.4 Novartis #5 Novartis #6 4.1 4.3 AstraZeneca BMS 3.6 3.6 Aventis Aventis 3.6 3.4 BMS Roche 3.2
Slide 7: NIBR: Building World-Class Research
Strategic Investments for Building World Class Key Functions and Sustainable Growth Phase 3 Phase 2 Innovation Best-in-class Phase 1 marketing & sales Integration and cost synergies 1996 1999 2002 2005 3-year 2-year aggressive 2-year aggressive cost synergy cycle investment cycle investment cycle 13
Slide 8: Aggressive Investments in Innovation
Cambridge Recruitment Full time employees 500 450 400 350 300 250 200 150 100 50 0 Dec Jan Feb Mar Apr May Jun Jul Aug Sep. Oct. Nov. '02 '03 '03 '03 '03 '03 '03 '03 '03 '03 '03 '03 15 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Aggressive Investments in Innovation Pharma R&D as
Slide 9: Top Rated Pipeline
Top Rated Pipeline Weighted average score based on NPV/EV, replacement power, patent risk, uniqueness, marketing burden, Medicare reform, late stage product risk, portfolio breadth 3 2 1 0 -1 -2 -3 gh y . is S th er er SK is he t ck no AZ J th ot ill J& M nt rin art ou fiz ay ye er yn oc iL bb G B v
Slide 10: Rising Industry Pressures
Agenda • Novartis strategy • Pharmaceutical market environment • Pharma performance - building blockbusters • Development pipeline • Outlook 19 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Rising Industry Pressures • Genomics creates flood of new targets R&D costs • Mega trials ne
Slide 11: Rising Industry Pressures (cont.)
Rising Industry Pressures (cont.) • Consolidation in managed care Price/market access pressures • Growth of cost-shifting plans (i.e., tiered co-pays) • Growing importance of discounts • ‘market-leader’ brands going generic Blockbuster patent expiry • Major classes becoming generic without ‘next gen
Slide 12: Industry Evolution – Strategic Implications
Industry Evolution – Strategic Implications Low "Continue "Invest to as-is" grow" Price decline versus "Commodi- “Mass today tization" customization" "Need to prepare" High Low High Degree of scientific innovation (Personalized medicine) 23 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund
Slide 13: Summary
Agenda • Novartis strategy • Pharmaceutical market environment • Pharma performance - building blockbusters • Development pipeline • Outlook 25 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Summary • Dynamically growing in-market brands … outpacing the competition • Strong commerci
Slide 14: Significant Number of Leading GP Brands
Significant Number of Leading GP Brands … Segment Rank Brand Market segment share in % 1 Angiotensin-2-receptor blocker 30.1 1 AHT -combinations (US) 33.6 1 Systemic antimycotics 58.0 1 Atopic dermatitis 19.41 1 Irritable bowel syndrome 11.91 1 Only markets where products are launched Source: IMS 16
Slide 15: Diovan: Strong Performance in Highly Competitive Market
Strong Performance in Highly Competitive Market US TRx1 in non-HCT2 ARB category since launch in ´000s Diovan® 1 000 800 Cozaar 600 400 200 0 1 11 21 31 41 51 61 71 81 91 101 1 Total prescription 2 Hydrochlorothiazide Months since launch Source: IMS NPA 9/03 - Monthly, US 29 Pictet larger cap semina
Slide 16: #1 US Anti-Hypertensives Combination Brand
# 1 US Anti-Hypertensives Combination Brand • Source of business from both Norvasc and ACE failures • Powerful efficacy − Superior systolic / diastolic blood pressure reductions − 9 out of 10 patients achieve blood pressure goal2 1 Anti-Hypertensive 2 Demonstrated in clinical trials 31 Pictet larger
Slide 17: #1 Brand for Eczema Control
Strong Rx Lift post DTC Start Weekly Zelnorm® TRx / NRx1 in ´000s 35 DTC initiated 30 TRx 25 + 73% 20 NRx 15 + 67% 10 5 ) ) ) ) 1) ) 8) ) 6) 0) 3) 7) 1) 5) ) 2) ) 9) 03 17 31 /7 /4 /2 /8 /5 /2 /1 /1 /3 /1 /2 /1 /2 /2 /1 (3 (4 (5 (8 (9 0/ 0/ 0/ (3 (4 (5 (5 (6 (6 (7 (7 (8 (9 (1 (1 (1 1 New prescriptio
Slide 18: DTC Expanded Share Leadership
DTC Expanded Share Leadership US NRx share DTC off in % DTC initiated 14 DTC back 12 Elidel® 10 8 6 Elocon 4 Protopic 2 1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 Weeks Source: IMS weekly 35 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Blockbuster Status in
Slide 19: Further Potential: Glivec and Zometa
... With Further Potential • Increase of CML prevalence by > 10% by 2008 • Expanded CML first-line use • GIST1 expansion • Dose escalation in CML and GIST • New tumor types • Combination therapy 1 GastroIntestinal Stromal Tumor 37 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Doubl
Slide 20: Strong Potential in Adjuvant Breast Cancer
Strong Potential in Adjuvant Breast Cancer • Results of adjuvant therapy (MA-17) with Femara® − After 2.4 years, Femara® group showed • 43% reduction in risk of recurrence • 46% reduction in cancer spreading into the other breast − Improvement of 4-year disease-free survival rate by 6% (93% vs 87% f
Slide 21: Significant Increase in Number of Blockbusters
Significant Increase in Number of Blockbusters % of total pharma sales 50% Diovan® Lotrel® • Effective positioning and messaging Glivec® / Gleevec® • Strong field force Zometa® 20% execution • Powerful LCM1 Zelmac®/Zelnorm® Diovan® • Effective DTC2 Elidel® • M&S “Science” Neoral® Femara® 2002 2008 1
Slide 22: Outstanding Productivity – Most US Approvals
Outstanding Productivity – Track Record of Most US Approvals over Four Years US approvals (NMEs and BLAs1) for top 10 pharma companies since 2000 Xolair® Zelnorm® Elidel® Foradil® Gleevec® Number of NMEs Zometa® 11 2003 Trileptal® 1 2002 Visudyne® 2001 Exelon® 8 Rescula® 1 2000 Starlix® 5 4 3 3 2 2
Slide 23: Highly Innovative Compounds and Development Pipeline
10 Highly Innovative Compounds First in Gold standard Large market Phase class potential potential Zoledronic acid (osteoporosis) III 9 9 AAE581 (osteoporosis) II 9 9 PTK787 (cancer) III 91 ICL670 (iron overload) III 9 9 FTY720 (transplantation) III 9 9 9 LDT600 (hepatitis B) III 9 LAF237 (type 2 di
Slide 24: Outlook
Agenda • Industry dynamics and Novartis strategy • Pharma performance - building blockbusters • Development pipeline • Outlook 47 Pictet larger cap seminar Zürich, 15 January 2004/ Raymund Breu Outlook • Young and diverse product portfolio in Pharmaceuticals with little exposure to patent expiries •