07.14.15
Headquarters: Basel, Switzerland
twitter.com/novartis
www.novartis.com
TOP SELLING DRUGS
Back in 2013 Novartis needed to shake things up. Feeling the pressure of the increasingly demanding environment in the healthcare industry, Big Pharma’s king of the hill decided that only operations with innovation power and global scale stand a chance of surviving over the next decade and beyond.
2014 brought to fruition the results of this review process. During the year, Novartis announced several transactions that, once completed, will shrink its business focus from six areas to three.
Novartis decided it would back its Pharmaceuticals, Alcon (eye care) and Sandoz (generics) divisions, while the Vaccines, Animal Health and Over-the-Counter (OTC) divisions ultimately lacked the commercial scale to compete effectively as independent businesses.
As part of this transformation process Novartis announced plans during the year to acquire GlaxoSmithKline’s (GSK) oncology products to strengthen its position as the world’s number two company in cancer treatments. It is also selling the Vaccines division, excluding the influenza business, to GSK—creating the world’s largest vaccines business. The flu vaccines business will go to CSL Ltd. in a separate transaction.
Novartis and GSK plan to merge their OTC businesses into a joint venture that would be one of the world’s largest consumer healthcare companies. Novartis will own 36.5% of this JV. In January 2015, Novartis sold off the Animal Health business to Eli Lilly, creating the world’s second-largest company in that sector.
Once these transactions are completed, Novartis will become a company focused on the three aforementioned businesses. Pharmaceuticals will be one of the world’s largest providers of innovative medicines and currently has a strong pipeline, with 135 projects in development. Alcon, the number one eye care company worldwide, has a strong presence in ophthalmic pharmaceuticals, surgical equipment and vision care products, such as contact lenses. Lastly, Sandoz, the number two generic medicines provider globally and number one in differentiated generics, including medicines that are difficult to develop and manufacture, maintains a leading biosimilars business, with three products on the market and a strong pipeline in clinical development.
Growth Products Fuel Performance
In terms of financial performance, in 2014 net sales increased 3% to $58 billion, which is admirable in light of increased pressure from generic competition in the market. Operating income rose 8% to $14.6 billion while margin improved 1.2 percentage points to 25.2%.
Across divisions, Novartis’ portfolio of growth products and presence in emerging growth markets continued to fuel performance in 2014. Sales of growth products increased 18% to $18.6 billion, or 32% of net sales. In the Pharmaceuticals division, growth products accounted for 43% of net sales, up from 37% in 2013—demonstrating how Novartis is rejuvenating its portfolio and mitigating the impact of patent expirations on key products.
Pharmaceuticals, which includes oncology, primary care and specialty care products, delivered net sales of $31.8 billion (–1%, +1% in constant currencies) as strong sales of growth products countered the impact of greater generic competition for Diovan and other products, particularly in the U.S. and Japan. Generic competition reduced sales by seven percentage points. Growth products generated $13.7 billion of division net sales, growing 17% compared to last year. Sales in emerging growth markets increased 11% to $8.1 billion.
Top-performing Pharmaceutical products in 2014 included Gilenya ($2.5 billion, +30%), an oral therapy for multiple sclerosis; Afinitor ($1.6 billion, +22%), a treatment for several types of cancer including breast and kidney; and Tasigna ($1.5 billion, +24%), a treatment for chronic myeloid leukemia.
The planned acquisition of GSK’s oncology products is expected to reinforce Novartis’ already strong position in cancer treatments. In addition, in February, Novartis acquired CoStim Pharmaceuticals, a Cambridge, MA-based, privately held biotechnology company focused on harnessing the immune system to eliminate immune-blocking signals from cancer. The move is intended to broaden Novartis’ cancer immunotherapy research program. Novartis will add late discovery stage immunotherapy programs directed to several targets, including PD-1.
In May Novartis acquired non-U.S. rights from Ophthotech for OAP030 (Fovista) for wet AMD. Also of note, in July personalized cell therapy CTL019 for leukemia received FDA breakthrough therapy designation.
Other highlights in 2014 included the submission of regulatory applications in the EU and U.S. for LCZ696 in chronic heart failure, an area of high unmet medical need. Novartis also submitted for approval NVA237 and QVA149 in the U.S. for chronic obstructive pulmonary disease (COPD). Cosentyx, formerly AIN457, received regulatory approval in Japan for psoriasis and psoriatic arthritis, as well as positive recommendations in the EU and U.S. for psoriasis. Other products that received regulatory approval in 2014 included Xolair for chronic spontaneous urticarial, also known as chronic idiopathic urticarial, in the EU and U.S., and Zykadia for ALK+ non-small cell lung cancer in the U.S.
In the Sandoz division, products are focused on retail generics, biopharmaceuitcals and oncology injectables, and anti-infectives. Biosimilars, which are follow-on versions of complex biologic drugs, made a strong contribution to growth, with sales rising 23% to $514 million globally.
In May, Sandoz was the first to apply for approval of a biosimilar in the U.S. under the new biosimilar pathway created in the Biologics Price Competition and Innovation Act of 2009, with filgrastim, which is used to decrease the incidence of infection among cancer patients receiving chemotherapy. In July, Sandoz announced FDA acceptance of a biosimilar application for filgrastim, a version of Amgen’s Neupogen.
Sandoz leads the industry with six biosimilars in Phase III trials or registration. Three Sandoz biosimilar products occupy the number one position in market share in their respective categories—Omnitrope, a human growth hormone; Binocrit for anemia; and filgrastim under the brand name Zarzio.
Sandoz had net sales of $9.6 billion in 2014, up 4% from the prior year, driven by a 15 percentage points increase in volume, more than offsetting 8 percentage points of price erosion.
Performance was driven by strong retail generics and biosimilars sales growth in Asia, excluding Japan, (+15%), the U.S. (+14%), and Latin America (+10%). Sales growth in Western Europe, excluding Germany, was solid at 4%.
In addition, Novartis’ efforts to expand its presence in emerging growth markets such as Asia, Africa and Latin America continued to show good results. Net sales in those markets rose 11% to $15.3 billion, led by China, up 15%, and by Brazil, up 18%.Innovation yields approvals.
In 2014, Novartis’ R&D efforts yielded 13 approvals in key markets, as well as 15 regulatory filings. For example, in March, Xolair was approved in the EU for chronic spontaneous urticaria and in the U.S. for chronic idiopathic urticaria, a severe skin condition characterized by hives. In April, Zykadia was approved in the U.S. for the treatment of ALK+ non-small cell lung cancer. In December, the company received approval in Japan for Cosentyx (formerly AIN457) for the treatment of psoriasis and psoriatic arthritis. Cosentyx also received positive recommendations from advisory bodies in the EU and U.S. for psoriasis.
Novartis also reached major milestones with promising pipeline products, including LCZ696 in chronic heart failure and CTL019 in certain forms of leukemia. CTL019, a personalized cell therapy for cancer being developed with the University of Pennsylvania in the U.S., received breakthrough therapy designation from the FDA, marking the fifth such designation for therapies under development by Novartis, including Bexsero, Zykadia, RLX030 and BYM338.
Oncology. A number of cancer drugs moved forward in late-stage development in 2014. For instance, LEE011, a CDK 4/6 inhibitor, showed promising results in breast cancer patients and is entering full development across multiple indications. And BKM120, a pan-PI3K inhibitor being developed in multiple tumor types, began Phase III trials for breast cancer, with results expected in 2015. Preliminary results from two pilot clinical trials of CTL019 showed that 27 of 30 patients with acute lymphoblastic leukemia experienced complete remission, suggesting it could become a potentially transformative treatment.
Cardiovascular. Novartis had success during the year with trials of LCZ696, an investigational treatment for chronic heart failure. Data from a study of 8400 cardiovascular patients showed that LCZ696 lowered the chances of death or hospitalization by 20% compared to the standard treatment for heart failure. Researchers stopped the study six months early due to compelling efficacy. LCZ696 works by relaxing the blood vessels and stimulating the kidneys to excrete sodium and water, relieving strain on the heart.
Immunology and Dermatology. Novartis achieved positive results of Phase III studies of Cosentyx for two additional indications: psoriatic arthritis and ankylosing spondylitis, a chronic inflammation of the joints in the spine. Cosentyx inhibits interleukin-17A, a protein involved in the inflammatory process. Global regulatory filings are planned in 2015 for Cosentyx for psoriatic arthritis and ankylosing spondylitis.
Eye care. Novartis licensed Google “smart lens” technology in July. Alcon is working with Google to develop products such as contact lenses to monitor glucose levels in patients’ tear fluid, as well as lenses that use tiny sensors to help wearers focus at any range.
Biosimilars. Sandoz filed a marketing application in the US for a proposed biosimilar, one of six in Phase III clinical trials or undergoing registration. The drug, which stimulates white blood cell production in some cancer patients undergoing chemotherapy, is called Zarzio (filgrastim) in Europe and is a proposed biosimilar to Neupogen from Amgen.
twitter.com/novartis
www.novartis.com
Headcount: | 133,413 |
Year Established: | 1996 |
Revenues: | $57,996 (flat) |
Pharma Revenues: | $31,791 (-1%) |
Net Income: | $10,280 (+11%) |
R&D: | $9,943 (+3%) |
TOP SELLING DRUGS
Drug | 2014 Sales | (+/-%) |
Gleevec/Glivec | $4,746 | 1% |
Gilenya | $2,477 | 1% |
Lucentis | $2,441 | 2% |
Diovan | $2,345 | -33% |
Tasigna | $1,529 | 21% |
Galvus | $1,224 | 2% |
Exforge | $1,396 | -4% |
Sandostatin | $1,650 | 4% |
Afinitor | $1,575 | 20% |
Exelon/Exelon Patch | $1,009 | -2% |
Exjade | $926 | 4% |
Back in 2013 Novartis needed to shake things up. Feeling the pressure of the increasingly demanding environment in the healthcare industry, Big Pharma’s king of the hill decided that only operations with innovation power and global scale stand a chance of surviving over the next decade and beyond.
2014 brought to fruition the results of this review process. During the year, Novartis announced several transactions that, once completed, will shrink its business focus from six areas to three.
Novartis decided it would back its Pharmaceuticals, Alcon (eye care) and Sandoz (generics) divisions, while the Vaccines, Animal Health and Over-the-Counter (OTC) divisions ultimately lacked the commercial scale to compete effectively as independent businesses.
As part of this transformation process Novartis announced plans during the year to acquire GlaxoSmithKline’s (GSK) oncology products to strengthen its position as the world’s number two company in cancer treatments. It is also selling the Vaccines division, excluding the influenza business, to GSK—creating the world’s largest vaccines business. The flu vaccines business will go to CSL Ltd. in a separate transaction.
Novartis and GSK plan to merge their OTC businesses into a joint venture that would be one of the world’s largest consumer healthcare companies. Novartis will own 36.5% of this JV. In January 2015, Novartis sold off the Animal Health business to Eli Lilly, creating the world’s second-largest company in that sector.
Once these transactions are completed, Novartis will become a company focused on the three aforementioned businesses. Pharmaceuticals will be one of the world’s largest providers of innovative medicines and currently has a strong pipeline, with 135 projects in development. Alcon, the number one eye care company worldwide, has a strong presence in ophthalmic pharmaceuticals, surgical equipment and vision care products, such as contact lenses. Lastly, Sandoz, the number two generic medicines provider globally and number one in differentiated generics, including medicines that are difficult to develop and manufacture, maintains a leading biosimilars business, with three products on the market and a strong pipeline in clinical development.
Growth Products Fuel Performance
In terms of financial performance, in 2014 net sales increased 3% to $58 billion, which is admirable in light of increased pressure from generic competition in the market. Operating income rose 8% to $14.6 billion while margin improved 1.2 percentage points to 25.2%.
Across divisions, Novartis’ portfolio of growth products and presence in emerging growth markets continued to fuel performance in 2014. Sales of growth products increased 18% to $18.6 billion, or 32% of net sales. In the Pharmaceuticals division, growth products accounted for 43% of net sales, up from 37% in 2013—demonstrating how Novartis is rejuvenating its portfolio and mitigating the impact of patent expirations on key products.
Pharmaceuticals, which includes oncology, primary care and specialty care products, delivered net sales of $31.8 billion (–1%, +1% in constant currencies) as strong sales of growth products countered the impact of greater generic competition for Diovan and other products, particularly in the U.S. and Japan. Generic competition reduced sales by seven percentage points. Growth products generated $13.7 billion of division net sales, growing 17% compared to last year. Sales in emerging growth markets increased 11% to $8.1 billion.
Top-performing Pharmaceutical products in 2014 included Gilenya ($2.5 billion, +30%), an oral therapy for multiple sclerosis; Afinitor ($1.6 billion, +22%), a treatment for several types of cancer including breast and kidney; and Tasigna ($1.5 billion, +24%), a treatment for chronic myeloid leukemia.
The planned acquisition of GSK’s oncology products is expected to reinforce Novartis’ already strong position in cancer treatments. In addition, in February, Novartis acquired CoStim Pharmaceuticals, a Cambridge, MA-based, privately held biotechnology company focused on harnessing the immune system to eliminate immune-blocking signals from cancer. The move is intended to broaden Novartis’ cancer immunotherapy research program. Novartis will add late discovery stage immunotherapy programs directed to several targets, including PD-1.
In May Novartis acquired non-U.S. rights from Ophthotech for OAP030 (Fovista) for wet AMD. Also of note, in July personalized cell therapy CTL019 for leukemia received FDA breakthrough therapy designation.
Other highlights in 2014 included the submission of regulatory applications in the EU and U.S. for LCZ696 in chronic heart failure, an area of high unmet medical need. Novartis also submitted for approval NVA237 and QVA149 in the U.S. for chronic obstructive pulmonary disease (COPD). Cosentyx, formerly AIN457, received regulatory approval in Japan for psoriasis and psoriatic arthritis, as well as positive recommendations in the EU and U.S. for psoriasis. Other products that received regulatory approval in 2014 included Xolair for chronic spontaneous urticarial, also known as chronic idiopathic urticarial, in the EU and U.S., and Zykadia for ALK+ non-small cell lung cancer in the U.S.
In the Sandoz division, products are focused on retail generics, biopharmaceuitcals and oncology injectables, and anti-infectives. Biosimilars, which are follow-on versions of complex biologic drugs, made a strong contribution to growth, with sales rising 23% to $514 million globally.
In May, Sandoz was the first to apply for approval of a biosimilar in the U.S. under the new biosimilar pathway created in the Biologics Price Competition and Innovation Act of 2009, with filgrastim, which is used to decrease the incidence of infection among cancer patients receiving chemotherapy. In July, Sandoz announced FDA acceptance of a biosimilar application for filgrastim, a version of Amgen’s Neupogen.
Sandoz leads the industry with six biosimilars in Phase III trials or registration. Three Sandoz biosimilar products occupy the number one position in market share in their respective categories—Omnitrope, a human growth hormone; Binocrit for anemia; and filgrastim under the brand name Zarzio.
Sandoz had net sales of $9.6 billion in 2014, up 4% from the prior year, driven by a 15 percentage points increase in volume, more than offsetting 8 percentage points of price erosion.
Performance was driven by strong retail generics and biosimilars sales growth in Asia, excluding Japan, (+15%), the U.S. (+14%), and Latin America (+10%). Sales growth in Western Europe, excluding Germany, was solid at 4%.
In addition, Novartis’ efforts to expand its presence in emerging growth markets such as Asia, Africa and Latin America continued to show good results. Net sales in those markets rose 11% to $15.3 billion, led by China, up 15%, and by Brazil, up 18%.Innovation yields approvals.
In 2014, Novartis’ R&D efforts yielded 13 approvals in key markets, as well as 15 regulatory filings. For example, in March, Xolair was approved in the EU for chronic spontaneous urticaria and in the U.S. for chronic idiopathic urticaria, a severe skin condition characterized by hives. In April, Zykadia was approved in the U.S. for the treatment of ALK+ non-small cell lung cancer. In December, the company received approval in Japan for Cosentyx (formerly AIN457) for the treatment of psoriasis and psoriatic arthritis. Cosentyx also received positive recommendations from advisory bodies in the EU and U.S. for psoriasis.
Novartis also reached major milestones with promising pipeline products, including LCZ696 in chronic heart failure and CTL019 in certain forms of leukemia. CTL019, a personalized cell therapy for cancer being developed with the University of Pennsylvania in the U.S., received breakthrough therapy designation from the FDA, marking the fifth such designation for therapies under development by Novartis, including Bexsero, Zykadia, RLX030 and BYM338.
Oncology. A number of cancer drugs moved forward in late-stage development in 2014. For instance, LEE011, a CDK 4/6 inhibitor, showed promising results in breast cancer patients and is entering full development across multiple indications. And BKM120, a pan-PI3K inhibitor being developed in multiple tumor types, began Phase III trials for breast cancer, with results expected in 2015. Preliminary results from two pilot clinical trials of CTL019 showed that 27 of 30 patients with acute lymphoblastic leukemia experienced complete remission, suggesting it could become a potentially transformative treatment.
Cardiovascular. Novartis had success during the year with trials of LCZ696, an investigational treatment for chronic heart failure. Data from a study of 8400 cardiovascular patients showed that LCZ696 lowered the chances of death or hospitalization by 20% compared to the standard treatment for heart failure. Researchers stopped the study six months early due to compelling efficacy. LCZ696 works by relaxing the blood vessels and stimulating the kidneys to excrete sodium and water, relieving strain on the heart.
Immunology and Dermatology. Novartis achieved positive results of Phase III studies of Cosentyx for two additional indications: psoriatic arthritis and ankylosing spondylitis, a chronic inflammation of the joints in the spine. Cosentyx inhibits interleukin-17A, a protein involved in the inflammatory process. Global regulatory filings are planned in 2015 for Cosentyx for psoriatic arthritis and ankylosing spondylitis.
Eye care. Novartis licensed Google “smart lens” technology in July. Alcon is working with Google to develop products such as contact lenses to monitor glucose levels in patients’ tear fluid, as well as lenses that use tiny sensors to help wearers focus at any range.
Biosimilars. Sandoz filed a marketing application in the US for a proposed biosimilar, one of six in Phase III clinical trials or undergoing registration. The drug, which stimulates white blood cell production in some cancer patients undergoing chemotherapy, is called Zarzio (filgrastim) in Europe and is a proposed biosimilar to Neupogen from Amgen.
Having taken the spot of Top Dog in 2014 Novartis has remained in pole position this year. While it has staved off expiries for some of its blockbuster drugs, the company still has looming expiries in 2016 and has invested heavily in R&D with the highest spend across the market sector. While trying to reshape the culture of the company, it has also tried to transform its drug portfolio, investing more time and effort in niche sectors of the market for diseases within the developing world. The announcement in August of an exclusive alliance with the Global Alliance for TB Drug Development and its continued work in drug development for parasitic diseases such as malaria, dengue fever and human African trypaosamiasis (HAT or sleeping sickness) may be where its future lies. The other new feather in its cap was the announcement that Alcon will market the new Google ‘smart lens’ technology, signaling a move into new pastures in the medical device field. Encompassing the diabetes sector, where Novartis has extensive experience, could be a clever move. Novartis hasn’t forgotten its mainstay in cancer therapies though, announcing a collaboration with BMS in NSCLC and more recently in March of this year creating a partnership with Aduro Biotech in order to accelerate its immunotherapy efforts. As things stand, its multi-faceted development pathway looks good for the year ahead. —Adele Graham-King |
Novartis has entered into a clinical collaboration with Bristol-Myers Squibb (BMS) to evaluate the safety, tolerability and preliminary efficacy of three molecularly targeted compounds in combination with BMS’s investigational PD-1 immune checkpoint inhibitor, Opdivo (nivolumab), in Phase I/II trials of patients with non-small cell lung cancer (NSCLC). Both studies will be conducted by Novartis. One trial will evaluate the combination of Opdivo with Zykadia (ceritinib), an FDA-approved treatment for patients with anaplastic lymphoma kinase-positive (ALK+) metastatic NSCLC who have progressed on or are intolerant to crizotinib. A second study will investigate Opdivo with INC280, a potent and highly selective inhibitor of c-MET receptor tyrosine kinase, and separately with EGF816, a potent, third-generation EGFR tyrosine kinase inhibitor that is active against T790 mutations. INC280 and EGF816 are currently being investigated in various Phase I/II NSCLC trials. This collaboration with BMS further advances Novartis’ development efforts in the field of immunotherapy. Earlier this year, Novartis acquired CoStim Pharmaceuticals Inc., adding late discovery stage immunotherapy programs focused on key oncogenic targets, including PD-1. Novartis is also actively investigating the potential of chimeric antigen receptor (CAR) T cell technologies in the treatment of various liquid and solid tumors through its alliance with the University of Pennsylvania. |