BASEL, Switzerland, July 14, 2005 (PRIMEZONE) -- Novartis AG (NYSE:NVS):
-- Group first-half net sales rise 11% (+8% lc) thanks to dynamic
performances by all divisions
-- Strong expansion of Oncology and Cardiovascular franchises
underpinning double-digit Pharmaceuticals sales growth of 12% in
USD (+9% lc)
-- Group operating income advances 11% as robust Pharmaceuticals
performance and impact of productivity initiatives offset
restructuring-related decline in Sandoz
-- Net income up 12% to USD 3.1 billion in first half as EPS expands
15%
-- Sandoz acquires Hexal in June, Eon Labs purchase expected in 2005
third quarter
-- Key pipeline projects on track, LAF237 (diabetes), SPP100
(hypertension) and LDT600 (hepatitis B) set to report first Phase
III data in the second half of 2005
Key figures
First half
H1 2005 H1 2004 % Change
% of % of
net net
USD m sales USD m sales USD lc
Net sales 15,140 13,612 11 8
Pharmaceuticals 9,921 8,882 12 9
Sandoz 1,635 1,456 12 8
Consumer Health 3,584 3,274 9 7
Operating income 3,529 23.3 3,169(1) 23.3 11
Net income 3,123 20.6 2,778(1) 20.4 12
Basic earnings per
share/ADS USD 1.34 USD 1.17(1) 15
(1) Pro forma basis
Second quarter
Q2 2005 Q2 2004 % Change
% of % of
net net
USD m sales USD m sales USD lc
Net sales 7,799 6,973 12 9
Pharmaceuticals 5,132 4,572 12 9
Sandoz 832 737 13 9
Consumer Health 1,835 1,664 10 8
Operating income 1,849 23.7 1,715(1) 24.6 8
Net income 1,646 21.1 1,508(1) 21.6 9
Basic earnings per
share/ADS USD 0.70 USD 0.63(1) 11
(1) Pro forma basis: This report reflects the adoption of new IFRS accounting standards that became effective on January 1, 2005, and other presentational changes. In order to provide a comparable basis, the 2004 pro forma statements reflect these changes as if they had been in effect already during 2004.
All product names appearing in italics are trademarks of Novartis Group Companies
Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis, said, "In the first half year, our broad health-care portfolio delivered good results. Our Oncology and Cardiovascular medicines continued their dynamic growth based on unique patient benefits. In the second half of 2005, we expect new study results for several innovative compounds. The acquisitions of Hexal and Eon Labs progress as planned. Overall, we are on track to achieve our objectives for 2005."
Net sales
First half
-- Group net sales rose 11% (+8% in local currencies, or lc) to USD
15.1 billion in the first half of 2005 as strong Pharmaceuticals
growth and a good Sandoz performance led to market share gains.
Overall, volume expansion contributed eight percentage points to
first-half sales growth, acquisitions provided one percentage
point, and currency translation led to an increase of three
percentage points. Lower selling prices led to a decline in sales
of one percentage point.
-- Pharmaceuticals net sales were up 12% (+9% lc) to USD 9.9
billion, fueled by the innovative product portfolio and Oncology
and Cardiovascular franchises. The one-time prior-year adjustment
of USD 62 million to reflect the change in accounting for sales
rebates in the U.S. had a minor impact on first-half growth.
Excluding this adjustment, first-quarter net sales would have
risen 13% (+10% lc) from the same period a year ago, while
second-quarter sales were not affected and rose 12% (+9% lc).
-- Sandoz net sales climbed 12% (+8% lc) to USD 1.6 billion,
supported by the European retail generics performance as well as
contributions from the Durascan and Sabex acquisitions completed
in 2004. The results of Sandoz do not yet include any sales from
the Hexal acquisition, completed on June 6, as sales and income
of this business will only be consolidated from the third quarter
of 2005 onwards.
-- Consumer Health net sales advanced 9% (+7% lc) to USD 3.6
billion, led by double-digit sales growth in Medical Nutrition
and Animal Health.
Second quarter
Group net sales up 12% to USD 7.8 billion
All three Divisions delivered double-digit growth, leading to an increase of 12% (+9% lc) for the Group in the second quarter.
Novartis increased its share of the global health-care market to 4.6% for the first five months of 2005, up from 4.4% in the same year-ago period, according to IMS Health.
Pharmaceuticals net sales rise 12% to USD 5.1 billion
Led by the key brands Diovan, Gleevec/Glivec, Lotrel, Femara and Zometa, net sales for the Pharmaceuticals Division rose 12% (+9% lc) in the second quarter.
General Medicines (excluding Mature Products) reported a net sales gain of 14% (+12% lc), led by a 19% (+17% lc) improvement in Cardiovascular franchise sales despite increased competition for Diovan and a slowdown in the U.S. branded antihypertension market. Net sales in Specialty Medicines (Oncology, Transplantation and Immunology, and Ophthalmics) advanced 18% (+14% lc). Oncology net sales surged 23% (+20% lc) based on the ongoing growth of Gleevec/Glivec as well as Femara, while Ophthalmics net sales were up 12% (+8% lc) as Visudyne performed well in many key markets worldwide.
Second-quarter sales in the U.S. rose 9% to USD 2.0 billion, supported by good performances from Diovan, Lotrel and Zelnorm as well as the Oncology franchise (+16%). In Europe, net sales rose 12% (+7% lc), while net sales advanced 10% (+7% lc) in Japan and 32% (+21% lc) in Latin America, thanks to excellent growth from Diovan and Gleevc. Sales in the emerging growth markets rose 29% (+23% lc), with leading performances in Turkey, China and Russia.
Sandoz net sales up 13% to USD 832 million
Second-quarter sales rose 13% (+9% lc), led by retail generics in France, Eastern Europe (particularly Russia) and contributions from the 2004 acquisitions of Durascan and Sabex. Strong sales of authorized generic products supported U.S. sales growth, where pricing conditions remained very competitive. The results of Sandoz do not yet include any sales from the Hexal acquisition, completed on June 6, as sales and income of this business will only be consolidated from the third quarter of 2005 onwards.
Consumer Health net sales up 10% to USD 1.8 billion
Net sales were up 10% (+8% lc) in the second quarter amid ongoing strong double-digit sales growth in Animal Health and low-double-digit sales growth for OTC as well as continued high-single-digit USD sales expansion in Medical Nutrition, CIBA Vision and Infant and Baby. Growth in Animal Health was driven by the U.S. as well as Latin America and Asia. A late cough and cold season helped OTC sales in the U.S. and Europe, while Medical Nutrition expanded sales at double-digit rates in North America, Japan and Australia. Infant and Baby benefited from the impact of new product launches in the U.S. CIBA Vision continued reinforcing its No. 2 worldwide market position thanks to the successful launch of the breathable contact lenses O2Optix.
Operating income
First half
H1 2005 H1 2004(1) Change
% of % of
net net
USD m sales USD m sales in %
Pharmaceuticals 2,975 30.0 2,624 29.5 13
Sandoz 189 11.6 223 15.3 -15
Consumer Health 575 16.0 539 16.5 7
Corporate income and
expense, net -210 -217 -3
Total 3,529 23.3 3,169 23.3 11
(1) Pro forma basis
Second quarter
Q2 2005 Q2 2004(1) Change
% of % of
net net
USD m sales USD m sales in %
Pharmaceuticals 1,611 31.4 1,373 30.0 17
Sandoz 79 9.5 132 17.9 -40
Consumer Health 289 15.7 274 16.5 5
Corporate income and
expense, net -130 -64
Total 1,849 23.7 1,715 24.6 8
(1) Pro forma basis
First half
-- Group operating income rose 11% to USD 3.5 billion, supported by
the strong Pharmaceuticals business expansion.
-- Pharmaceuticals operating income was up 13% to USD 3.0 billion
despite continued strong investments in R&D and launch
investments in new products and indications.
-- Sandoz operating income declined 15% to USD 189 million, mainly
impacted by restructuring charges and price pressures in the U.S.
-- Consumer Health operating income climbed 7% to USD 575 million,
driven by strong sales performance and despite major investments
to strengthen key brands, including the launch of O2Optix contact
lenses.
Second quarter
Group operating income up 8% to USD 1.8 billion
Operating income rose at a slower pace than net sales in the second quarter, as a strong Pharmaceuticals expansion and Consumer Health contribution were offset by Sandoz, which was affected by the impact of price pressure in the US and one-time restructuring and other charges.
Pharmaceuticals operating income rises 17% to USD 1.6 billion Operating income rose 17% in the second quarter, outpacing net sales growth based on strong productivity gains in Cost of Goods Sold (COGS), General and Administrative and Marketing and Sales more than offsetting R&D investments. The operating margin improved to 31.4%, up 1.4 percentage points from 30.0% in the year-ago quarter. COGS declined 1.2 percentage points in the second quarter to 15.3% of net sales based on improvements in productivity and product mix. Marketing and Sales expenses fell 0.1 percentage points to 32.8% of net sales as productivity gains more than offset targeted investments to support Femara and Enablex in the U.S. as well as to expand operations in China and Turkey. Research and Development expenses rose faster than sales, climbing 15% and accounting for 17.9% of net sales. Key factors were investments in Phase III trials for LAF237 (diabetes), Aclasta (osteoporosis), SPP100 (hypertension), LDT600 (hepatitis B) as well as investments in the Novartis Institute for BioMedical Research (NIBR). Other Income and Expense was flat compared to the year-ago quarter, while General and Administrative expenses improved to 3.1% of sales, down 0.3 percentage points from the year-ago quarter.
The second-quarter included a divestment gain of USD 96 million from the sale of license rights for Restasis(r) (cyclosporine ophthalmic emulsion) to Allergan (excluding royalties until the time of sale in April 2005). In the prior-year quarter, license income of USD 5 million was recorded.
Sandoz operating income declines 40% to USD 79 million
Operating income in the second quarter declined against a strong previous-year performance, mainly as a result of one-time expenses of USD 30 million for restructuring and other charges. The overall operating margin was affected negatively by the one-off items as well as price pressure in the U.S., particularly for AmoxC and omeprazole, while Marketing and Sales expenses as well as General and Administrative expenses were stable as a percentage of net sales.
Consumer Health operating income up 5% to USD 289 million
Operating income in the second quarter increased 5%, at a slower pace than net sales as a result of higher Marketing and Sales expenditures, particularly in CIBA Vision for the O2Optix launch, as well as R&D investments to further strengthen product pipelines in OTC and Medical Nutrition.
Group net income rises 9% to USD 1.6 billion
Net income for the second quarter rose 9% to USD 1.6 billion compared to USD 1.5 billion (pro forma) in the year-ago period. Net income as a percentage of net sales fell slightly to 21.1% from 21.6% in the 2004 second quarter.
Sandoz preparing for Eon integration following Hexal acquisition
Novartis has made significant progress toward creating the world leader in generic pharmaceuticals through the previously announced strategic acquisitions of Hexal AG of Germany and Eon Labs, Inc. (Nasdaq:ELAB) of the U.S.
Novartis completed the acquisition of Hexal AG on June 6. Only a provisional consolidated balance sheet of Hexal AG was available for consolidation at the end of the second quarter of 2005. Novartis will record in the third quarter 2005 report the results of Hexal retroactive to June 6. For the full year, Novartis expects the consolidation of Hexal and Eon Labs (based on preliminary estimates) to have a net negative effect on operating income of between USD 150 million and USD 250 million. This estimate reflects the operating income contribution from the two companies offset by a number of one-time costs, which include integration, restructuring and inventory step-up costs. The negative impact on Group net income I expected to be between USD 250 million and USD 350 million, reflecting in addition lower net financial income based on reduced net liquidity. Based on the current sales performances of the two companies, Novartis anticipates the second-half sales contribution will be in excess of USD 1.0 billion.
Novartis anticipates receiving U.S. regulatory approval during the third quarter of 2005 to acquire Eon Labs after submitting a response in June for additional information to the U.S. Federal Trade Commission. The tender offer to acquire the publicly held shares of Eon Labs, set at USD 31.00 per share, is currently scheduled to expire on July 20, 2005, and is subject to completion of the U.S. regulatory process and the contemporaneous purchase of a 67.7 percent stake in Eon Labs from its control shareholder.
These strategic acquisitions, which were announced in February, combine Sandoz's global geographic presence and expertise in anti-infectives with Hexal's leadership in Germany and strong track record of successful product development as well as Eon Labs' strong position in the U.S. for "difficult-to-make" generics. After the acquisitions are completed, Sandoz will be the global leader in generics with combined pro forma 2004 sales of USD 5.1 billion, a portfolio of over 600 active ingredients in more than 5,000 dosage forms and more than 20,000 employees.
Group outlook (barring any unforeseen events)
Based on the half-year performance, Novartis remains confident of achieving its key financial objectives for 2005. Further gains in market share are expected to keep Novartis positioned as one of the fastest-growing pharmaceutical companies, delivering high single-digit net sales growth for the Group and Pharmaceuticals in local currencies.
Barring any unforeseen events, Group operating and net income should reach new record levels on a comparable basis (and excluding the impact of the Hexal and Eon Labs acquisitions).
Pharmaceutical business and key product highlights
(Note: All net sales and percentage figures refer to second-quarter2005 results)
General Medicines
Diovan (USD 912 million) (+20%; +18% lc; +15% U.S.), the No. 1 angiotensin-receptor blocker (ARB) worldwide, maintained strong growth rates despite aggressive competition in key markets and a slowdown in the overall ARB market growth in the U.S., where Diovan remained the leader with 38% share of the ARB market (Source: IMS). Germany, France and Italy led sales in Europe, where Diovan became in June the only antihypertensive of its kind to gain EU approval to treat both heart attack survivors (VALIANT trial) and patients with heart failure (Val-HeFT trial).
Lotrel (USD 278 million only in the U.S.) (+22%), the No. 1 fixed combination treatment for hypertension in the U.S., remained the top-ranked branded combination antihypertensive therapy. Lotrel, along with Diovan, also benefited from disease awareness and education initiatives in the U.S.
Lamisil (USD 315 million) (+6%; +4% lc; +1% U.S.), the leading treatment worldwide for fungal nail infections, performed well and maintained its U.S. market leadership position despite the introduction of a generic version of the competitor itraconazole. Sales growth in the U.S., however, was negatively affected by inventory de-stocking. France continued to see high sales, maintaining its position as the largest European market.
Zelnorm/Zelmac (USD 102 million) (+34%; +35% lc +37% U.S.), a novel therapy for irritable bowel syndrome with constipation (IBS-C) and the first and only prescription medicine for chronic idiopathic constipation, kept up a robust double-digit growth rate, reaching a 68% share of the IBS market in the US. Initiatives in the U.S. to grow awareness about the benefits of Zelnorm for treating IBS-C and chronic constipation supported sales. Sales outside the U.S. were up 28% for the quarter.
Elidel (USD 58 million) (-38%; -39% lc; -50% U.S.) reported lower sales based on a decline in U.S. prescriptions for the eczema treatment. Novartis is still in product labeling discussions with the FDA after an FDA Advisory Committee in February recommended the inclusion of a boxed warning for Elidel and Protopic(r) (Astellas) relating to a theoretical risk of lymphoma. Novartis and many independent medical experts do not agree that such an action would be justified. Novartis remains confident in the safety and efficacy of Elidel in its approved indications. Sales outside the U.S. rose 13% in the quarter.
Specialty Medicines(Note: All net sales and percentage figures refer to second-quarter2005 results)
Oncology
Gleevec/Glivec (USD 537 million) (+33%; +28% lc; +18% U.S.), for all stages of Philadelphia-chromosome positive (Ph+) chronic myeloid leukemia (CML) and certain forms of gastro-intestinal stromal tumors (GIST), maintained strong growth rates in the second quarter. This dynamic performance was achieved through further penetration of both the CML and GIST markets as well as an increase in the average daily dose. Promising new data presented at the American Society of Clinical Oncology (ASCO) assessing high-dose Glivec (800mg) in patients with chronic phase Ph+ CML further demonstrated the importance of optimizing patient response to therapy.
Zometa (USD 312 million) (+13%; +11% lc; +7% U.S.), the leading intravenous bisphosphonate for bone metastases, reached a record 73% market share in the U.S. during the second quarter, supported in part by greater use in prostate and lung cancer. After achieving blockbuster status in 2004, growth rates for Zometa have moderated due to high penetration rates in breast cancer and myeloma as well as increasing competition. Strong 12-month data from the Z-FAST study investigating the prevention of bone loss in women with early breast cancer receiving aromatase inhibitor therapy demonstrated an important potential new use of Zometa.
Femara (USD 136 million) (+48%; +44% lc; +58% U.S.), a leading therapy for early and advanced breast cancer in postmenopausal women, continued to grow strongly following its European approval for use in the extended adjuvant setting (after standard tamoxifen treatment), an indication approved in more than 75 countries, including the U.S. Applications have now been filed in both the U.S. and Europe for use of Femara in the adjuvant setting (post-surgery). Data from two landmark trials -- MA-17 in the extended adjuvant setting and BIG 1-98 in adjuvant treatment -- have supported the growth of Femara and its position as a major advance in the treatment of women with breast cancer. Since publication of the first MA-17 results in October 2003, monthly prescriptions for Femara in the U.S. have risen more than 190%.
Sandostatin (USD 232 million) (+19%; +16% lc; +18% U.S.), a leading treatment for patients with the hormone condition acromegaly as well as for symptoms of gastro-entero-pancreatic neuroendocrine tumors, achieved high double-digit growth rates due to the performance of the long-acting LAR version, while the subcutaneous version faced generic competition in the U.S.
Ophthalmics
Visudyne (USD 129 million) (+18%; +15% lc; -6% U.S.), a top treatment for "wet" AMD (age-related macular degeneration), the leading cause of blindness for people over age 50, advanced in the second quarter, helping the business unit to report an 12% (+8% lc) rise in second-quarter sales. Visudyne sales grew in many key markets worldwide, with sales outside the U.S. up 31%. In the U.S., sales declined slightly due to new competition.
Transplantation
Sales rose 3% (-1% lc) during the second quarter, primarily the result of generic competition for the Neoral/Sandimmun franchise (-3%; -6% lc; -21% U.S.). The decline in the U.S. was partially compensated for by growth in Japan and select European countries, including France and Germany. Myfortic, for use in kidney transplantation, gained market share worldwide and is now marketed in most major countries, including Italy. Certican received Swiss approval on May 18, allowing for regulatory submissions in several countries in Asia, the Middle East and Europe.
Product and regulatory update
Novartis has made good progress toward its 2005 objectives for key development projects and regulatory milestones. Among the second-quarter developments:
-- Aclasta(1) (zoledronic acid 5 mg solution for infusion) was
launched in Germany, its first market worldwide, in May for the
treatment of Paget's disease of the bone following EU approval in
April 2005. Novartis is working with the FDA to gain approval
for Aclasta in the U.S. for this indication after receiving an
"approvable" letter in March. Aclasta is also being developed as
a once-yearly treatment for osteoporosis and other metabolic bone
disorders.
(1) Aclasta is the approved name in the European Union, the U.S.
name is under FDA review.
-- Exjade, a once-daily oral iron chelator for the treatment of
chronic iron overload due to blood transfusions, has received
priority review from the FDA and a number of other health
authorities, including Australia, Canada and Switzerland.
-- Xolair is under review by European regulatory authorities. This
novel agent, already approved in the U.S., offers a breakthrough
in treating asthma, particularly as a unique add-on therapy for
adults and adolescents with moderate to severe persistent asthma
who remain inadequately controlled with conventional medicines.
Xolair is being developed in collaboration with Genentech and
Tanox.
-- AMN107 has entered a pivotal Phase II clinical trial for patients
with Philadelphia chromosome-positive (Ph+) chronic myeloid
leukemia (CML) who are resistant or intolerant of Gleevec as well
as patients with relapsed or refractory Ph+ acute lymphoblastic
leukemia (ALL), system mastocytosis or hypereosinophilic syndrome
/ chronic eosinophilic leukemia. The decision to proceed to Phase
II was based on Phase I clinical data in Gleevec-resistant
patients that showed more than 90% of patients with chronic Ph+
CML achieved a hematologic response, and more than 60% of
patients in the advanced stages of Ph+ CML achieved similar
responses.
-- FTY720, in development as a once-daily oral treatment for
multiple sclerosis, is planned to start Phase III trials in the
fourth quarter of 2005. Results of a six-month Phase II trial
presented in June showed a significant reduction in inflammatory
disease activity and clinical relapse rate as soon as after two
months of treatment. Results for 12 months of treatment from the
trial's extension will be presented in September.
-- Preliminary results of the first of two Phase III studies in
transplantation indicated that FTY720 narrowly missed the study
endpoint of non-inferiority to MMF. Further guidance on FTY720 in
transplantation is planned to be provided when results of the
second Phase III study become available in the fourth quarter of
2005.
-- The 12-month Phase III MARINA study for the investigational drug
Lucentis (ranibizumab) met its primary efficacy endpoint of
maintaining vision in patients with "wet" age-related macular
degeneration (AMD). In addition, patients treated with Lucentis
had, on average, a significant improvement in visual acuity,
while placebo-treated patients experienced on average a
significant decline. Data from the trial will be presented at the
23rd Annual Meeting of the American Society of Retina Specialists
(ASRS) on July 18.
-- Novartis is making good progress in several Phase III clinical
trials for compounds in late-stage development, many of which
have the potential to be first-in-class medicines that address
significant medical needs. Among the compounds expected to have
Phase III data by the end of 2005 are LAF237 (vildagliptin) for
the treatment of type 2 diabetes, SPP100 (aliskiren) for the
treatment of hypertension and LDT600 (telbivudine) for use in
treating hepatitis B.
-- A series of licensing agreements were completed in the second
quarter of 2005 that will further strengthen the Novartis
development pipeline. These agreements include NVA237, an
inhaled, long-acting, anti-muscarinic agent for the treatment of
chronic obstructive pulmonary disease (COPD) with Vectura Group
plc and Arakis that is currently in Phase II trials, ANA975 in
Phase I development for the treatment of chronic hepatitis C with
Anadys Pharmaceuticals and RSV604, a first-in-class therapy in
Phase I/II trials for the treatment of respiratory syncytial
virus (RSV) infections, the most common respiratory infection in
infants, with Arrow Pharmaceuticals.
-- Novartis and Procter & Gamble Pharmaceuticals, Inc. (P&GP), a
division of The Procter & Gamble Company, announced in July that
they have entered into an agreement for the co-promotion and
further development of Enablex(r) (darifenacin) extended release
tablets for the treatment of overactive bladder (OAB) in the
United States. Novartis will continue to record revenues for
Enablex and will pay royalties to P&GP based on the product's
performance.
Corporate
Corporate income and expense, net
Net corporate expenses were USD 130 million in the second quarter compared to an expense of USD 64 million in the year-ago period, mainly the result of an increase in the elimination of inter-divisional profit in inventory of USD 20 million and an increase in certain legal and product liability accruals. In the first six months, net corporate expenses were USD 210 million against an expense of USD 217 million in the prior year.
Financial income, net
Net financial income in the second quarter totaled USD 61 million, down from USD 98 million in the year-ago period. The overall second-quarter return on net liquidity was 4.8% compared to 7.3%, reflecting the low-yield environment and lower level of net liquidity following the payment of USD 5.3 billion for the Hexal acquisition on June 6. For the half year, net financial income was USD 106 million compared to USD 126 million in the 2004 period, leading to a return of 3.5% against 4.1 % in the prior year.
Result from associated companies
Associated companies provided a net contribution of USD 28 million in the second quarter compared to USD 14 million in 2004. The Group's 42% investment in Chiron Corporation contributed a loss of USD 16 million compared with income of USD 4 million in the prior-year period. The investment in Roche resulted in income of USD 41 million. This amount consists of an estimated USD 68 million share of Roche's net income for the 2005 second quarter, offset by charges of USD 27 million related to amortization of intangible assets. In the first half, associated companies generated income of USD 61 million against USD 56 million in the year-ago period.
Balance sheet
The Group's equity decreased by USD 0.9 billion in the first half of 2005 to USD 30.4 billion at June 30, 2005, as a result of the USD 2.1 billion dividend payment, a total of USD 0.4 billion in purchases of treasury shares and USD 1.7 billion of translation losses. This more than offset net income of USD 3.1 billion and other movements of USD 0.2 billion.
Net liquidity declined by USD 5.3 billion in the first half to USD 1.7 billion at June 30, 2005, from USD 7.0 billion at January 1, 2005, following the outlay of USD 5.3 billion for the Hexal acquisition. The debt/equity ratio at the end of the first half was 0.25:1 compared to 0.22:1 as of December 31, 2004.
During the second quarter, Novartis repurchased 0.2 million shares for USD 9 million through its share repurchase program via a second trading line on the SWX Swiss Exchange, bringing the total of shares repurchased in 2005 to 10.2 million for USD 0.5 billion. Since the start of the fourth program in August 2004, a total of 25.4 million shares have been repurchased for USD 1.2 billion.
Novartis is one of the few non-financial companies worldwide to have attained the highest credit ratings from Standard & Poor's and Moody's, the two benchmark rating agencies. S&P rates Novartis as AAA for long-term maturities and A1+ for short-term maturities, while Moody's has rated the company as Aaa and P1, respectively.
Cash flow
Cash flow from operating activities for the first half rose by USD 0.6 billion to USD 3.3 billion, mainly the result of the strong business expansion and strict management of working capital. In the second quarter, cash flow from operating activities was reduced by USD 0.4 billion to USD 1.3 billion, primarily due to the dividend withholding tax payment of USD 745 million occurring in the 2005 second quarter compared to the first quarter of 2004. Free cash flow (excluding any impact from the Hexal transaction) in the first half rose USD 0.5 billion to USD 0.8 billion despite a higher dividend payment in 2005.
Disclaimer
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 "will," "anticipate," "outlook," "expect," "pipeline," "potential," "planned," "will be," "intends to," or similar expressions, or by express or implied discussions regarding potential future sales of new or existing products, potential new products or potential new indications for existing products, or by other discussions of strategy, plans or intentions. Such statements reflect the current views of the Group with respect to future events and are subject to certain risks, uncertainties and assumptions. There can be no guarantee that any products will reach any particular sales levels, or that any new products will be approved for sale in any market, or that any new indications will be approved for existing products in any market. In particular, management's expectations could be affected by, among other things, new clinical data; unexpected clinical trial results; unexpected regulatory actions or delays or government regulation generally; the Group's ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and general public pricing pressures and other risks and factors referred to in the Group's current Form 20-F on file with the U.S. 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. 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 contained in this press release as a result of new information, future events or otherwise.
About Novartis
Novartis AG (NYSE:NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group's businesses achieved net sales of USD 28.2 billion and pro forma net income of USD 5.6 billion. The Group invested approximately USD 4.2 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 83,700 people and operate in over 140 countries around the world.
For further information please consult http://www.novartis.com.
Further Important Dates September 20, 2005 Pipeline update October 18, 2005 Nine-month and third quarter results January 2006 Full-year 2005 results Please find full media release in English attached. http://hugin.info/134323/R/1002329/153708.pdf Further language versions are available through the following links: German version is available through the following link:
http://dominoext.novartis.com/nc/ncprre01.nsf/0/6a5d22f72f245aebc125703d00730b9c
French version is available through the following link:
http://dominoext.novartis.com/nc/ncprre01.nsf/0/3d0cc09445451320c125703d0072f744