Novartis provides progress update on plans to integrate Hexal and Eon Labs with Sandoz

Basel, April 26, 2005 - Novartis reports on key milestones in the integration planning to merge Hexal AG and Eon Labs, Inc. with Sandoz.

 

"In the few weeks since the acquisitions were announced in February, we have made great progress in developing our plans to integrate the three companies," said Dr. Andreas Rummelt, CEO of Sandoz. "At the same time, we sustained the momentum in our business, achieving our targets and addressing the needs of patients and physicians who want high-quality, low-cost generics."

 

Integration planning activities are under way to ensure the completion of the transaction and successful operation of the combined company after the closings, which are expected to be completed in the second half of 2005. In the meantime, all three companies continue to operate separately as independent, directly competing companies.

 

"The goal of our integration planning is to be fully prepared to operate as one unified, aligned company immediately following regulatory approvals," Dr. Rummelt said.

 

Action steps that have been completed include the creation of an Integration Steering Committee and Integration Office to lead all integration-related activities. Approximately 70% of Country General Managers have been nominated as part of a process that will be completed by early May. All candidates are assessed by top executives of Sandoz and Hexal  based on their business performance, experience and leadership skills.

 

Specific strategies based on publicly available data have been charted out for each country.  This includes the decision under which brand the new company will operate in the various countries. In this context, it has been decided to maintain both the Hexal and Sandoz names in Germany.

 

Holzkirchen, Germany, has been chosen as the new location of the global headquarters for Sandoz.

 

The primary reason for this choice was the proximity to major operational sites of the Hexal commercial, development and production functions in Holzkirchen and the Sandoz production site in Kundl, Austria. The emerging biotechnology industry in Munich was an additional factor. The importance of Germany - the No.2 generics market in the world and one of the fastest-growing markets - and government support on the local and state levels also played an important role. Approximately 150 employees will be located in the global headquarters in Holzkirchen, which also will be the site for regional commercial operations as well as the Hexal German commercial operations of the new company.

 

The Austrian Government was very supportive in facilitating the implementation of the headquarters of the new company in Vienna, but the proximity to operations in the end outweighed all of the advantages of maintaining the headquarters in Vienna.

 

However, the Kundl site in Tyrol, which currently employs approximately 2,700 people, will remain the headquarters of the Anti-infectives business unit. In addition, Novartis is evaluating the possibility of further strengthening the biopharmaceutical operations by investing in a plant expansion and adding approximately 50 new jobs at this site. The final decision will depend on the outcome of ongoing discussions with the Tyrolean government. The departure of the Sandoz headquarters from Vienna will have no impact on the activities of the pharma research center in Vienna.

 

Selected Technical Operations functions will be transferred to the global headquarters of Novartis in Basel, Switzerland, in order to take advantage of the existing infrastructure and of possible synergies with Logistics, Purchasing and Finance functions. The company expects to add some 30 positions in Basel.  

 

Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group's businesses achieved 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 81,400 people and operate in

over 140 countries around the world. Further information is available at www.novartis.com.

 

Sandoz, a Novartis company, is a world leader in generic pharmaceuticals and develops, manufactures and markets these medicines as well as pharmaceutical and biotechnological active ingredients. Decades of experience and know-how make Sandoz a renowned partner in pharmaceuticals, biogenerics and anti-infectives. Altogether, Sandoz employs 13,000 people in over 110 countries and reported sales of USD 3.0 billion in 2004.

 

This document contains "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act.  Forward-looking statements are statements that are not historical facts and are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "will", or similar expressions, or by express or implied discussions regarding strategies, plans and expectations (including synergies).  These statements include, but are not limited to, financial projections and estimates and their underlying assumptions, statements regarding the benefits of the business transactions described herein, including future financial and operating results. Such statements reflect the current plans, expectations, objectives, intentions or views of management with respect to future events, are based on the current beliefs and expectations of management and are subject to significant risks, uncertainties and assumptions.  Management's expectations could be affected by, among other things, competition in general, the general economic environment and other risks such as, but not limited to, those referred to in Novartis AG's 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 differ materially from those set forth or implied by the forward-looking statements.

 

The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: the ability to obtain governmental approvals for the transaction on the proposed terms and schedule; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; social and political conditions such as war, political unrest and terrorism or natural disasters; and general economic conditions and normal business uncertainty and competition and its effect on pricing, spending, third-party relationships and revenues.  These forward-looking statements speak only as of the date of this press release and no undertaking has been made to update or revise them if there are changes in expectations or if any events, conditions or circumstances on which any such forward looking statement is based.

 

Securityholders of Eon are urged to read the tender offer statement relating to the tender offer when such document becomes available. The tender offer statement will contain important information. Eon Securityholders will be able to obtain a free copy of the tender offer statement and other filed documents when they become available at the SEC's internet site (http://www.sec.gov).

 

 

 

John Gilardi
Novartis Global Media Relations
+41 61 324 3018 (direct)
+41 61 324 2200 (main)
john.gilardi@novartis.com

 

Kurt Leidner
Sandoz Communications
+43 1 260 68 9611 (direct)
+43 1 260 680 (main)

 

 

German version is available through the following link: