Novartis publishes updated 2015 segment financials reflecting new division structure

  • Updated segment financials reflect transfer of Ophthalmic Pharmaceuticals franchise from Alcon to Pharmaceuticals, and 19 mature products from Pharmaceuticals to Sandoz, as outlined in Q4 and FY 2015 earnings release
  • No change in audited 2015 Consolidated Financial Statements for the total Group

- Novartis announced today that it has published updated 2015 quarterly and full year segment financials reflecting the new division structure, as announced in the January 27, 2016 earnings release, as if the transfers had taken place from January 1, 2015. The updated segment financials are provided in accordance with the requirements of IFRS, and to aid comparability of 2016 quarterly and full year results, which will be reported on the new division structure.

The updated segment financials reflect the transfer of the Ophthalmic Pharmaceuticals franchise from the Alcon Division to the Pharmaceuticals Division (USD 3.8 billion of net sales in 2015), and the transfer of a portfolio of 19 mature products from the Pharmaceuticals Division to the Sandoz Division (USD 0.9 billion of net sales in 2015).

The updated operating income for each segment reflects all costs attributable to operation of the transferred businesses. The updated segment financials do not include any cost synergies. Future operating costs are expected to be optimized over time as the transferred businesses are fully integrated.

These changes will be reflected from Q1 2016 for financial reporting purposes, with transfer of operational control from April 1, 2016.

A presentation of the updated segment financials is available on the Novartis website at­estors/event-calendar.

2016 Group outlook reiterated
Barring unforeseen events

The presentation also reiterates the guidance given in the January 27, 2016 earnings release. Based on the new division structure, we expect divisional net sales performance in constant currencies (cc) in 2016 to be as follows:

  • Pharmaceuticals: broadly in line with 2015 to a slight decline (mid-single digit growth excluding Gleevec /Glivec generic impact)
  • Alcon: low single digit growth
  • Sandoz: low to mid-single digit growth

Group net sales and core operating income in 2016 are expected to be broadly in line with the prior year (cc), after absorbing the impact of generic competition. Generic competition impact on sales is expected to be as much as USD 3.2 billion compared to USD 2.2 billion in 2015.

Excluding Gleevec /Glivec generic impact, we would expect Group net sales to grow mid-single digit (cc) and Group core operating income to grow in the mid-teens (cc).

These comparisons are versus 2015 continuing operations.

Investor conference call
We will hold an investor and analyst call today at 14:00 CEST (13:00 BST, 08:00 EDT). Samir Shah, Global Head of Investor Relations, will lead the call and walk through the presentation of the updated segment financials. There will be an opportunity for questions at the end. Dial in 5-10 minutes prior to the start time using the confirmation code and numbers below.