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Novartis AG (NVS) Joseph Jimenez on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 21, 2016 8:00 am ET


Joseph Jimenez - Chief Executive Officer

Samir Shah - Global Head-Investor Relations

F. Michael Ball - Chief Executive Officer, Alcon, Inc.

Harry Kirsch - Chief Financial Officer

David R. Epstein - Division Head-Novartis Pharmaceuticals and Member-Executive Board

Vasant Narasimhan - Chief Medical Officer & Head-Drug Development

Richard Francis - Division Head, Sandoz, Novartis AG


Jeffrey Holford - Jefferies LLC

Richard Vosser - JPMorgan Securities Plc

Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC

Matthew J. Weston - Credit Suisse Securities (Europe) Ltd.

Andrew S. Baum - Citigroup Global Markets Ltd.

Tim M. Race - Deutsche Bank AG (Broker UK)

Kerry Holford - Exane BNP Paribas

Graham Parry - Bank of America Merrill Lynch

Florent Cespedes - Société Générale SA (France)

Steve Scala - Cowen & Co. LLC

Vincent Meunier - Morgan Stanley & Co. International Plc

Michael Leuchten - Barclays Capital Securities Ltd.


Good morning and good afternoon, and welcome to the Novartis Q1 2016 Results Release Conference Call and live audio webcast. Please note that during the presentation, all participants will be in listen-only mode and the conference is being recorded. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends.

With that, I would like to hand over to Mr. Joe Jimenez, CEO of Novartis. Please go ahead, sir.

Joseph Jimenez - Chief Executive Officer

Thank you. I'd like to welcome everybody here today. Now, joining me on the Novartis end are Harry Kirsch, our CFO; we have David Epstein, Head of Pharma; Mike Ball, Head of Alcon; Richard Francis, Head of the Sandoz; and Vas Narasimhan, who's our new Global Head of Drug Development.

Now, before we start, I'd like Samir to read the Safe Harbor Statement. Samir?

Samir Shah - Global Head-Investor Relations

Good morning, everybody. The information presented in this conference call contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements.

Please refer to the company's Form 20-F on file with the U.S. Securities and Exchange Commission for a description of some of these factors.

Joseph Jimenez - Chief Executive Officer

Thanks, Samir. Okay. Starting on slide number four, we had a solid quarter. We absorbed the Gleevec patent expiration, as well as investing in new launches, and our net sales were up about a 1 point in constant currency. Core operating income was down 5% and this reflects the Gleevec patent expiration, as well as the launch investments, and we're making some good progress on the launches, which we'll talk about in a minute.

On slide five, you can see the five priorities that I laid out at the beginning of the year and I want to touch on each of these. Starting with financial results on slide six; as you know, 2016, we do have some pretty strong headwinds with the Gleevec patent expiration with the launch of Entresto and Cosentyx in terms of additional spending, as well as spending on Alcon, but we had a good quarter. Pharma was up 1%, ex-Gleevec, it was up 4%. Sandoz had a good quarter; sales up 4% in constant currency and this was really driven by growth of the Biopharmaceuticals business. And then Alcon was down as expected, as we begin to execute the growth acceleration plan.

The second priority is on the next slide and it's to strengthen innovation across all of our divisions. On Entresto and Cosentyx, the launches are progressing. So Cosentyx is doing extremely well. As you could see, we're growing share both in the U.S. and Europe as we launch in psoriasis, as well as the two new indications. David's going to talk more about that.