Novartis Vas Narasimhan JPMorgan Presentation
Transcript of Novartis Vas Narasimhan JPMorgan Presentation
Reimagining MedicineStrategy UpdateVas Narasimhan, CEOJ.P. Morgan Healthcare ConferenceJanuary 11, 2021
Novartis AG
Disclaimer
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation2
This presentation contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 that can generally be identified bywords such as “potential,” “expected,” “will,” “planned,” “pipeline,” “outlook,” or similar expressions, or by express or implied discussions regarding potential new products, potentialnew indications for existing products, potential product launches, or regarding potential future revenues from any such products; or regarding the development or adoption ofpotentially transformational technologies, treatment modalities and business models; or regarding potential future, pending, announced or completed transactions; or regarding thepotential benefits from and impact of current and future productivity programs on our financial performance and results; or regarding potential future sales or earnings of the Group orany of its divisions, or potential shareholder returns; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Suchforward-looking statements are based on our current beliefs and expectations regarding future events, and are subject to significant known and unknown risks and uncertainties.Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. In particular, our expectations could be affected by, among other things: global trends toward health care cost containment, including ongoing government, payorand general public pricing and reimbursement pressures and requirements for increased pricing transparency; regulatory actions or delays or government regulation generally,including potential regulatory actions or delays with respect to the development of the products described in this presentation; the impact of the COVID-19 pandemic on enrollment in,initiation and completion of our clinical trials in the future, and research and development timelines, including regulatory approvals; the potential that the anticipated benefits from andimpact of current and future productivity programs on our business, including our financial performance and results, may not be realized or may be more difficult or take longer torealize than expected; the potential that the strategic benefits, synergies or opportunities expected from the transactions described may not be realized or may be more difficult ortake longer to realize than expected; dependence on third parties to fulfill manufacturing and supply obligations; the uncertainties involved in predicting shareholder returns; theuncertainties involved in the research and development of new healthcare products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain ormaintain proprietary intellectual property protection; safety, quality, data integrity or manufacturing issues; uncertainties regarding actual or potential legal proceedings, investigationsor disputes; uncertainties involved in the development or adoption of potentially transformational technologies, treatment modalities and business models; our performance onenvironmental, social and governance measures; political, economic and trade conditions; uncertainties regarding future global exchange rates; general political, economic andbusiness conditions, including the effects of and efforts to mitigate pandemic diseases such as COVID-19; uncertainties regarding future demand for our products; uncertaintiesregarding potential significant breaches of data security or data privacy, or disruptions of our information technology systems; and other risks and factors referred to in Novartis AG’scurrent Form 20 F on file with the US Securities and Exchange Commission. Novartis is providing the information in this presentation as of this date and does not undertake anyobligation to update any forward-looking statements as a result of new information, future events or otherwise.
We are transforming Novartis...
Our focus Our five priorities
Strategy set out in 2018... ...is transforming Novartis
100% focused as a medicines company
Record-high engagement score
Leading pipeline, with 4 advanced therapy platforms
Achieved USD 2bn cost savings over 2017-2020
Establishing a leading digital and data science platform
Improving ESG scores, sector-leader across 3 key indices
Focus ourcompany and capital
Strengthenour core
Acceleratecertaingeographies
Unleash the power of our people
Delivertransformativeinnovation
Go bigon dataand digital
Embraceoperationalexcellence
Build trustwith society
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation3
...while delivering strong operational performance...
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation4
1. Continuing operations excludes Alcon, includes the businesses of Innovative Medicines and Sandoz as well as the continuing corporate functions. 2. Constant currencies (cc) and core results are non-IFRS measures. 3. Historically Q4 margin lower due to seasonality.
Continuing operations1
2017 % 2018 growth (cc)
2018 % 2019 growth (cc)
2019 % 9M 2020 growth (cc)
9M 2020
Net salesUSD bn, growth cc2 42.3 +5% 44.8 +9% 47.4 +4% 35.9
Core2 OpIncUSD bn, growth cc2 11.7 +7% 12.6 +17% 14.1 +16% 11.9
Innovative Medicines Core2 margin%, growth cc2
31.0% +1.0% pts 32.0% +1.8% pts 33.5% +2.7% pts 36.3%3
...and a robust response to the COVID-19 pandemic
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation5
Associates Patients & HCPs Society
Taking care of the health and safety of our employees...• Job safety• ‘Choice with responsibility’• Support productivity and wellbeing
...whilst serving our key stakeholders...• Patient-oriented digital solutions• HCPs multi-channel engagements• Business continuity in our operations
...and playing a pivotal role in supporting the global response• Donations and access support• Research and development• External collaborations
We have focused the company...
Company 4
Company 13
Company 8
Company 14
≥ 20
0<
200
Conglomerate < 75% Pure-play ≥ 75%
SizeMarket cap, $bn
Company 3
Company 1
Company 12
Company 2 Company 11
Company 5Company 9
Company 10
Company 7
Company 6 Rx OtherBubble area = 2019 total company revenue
Rx% of revenues
Note: Companies grouped by strategic archetype, not strictly to scale. Source: Evaluate Pharma, S&P Capital IQ, Annual Reports. Revenues FY 2019, Market Caps as of Jan 1, 2020 except Company 2 (May 8, 2020).Rx = Innovative medicines. Other = vaccines, animal health, generics / biosimilars, consumer health, medical devices / diagnostics, revenues not attributable to a specific segment / TA and other revenues.
TODAY
END 2017
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation6
...through a broad range of transactions and partnerships
Innovative Medicines
Sandoz
Digital
NIBR
DivestmentsOut-licensing
⭐ Advanced Therapy Platform (Cell Therapy, Gene Therapy, RLT, RNA)1. For Sandoz Small Molecules, only deals >1m USD consideredAs of December, 2020
Consumer health
⭐⭐ ⭐
⭐
⭐Entresto JP
⭐
⭐ ⭐
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation7
Selected deals and total number1 2018-2020⭐
⭐⭐
45
25
45
22
88
⭐
Today, we present investors a differentiated profileDiversified across geographies and TAs, while providing exposure to cutting-edge platforms
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation8
1. Only TAs (Therapeutic Areas) with annual 3rd party sales >USD 500m in 2019; TA definition as per Evaluate Pharma; manual adjustments to keep classification consistent vs. previous years. 2. Defined as net sales from one of the mentioned therapy platforms by 2025 according to Evaluate Pharma and publicly available pipeline information. Source: Evaluate Pharma 2020
Company # of TAs1Top-selling drug % total net sales
Blockbusters #
Advanced therapy platforms2 Geographical diversification% of total Rx salesCell Gene RLT RNA
8% 15 ✔ ✔ ✔ ✔Company 1 8% 6 ✔ ✔Company 2 41% 8Company 3 15% 11 ✔ ✔Company 4 27% 4Company 5 13% 7 ✔ ✔Company 6 15% 13 ✔ ✔Company 7 24% 7 ✔ ✔Company 8 14% 9 ✔ ✔Company 9 21% 7 ✔Company 10 9% 5 ✔ ✔Company 11 27% 9 ✔Company 12 18% 9 ✔Company 13 22% 6 ✔Company 14 39% 4 ✔ ✔
101010
999
8666
44
33
2US
Canada & Latin AmericaEU
ex-USAsia, Africa, Australasia
Significant progress to solidify our culture journey towards an inspired, curious and unbossed organization
1. Source: Quarterly Glint Engagement Survey Scores (out of 100). 2. Source: Team Perspectives, December 2020, 67k participants.
75
80
11/1908/1905/19 03/20 05/20 11/2008/20
Pharma benchmark: 70
68
75
11/2003/2005/19 05/2008/19 11/19 08/20
Pharma benchmark: 70
Engagement1 Growth & learning1 Manager effectiveness2
• Rolled out new Values & Behaviors and EVOLVE performance management system, incl. removing ratings
• Coursera: ~450k courses completed by ~50k users in 2020, platform access extended to over 10k family and friends
• Launched TEDxNovartis
• ‘Unbossed Leadership Experience’ re-designed (virtual) and delivered to ~5k leaders in the organization
• Scaling to all 22k people managers
CuriousInspired Unbossed
Culture Sense under finalization to track progress and establish the link between culture and performance
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation9
Unleash the power of our people
8284
Q1 ’20Q1 ’19 Q4 ’20
Global benchmark: 77
We have a leading pipeline by key measures
InnovationScale# of projects1
ValueEstimated 2026 sales from products launched 2020-20263
116 Phase 1/2
49 Phase 3/ Registration
>65 NMEs
20Advanced platform therapies in clinical development
~90% Pipeline2 potentially first-in-class / first-in-indication
~80% Target areas of high unmet need2
Company H
Company DCompany C
Company A
Company E
Company B
Company FCompany G
Company I
#2 Replacement power
1. Including Global Health, excluding Sandoz. As of December, 2020. 2. Projects in confirmatory development. 3. Innovative Medicines product sales excl. Vaccines and LCM products (e.g. new formulations, combos with off-patent molecules); compound-based analysis (Ph2 and 3) with additional indications allocated to 1st launch. Source: Novartis peer group analysis based on data from Evaluate Pharma (download from September 24, 2020).
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation10
Deliver transformative innovation
In 2020 we advanced our innovation agenda
Beovu® (DME) Jakavi® (Chronic GvHD) Asciminib (CML) Iptacopan (PNH, C3G) (IA)
Major approvalsSelected examples
Major readoutsSelected examples
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation
Hyperlipidemia (EU)
RMS (US)
NSCLC (US, JP)
Asthma (EU, JP)
nr-axSpA (US, EU, JP)Pediatric PsO (EU)AS (CN)
Leqvio® (EU) Kesimpta® (EU, JP) Entresto® HFpEF (US)
Major submissionsSelected examples
SMA IV (EU, JP)
wAMD (EU, JP)
Sickle cell disease (EU)
HR+/HER2- aBC (EU)
CRSwNP (US, EU)
11
Deliver transformative innovation
2021 catalysts maintaining momentum
Potential catalysts Selected examplesMajor approvals Leqvio® (US)
HyperlipidemiaKesimpta® (EU/JP)RMS
Entresto® (US)HFpEF
Entresto® (JP/CN)HTN
Major submissions1 Alpelisib (BYL719)PROS
Sabatolimab (MBG453)MDS
Jakavi®Acute and chronic GvHD
177Lu-PSMA-617mCRPC
Kymriah®
FL, r/r DLBCL 1st relapseAsciminib (ABL001)CML
Canakinumab3
NSCLC 1L + 2LEntresto®
Post-AMIBeovu®
DME
Major readouts2
(pivotal)177Lu-PSMA-617mCRPC
Kymriah®
r/r DLBCL 1st relapseKisqali®Breast cancer (MONALEESA-2 OS)
CanakinumabNSCLC 1L + 2L
Entresto®
Post-AMICosentyx®
HS
Sabatolimab (MBG453)MDS
Ligelizumab (QGE031)CSU
1. First submission in any market. 2. Readouts enabling submission or label change. 3. Depending on timing of final read-out submission may move to early 2022.
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation12
Deliver transformative innovation
Moving forward a breadth of assets to drive long-term growth...
PharmaceuticalsLifecycle management OncologyAsset Indications
HFpEF, Post-AMI, Essential hypertension (ex US), Pediatric
Derm: HS, L. Planus, Peds PsORheum: jPsA/ER, GCA, Lupus Nephritis
Adjuvant BC
BYL719 PROS, TNBC, Ovarian cancerHER2+ aBC, HNSCC 2/3L
DME, RVO, Diabetic retinopathy
Asset Indications
Iptacopan(LNP023) IgAN, PNH, aHUS, C3G, iMN
Iscalimab(CFZ533) Sjögren's, Kidney Tx, Liver Tx
Ligelizumab(QGE031)
CSU, Pediatric CSU, CINDU, food allergy
Pelacarsen(TQJ230) CVRR-Lp(a)
Branaplam(LMI070) Huntington disease, SMA
Asset Indications
Canakinumab(ACZ885)
NSCLC 1L/2L, NSCLC adjuvant
177Lu-PSMA-617 mCRPC 3L, mCRPC pre-taxane
Sabatolimab(MBG453)
HR-MDS, AML, Maintenance MRD + AML
TNO155Solid tumors, Multiple combinations being explored including 1L KRAS NSCLC
LXH254 BRAF/NRASm Melanoma, mRAS/RAF NSCLC
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation13
Deliver transformative innovation
Selected opportunities
‘Wild Cards’ CSJ117 (Asthma), ECF843 (Dry Eye), LNA043 (Osteoarthritis), QBW251 (COPD), NIS793 (Solid Tumors)
...while strengthening our advanced therapy platforms
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation14
1. DLBCL 1st relapse, r/r FL, r/r DLBCL in combo with pembro, 1st line high risk pediatric and young adult ALL. 2. Both pALL and DLBCL.
Research & Development Manufacturing CommercializationClinical programs Pre-clinical Internal sites More info Countries approved Reimbursed
GeneTherapy
4 OAV101 SMA IT 19 3 Libertyville (US) 1m+Square feet footprint of the internal network
37 6OAV201 Rett syndrome Longmont (US)
ADPT03 Sickle cell anemia Durham (US)
CPK850 RP
Cell Therapy
8 CTL019 Multiple1 10 3 Morris Plains (US) 4Continents spanned by Novartis’ manufacturing network
28 232
JEZ567 AML Stein (CH)
LXF821 Glioblastoma multiforme Les Ulis (FR)
MCM998 Plasma cell myeloma
YTB323 Hematological malignancy
RLT 4 177Lu-NeoB Multiple solid tumors 14 6 Millburn (US) 1Additional site under construction in Indianapolis (US)
Lutathera® 38 16177Lu-oxodotreotide GEP-NET 1L G3 Ivrea, Saluggia, Forli (IT)177Lu-PSMA-617 mCRPC Zaragoza (ES)177Lu-PSMA-R2 Prostate cancer IDB (NL)
4 additional clinical programs relating to RNA (including KJX839 and TQJ230)
Deliver transformative innovation
Strong performance from our growth drivers, with focus on launch excellence for our recent and upcoming launches
Major recent / upcoming launchesKey growth driver sales 9M 2020
nm – not meaningful
573
231
151
491
153
166
300
187
178
152
142
140
SalesUSD Million
Growth vs. PYUSD Million
Growth vs. PYcc
1,781 48%
666 nm
2,886 12%
1,267 24%
236 nm
503 59%
268 164%
153 nm
1,134 17%
333 82%
963 19%
633 30%
Canakinumab Sabatolimab
Asciminib 177Lu-PSMA-617
nr-axSpA HFpEF, HTN
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation15
Embrace operational excellence
Progressing at steady pace in NTO / NBS transformations...
15 Sites exited since 2016
126 Warehouses reduced since 2016
26 Sites infrastructures carved out
2 New Operations Centers
>50 Global processes being re-designed
50% DM suppliers reduced since 2016
3 New sites1 online for cell therapies
2.8x Increase in Bio capacity since 2016
>175 USD m invested for new process technology to produce antibiotics API2
Asset intensity reduction
Standardization
Innovation
Select achievements
Continuing on the journey to become a 4th gen, industry-leading enterprise transformation engine
65% NBS associates across 5 Global Service Centers
>15k Novartis associates in Activity-Based Working
>90k Novartis associates using OneNovartis Services
>45k Novartis associates enabled to work remotely
>35k Digital assets hosted on one single platform (FUSE)
State-of-the-art advanced analytics, sourcing, contract management, travel & expenses, HR standardization and automation
Novartis Technical Operations Novartis Business Services
USD 2bn savings delivered 2017-20201. Stein (CH), Les Ulis (FR), FBRI (JP). 2. Investment in Kundl, in collaboration with the Austrian government.
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation16
Embrace operational excellence
...and delivering on our margin commitment
Mid to high
30s
High30s
32.0
2017 2018 2019 9M 20201 Near-term Mid-term
31.033.5
36.3
Innovative MedicinesCore margin (%)
+ Sales momentum of key growth drivers and operational excellence on upcoming launches
+ USD 2bn expected in the mid-term from NTO productivity program started in 2021
+ Evolution in ways of working
‒ Generic erosion‒ Launch investments
Main drivers moving forward
1. Historically Q4 margin lower due to seasonality.
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation17
Embrace operational excellence
Establishing a leading digital and data science platform
Scaling major platforms across the value chain, e.g.:
• Data42 (3k+ trials ingested)• Control Towers (SpotOn live
in 5 manufacturing sites)
• Next Gen Engagement (ACTalya live with 6k+ reps)
DS&AI community of 800+ data scientists
Upskilled the organization through leadership programs and learning offeringKept investing to strengthen our data foundations
Rolled out our partnership accelerator—Biome—with openings in UK, India, Canada, China
Signed new scalable partnerships, e.g. Doximity
Progressing on our strategic alliances, e.g.:
• Microsoft: AI Innovation Lab• AWS: TechOps optimization
• Tencent: AI Nurse HF patient solution in China (17k+ patients enrolled, ~400 hospitals)
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation18
Key developments in Data & Digital over the past 12 monthsPursue bolder moves
#1 partnerin tech ecosystem
MakeNovartis digital
Scale digital lighthouses
Go big on data and digital
Made significant strides in building trust with society and in integrating ESG across every aspect of our company
Key ESG developments over the past 12 months and selected aspirations
Resolved material legacy compliance issues
Launched Code of Ethics
Ethical Standards
Be recognized in the healthcare sector for Human Rights
Strong COVID-19 response
Integrating D&I efforts across our operations
Corporate Citizenship
Full Carbon, Plastic and Water Neutrality by 2030
Introduced 100+ Emerging Market Brands
Issued sustainability-linked bond
Pricing & Access
200% increase in SITs patient reach by 20251
Expanded our Africa sickle cell disease program
Advancing pipeline of novel malaria treatments
Global Health Challenges
50% increase in our Flagship Programs’ reach by 20251
Launched ESG index
New ESG ManagementOffice and Head of Environmental Sustainability
Integrated reporting and optimized ESG data management
Governance &Transparency
1. As defined in ESG bond prospectus.
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation19
Build trust with society
Confident that we will grow top and bottom line every year to 2025 and meet external expectations
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation20
Launches2Growth Drivers12019 Actual
Other/Pipeline Sandoz Gx Brands3
47
60
+4% CAGR
33.5%ConsensusIM margin
Analyst consensus salesUSD billion
37.6%
2025 External expectations basedon analyst consensus
1. Cosentyx®, Entresto®, Zolgensma®, Kisqali®, Mayzent®, Tafinlar+Mekinist®, Jakavi®, Beovu®, Xiidra®, Aimovig®, Xolair®. 2. Lutathera®, Kymriah®, Piqray®, Adakveo®, Kesimpta®, Leqvio®, Tabrecta®, Asciminib. 3. Brands with 2024 consensus sales lower than 2019 actual sales (Glivec®, Tasigna®, Afinitor®, Votrient®, Promacta®, Exjade®, Sandostatin®, Galvus®, Gilenya®, Lucentis®). Source: Novartis Investor Relations in-house consensus as of November 12, 2020.
Conclusions
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation21
In 2020 we kept executing on our strategy, while delivering strong operational performance
Novartis is now positioned as a focused medicines company with a differentiated profile
We have made tangible progress across our five strategic priorities—which taken together make our proposition unique—and have full confidence in our long-term growth potential
✓✓✓
Strengthen our core
Accelerate certain geographies
Unleash the power of our people Deliver transformative innovation
Embrace operational excellence Go big on data and digital Build trust with society
Focus our company and capital
Thank you
Glossary
| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation23
aBC Advanced breast canceraHUS Atypical hemolytic uremic syndromeAI Artificial intelligenceAML Acute myeloid leukemiaAPI Active pharmaceutical ingredient AS Ankylosing spondylitisAWS Amazon Web ServicesC3G C3 glomerulopathyCINDU Chronic inducible urticariaCML Chronic myeloid leukemiaCOPD Chronic obstructive pulmonary diseaseCRSwNP Chronic rhinosinusitis with nasal polyposisCSU Chronic spontaneous urticariaCVRR Cardiovascular risk reductionD&I Diversity and inclusionDLBCL Diffuse large B-cell lymphomaDM Direct materialDME Diabetic macular edemaDS&AI Data science and artificial intelligenceESG Environmental, social and governance
FL Follicular lymphomaFY Full yearGCA Giant cell arteritisGvHD Graft versus host diseaseHCP Healthcare providerHF Heart failureHFpEF Heart failure with preserved ejection fractionHNSCC Head and neck squamous cell carcinomaHS Hidradenitis suppurativaHTN HypertensionIA Interim analysisIgAN IgA nephropathyiMN Membranous nephropathyjPsA/ER Juvenile psoriatic arthritis/enthesitis-related arthritisLCM Lifecycle managementmCRPC Metastatic castration-resistant prostate cancerMDS Myelodysplastic syndromesMRD Measurable residual diseaseNBS Novartis Business ServicesNIBR Novartis Institutes for BioMedical Research
NME New molecular entitynr-axSpA Non-radiographic axial spondyloarthritisNSCLC Non-small cell lung cancerNTO Novartis Technical OperationsOS Overall survivalpALL Pediatric acute lymphoblastic leukemiaPNH Paroxysmal nocturnal haemoglobinuriaPost-AMI Post-acute myocardial infarctionPsO PsoriasisRLT Radio ligand therapyRMS Relapsing multiple sclerosisRNA Ribonucleic acidRP Retinitis pigmentosaRVO Retinal vein occlusionSIT Strategic innovative therapiesSMA IV Spinal muscular atrophy intravenousTA Therapeutic areaTNBC Triple negative breast cancerTx TransplantwAMD Wet age-related macular degeneration