NOVARTIS AG 2014
Telephone: +41 61 324 11 11
|PRODUCT||2013 SALES||2012 SALES|
|Diovan, Diovan HCT||$3,524||$4,417|
|Exelon, Exelon Patch||$1,032||$1,050|
All sales are in millions of dollars.
All sales are in millions of dollars except EPS.
A New Growth Phase
Despite difficult conditions, Novartis is increasing sales through the launch of innovative therapies, a clear focus on growth markets, and productivity-oriented cost control.
Dealing with patent expirations for some of the company’s long-time leading medicines in addition to a volatile economic environment, Novartis has been undertaking various measures throughout its business scope in an effort to generate strong operating results. Innovation remains a key component, as Novartis possesses one of the industry’s most robust product portfolios. Continuing to rejuvenate the portfolio, Novartis’ pharmaceutical business in the past two years has achieved significant major regulatory approvals for first-in-class products and new indications in the United States and European Union. Novartis also has revamped its divisional structure with business divestitures in 2013 and 2014. Emerging markets are being more heavily targeted by the company to help generate future success.
Management’s goal is to strengthen Novartis as a diversified health-care company in its individual fields of business and as a whole. According to leadership, Novartis strives for a broad and competitive product portfolio and strong positioning in long-term growth markets. To this end, Novartis is continuing to pursue its long-standing and proven diversification strategy, which – alongside a focus on innovation – includes the development of affordable and non-patented medicines.
The broad portfolio of Novartis consists of innovative medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines, OTC and animal health products. The Group’s wholly owned businesses are organized into six worldwide operating divisions, with results reported in five segments: Pharmaceuticals (Innovative patent-protected prescription medicines), Alcon (Surgical, ophthalmic pharmaceutical, and vision care products), Sandoz (Generic pharmaceuticals), Vaccines (Preventive human vaccines), and Consumer Health (OTC medicines and Animal Health). According to management, Novartis is the only healthcare company worldwide with leading positions in each of these areas.
Novartis’ growth products – including Gilenya, Afinitor, Tasigna, Galvus, Xolair, Lucentis,the Q Family and Jakavi, amongst others – contributed significantly to overall performance during 2013. The growth products accounted for 31 percent or $18.1 billion of Group net sales, up 15 percent over the 2012 total; first-half 2014 remained on line with those figures ($9.0 billion or 31 percent of Group net sales, up 18 percent year-over-year). Novartis defines its growth products as those launched in the past five years or with patent protection until 2017. The oral type 2 diabetes treatment Galvus achieved blockbuster status during 2013 for the first time.
While Novartis’ concentration on innovation contributes to its portfolio rejuvenation, the company is additionally focused on continuously improving the commercial execution of approved products and expanding access to medicines in its Emerging Growth Markets (EGMs) to drive growth across the portfolio. The EGMs consist of all markets other than the Established Markets of the United States, Canada, Western Europe, Japan, Australia and New Zealand. Novartis leadership notes that during a time of slowing growth for healthcare product sales in industrialized countries, many emerging markets have experienced proportionately higher sales growth and an increasing contribution to the industry’s global performance. In 2013, the company recorded $14.7 billion, or 25 percent (2012: 24 percent) of net sales from EGMs compared with $43.2 billion, or 75 percent (2012: 76 percent) of Novartis net sales, in the Established Markets. However, combined net sales in the EGMs rose 10 percent in constant currency in 2013 versus 2 percent sales growth in constant currency in the Established Markets during the same time frame. Because of this trend, Novartis has taken steps to increase the company’s presence in its Emerging Growth Markets. In first-half 2014, EGM sales equaled $7.42 billion (up 8 percent in constant currencies) or 26 percent of total net sales.
Significant investments are being made to bolster Novartis’ footprint in key markets and establish the company as a market leader. In Russia and Brazil, the company is building a significant manufacturing presence. Novartis’ strong growth trajectory continues in China, with 2013 net sales increasing 23 percent in constant currencies over the prior calendar term. China became one of Novartis’ top 10 markets in 2013. According to IMS data, Novartis achieved the highest growth in China of any multinational pharmaceutical company during first-quarter 2014.
R&D of innovative and highly effective drugs that fulfill unmet patient needs remains central to Novartis’ strategy and fundamental to the company’s future success, according to its management. Novartis has more than 200 projects in clinical development, including over 140 in its Pharmaceuticals Division. Reflecting its commitment to innovation, Novartis invested 17 percent ($9.9 billion) of 2013 net sales in research and development. Pharmaceutical R&D investments represented $7.2 billion or 22 percent of pharmaceuticals net sales, concentrating on the areas of greatest patient need and scientific promise. Core R&D expenditure as a percentage of net sales grew 0.8 percentage points in constant currencies in first-half 2014.
“Our commitment to science-based innovation remains the centerpiece of our strategy,” comments Joseph Jimenez, CEO of Novartis. “ … Our pharmaceuticals innovation engine has built a rich pipeline of potential new products. We received breakthrough therapy designation from the U.S. Food and Drug Administration for three drug candidates – among the highest number received by any company in 2013. These were: RLX030 (serelaxin) for acute heart failure, LDK378 (Zykadia) for non-small cell lung cancer, and BYM338 (bimagrumab) for a rare degenerative muscle disease. We expect to have at least 14 blockbusters by 2018, which will be key to our future success.”
According to company leaders, engaging with society to improve access to healthcare is integral to the way Novartis operates. During 2013, Novartis’ contributions and programs in this area were valued at $2.1 billion. The company provided medicine to more than 100 million patients and health education, infrastructure development and other programs to another 8.1 million people around the globe.
Transactions & Collaborations
Novartis announced in April 2014 definitive agreements with GlaxoSmithKline plc and Eli Lilly and Co. on a set of transactions consistent with the company’s strategy that are anticipated to further accelerate its future growth.
In an inter-conditional transaction, Novartis agreed to acquire GlaxoSmithKline’s oncology products and become GSK’s preferred commercialization partner for its oncology pipeline; create a joint venture with GSK in consumer healthcare, in which Novartis would own 36.5 percent; and divest its Vaccines Division (excluding flu) to GSK. Separately, Novartis agreed to divest its Animal Health Division to Lilly.
The deal with GSK is expected to close during first-half 2015, and the transaction with Lilly is on pace to be completed in first-quarter 2015. Novartis additionally commenced a sale process to divest its flu vaccines business.
Novartis reached a deal with a division of Google Inc. during 2014 to in-license its “smart lens” technology for all ocular medical uses. The technology consists of non-invasive sensors, microchips and other miniaturized electronics embedded within contact lenses.
Novartis struck an agreement with Ophthotech Corp. in 2Q 2014 for the exclusive rights to market Fovista (anti-PDGF aptamer) outside the United States. If approved, Fovista is expected to be first in its drug class to reach the marketplace for wet age-related macular degeneration.
FDA during second-quarter 2014 licensed Novartis’ manufacturing facility in Holly Springs, N.C., for the production of cell-culture influenza vaccines. This marks the first U.S. facility of its kind.
Novartis strengthened its competitive position in the field of immune-oncotherapy during first-quarter 2014 with the acquisition of the biotech company CoStim Pharmaceuticals Inc. CoStim’s novel immune modulating targets and technology complement the investigative CART cell therapy technology Novartis is already developing in conjunction with the University of Pennsylvania.
Novartis agreed to an exclusive global licensing and research collaboration during September 2013 with Regenerex LLC for use of the Louisville, Ky.-based biopharma company’s novel Facilitating Cell Therapy platform.
Novartis inked a development and licensing pact as announced in July 2013 with Biological E Ltd. (BioE), a biopharma company based in India. The transaction is centered around two vaccines to protect against typhoid and paratyphoid fevers.
Novartis and Malaria No More, a leading global charity determined to end malaria deaths, revealed in April 2013 that they are joining forces on the Power of One campaign. Through the campaign, they intend to help close the treatment gap and accelerate progress in the fight against malaria. For a three-year period, Novartis is supporting the campaign financially and donating up to 3 million full courses of its pediatric antimalarial drug to match the treatments donated by the public.
Novartis generated net sales of $57.92 billion during 2013 compared to $56.67 billion in the prior year. Net income for 2013 totaled $9.29 billion, down from $9.38 billion in the previous calendar term. Research and development spend reached $9.85 billion ($9.64 billion excluding impairment and amortization charges) in 2013 and was reported at $9.33 billion during 2012.
The Pharmaceuticals segment generated $32.2 billion (56 percent) of Group net sales in 2013 and $9.4 billion (80 percent) of Group operating income (excluding Corporate income and expense, net). The division is divided into the following business franchises: Primary Care, consisting of Primary Care medicines and Established Medicines; and Specialty Care, consisting of Ophthalmology, Neuroscience, Integrated Hospital Care, and Critical Care medicines. Novartis Oncology is organized as a business unit, responsible for the worldwide development and marketing of oncology medicines.
The Alcon business delivered 2013 sales of $10.5 billion (18 percent of Group net sales) and $1.2 billion (11 percent) of Group operating income (excluding Corporate income and expense, net). Alcon researches, develops, manufactures, distributes and sells eye-care products and technologies to serve the full life cycle of eye-care needs.
For 2013, Sandoz recorded $9.2 billion or 16 percent of Group net sales, and $1.0 billion or 9 percent of Group operating income (excluding Corporate income and expense, net). This business segment develops, manufactures, distributes and sells prescription medicines as well as pharmaceutical and biotechnological active substances, which are not protected by valid and enforceable third-party patents. Sandoz also has activities in Retail Generics, Anti-Infectives and Biopharmaceuticals & Oncology Injectables.
The Vaccines and Diagnostics segment produced $2.0 billion, or 3 percent, of Group net sales in 2013. On Jan. 9, 2014, Novartis finalized the divestment of its blood transfusion diagnostics unit to Grifols S.A. As a result, this Novartis division now consists only of vaccines. The Vaccines business researches, develops, manufactures, distributes and sells human vaccines globally.
Novartis’ Consumer Health unit is composed of two divisions: Over-the-Counter and Animal Health. Each division has its own R&D, manufacturing, distribution and selling capabilities, but according to Novartis, neither is material enough to the Group to be separately disclosed as a segment. Consumer Health accounted for $4.1 billion or 7 percent of Group net sales in 2013, and $0.2 billion or 1 percent of Group operating income (excluding Corporate income and expense, net).
Heading into 2014, managers expected the impact of generic competition to affect Novartis’ full-year net sales as much as $3 billion. Halfway through 2014, Novartis was able to increase sales compared to its performance during January-June 2013. Group net sales rose 2 percent in constant currencies to $28.7 billion in the first six months of 2014. Growth products contributed $9 billion or 31 percent of Group net sales, advancing 18 percent in U.S. dollars compared to first-half 2013.
Group operating income during 1H 2014 improved 14 percent (more than 21 percent in constant currencies) to $6.6 billion versus January-June 2013, mainly due to a $0.9 billion exceptional gain in first-quarter 2014 from the divestment of the blood transfusion diagnostics unit. Core operating income in January-June 2014 rose 2 percent (more than 6 percent in constant currencies) year-over-year to $7.5 billion. Group net income totaling $5.6 billion increased 13 percent (more than 19 percent in constant currencies) versus the one-year-earlier period, broadly in line with operating income. Group core net income was reported at $6.5 billion for growth of 2 percent (more than 6 percent in constant currencies), in line with core operating income. Research and development expenditure amounted to $4.39 billion in first-half 2014 and $4.37 billion in the one-year-earlier period.
Comparing first-half 2014 results with the same time frame during 2013 including the blood transfusion diagnostics unit, Group total net sales rose 1 percent (more than 1 percent in constant currencies), Group total operating income increased 12 percent (more than 19 percent in constant currencies), and Group total net income grew 12 percent (more than 17 percent in constant currencies).
For January-June 2014, Pharmaceuticals generated net sales of $16.0 billion (0 percent, or more than 1 percent in constant currencies), spurred by volume growth (more than 6 percentage points) and pricing (more than 2 percentage points), which offset the effect of generic competition (less than 7 percentage points). Alcon net sales rose 3 percent (more than 5 percent in constant currencies) to $5.5 billion during the first six months of 2014. Sandoz net sales were up 4 percent to $4.6 billion compared to first-half 2013, as volume growth of 13 percentage points more than offset 9 percentage points of price erosion. Vaccines net sales decreased 3 percent (down 4 percent in common currencies) to $455 million in January-June 2014 versus $467 million in the previous-year period, mainly driven by the phasing of bulk pediatric shipments. Net sales for Consumer Health improved 5 percent (up 6 percent in common currencies) to $2.1 billion year-over-year, led by strong performance of key global brands and product re-launches in OTC and Animal Health.
Based upon Novartis’ overall performance during first-half 2014, Group net sales are expected to grow in the low to mid-single digits in constant currencies with core operating income growing ahead of sales (and now refined to mid to high-single digit rate in constant currencies). Novartis says this outlook recognizes the arrival of generic competition for Diovan monotherapy in the United States on July 7, 2014, including an authorized generic from Sandoz on that date. According to company leaders, if June average exchange rates prevail for the remainder of the year, the currency impact for 2014 would be -1 percent on sales and -3 percent to -4 percent on core operating income.
“Novartis delivered solid financial performance with core margin expansion in the second quarter and first half (2014),” Mr. Jimenez says. “Pharmaceuticals, in particular, showed improved productivity, driving core operating leverage for the Group. We also made significant progress on innovation across the portfolio, reaching milestones such as FDA approval for Zykadiain ALK+ non-small cell lung cancer, FDA Fast Track designation and rolling submission for LCZ696 in chronic heart failure, CHMP recommendation for Simbrinza in glaucoma, and FDA Breakthrough Therapy designation for CTL019 in acute lymphoblastic leukemia. These innovation milestones reinforce the growth prospects of our leading businesses.”
Gleevec/Glivec remained Novartis’ best-selling medicine in 2013, with sales coming in at $4.69 billion compared to the prior-year total of $4.68 billion. First-half 2014 sales came in at $2.3 billion, down 2 percent year-over-year. Gleevec/Glivec (imatinib mesylate/imatinib mesylate) is available to treat patients with metastatic and/or unresectable KIT+ gastrointestinal stromal tumors (GIST), as an adjuvant treatment for certain adult patients following resection of KIT+ GIST, and as a targeted therapy for Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML). Initially launched during 2001, the medicine is marketed in more than 120 countries.
Gleevec/Glivec is additionally available in the United States, EU and Japan to treat Philadelphia chromosome-positive acute lymphoblastic leukemia, a rapidly progressive type of leukemia. The kinase inhibitor is also marketed in the United States and EU to treat dermatofibrosarcoma protuberans, a rare solid tumor; hypereosinophilic syndrome; myelodysplastic/myeloproliferative diseases and other rare blood disorders. Gleevec is additionally FDA-approved for aggressive systemic mastocytosis. The product has received approvals in at least 68 countries as a post-surgery (adjuvant setting) therapy for certain adult patients with KIT+ GIST. After gaining U.S. regulatory clearance in January 2013, the EMA approved Gleevec/Glivec in July 2013 for pediatric patients with newly diagnosed Ph+ acute lymphoblastic leukemia in combination with chemotherapy.
The patent on the active ingredient in Gleevec/Glivec is due to expire during July 2015 in the United States, during 2016 in the major EU countries, and in September 2014 for the main indications in Japan. However, the medicine is protected by additional patents claiming innovative features of Gleevec/Glivec.
Diovan, along with Diovan HCT/Co-Diovan, was the best-selling branded anti-hypertensive medication globally as of October 2013. Diovan (valsartan) is the only agent in its class marketed to treat each of the following: high blood pressure (including children 6 to 18 years), high-risk heart attack survivors and patients with heart failure. Initially introduced during 1996, Diovan is available in 120-plus countries for treating high blood pressure, in over 90 countries for heart failure, and in more than 70 countries for heart attack survivors. Diovan HCT/Co-Diovan (valsartan and hydrochlorothiazide) was first launched in 1997 and is available in over 100 countries.
A long-time best seller for Novartis, Diovan franchise sales declined by nearly $900 million from 2012 ($4.42 billion) to 2013 ($3.52 billion). The decreased sales trend continued in the first six months of 2014, falling 16 percent year-over-year to $1.55 billion. The patent on valsartan has expired in major markets around the globe. U.S. patent protection ran out during September 2012. Generic versions of Diovan HCT have been introduced in the United States, but not yet for Diovan monotherapy as of early 2014. Patent expiration occurred during November 2011 in major EU countries, where generic competition is taking place. Patent protection ended in Japan during 2013, and will run its course in 2016 for Co-Diovan (including patent-term extensions).
Novartis’ No. 3 seller in 2013 was Lucentis (ranibizumab), a recombinant humanized high-affinity antibody fragment that binds to vascular endothelial growth factors (VEGF). Sales during the year were reported at $2.38 billion, compared to $2.4 billion for 2014. Lucentis sales rose from $1.17 billion in January-June 2013 to $1.24 billion during the first two quarters of 2014.
Since its market introduction in 2007, there are more than 2.2 million patient-treatment years of exposure for Lucentis. Novartis licensed the eye-health drug from Genentech for non-U.S. development and commercialization. Lucentis is the only anti-VEGF therapy licensed in many countries for four ocular indications: wet age-related macular degeneration (wet AMD), visual impairment due to diabetic macular edema (DME), visual impairment because of macular edema secondary to retinal vein occlusion (RVO), and visual impairment resulting from choroidal neovascularization secondary to pathologic myopia (myopic CNV). The medicine is available in 100-plus countries to treat patients with wet AMD, for treating visual impairment due to DME and macular edema secondary to RVO. Lucentis is additionally licensed in over 40 countries for treating visual impairment due to myopic CNV.
In terms of dollar volume, Gilenya was Novartis’ largest gainer from 2012 ($1.2 billion) to 2013 ($1.93 billion). The impressive growth continued during January-June 2014, as worldwide sales rose 30 percent year-over-year to $1.16 billion. Gilenya represents the first once-daily oral therapy approved to treat relapsing forms of multiple sclerosis (MS) and is the first in a new class of compounds called sphingosine 1-phosphate receptor modulators. The drug is FDA-approved for relapsing forms of MS and is available in the EU for adult patients with highly active relapsing remitting MS (RRMS) defined as either high disease activity despite treatment with beta interferon, or rapidly evolving severe RRMS.
In a growing oral market with multiple options, Gilenya as of early 2104 was the only oral MS treatment that provides early and long-term reduction in the rate of brain volume loss and enduring high efficacy across all key disease activity measures (disability progression, relapses, MRI activity, brain volume loss). Gilenya is proven to consistently limit brain-volume loss, evident within six months and sustained for up to four years in Phase III trials and up to seven years in a Phase II study. Gilenya is also the only oral disease-modifying therapy with proven superior relapse reduction versus an active comparator (61 percent in interferon non-responders). The product has demonstrated very good tolerability over the long term. Nine out of 10 patients and their physicians confirm favorable tolerability with Gilenya in a real-world setting. The medicine is available in more than 78 countries and is licensed from Mitsubishi Tanabe Pharma Corp.
Patent protection for fingolimod, the active chemical in Gilenya, is scheduled to expire in 2019 in the United States and during 2018 in Europe and Japan. In Europe and Japan, Novartis holds regulatory exclusivity for the data generated for approval of Gilenya until 2021, which could possibly be extended by a year in Europe. A patent for the commercial formulation has been granted in most major markets. This patent will run its course during 2024 in most countries, including Europe and Japan, and in 2026 in the United States.
The somatostatin analogue Sandostatin was first introduced during 1988 and is marketed in more than 100 countries. Sandostatin is used for treating patients with functional gastroenteropancreatic tumors as well as acromegaly. During 2013, the drug continued to benefit from increasing use of Sandostatin LAR in key markets, helping drive sales up 8 percent at constant currencies to $1.59 billion. Sandostatin first-half sales improved from $772 million in 2013 to $801 million during 2014.
A new form of the long-acting version Sandostatin LAR, which includes an enhanced diluent, safety needle and vial adapter, has been cleared for marketing in at least 40 countries with additional filings under way. Sandostatin LAR is additionally available in 44 countries for the delay of disease progression in patients with advanced neuroendocrine tumors of the midgut or unknown primary tumor location.
Patent protection for octreotide acetate, the main chemical of Sandostatin, has expired. Generic versions of Sandostatin SC have been introduced in the United States and elsewhere. Patents protecting Sandostatin LAR, which accounts for a majority of the Sandostatin franchise’s sales, expired in 2010 in key markets outside the United States and will end during 2014 and beyond in America.
Another billion-dollar family for Novartis is Exforge (valsartan and amlodipine besylate). Exforge is a one-pill combination of the ARB Diovan and the calcium channel blocker amlodipine besylate. Diovan initially was approved for treating high blood pressure in Switzerland in 2006, and in the United States and EU during 2007. The medicine is marketed in 100-plus countries. U.S. regulators cleared Exforge during 2008 for the first-line treatment of hypertension in patients likely to need multiple drugs to achieve their blood pressure goals. Exforge was given the green light during January 2010 in Japan and was also launched in China.
Exforge HCT is a single pill joining together three widely prescribed high blood pressure treatments: an ARB (valsartan), calcium channel blocker (amlodipine) and a diuretic (hydrochlorothiazide). The product was approved in the EU and the United States during 2009, and is marketed in over 60 countries.
Although market exclusivities for Exforge and Exforge HCT will remain in the EU and Japan due to regulatory exclusivities and to a valsartan patent extension for Exforge in Japan until 2015, there is a risk that generic manufacturers may circumvent regulatory exclusivity and obtain approval of a combo valsartan-amlodipine product in Europe. In the United States, through a license pact with a generics manufacturer, Exforge was expected to fend off generic competition until October 2014.
Exforge franchise sales totaled $1.46 billion during 2013 compared to $1.35 billion for the previous year. Exforge first-half sales improved slightly from 2013 ($725 million) to 2014 ($733 million).
Afinitor/Votubia performed strongly in 2013 with sales of $1.31 billion, rising from $797 million in 2012. Sales continued to improve in first-half 2014 to $741 million versus $611 million in January-June 2013. The drug is marketed in 100-plus countries for treating various cancers such as HR+/HER2- advanced breast cancer, advanced renal cell carcinoma and advanced pancreatic neuroendocrine tumors. Everolimus, the main chemical in Afinitor/Votubia, is additionally available in over 60 countries for treating renal angiomyolipomas and/or subependymal giant cell astrocytomas associated with tuberous sclerosis complex, including as a dispersible tablet form in the United States and the EU for SEGA.
An oral inhibitor of the mTOR pathway, everolimus is also available under the brand names Zortress/Certican for use in other non-oncology indications. The product is available in 90-plus markets to prevent organ rejection in adult heart and kidney transplant patients. Zortress/Certican is approved in more than 70 countries for liver transplant patients in the EU, United States, and many other countries.
Everolimus is undergoing Phase III studies for patients with gastrointestinal and lung NET, HER2+ breast cancer, lymphoma and TSC-related seizures. The drug is exclusively licensed to Abbott and sublicensed to Boston Scientific for use in drug-eluting stents.
Zortress/Certican sales grew from $210 million during 2012 to $249 million for 2013. Sales continued to improve in the first half of 2014, rising to $156 million after generating $120 million in the one-year-earlier period. Patent life for everolimus is due to expire during 2020 in the United States and in 2018-2019 in Europe and other major countries.
Tasigna (nilotinib) is rapidly growing as a more effective, targeted therapy for certain adult patients with Ph+ CML. The drug is marketed as a first-line therapy for newly diagnosed patients with Ph+ CML in the chronic phase in over 85 countries, including the United States, EU, Japan and Switzerland. Tasigna is available in 110-plus countries as a second-line treatment for patients with Ph+ CML in chronic and/or accelerated phase who are resistant or intolerant to existing treatment, including Gleevec/Glivec.
A signal transduction inhibitor of the BCR-ABL tyrosine kinase, Tasigna’s market share continues to increase globally in first-line and second-line settings. The product is part of Novartis’ Bcr-Abl franchise with net sales of $6.0 billion, (more than 7 percent in constant currencies), which includes Gleevec/Glivec. Novartis launched a worldwide clinical-trial program to study the potential for Ph+ CML patients to maintain deep molecular response after stopping nilotinib therapy – a concept known as treatment-free remission.
Tasigna in 2013 broke the billion-dollar barrier for the first time with sales of $1.27 billion after producing $998 million in the prior calendar year. For the first six months of 2014, the drug’s sales reached $710 million, up 19 percent year-over-year. Patent protection for Tasigna is due to run out during 2023 in the United States and other major markets.
The Galvus group generated 2013 sales of $1.2 billion, up 40 percent in constant currencies versus 2012. First-half 2014 sales came in at $636 million compared to $556 million in the corresponding one-year-earlier period. The group includes Galvus, an oral treatment for type 2 diabetes, and Eucreas, a single-pill combo of vildagliptin (the active ingredient in Galvus) and metformin. The Galvus family during 2013 continued to produce strong growth across markets such as Europe, Japan, Latin America, and Asia Pacific. Performance was fueled by a continued concentration on patients whose diabetes remains uncontrolled on metformin, as well as an expansion of usage in new patient segments based on new indications.
Galvus and Eucreas are marketed in over 110 countries. Patent protection for vildagliptin and the patented active ingredient in Eucreas is due to expire (with extensions) during 2019 to 2024.
The Exelon franchise produced stable sales of $1.03 billion in 2013 as a therapy for Alzheimer’s disease (AD) dementia and Parkinson’s disease (PD) dementia. The product line’s sales fell from $529 million in 1H 2013 to $508 million for the first two quarters of 2014. Exelon Patch, the novel transdermal form of the product introduced during 2007 and available in over 90 countries, generated most of the sales. U.S. regulators during June 2013 expanded the indication for Exelon Patch – already approved for treating mild to-moderate dementia of the Alzheimer’s type and mild to-moderate dementia associated with PD – to include the treatment of patients with severe AD. The severe AD indication was subsequently given the go-ahead in Argentina during September 2013 and Chile in October 2013. European marketing authorization was received during January 2013 for the higher dose in mild-to-moderate AD. The first generic versions of Exelon Patch have been introduced in the European Union.
Exjade is a once-daily oral therapy for the treatment of chronic iron overload due to blood transfusions in patients 2 years and older. The medicine’s 2013 sales reached $893 million (more than 4 percent in constant currencies), with steady growth accomplished in the United States, Europe, Latin America, China, Middle East and Japan. Exjade’s sales rose from $437 million during January-June 2013 to $452 million for first-half 2014.
Exjade was initially approved during 2005 and is marketed in 100-plus countries. The drug is additionally available for treating chronic iron overload in patients 10 years and older with non-transfusion-dependent thalassemia in over 60 countries, including the United States and EU member states.
Patent protection for the active ingredient in Exjade runs out during 2019 in the United States and 2021 in other markets. Generic companies in the United States and Canada have contested the compound patent. An automatic stay preventing U.S. regulators from approving a generic version of Exjade expired during August 2014. Novartis initiated patent litigation against that generic company in the United States, with a trial that was scheduled for January 2014.
Marketed in over 90 countries, the transplantation drug Myfortic generated 2013 sales of $637 million (more than 13 percent in constant currencies). The product’s sales fell from $319 million during the first six months of 2013 to $256 million in 1H 2014. Myfortic is available for the prevention of acute rejection of kidney allografts and is indicated for treatment in combination with cyclosporine and corticosteroids. Myfortic (enteric-coated formulation of mycophenolate sodium) was initially approved in the United States during 2004 and in the EU during 2003.
There is no patent protection for the active chemical in Myfortic. Patents covering the formulation are due to run out during 2017. In the United States, four patent litigations have been settled and a generic version of Myfortic is on the market. Generic companies are seeking clearance for Myfortic generics in some European countries.
The biologic Xolair is available for appropriate patients with severe persistent allergic asthma in Europe and moderate-to-severe persistent allergic asthma in the United States. Xolair sales came in at $613 million for 2013, a 24 percent improvement over its 2012 result. The drug’s sales amounted to $370 million in first-half 2014 and $289 million during the first two quarters of 2013.
The humanized monoclonal antibody is approved in 90-plus countries and during 2013 it continued to grow strongly in Europe, Japan, Canada and Latin America. Novartis jointly promotes Xolair with Genentech/Roche in the United States and shares a portion of operating income, but does not record U.S. sales.
A Phase III trial for Xolair is advancing to support registration in China. Results from three pivotal Phase III registration studies for omalizumab, the main ingredient in Xolair, for treating chronic idiopathic urticaria (CIU; also known as chronic spontaneous urticaria/CSU in the EU) were presented in 2013. Regulatory filings for omalizumab in CIU/CSU were completed in the EU, United States and Switzerland during third-quarter 2013. The CHMP in January 2014 granted a positive opinion for the use of Xolair as an add-on therapy for CSU in adult and adolescent patients 12 years and older with inadequate response to H1 antihistamines.
Patent protection for omalizumab is due to expire during 2018 in the United States and during 2017 in Europe and Japan. Patent protection expired during 2012 in Canada and Hong Kong, with no biosimilar competitors having been launched as of early 2014.
Available as a treatment for ADHD in children, Ritalin and Ritalin LA are marketed in over 70 and 30 countries respectively, and they are additionally indicated for narcolepsy. Ritalin was initially marketed during the 1950s. Focalin and Focalin XR are also marketed in the United States for children with ADHD, and Focalin XR is indicated for adults as well. Focalin XR is additionally marketed in Switzerland. Ritalin Immediate Release is facing generic competition in most countries. Some strengths of Ritalin and Focalin are subject to U.S. generic competition.
Ritalin and Focalin sales during 2013 improved 8 percent in constant currencies to $594 million. First-half 2014 sales for Ritalin and Focalin dropped off 17 percent from the one-year-earlier period to $242 million.
Recent Product Approvals/In The Pipeline
Novartis strives to ensure that patients can benefit from new medicines as quickly as possible by increasing the speed of development, designing clinical studies to produce necessary data and collaborating with governments on innovative pricing arrangements for new products. Novartis has one of the industry’s most competitive pipelines, consisting of over 200 projects in clinical development throughout the Group and roughly 140 pharmaceutical projects.
Alcon’s Simbrinza gained EU clearance during July 2014 to treat patients living with glaucoma. The product provides a convenient option to reduce treatment burden compared to concomitant administration of single drugs. Simbrinza is the first beta blocker-free formulation joining together two approved therapies, Brinzolamide 10mg/mL and Brimonidine 2mg/mL, in one single bottle.
FDA accepted Sandoz’s application for biosimilar filgrastim as announced during July 2014. Sandoz is the first company to announce a biologic approval submission via the biosimilars pathway created in the Biologics Price Competition and Innovation Act of 2009. The reference product is Amgen’s blockbuster brand Neupogen, which is indicated to decrease the incidence of infection, as manifested by febrile neutropenia, in patients with nonmyeloid malignancies receiving myelosuppressive anticancer drugs associated with a significant incidence of severe neutropenia with fever.
Zykadia (ceritinib) was FDA-approved during second-quarter 2014 for anaplastic lymphoma kinase positive non-small cell lung cancer. Zykadia gained U.S. regulatory clearance as a treatment for patients with ALK+ metastatic non-small cell lung cancer (NSCLC) who have progressed on or are intolerant to crizotinib, which is marketed as Xalkori by Pfizer Inc. A regulatory application was filed with EU health authorities for LDK378 in ALK+ NSCLC.
Also during 2Q 2014, FDA granted Fast Track designation and agreed to a rolling NDA submission for LCZ696. The product candidate is being developed for heart failure with reduced ejection fraction. The Fast Track designation follows the early closure of the Phase III PARADIGM-HF trial, the largest-ever study of a heart failure treatment, based on strength of interim results.
U.S. regulators during July 2014 granted Breakthrough Therapy status to CTL019. The investigational chimeric antigen receptor (CAR) therapy is intended for treating pediatric and adult patients with relapsed/refractory acute lymphoblastic leukemia. Novartis acquired the rights to CTL019 from the University of Pennsylvania during 2012 as part of a multiyear collaboration agreement. CTL019 represents the fifth Breakthrough Therapy designation for Novartis.
Novartis filed for FDA approval of its vaccine candidate Bexsero in second-quarter 2014. The company submitted a Biologic License Application for marketing clearance for the use of Bexsero to help protect against meningitis B (MenB) in adolescents and young adults. The vaccine has been approved in the EU to prevent meningococcal serogroup B infections in all age groups.
Pivotal Phase III study results presented at the Annual Meeting of the American Society of Clinical Oncology (ASCO) demonstrated that Jakavi (ruxolitinib) significantly improved two key measures of disease control in polycythemia vera (PV). Worldwide regulatory submissions for that indication are under way.
Jakavi already has been cleared for marketing for other indications in over 50 countries, including EU member states, Canada, Australia, Russia, Mexico and Argentina. Jakavi is the first JAK inhibitor indicated for treating disease-related splenomegaly or symptoms in adult patients with primary myelofibrosis (also known as chronic idiopathic myelofibrosis), post-polycythemia vera myelofibrosis or post-essential thrombocythemia myelofibrosis.
Other Data presented at ASCO demonstrated that Zykadia shrank tumors in patients with ALK+ NSCLC. The results included those who had received previous treatment with an ALK inhibitor and those receiving one for the first time.
Additionally at ASCO, Novartis presented pivotal Phase III study results showing that adding the investigational compound panobinostat/LBH589 to bortezomib (marketed by Millennium Pharmaceuticals Inc. as Velcade) and dexamethasone significantly improved progression-free survival in patients with relapsed or relapsed and refractory multiple myeloma versus treatment with the same regimen with placebo.
Among other Novartis ASCO highlights, a pivotal Phase II trial showed that patients with locally advanced or metastatic basal cell carcinoma (BCC) taking the investigational oral compound sonidegib/LDE225 had marked and sustained tumor shrinkage. The new product candidate was filed with EU regulators during second-quarter 2014 and additional global submissions are in progress.
Phase III trial results revealed during 2Q 2014 demonstrated that acromegaly patients for whom current standard of care provides inadequate disease control achieved greater biochemical control with the investigational therapy Signifor LAR (pasireotide LAR; SOM230). These results, along with a separate Phase III study, are the basis for global regulatory submissions in this indication.
Positive results announced in 2Q 2014 for Ultibro Breezhaler reinforced the product’s strong competitive profile. Phase III study results showed the superiority of once-daily Ultibro Breezhaler (indacaterol/glycopyrronium) 110/50 mcg in lung function versus GSK’s twice-daily Seretide Accuhaler (salmeterol/fluticasone (SFC)) 50/500 mcg.
New data show that more MS patients treated with Gilenya had brain volume loss rates comparable to people without multiple sclerosis compared to those taking placebo. Also, new pooled analyses confirmed the consistent efficacy of Gilenya across four key measures of MS in pre-treated patients with high disease activity.
Clinical trials are in progress to expand efficacy data for RLX030 in acute heart failure. FDA and the CHMP confirmed that additional evidence of the efficacy of serelaxin/RLX030 is necessary for U.S. and EU marketing clearance for treating acute heart failure. U.S. and EU health authority committees voted against recommending approval for the medicine during first-quarter 2014.
The 2014 first quarter for Novartis also saw continued pipeline progress with positive regulatory decisions and significant clinical-trial data released. For example, Xolair was approved by U.S. and EU health authorities as the first and licensed therapy for the up to 50 percent of patients with CIU/CSU who do not respond to approved doses of antihistamines.
Lucentis was cleared for marketing in Japan for its fourth approved indication in that country. The drug was given the green light to treat patients with diabetic macular edema (DME), a leading cause of vision loss in diabetes patients. Lucentis is the first anti-VEGF therapy to obtain marketing clearance for DME in Japan.
Secukinumab (product code AIN457) demonstrated high efficacy in two Phase III trials, as revealed during first-quarter 2014. Being developed for moderate-to-severe plaque psoriasis, secukinumab showed consistent high efficacy when administered with a convenient pre-filled syringe or autoinjector/pen, meeting primary and secondary endpoints. Also, a new Phase IIIB head-to-head study of AIN457 versus Janssen Biotech Inc.’s Stelara (ustekinumab) began patient enrollment.
Patient enrollment was finished in only eight months for the Phase III study of biosimilar etanercept in patients with moderate-to-severe chronic plaque-type psoriasis. The drug is marketed as by Amgen as Enbrel, which is one of the world’s top-selling prescription medicines. Novartis also has a biosimilar version of the psoriasis drug adalimumab, which is marketed by AbbVie as Humira – the world’s top selling Rx drug in 2013 – in Phase III clinical development.
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February 2015 Focus: Agenda 2015, Top 10 Pipelines, SFE