BASEL, Switzerland - Novartis International AG, whose Alcon division has a manufacturing facility in Berks County, released its fourth-quarter and full-year earnings for 2018 and released details of its proposed spin-off of Alcon in the first half of 2019.
Efforts toward the proposed 100-percent spinoff of the Alcon eye care division are progressing with the Novartis board of directors providing final endorsement of the potential transaction. Novartis shareholders will vote on the proposed spin-off at Novartis' annual general meeting of shareholders (AGM) on February 28, 2019.
In addition to shareholder approval, completion of the proposed Alcon spin-off remains subject to certain conditions, such as no material adverse events, receipt of necessary authorizations as well as tax rulings and opinions. If all necessary approvals are secured and steps completed, the spin-off would be implemented through the distribution of a dividend-in-kind of Alcon shares to Novartis shareholders and ADR (American Depository Receipt) holders.
The distribution is expected to be tax neutral on a U.S. and Swiss income tax basis. If the distribution is approved at the Novartis shareholder meeting and the conditions for it are met, shareholders will receive the following:
• For every 5 Novartis shares: 1 Alcon Share
• For every 5 Novartis ADRs: 1 Alcon Share
Novartis provided the names of the individuals who will comprise the future Alcon board of directors to be led by Chairman Designate, Mike Ball. The directors are as follows: Lynn Bleil, Arthur Cummings, M.D., David J. Endicott, Thomas Glanzmann, D. Keith Grossman, Scott Maw, Karen May, Ines Pöschel and Dieter Spälti.
Alcon net sales were $7.1 billion for the full year, up 6 percent over 2017. Surgical sales grew 7 percent with growth across all key product categories, driven mainly by IOLs (Intra Ocular Lenses) and consumables. Vision Care sales grew 3 percent, mainly driven by growth in contact lenses with continued double-digit growth of Dailies Total1.
"In 2018, we re-imagined Novartis," said Vas Narasimhan, CEO of Novartis, commenting on the company's results. "We took major steps towards becoming a medicines company that focuses its capital on developing, launching, and creating global access to breakthrough medicines."
Net sales for Novartis were $51.9 billion in 2018, driven by volume growth of 9 percent, mainly driven by Cosentyx, advanced accelerator applications (AAA) and four additional products reaching blockbuster status (Promacta/Revolade, Tafinlar + Mekinist, Entresto and Xolair). Operating income was $8.2 billion, down 5 percent from 2017, mainly due to the impacts from Merger &Acquisition transactions, higher restructuring and net impairment charges, and growth investments, partly offset by higher sales. Core operating income was $13.8 billion, an 8 percent increase from 2017, driven by higher sales and gross margin, partly offset by investments, including AveXis.
Innovative Medicines net sales were $34.9 billion, an increase of 8 percent for the full year. Pharmaceuticals business unit grew 7 percent, driven by Cosentyx reaching $2.8 billion and Entresto $1.0 billion.
Oncology business unit grew 9% (constant currencies), driven by AAA including Lutathera, both Promacta/Revolade and Tafinlar + Mekinist reaching $1.2 billion. Generic competition had a negative impact of 2 percentage point and pricing had a negative impact of 1 percentage point.
Sandoz net sales were $9.9 billion in 2018, a decrease of 3 percent (cc) with 8 percentage points of price erosion mainly in the US, partially offset by volume growth of 5 percentage points. Excluding the U.S., net sales grew by 4 percent.
Global sales of Biopharmaceuticals grew 24 percent, mainly driven by Rixathon (rituximab) and Erelzi (etanercept) in Europe, and Zarxio (filgrastim) in the US.
"Looking ahead, we expect to sustain top and bottom line growth driven by the strength of our in-line brands and our exciting lineup of 10 potential blockbuster launches by 2020," Narasimhan said.
Novartis is a leading global medicines company that uses innovative science and digital technologies to create treatments in areas of great medical need. It consistently ranks among the world's top companies, investing in research and development. Novartis products reach nearly 1 billion people globally, and the company says it is intent on finding ways to expand access to its latest treatments. About 125,000 people of more than 140 nationalities work at Novartis around the world.
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