Tag: European Market

• Recent and upcoming divestments will streamline the business and provide increased focus to deliver shareholder returns. 
• Recent product launches indicate solid sales momentum, with near-term product pipeline potentially providing further upside.  
• Selective bolt-on acquisitions to supplement organic growth. 
• Operating efficiency focuses to further support earnings growth.
• As the new management team improves Company culture, investors are less likely to ascribe a discount to the stock based on legacy issues.  

Key Risks

We see the following key risks to investment thesis:

• Recently launched products fail to deliver sales growth as expected by the market.
• New product pipeline fails to yield “blockbuster” products or delays in bringing key products to market.
• R&D programs do not yield new long-term ideas.
• Increased competition (pricing pressure & innovative products) from new entrants or existing players.  
• Value destructive M&A.
• Regulatory / litigation risks.

Management’s outlook

Assuming a continuation of the return to normal global healthcare systems including prescription dynamics particularly oncology in 2H21, and that no Gilenya and Sandostatin LAR generics enter in FY21 in the US, management anticipates (in cc); (1) FY21 net sales to grow low to mid-single digit, with Innovative Medicines to grow mid-single digit and Sandoz to decline low to mid-single digit, and core operating income to grow mid-single digit (ahead of sales), with Innovative Medicines growing mid to high-single digit, ahead of sales, and Sandoz declining low to mid-teens. (2) 2H21 net sales growth to accelerate from 3% in 1H21 to mid-single digit, as the Company continues to return to normal prescribing behaviors, as well as further Sandoz stabilization, and core operating income growth to be high-single digit, driven by higher sales and ongoing productivity programs partly offset by increased investments in growth drivers and pipeline.

Company Description  

Novartis AG (NOVN) is an innovative healthcare company headquartered in Basel, Switzerland, with approximately 125,000 employees. In 2017, the Group reported net sales of US$49.1bn, while R&D throughout the Group amounted to approximately US$9.0bn. The Company sells its products in approximately 155 countries. The group has two segments which it reports on: (1) Innovative Medicines (Oncology / Pharmaceutical), and (2) Sandoz generics division.    

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.