Novartis(NVS) - 2023 Q4 - Annual Report

Financial Performance - Net sales from continuing operations reached $45.4 billion, up from $42.2 billion in 2022, representing a growth of approximately 5.1%[21] - Net income from continuing operations rose to USD 8.6 billion, a 62% increase from USD 6.0 billion in 2022[169] - Core operating income from continuing operations was $16.4 billion, compared to $14.8 billion in 2022, reflecting an increase of about 10.8%[22] - Core operating income increased to USD 16.4 billion, up 18% in constant currencies, with a core operating income margin of 36.0%[172] - Free cash flow increased to USD 13.2 billion, up 9% driven by higher net cash flows from operating activities[172] - The company paid USD 7.3 billion in dividends to shareholders in 2023[157] Sales Growth - The company achieved a 10% growth in sales (constant currency) and an 18% growth in core operating income (constant currency) in 2023[41] - Sales of Entresto, a heart failure medicine, grew 31% to USD 6.0 billion, with approximately 10 million patients treated globally[166][178] - Kesimpta, a treatment for relapsing multiple sclerosis, saw sales of USD 2.2 billion, up 99% from the previous year[166] - Pluvicto, a radioligand therapy for prostate cancer, registered sales of USD 1.0 billion, reflecting a 261% increase[167] - Cosentyx sales increased 5% (cc) to USD 5.0 billion in 2023, with sales outside the US growing 19% (cc)[187] - Kisqali sales increased 75% (cc) to USD 2.1 billion, driven by its overall survival benefits in HR+/HER2- advanced breast cancer[192] - Scemblix registered sales of USD 413 million, up 179% (cc), demonstrating high unmet need for CML treatment options[198] Research and Development - Novartis invested $8.6 billion in research and development in 2023, an increase from $8.3 billion in 2022[21] - The company reported a total of 3,951 gene, cell, and RNA therapies in development, with 53% being gene therapies[75] - The average cost to develop and bring a new medicine to market is USD 2.3 billion, taking over seven years from initial clinical trials to the end of Phase III[84] - Novartis is actively engaging with over 100 investigational medicines, integrating patient perspectives into research and development processes[130] - Novartis has removed the requirement for a bone marrow aspiration test in clinical trials for CML, improving patient recruitment and experience[136] Market Presence and Strategy - Novartis maintains a strong presence in priority markets, including the US, Germany, China, and Japan, which are expected to account for most of the growth in global healthcare spending over the next five years[90] - The global medicine market is projected to grow at a compound annual growth rate of 3-6% through 2027, reaching approximately USD 1.9 trillion[75] - The company aims for a 5% compound annual growth rate (CAGR) in sales from 2023 to 2028, driven by strong momentum in its existing portfolio and key upcoming launches[91] - The company targets to increase core margins to the 40%+ range by 2027 through operational excellence initiatives[93] Sustainability and ESG Initiatives - The company reported a 63% reduction in greenhouse gas emissions in its own operations compared to the 2016 baseline[22] - Novartis achieved a 63% reduction in Scope 1 and 2 carbon emissions compared to the 2016 baseline, on track to become carbon neutral in its operations by 2025[6] - 57% of supplier emissions are covered by contracts that include environmental sustainability criteria, aiming for 100% coverage by 2025[8] - The company is on track for a 50% reduction in water consumption in its operations by 2025, compared to the 2016 baseline[11] - 66% reduction in waste sent for disposal achieved compared to the 2016 baseline, with a target to reduce by half by 2025[15] - 51% of new projects have incorporated sustainable design principles, with a goal of 100% by 2030[14] - Novartis aims to become plastic neutral by 2030, with an established baseline for reducing plastics in packaging and devices[14] - The company is working on increasing the share of primary emissions data collected from suppliers, enhancing its carbon neutrality efforts across the value chain[9] - Novartis has completed a physical water risk assessment for all its sites, aiming to become water neutral in its operations by 2030[11] Product Development and Approvals - Novartis received 22 approvals for new medicines in the US, EU, Japan, and China in 2023, slightly down from 23 in 2022[21] - The acquisition of Chinook Therapeutics added two promising Phase III assets for IgA nephropathy to Novartis' pipeline[37] - 100% of new product launches in 2023 included a global access strategy, reaching 33.2 million patients[157] - Submissions for approval of ribociclib in early breast cancer were completed in August to the EMA and in December to the FDA[193] - Scemblix has been approved in more than 60 countries for patients with Philadelphia chromosome-positive CML in chronic phase[198] Workforce and Gender Diversity - Female representation in management reached 48%, meeting the aspiration for gender balance globally by the end of 2023[21] - Novartis employs over 78,000 people globally, with 48% of management positions held by women[66] - The company achieved a mean gender pay gap of -0.9% globally as of December 31, 2022, and increased women in management to 48%[122] Corporate Transformation - Novartis spun off its Sandoz generics and biosimilars business in October 2023, marking a significant transformation into an innovative medicines company[52] - The company has made targeted acquisitions since 2015, including Chinook Therapeutics in 2023, to enhance its capabilities in innovative therapies[54]