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How Did Sandoz Perform in 4Q17 and Fiscal 2017?

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Sandoz revenue trends

In 4Q17, Novartis’s (NVS) subsidiary Sandoz reported revenues of $2.6 billion. Sandoz’s year-over-year (or YoY) revenues remained flat in 4Q17. In fiscal 2017, Novartis’s Sandoz reported revenues of $10.1 billion, which reflected a ~1% decline on a YoY basis. In 4Q17, Sandoz reported operating income and core operating income of $305 million and $543 million, respectively, compared to $365 million and $521 million in 4Q16. In 4Q17, Sandoz’s operating income and core operating income represented 11.8% and 20.9% of its net sales compared to ~14.0% and ~20.0% in 4Q16.

In fiscal 2017, Sandoz reported operating income and core operating income of $1.4 billion and $2.1 billion, respectively, compared to $1.4 billion and $2.1 billion in 2016.

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Regional revenues

In 4Q17, in the US market, Sandoz reported revenues of $796 million, which reflected a ~17% decline on a YoY basis. The industry-wide pricing pressure primarily led to the decline of revenues in the US market. In 4Q17, in the Europe market, Sandoz reported revenues of $1.2 billion. The sales growth in France, Germany, and the UK primarily led to the revenue growth of Sandoz’s revenues in the European market.

In 4Q17, in Asia, Africa, and Australia, Sandoz generated net revenues of $377 million. In 4Q17, sales growth in China primarily pushed the revenue growth of Sandoz. In fiscal 2017, in the US and Europe markets, Sandoz reported revenues of $3.3 billion and $4.6 billion, respectively. In Europe, sales growth in France, Switzerland, and Italy primarily pushed the revenue growth. In 2017, in Asia, Africa, and Australia, Sandoz generated revenues of $1.4 billion. Sales growth in Japan primarily pushed the revenue growth.

Recent developments

In March 2018, the European Medicines Agency’s Committee for Medicinal Products for Human Use (or CHMP) gave a positive recommendation for marketing authorization application of Sandoz’s infliximab, which is a proposed biosimilar to Johnson & Johnson’s (JNJ) Remicade.

The positive recommendations of CHMP were based on the results from the phase 3 REFLECTIONS B537-02 trial, in which Sandoz’s infliximab demonstrated equivalent efficacy to reference medicine Remicade. The positive recommendations of CHMP will be further reviewed by the European Commission. Approval of the proposed biosimilar would allow Sandoz to commercialize the drug in 28 European Union countries. The approval of infliximab is expected to boost Sandoz’s revenue growth.

In February 2018, the U.S. Food and Drug Administration (or FDA) approved Glatopa, a generic version of Teva Pharmaceuticals’ (TEVA) Copaxone for the treatment of individuals with relapsing forms of multiple sclerosis. Sandoz developed Glatopa in collaboration with Momenta Pharmaceuticals (MNTA).

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