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Alcon Performance and Strategic Priorities
Credit Suisse Healthcare Conference – Nov 11, 2014
1 | Harvard Club | Jeff George | September 24, 2014
Jeff George, Global Head of Alcon
Legal Disclaimer
This presentation contains expressed or implied forward-looking statements, including discussions of our research
and development activities and pipeline. Such forward-looking statements reflect the current views of the Group
regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause
actual results to be materially different from any future results expressed or implied by such statements. These
expectations could be affected by, among other things, risks and factors referred to in the Risk Factors section of
Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Novartis is providing
the information in this presentation as of this date and does not undertake any obligation to update it in the future.
Constant currencies (cc), core results, and free cash flow are non-IFRS measures. An explanation of these nonIFRS measures and reconciliation tables can be found beginning on page 52 of the Novartis Group Condensed
Interim Financial Report for Q3 2014.
All growth figures throughout this presentation are in constant currencies (cc).
2 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Alcon is the global leader in ophthalmology
Ophthalmology Revenue
2013, USD billions
• 25,000+ employees, serving 180 countries
10.5
• Second-largest Novartis division
• Global leader in eye care 1
3.0
– #1 globally in Surgical Ophthalmology
– #1 globally in Ophthalmic Pharmaceuticals
2.9
– #2 globally in Vision Care
• Nearly $1 billion invested in R&D annually
1.1
1
Based on annual revenue from company statements in annual reports
3 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
• 23 manufacturing sites producing 250,000+
SKU’s
Alcon products help patients across ocular diseases
Cornea
Refractive error,
inflammation, allergy,
infection, dry eyes
Lens
Cataracts,
presbyopia,
astigmatism
4 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Optic nerve
Glaucoma
Retina
Vitreoretinal /
retinal diseases
Ophthalmic Pharma: Alcon is the global leader with
products treating a broad range of conditions
Sales
2013 USD Billions
Key brands
4.1
Dry Eye / Rest
Pharma
Systane®, Tears Naturale®
0.9
Allergy/Otic/Nasal
0.9
Patanol®, Pataday®,
Patanase®, Ciprodex®
Infection/
Inflammation
1.0
NevanacTM, Ilevro®, Durezol®
Glaucoma
1.3
Travatan®, DuoTrav®, Azopt®,
Azarga®, Simbrinza®
5 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Surgical
Surgical: Alcon is the global leader
Sales
2013 USD Billions
Refractive/Other
Vitreoretinal
products
Cataract products
(IOL)
Key products
3.9
0.3
Lasik and refractive
correction equipment
0.6
1.3
Surgical equipment
and devices
Medical devices
(e.g., IOLs)
Cataract products
(non-IOL)
1.7
6 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Femtosecond laser for
improved precision
Vision Care
Alcon is #2 in contact lenses and #1 in solutions
and has recently launched a number of key innovations
Sales
2013 USD Billions
Key brands
2.5
Contact lens care
0.7
Contact lenses
1.8
Source: GFK Retail Data, CLI
7 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Agenda
Alcon September YTD Performance Update
Alcon Strategic Priorities
8 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Alcon YTD sales +5% vs. PY (cc) & reported OpInc +16% (usd)
September YTD financials
Sept. YTD
2013
USDm
Sept. YTD
2014
USDm
% USD
% cc
Net sales to third party
7,841
8,124
+4%
+5%
Core operating income
2,843
2,916
+3%
+6%
Core ROS
36.3%
35.9%
-0.4%
+0.2%
Operating income
1,060
1,232
+16%
+24%
ROS
13.5%
15.2%
+1.7%
+2.5%
Total function costs
2,929
2,908
+1%
+0%
Free Cash Flow
2,013
2,159
+7%
+11%
% of Sales
25.7%
26.6%
9 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Growth vs. PY
Sales and profit growth both accelerated in Q3
Growth vs. prior year
Percent, constant currency
Core OpInc
Sales
12
6.0
3.6
2
Q2 2014
Q3 2014
10 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Q2 2014
Q3 2014
Q3 Highlights and Lowlights
Q3 Highlights
Q3 Lowlights
▪
Strong surgical sales growth (+10%)
▪
Soft Japan performance (+2% vs. PY)
▪
Emerging markets1 growing +18% vs. PY, led by
Russia (+25%), China (+22%), and Turkey (+21%)
▪
Top 5 EU markets underperforming
(+2% vs. PY)
▪
Systane® accelerating (+33%)
▪
Dailies Total1® sales +68% vs. PY
▪
Weak allergy and otic seasons
▪
Profits +59% vs. PY cc and Core
OpInc +12% cc
▪
Contact lens care
underperforming (-8%)
1 Emerging markets comprise all markets excluding the US, Canada, Western Europe, Japan, Australia, and New Zealand
11 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Emerging markets are leading Alcon’s growth globally
2014 YTD growth vs. PY
Percent in constant currency
North America
3
EMEA
2
Japan
3
Asia
13
Latin America
16
12 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
All franchises are growing YTD, with Surgical accelerating
Q3 vs. PY
Percent in cc
2014 September YTD Net Sales
USD bn, at actual FX reported rates
Pharma
3.2
Surgical
Vision
Care
3.0
1.9
Alcon
13 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
8.1
YTD vs. PY
Percent in cc
+4
+4
+10
+7
+4
+3
+6
+5
Pharma
Alcon’s fixed-dosed glaucoma products growing double-digit
Azarga®, Simbrinza®, and DuoTrav® sales growth vs. PY
Percent
+23%
Sept. YTD 2013
Sept. YTD 2014
14 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Systane® has grown +25% vs. PY, leading
our Dry Eye franchise
Systane® sales growth vs. PY
Percent
+25%
Sept. YTD 2013
Sept. YTD 2014
15 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Pharma
Surgical
Alcon is driving innovation in Cataract Refractive surgery
Clinical Plan
Surgical Planning
Treatment
Femtosecond
Laser
16 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Operate
Intra-operative
Aberrometry
Strong Centurion® rollout is supporting
improved IOL performance
Surgical
• Approaching 10% penetration of our global
installed base and 15% in the US
• Centurion® represented 21% of our US phaco
procedures in September (13% globally)
• Improving IOL share
17 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Surgical
Centurion® and LenSx® bolstering IOL performance
Global1 Centurion® and LenSx® accounts vs. non-Centurion® and non-LenSx® accounts
August YTD IOL unit growth vs. PY, percent
Centurion® accounts, Account-level impact
10%
LenSx® accounts, Account-level impact
10%
2%
Centurion®
accounts
1
NonCenturion®
accounts
US, Top 4 Europe, LACAR, and Asia
18 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
2%
LenSx®
accounts
NonLenSx®
accounts
Alcon has rapidly increased share in the contact
lenses market on back of Dailies Total1® launch
Alcon vs. Competitor unit share
US Market, 2008-20141 through Sept. 2014
50%
40%
30%
20%
10%
37.8%
25.5%
36.5%
33.8%
32.9%
24.6%
26.1%
26.8%
32.1%
28.2%
31.9%
29.5%
25.8%
27.2%
27.1%
22.9%
25.6%
12.0%
10.1%
10.5%
8.8%
30.5%
30.5%
25.8%
19.7%
14.4%
7.5%
8.5%
2013
2014
0%
2008
1
2009
2010
2011
Data is from September of each year
Source: GFK Retail Data
19 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
2012
Vision Care
Vision Care
Dailies Total1® is seeing rapid uptake
Dailies Total1® sales growth vs. PY
Percent
Premium SiHy dollar market share, US
Percent
100
100
80
+103%
60
52
40
46
20
0
Sept. YTD 2013 Sept. YTD 2014
Source: GFK Retail Data
20 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
0
Mar Jun Sep Dec Mar Jun Sep
2013
2014
Agenda
Alcon September YTD Performance Update
Alcon Strategic Priorities
21 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Alcon Strategic Priorities
Growth
Innovation
Productivity & Quality
People & Culture
cultureXchange
learn share evolve
Exchanging ideas for a Beyond 1 Culture
x
22 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
x
Collaboration with Google could
transform diabetes and presbyopia
Innovation
• Strengthens Alcon’s leadership in contact lenses and intraocular lenses
• Involves non-invasive sensors, microchips, and other miniaturized electronics
• Focuses currently on diabetes and presbyopia
23 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Intra-operative aberrometry will strengthen
Alcon’s position as an innovation leader
Acquisition of
24 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Innovation
Intraoperative
guidance system
for enhanced
cataract outcomes
Alcon is pursuing breakthrough
treatments in Retina
Innovation
RTH258 has potential to augment wet
AMD therapies
Breakthrough
Retina
Treatments
LFG316 Complement Inhibitor for
Geographic Atrophy (advanced form
of dry AMD)
Jetrea®: first pharmaceutical treatment
for eligible patients with vitreomacular
traction
25 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Alcon has a deep commitment
to Quality and Compliance
Quality
Recent Alcon FDA Inspections
Fort Worth R&D, TX
July 14-24
Huntington, WV
August 5-7
0 Observations
3 Observations
Lake Forest, CA
September 10-16
0 Observations
26 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Fort Worth North, TX
September 2-8
0 Observations
Batam, Indonesia
November 3-7
0 Observations
People
Alcon Executive Leadership Team
Jeff George
Global Head, Alcon
Commercial Operations
Functions
Robert Warner
President,
US
Riad Sherif
President,
EMEA
Sabri Markabi, M.D
SVP, R&D
Ed McGough
SVP, MFG &
Technical
Operations
Sergio Duplan
President,
Latin America and
Canada
Roy Acosta
President,
Asia and Russia
David Nieto
Chief Financial
Officer
Merrick McCracken
SVP, Human
Resources
Jim Murphy
President,
Japan
Laurent Attias
Head, Global
Franchises &
Marketing
Christina
Ackermann
SVP, Legal
General Counsel
Bettina Maunz
VP, Head of Global
Communications
Sue Whitfill
Head, Global Quality
27 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Back-up
28 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Centurion® has further expanded Alcon’s
leadership position in phaco equipment
Key Differentiators
Key Differentiators
 “Active Fluidics” – major improvement in Intraocular
Pressure (IOP) stability
 Intuitive touch screen user interface
 Link to Verion™ pre-operative image-guided
planning
29 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
Alcon offers a range of intraocular lenses
Increasing value
Base IOLs
Advanced technology IOLs
Product
Description
base
monofocal
30 | Credit Suisse Healthcare Conference | Jeff George | November 11, 2014
addresses
astigmatism
addresses
presbyopia
addresses
astigmatism and
presbyopia