In order to comply with International Financial Reporting Standards (IFRS), Novartis has separated the Group's reported financial data into "continuing" and "discontinued" operations. The results of the Alcon business in 2019 are reported as discontinued operations. See page 43 and Notes 2, 3 and 10 in the Condensed Financial Report for a full explanation. The commentary below focuses on continuing operations including the businesses of Innovative Medicines and Sandoz, as well as the continuing Corporate functions. We also provide information on discontinued operations. Continuing operations fourth quarter Net sales were USD 12.8 billion (+3%, +1% cc) in the fourth quarter driven by volume growth of 6 percentage points, offset by price erosion of 2 percentage points and the negative impact from generic competition of 3 percentage points. Operating income was USD 2.6 billion (+45%, +51% cc) mainly due to lower impairments, lower legal charges and income from contingent receivables. Net income was USD 2.1 billion (+86%, +93% cc) driven by higher operating income and benefiting from lower taxes. EPS was USD 0.92 (+84%, +93% cc), growing in line with net income. Core operating income was USD 3.5 billion (+1%, +2% cc) mainly driven by higher sales. Core operating income margin was 27.4% of net sales, decreasing by 0.5 percentage points (+0.4 percentage points cc). Core net income was USD 3.0 billion (+2%, +3% cc) mainly driven by growth in core operating income. Core EPS was USD 1.34 (+2%, +3% cc), growing in line with core net income. Free cash flow from continuing operations amounted to USD 3.3 billion (-4%) compared to USD 3.5 billion in the prior year quarter, as higher cash flows from operating activities were more than offset by increased net investment for intangible assets. Innovative Medicines net sales were USD 10.2 billion (+3%, +1% cc) with volume contributing 6 percentage points to growth, pricing had a negative impact of 1 percentage point and generic competition had a negative impact of 4 percentage points mainly due to Afinitor and Exjade. Pharmaceuticals BU sales grew 2% (cc) driven by strong growth from Entresto, Cosentyx and Zolgensma. Growth was partly offset by declines in Established Medicines and mature Ophthalmology brands. Oncology BU sales were broadly in line with prior year (+1% cc). Strong performance of Promacta/Revolade, Jakavi, Tafinlar + Mekinist, Kymriah, Adakveo and Kisqali was offset by generic competition, mainly for Exjade and Afinitor. The COVID-19 pandemic continued to negatively impact dermatology and ophthalmology. Sandoz net sales were USD 2.5 billion (+2%, 0% cc) with a volume increase of 3 percentage points. There was a negative price effect of 3 percentage points, despite the benefit from off-contract sales in the US. Global sales of Biopharmaceuticals grew 16% (cc), driven by continued strong growth in Europe. Continuing operations full year Net sales were USD 48.7 billion (+3%, +3% cc) in the full year mainly driven by Entresto, Zolgensma and Cosentyx. Volume contributed 9 percentage points to sales growth, partly offset by price erosion of 3 percentage points and the negative impact from generic competition of 3 percentage points. Operating income was USD 10.2 billion (+12%, +19% cc) mainly driven by higher sales and productivity including lower spend. Net income was USD 8.1 billion (+13%, +20% cc) mainly driven by higher operating income. EPS was USD 3.55 (+14%, +21% cc), growing faster than net income and benefiting from lower weighted average number of shares outstanding. Core operating income was USD 15.4 billion (+9%, +13% cc) mainly driven by higher sales, improved gross margin and productivity including lower spend. Core operating income margin was 31.7% of net sales, increasing by 2.0 percentage points (+2.8 percentage points cc). Core net income was USD 13.2 billion (+9%, +12% cc) mainly driven by growth in core operating income. Core EPS was USD 5.78 (+9%, +13% cc), growing faster than core net income and benefiting from lower weighted average number of shares outstanding. Free cash flow from continuing operations amounted to USD 11.7 billion (-10%) compared to USD 12.9 billion in 2019, as higher operating income adjusted for non-cash items was more than offset by payments related to legal matters and lower divestment proceeds. Innovative Medicines net sales were USD 39.0 billion (+3%, +4% cc) with volume contributing 10 percentage points to growth, pricing a negative 3 percentage points and generic competition had a negative impact of 3 percentage points. Pharmaceuticals BU grew 5% (cc) driven by Entresto (+44% cc), Zolgensma (reaching USD 0.9 billion), Cosentyx (+13% cc) and Ilaris (+31% cc). Growth was partly offset by declines in Gilenya, and lower demand for Lucentis due to COVID-19. Other Ophthalmology products were also impacted by both COVID-19 and generic competition. Oncology BU grew 3% (cc) driven by Promacta/Revolade (+23% cc), Jakavi (+20% cc), Kisqali (+45% cc), Tafinlar + Mekinist (+16% cc) and Piqray (reaching USD 0.3 billion), partly offset by generic competition mainly on Afinitor and Exjade. Sandoz net sales were USD 9.6 billion (-1%, 0% cc) with volume growth of 2 percentage points despite the negative impact of COVID-19 mainly on the retail business. There was a negative price effect of 2 percentage points, despite the benefit from off-contract sales and favorable revenue deduction adjustments. Sales in Europe grew 2% (cc), while sales in the US declined 14%, due to the continued volume decline in oral solids including partnership terminations. Global sales of Biopharmaceuticals grew 19% (cc) to USD 1.9 billion, driven by continued double-digit growth across all regions. Discontinued operations Discontinued operations include the business of Alcon and certain corporate costs directly attributable to Alcon up to the spin-off date. As the Alcon spin-off was completed on April 9, 2019, the prior year included three months of operating results of the divested business. In 2020, there were no operational activities related to discontinued operations. In the full year of 2019, discontinued operations net sales were USD 1.8 billion, operating income amounted to USD 71 million and net income from discontinued operations was USD 4.6 billion, including the non-taxable non-cash net gain on distribution of Alcon Inc. to Novartis AG shareholders which amounted to USD 4.7 billion. For further details see Note 2 "Distribution of Alcon Inc. to Novartis AG shareholders", Note 3 "Significant transactions -- Completion of the spin-off of the Alcon business through a dividend in kind distribution to Novartis AG shareholders" and Note 10 "Discontinued operations" in the Condensed Financial Report. Total Group full year For the total Group, net income amounted to USD 8.1 billion compared to USD 11.7 billion in the prior year, including the non-taxable non-cash net gain on distribution of Alcon Inc. which amounted to USD 4.7 billion. Basic earnings per share was USD 3.55 compared to USD 5.12 in prior year. Cash flow from operating activities for the total Group amounted to USD 13.6 billion and free cash flow to USD 11.7 billion. Q4 key growth drivers Underpinning our financial results in the quarter is a continued focus on key growth drivers including: Entresto (USD 716 million, +35% cc) sustained strong growth with increased patient share across markets, driven by demand as the essential first choice therapy for rEF heart failure. ------------------ ----------------------------------------------------------- Cosentyx (USD 1 109 million, +13% cc) saw continued growth despite lower new patient starts across the market in dermatology and rheumatology due to COVID-19. ------------------ ----------------------------------------------------------- Promacta/Revolade (USD 471 million, +23% cc) grew across all regions, driven by increased use in chronic immune thrombocytopenia and as first-line treatment for severe aplastic anemia in the US. ------------------ ----------------------------------------------------------- Jakavi (USD 376 million, +24% cc) growth was driven by strong demand in the myelofibrosis and polycythemia vera indications. ------------------ ----------------------------------------------------------- Zolgensma (USD 254 million, +33% cc) growth was driven by expansion outside the US, including reimbursement in the EU and Japan, despite COVID-19 impacts. ------------------ ----------------------------------------------------------- Tafinlar + (USD 408 million, +13% cc) continued to show solid Mekinist growth driven by demand in adjuvant melanoma as well as NSCLC. ------------------ ----------------------------------------------------------- Kymriah (USD 141 million, +42% cc) grew strongly in Europe, US and Japan. Coverage continued to expand, with more than 290 qualified treatment centers and 27 countries having coverage for at least one indication. ------------------ ----------------------------------------------------------- Mayzent (USD 57 million) continued to grow steadily, fulfilling an important unmet medical need in patients showing signs of progression. ------------------ ----------------------------------------------------------- Adakveo (USD 34 million) US launch continued to progress well, with more than 600 accounts purchasing Adakveo to
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