Complete the Excel Spreadsheet Using the instructions within the file and the PDF files attached.
Project requirements ACC 232 Project requirements Financial statement analysis What is this project all about? This semester, we will analyze Pfizer and Novartis. Search online for “Pfizer Investor Relations” and “Novartis Investor Relations” to find your way to the annual reports and financial statements. Links to the financials can also be found on the Project worksheet tab. They may take a minute to fill. OR Use the attached files. You can earn 40 points total for the project: 32 for the ratios and 8 for your closing written statements. Excel is required. Make sure to edit your work carefully. Submit in AMEengagge on time according to the syllabus schedule. Using the Internet, find and print the Income Statements and Balance Sheets for our two companies for the two most recent years. There will be 4 ratio calculations for each type of ratio. For example, for each ratio, you will calculate (1) Pfizer 2018, (2) Pfizer 2017, (3) Novartis 2018 and (4) Novartis 2017. Use the Excel worksheet here to organize your work. What are the project requirements? #1 Complete the following financial ratios for both companies and both years (32 points) Analysis type:Ratio name:Ratio formula:indication/implication Liquidity analysisCurrent RatioCA/CLWritten response5 Profitability analysisGross Profit MarginGP/SWritten response5 Return on EquityNI / Avge SEWritten response5 Return on AssetsNI / Avge TAWritten response5 Operations analysisInventory TurnoverCGS / Avge InvyWritten response5 Solvency analysisDebt to Equity RatioTL / TSEWritten response5 Market PriceGivenWritten response1 Earnings Per ShareGivenWritten response1 #2 Complete the following closing written statements (8 points) Prepare a closing statement about what you learned about these companies through our analysis and discussions. 4 If you were going to pick one company to invest in, which company would you select and why. 4 40 Project worksheet ACC 232 Project worksheetPfizer and NovartisSOLUTION Ratio:Company and Year:Numerator:Denominator:Answer:What does this ratio indicate/imply? 1)Current ratioPfizer 12/31/2018ERROR:#DIV/0! CA/CLPfizer 12/31/2017ERROR:#DIV/0! Novartis 12/31/2018ERROR:#DIV/0! Novartis 12/31/2017ERROR:#DIV/0! 2)Gross profit marginPfizer 12/31/2018ERROR:#DIV/0! GP/SPfizer 12/31/2017ERROR:#DIV/0! Novartis 12/31/2018ERROR:#DIV/0! Novartis 12/31/2017ERROR:#DIV/0! 3)Return on EquityPfizer 12/31/2018ERROR:#DIV/0! NI / Avge SEPfizer 12/31/2017ERROR:#DIV/0! Novartis 12/31/2018ERROR:#DIV/0! Novartis 12/31/2017ERROR:#DIV/0! 4)Return on AssetsPfizer 12/31/2018ERROR:#DIV/0! NI / Avge TAPfizer 12/31/2017ERROR:#DIV/0! Novartis 12/31/2018ERROR:#DIV/0! Novartis 12/31/2017ERROR:#DIV/0! 5)Inventory turnoverPfizer 12/31/2018ERROR:#DIV/0! CGS / Avge InvyPfizer 12/31/2017ERROR:#DIV/0! Novartis 12/31/2018ERROR:#DIV/0! Novartis 12/31/2017ERROR:#DIV/0! 6)Debt-to-equity ratioPfizer 12/31/2018ERROR:#DIV/0! TL / TEQPfizer 12/31/2017ERROR:#DIV/0! Novartis 12/31/2018ERROR:#DIV/0! Novartis 12/31/2017ERROR:#DIV/0! 7)Market pricePfizer Novartis 12/31/16$32.48$65.27 12/31/17$36.22$75.23 12/31/18$43.65$76.89 8)Earnings per sharePfizer Novartis 12/31/16$1.18$2.82 12/31/17$3.57$3.28 12/31/18$1.90$5.44 Closing statements: re-size the box if you need more room. re-size the box if you need more room. Financial statement locations: Pfizer 2018 pdf pg 70, 72https://investors.pfizer.com/financials/annual-reports/default.aspx Pfizer 2017 pdf pg 77https://investors.pfizer.com/financials/annual-reports/default.aspx Novartis 2018 pdf pg F-1, F-3https://www.novartis.com/investors/financial-data/annual-results Novartis 2017 pdf pg 186,188https://www.novartis.com/investors/novartis-annual-reporting-suite/annual-report-and-20-f-archive https://investors.pfizer.com/financials/annual-reports/default.aspxhttps://investors.pfizer.com/financials/annual-reports/default.aspxhttps://www.novartis.com/investors/financial-data/annual-resultshttps://www.novartis.com/investors/novartis-annual-reporting-suite/annual-report-and-20-f-archive Novartis Annual Report 2017 Annual Report 2017 Our mission Our mission is to discover new ways to improve and extend people’s lives. We use science-based innovation to address some of society’s most challenging healthcare issues. We discover and develop breakthrough treatments and find new ways to deliver them to as many people as possible. We also aim to provide a shareholder return that rewards those who invest their money, time and ideas in our company. Novartis Annual Report 2017 | 1 Contents CHAIRMAN’S LETTER 2 CHIEF EXECUTIVE OFFICER’S LETTER 4 KEY PERFORMANCE INDICATORS – CONSOLIDATED HIGHLIGHTS 6 2017 AT A GLANCE 8 STRATEGIC OVERVIEW Our environment 15 Our strategy 17 Our culture and values 18 Our structure 19 PERFORMANCE Performance summary 23 Innovative Medicines 34 Sandoz 36 Alcon 38 INNOVATION Innovation 42 Pipeline 58 CORPORATE RESPONSIBILITY Corporate responsibility at Novartis 67 Access to healthcare 69 Patient health and safety 70 Novartis access approaches: performance indicators 2017 71 CORPORATE GOVERNANCE Letter from the Chairman 82 Summary of our corporate governance approach 84 Our shares and our shareholders 85 Our Board of Directors 92 Our management 106 Our independent external auditors 111 Our corporate governance framework 113 Further information 114 COMPENSATION REPORT Compensation Committee Chairman’s letter 118 Executive Committee compensation at a glance 120 Board compensation at a glance 122 Executive Committee compensation philosophy and principles 123 Executive Committee compensation policies 124 Executive Committee performance management process 126 2017 Executive Committee compensation 127 2018 Executive Committee compensation 143 Board compensation 146 Compensation governance 152 FINANCIAL REPORT Operating and financial review 2017 156 Novartis Group consolidated financial statements 186 Financial statements of Novartis AG 262 OTHER INFORMATION Key dates for 2018, contact information and forward-looking statements 276 Cover photo Ratan Singh and his wife, Ram Kali, attend a health clinic in Triveni Vihar in Uttar Pradesh, India, supported by a Novartis initiative that has improved access to healthcare for India’s rural poor over the past decade. Photo below Graduate intern Felix Peix uses CRISPR genome editing technology at Novartis in Basel, Switzerland. CRISPR edits the genes of targeted cells, assisting in drug discovery and offering the potential to treat disease by deleting, repairing or replacing specific genes. 2 | Novartis Annual Report 2017 Chairman’s letter Dear shareholder, Novartis made substantial progress in 2017. We returned Alcon to growth, launched important new products, and benefited from efficiency gains delivered by Novartis Business Services and the recently established global drug development and production organizations. These accomplishments have helped us to deliver solid perfor- mance. We increased sales by 2% in constant currencies, improved net income by 12% in constant currencies, and were able to strengthen our cash flow and core earnings per share with the objective of continuing to create value for our shareholders. With the appointment of Vasant Narasimhan as Chief Executive Officer starting February 1, the Board of Directors is confident Novartis is well placed to begin a new phase of growth and strengthen its global market position We believe innovation will become increasingly import- ant in view of the persistent challenges in the healthcare environment. To remain at the forefront of innovation, we have continued to strengthen our leadership. We have also enhanced our ability to develop breakthrough therapies by accelerating internal and external collaboration, pur- suing bolt-on acquisitions and digitizing our operations. The creation of the Chief Digital Officer position is set to add further impetus to the transformation of Novartis. With the appointment of Vasant Narasimhan as Chief Executive Officer starting February 1, the Board of Directors is confident Novartis is well placed to begin a new phase of growth and strengthen its global market position. As we move forward, our leadership team is focused on driving innovation and is cultivating a company culture aimed at helping us become one of the most trusted partners in the healthcare industry. On behalf of the Board of Directors, I would also like to express my gratitude to our outgoing CEO, Joseph Jimenez, who has successfully led Novartis for eight years through a challenging period of major patent expirations and laid the foundation for a strong future. We will continue to make substantial investments in research and development and to concentrate on ex - ploring new therapeutic pathways that help improve and extend people’s lives. We are currently investigating more than 70 new molecules in areas of high unmet medical need such as cancer, respiratory disease and heart disease. Joerg Reinhardt Novartis Annual Report 2017 | 3CHAIRMAN’S LETTER We are prepared to take calculated risks across the research portfolio and work toward translating scientific advances in fields such as genetics and immunology into pharmaceutical products. As part of these efforts, we launched three cancer therapies in 2017: Kisqali, Rydapt and Kymriah. Kymriah, developed with the University of Pennsylvania in the US, is the first approved chimeric antigen receptor T-cell (CAR-T) therapy, an innovative cell therapy that is available in the US on an industrial scale and takes personalized medicine to a new level. Reflecting our ambition to deliver our treatments to as many patients as possible, we are also accelerating our activities to improve access to healthcare in devel- oping countries. As part of these efforts, we expanded the reach of our Novartis Access program, which aims to help address the rise in chronic diseases in lower-income countries in Africa, Asia and South America. We constantly seek ways to improve our corporate governance, strengthen our commitment to integrity and ethical behavior, and continue cultivating an open and transparent dialogue with our many stakeholders. We pursue engagement with patient groups, customers, share holders and society as a whole. We are convinced that this exchange benefits our company in the long term and can also contribute to strengthening healthcare systems. I thank you for the confidence you have placed in our company and am pleased to be able to propose a dividend increase of 2% to CHF 2.80 at the next Annual General Meeting. Sincerely, Joerg Reinhardt Chairman of the Board of Directors The future of healthcare The healthcare industry is going through a transformative period marked by diver ging trends. On the one hand, digital technologies and new biotechnological discoveries allow for the development of breakthrough thera- pies that can help substantially improve the individual treatment of patients. At the same time, aging populations are set to lead to an increase in the cost of care due to the rise in noncommunicable diseases. Novartis is committed to enhancing healthcare innovation to address high unmet medical needs and is prepared to leverage breakthrough technologies in the interest of patients. We are also collabo ra ting with healthcare providers on new pricing solutions such as outcomes- based payment models that can help ease the burden on healthcare systems while at the same time supporting patients’ access to quality care. For further detail, see k Our strategy page 17 4 | Novartis Annual Report 2017 Since 2015, we have transformed our portfolio and focused the company on leading businesses with inno- vation power and global scale, which contributed to our solid 2017 performance. In addition, we now have the right organizational structure in place to enable future growth. Notably, we’ve centralized Global Drug Devel- opment, enabling the organization to more effectively leverage new technologies such as advanced analytics to speed clinical trials and bring medicines to market faster. We’re building one of the most powerful pipelines in the industry with multiple potential blockbusters, and we’re pursuing strategic collaborations to further strengthen our innovation. At the same time, we’re leading the industry’s shift toward outcomes-based pricing and we’re piloting new commercial models using real-world evidence to help