Press Release: Novartis delivers strong full year -2-

Core operating income was USD 16.4 billion (11%, +18% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income margin was 36.0% of net sales, increasing 0.9 percentage points (+2.4 percentage points cc).

Core net income was USD 13.4 billion (+13%, +19% cc), mainly due to higher core operating income. Core EPS was USD 6.47 (+18%, +25% cc), benefiting from lower weighted average number of shares outstanding.

Free cash flow from continuing operations amounted to USD 13.2 billion (+9% USD), compared with USD 12.1 billion in 2022 driven by higher net cash flows from operating activities.

Discontinued operations

Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz prior to the spin-off up to the distribution date of October 3, 2023, and certain other expenses related to the spin-off. Included in 2023 is also the IFRS Accounting Standards non-cash, non-taxable net gain on the distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, representing mainly the excess amount of the IFRS Accounting Standards distribution liability, which is the estimated fair value of the Sandoz business distributed to Novartis AG shareholders, over the then carrying value of Sandoz business net assets. There were no operating results for the fourth quarter 2023 following the distribution date. The prior year includes the results for the full period.

Fourth quarter

Net income from discontinued operations amounted to USD 5.8 billion, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, compared to USD 151 million in prior year.

Full year

Discontinued operations net sales in 2023 were USD 7.4 billion, compared to USD 9.4 billion in 2022 and operating income amounted to USD 265 million compared to USD 1.3 billion in 2022.

Net income from discontinued operations in 2023 amounted to USD 6.3 billion, compared to USD 906 million in 2022, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders, which amounted to USD 5.9 billion.

Total Company

Fourth quarter

Total Company net income was USD 8.5 billion in 2023, compared to USD 1.5 billion in 2022 and basic EPS was USD 4.14 compared to USD 0.69 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for total Company amounted to USD 2.5 billion and free cash flow amounted to USD 2.1 billion.

Full year

Total Company, net income amounted to USD 14.9 billion in 2023, compared to USD 7.0 billion in 2022, and basic earnings per share was USD 7.15 compared to USD 3.19 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for the total company amounted to USD 14.5 billion, and free cash flow amounted to USD 13.2 billion.

Q4 key growth drivers

Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q4 growth) including:

Entresto (USD 1 635 million, +26% cc) sustained robust demand-led

growth, with increased patient share across all geographies

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Kisqali (USD 610 million, +76% cc) sales grew strongly across

all regions, based on increasing recognition of consistently

reported overall survival in HR+/HER2- advanced breast

cancer

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Kesimpta (USD 641 million, +73% cc) sales grew across all regions

driven by increased demand and strong access

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Cosentyx (USD 1 303 million, +21% cc) US sales grew (+17%)

and ex-US sales (+26% cc), benefitting from lower

prior year base (including revenue deduction adjustments

in the US)

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Pluvicto (USD 273 million, +53% cc) continued sales growth

in the US. Supply now unconstrained, focusing on initiating

new patients

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Ilaris (USD 376 million, +29% cc) sales grew across all regions

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Leqvio (USD 123 million, +190% cc) launch is ongoing, with

focus on patient on-boarding, removing access hurdles

and enhancing medical education

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Scemblix (USD 125 million, +143% cc) continued its strong launch

uptake demonstrating the high unmet need in CML

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Jakavi (USD 444 million, +14% cc) sales grew in emerging

growth markets, Europe and Japan, driven by strong

demand in both myelofibrosis and polycythemia vera

indications

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Xolair (USD 378 million, +16% cc) sales grew across all regions

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Tafinlar + (USD 486 million, +7% cc) sales grew mainly in the

Mekinist US and emerging growth markets, partly offset by decline

in Europe

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Promacta/Revolade (USD 563 million, +4% cc) sales grew mainly in the

US driven by increased use in chronic ITP and severe

aplastic anemia

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Piqray (USD 131 million, +18% cc) sales grew mainly in the

US

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Lutathera (USD 147 million, +13% cc) sales grew across all regions

due to increased demand

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Emerging Growth Grew +18% (cc) overall. China grew (+38% cc) to USD

Markets* 0.8 billion, due to lower prior year base. For the

full year, China grew +17% (cc)

*All markets except the US, Canada, Western Europe,

Japan, Australia, and New Zealand

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Net sales of the top 20 brands in 2023

Q4 2023 % change FY 2023 % change

USD m USD cc USD m USD cc

------- ---- ---- ------- ---- ----

Entresto 1 635 27 26 6 035 30 31

-------------------- ------- ---- ---- ------- ---- ----

Cosentyx 1 303 21 21 4 980 4 5

-------------------- ------- ---- ---- ------- ---- ----

Promacta/Revolade 563 4 4 2 269 9 10

-------------------- ------- ---- ---- ------- ---- ----

Kesimpta 641 74 73 2 171 99 99

-------------------- ------- ---- ---- ------- ---- ----

Kisqali 610 71 76 2 080 69 75

-------------------- ------- ---- ---- ------- ---- ----

Tafinlar + Mekinist 486 5 7 1 922 9 11

-------------------- ------- ---- ---- ------- ---- ----

Tasigna 446 -6 - 6 1 848 -4 -3

-------------------- ------- ---- ---- ------- ---- ----

Jakavi 444 14 14 1 720 10 12

-------------------- ------- ---- ---- ------- ---- ----

Lucentis 301 -24 - 25 1 475 -21 -20

-------------------- ------- ---- ---- ------- ---- ----

Xolair 378 17 16 1 463 7 9

-------------------- ------- ---- ---- ------- ---- ----

Ilaris 376 25 29 1 355 20 22

-------------------- ------- ---- ---- ------- ---- ----

Sandostatin 316 4 5 1 314 6 8

-------------------- ------- ---- ---- ------- ---- ----

Zolgensma 286 -7 - 4 1 214 -11 -9

-------------------- ------- ---- ---- ------- ---- ----

Pluvicto 273 53 53 980 262 261

-------------------- ------- ---- ---- ------- ---- ----

Gilenya 154 -55 - 55 925 -54 -54

-------------------- ------- ---- ---- ------- ---- ----

Exforge Group 156 -2 - 1 713 -4 -1

-------------------- ------- ---- ---- ------- ---- ----

Galvus Group 153 -27 - 17 692 -19 -11

-------------------- ------- ---- ---- ------- ---- ----

Diovan Group 147 4 6 613 -6 -1

-------------------- ------- ---- ---- ------- ---- ----

Lutathera 147 15 13 605 28 28

-------------------- ------- ---- ---- ------- ---- ----

Gleevec/Glivec 128 -27 - 25 561 -25 -22

-------------------- ------- ---- ---- ------- ---- ----

Top 20 brands total 8 943 13 14 34 935 10 12

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January 31, 2024 01:00 ET (06:00 GMT)