Press Release: Novartis delivers strong full year -4-

-- Chong Kun Dang (LMW, lead asset CKD-510 for diseases

in which the enzyme HDAC6 is thought to play a role,

including some cardiovascular diseases)

-- SanReno (LMW and mAb, securing worldwide rights for

Atrasentan/Zigakibart)

-- Argo Biopharma (xRNA, undisclosed targets)

Neuroscience:

-- Voyager Therapeutics (Gene therapy, strategic

collaboration and capsid license agreement for

potential Huntington's Disease and spinal muscular

atrophy therapies)

Immunology:

-- Calypso (Biotherapeutics, lead asset CALY-002 a

promising anti-IL-15 mAB, to be investigated in a

range of autoimmune indications)

Oncology:

-- Legend Biotech (Cell Therapy, targeting DLL3, a

ligand highly expressed in several cancers)

Isomorphic Labs -- Leveraging AI including next generation

AlphaFold model, to discover novel small molecule

therapeutics against undisclosed targets

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Capital structure and net debt

Retaining a good balance between investment in the business, a strong capital structure and attractive shareholder returns remains a priority.

In 2023, Novartis repurchased a total of 87.5 million shares for USD 8.4 billion on the SIX Swiss Exchange second trading line. These repurchases included 52.8 million shares (USD 4.9 billion) under the USD 15 billion share buyback (announced in December 2021 and completed in June 2023) and 23.0 million shares (USD 2.3 billion) under the new up-to USD 15 billion share buyback announced in July 2023 (which is continuing as planned, with up-to USD 12.7 billion remaining). In addition, 11.7 million shares (USD 1.2 billion) were repurchased to mitigate dilution related to participation plans of associates. Furthermore, 1.6 million shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 13.5 million shares (for an equity value of USD 1.1 billion) were delivered as a result of options exercised and share deliveries related to participation plans of associates. Consequently, the total number of shares outstanding decreased by 75.6 million versus December 31, 2022. These treasury share transactions resulted in an equity decrease of USD 7.4 billion and a net cash outflow of USD 8.6 billion.

As of December 31, 2023, net debt increased to USD 10.2 billion compared to USD 7.2 billion at December 31, 2022. The increase was mainly due to the USD 7.3 billion annual dividend payment, net cash outflow for treasury share transactions of USD 8.6 billion and net cash outflow for M&A / intangible assets transactions of USD 3.3 billion. This increase in net debt was partially offset by USD 13.2 billion free cash flow and a USD 3.0 billion reduction in the net debt position of Novartis related to the Sandoz spin-off.

As of Q4 2023, the long-term credit rating for the Company is A1 with Moody's Investors Service and AA- with S&P Global Ratings.

2024 outlook

Barring unforeseen events; growth vs prior year in cc

Net sales Expected to grow mid single digit

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Core operating income Expected to grow high single digit

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Key assumptions:

-- Our guidance assumes that no Entresto generics launch in the US in 2024

Foreign exchange impact

If late-January exchange rates prevail for the remainder of 2024, the foreign exchange impact for the year would be negative 1 percentage point on net sales and negative 3 percentage points on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.

Annual General Meeting

Dividend proposal

The Novartis Board of Directors proposes a dividend payment of CHF 3.30 per share for 2023, up 3.1% from CHF 3.20 per share in the prior year, representing the 27th consecutive dividend increase since the creation of Novartis in December 1996. Shareholders will vote on this proposal at the Annual General Meeting on March 5, 2024.

Reduction of share Capital

The Novartis Board of Directors proposes to cancel 87 547 255 shares (repurchased under the authorization of March 4, 2022) and to reduce the share capital accordingly by CHF 42.9 million, from CHF 1 115 964 098.48 to CHF 1 073 065 943.53.

Elections of the Board Chair and the members of the Board of Directors

The Board of Directors proposes the re-election of all current members of the Board of Directors (including the Board Chair).

Key figures(1)

Continuing Q4 Q4 FY FY

operations(2) 2023 2022 % change 2023 2022 % change

USD m USD m USD cc USD m USD m USD cc

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

Net sales 11 423 10 576 8 10 Net sales 45 440 42 206 8 10

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

Operating income 2 582 1 755 47 68 Operating income 9 769 7 946 23 39

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

As a % of sales 22.6 16.6 As a % of sales 21.5 18.8

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

Net income 2 638 1 315 101 130 Net income 8 572 6 049 42 62

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

EPS (USD) 1.29 0.62 108 140 EPS (USD) 4.13 2.77 49 70

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

Cash flows from Cash flows from

operating activities 2 547 3 768 -32 operating activities 14 220 13 039 9

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

Non-IFRS measures Non-IFRS measures

Free cash flow 2 141 3 462 -38 Free cash flow 13 160 12 123 9

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

Core operating income 3 821 3 645 5 13 Core operating income 16 372 14 794 11 18

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

As a % of sales 33.5 34.5 As a % of sales 36.0 35.1

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

Core net income 3 126 2 963 6 11 Core net income 13 446 11 946 13 19

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

Core EPS (USD) 1.53 1.39 10 16 Core EPS (USD) 6.47 5.48 18 25

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

Discontinued Q4 Q4 FY FY

operations(2) 2023 2022 % change 2023 2022 % change

USD m USD m USD cc USD m USD m USD cc

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

Net sales 2 374 nm nm Net sales 7 428 9 372 nm nm

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

Operating income 194 nm nm Operating income 265 1 251 nm nm

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

As a % of sales 8.2 As a % of sales 3.6 13.3

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

Net income 5 842 151 nm nm Net income 6 282 906 nm nm

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

Non-IFRS measures Non-IFRS measures

Core operating income 385 nm nm Core operating income 1 185 1 871 nm nm

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