Novartis Third Quarter and Nine Months 2023 Condensed Interim Financial Report – Supplementary Data | INDEX | Page | | --- | --- | | COMPANY OPERATING PERFORMANCE REVIEW | | | Continuing operations | 3 | | Discontinued operations | 11 | | Total Company | 11 | | COMPANY CASH FLOW AND BALANCE SHEET | 12 | | INNOVATION REVIEW | 16 | | CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | | | Consolidated income statements | 19 | | Consolidated statements of comprehensive income | 21 | | Consolidated balance sh ...

[Group and Divisional Operating Performance](index=3&type=section&id=GROUP%20AND%20DIVISIONAL%20OPERATING%20PERFORMANCE) [Group Performance](index=3&type=section&id=Group) Novartis Group achieved robust Q2 and H1 2023 growth, driven by volume, with double-digit increases in net sales and operating income (cc), as it strategically transforms into a "pure-play" innovative medicines business with the planned Sandoz spin-off Group Key Financial Data (Q2 & H1 2023) | Indicator | Q2 2023 (Million USD) | Q2 YoY Change (cc) | H1 2023 (Million USD) | H1 YoY Change (cc) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | 13,622 | +9% | 26,575 | +8% | | **Operating Income** | 2,920 | +50% | 5,776 | +28% | | **Net Income** | 2,317 | +54% | 4,611 | +32% | | **Core Operating Income** | 4,668 | +17% | 9,081 | +16% | | **Core Net Income** | 3,811 | +19% | 7,425 | +19% | | **Core EPS (USD)** | 1.83 | +25% | 3.54 | +25% | - The company is strategically transforming into a "pure-play" innovative medicines business, focusing on five core therapeutic areas: Cardiovascular, Immunology, Neuroscience, Solid Tumors, and Hematology[6](index=6&type=chunk) - The planned spin-off of Sandoz is set for early Q4 2023, subject to shareholder vote at an Extraordinary General Meeting on September 15[7](index=7&type=chunk)[8](index=8&type=chunk)[10](index=10&type=chunk) - Q2 net sales growth was primarily driven by **14 percentage points of volume growth**, partially offset by price erosion (**-2 percentage points**) and generic competition (**-3 percentage points**)[14](index=14&type=chunk) [Innovative Medicines Segment](index=7&type=section&id=Innovative%20Medicines) The Innovative Medicines segment, a core growth engine, achieved **$11.2 billion** in Q2 2023 net sales (**+9% cc**), driven by strong performance from key products like Entresto, Kesimpta, Pluvicto, and Kisqali, alongside significant growth in operating income and margins Innovative Medicines Segment Key Financial Data (Q2 & H1 2023) | Indicator | Q2 2023 (Million USD) | Q2 YoY Change (cc) | H1 2023 (Million USD) | H1 YoY Change (cc) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | 11,243 | +9% | 21,813 | +8% | | **Operating Income** | 2,999 | +52% | 5,674 | +30% | | **Core Operating Income** | 4,387 | +20% | 8,475 | +19% | - Q2 sales growth was primarily driven by products such as Entresto (**+37% cc**), Kesimpta (**+105% cc**), Pluvicto (**$240 million**), and Kisqali (**+66% cc**), partially offset by generic competition for Gilenya[34](index=34&type=chunk) - Regionally, US market sales grew by **14%**, Europe by **2% (cc)**, and Emerging Growth Markets by **17% (cc)**, with China sales increasing by **16% (cc)**[35](index=35&type=chunk) Q2 2023 Sales and Growth by Key Therapeutic Area | Therapeutic Area | Q2 2023 Sales (Million USD) | YoY Change (cc) | | :--- | :--- | :--- | | **Cardiovascular** | 1,594 | +41% | | **Solid Tumors** | 1,656 | +54% | | **Immunology** | 1,950 | +4% | | **Neuroscience** | 961 | +28% | | **Hematology** | 1,782 | +10% | - Established Brands like Lucentis and Gilenya saw sales decline by **20% (cc)** and **52% (cc)** respectively, due to generic competition[71](index=71&type=chunk)[72](index=72&type=chunk) [Sandoz Segment](index=13&type=section&id=Sandoz) The Sandoz segment achieved **$2.4 billion** in Q2 2023 sales (**+8% cc**), driven by volume growth in Europe and biosimilars, but operating income significantly declined by **41% (-27% cc)** due to higher legal settlement expenses and spin-off related standalone costs Sandoz Segment Key Financial Data (Q2 & H1 2023) | Indicator | Q2 2023 (Million USD) | Q2 YoY Change (cc) | H1 2023 (Million USD) | H1 YoY Change (cc) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | 2,379 | +8% | 4,762 | +8% | | **Operating Income** | 212 | -27% | 531 | -19% | | **Core Operating Income** | 429 | +6% | 933 | +5% | - Q2 sales growth was primarily driven by the European market (**+13% cc**), while the US market experienced an **8%** sales decline[75](index=75&type=chunk) - Global Biosimilars sales grew by **13% (cc)**, reaching **$531 million**[75](index=75&type=chunk) - The decline in operating income was primarily attributed to higher legal settlement expenses, increased selling and marketing expenses to drive sales growth, and standalone costs related to the spin-off[76](index=76&type=chunk) [Cash Flow and Group Balance Sheet](index=15&type=section&id=CASH%20FLOW%20AND%20GROUP%20BALANCE%20SHEET) [Cash Flow](index=15&type=section&id=Cash%20Flow) In H1 2023, the Group's net cash inflow from operating activities was **$6.5 billion**, a **21%** increase driven by higher net income, while Q2 operating cash flow was **$3.6 billion**, a slight decrease year-over-year, with H1 free cash flow reaching **$6.0 billion**, up **23%** Key Cash Flow Data (H1 2023 vs H1 2022) | Indicator (Million USD) | H1 2023 | H1 2022 | YoY Change | | :--- | :--- | :--- | :--- | | **Net cash flows from operating activities** | 6,533 | 5,404 | +21% | | **Net cash flows from/(used in) investing activities** | 9,568 | (2,263) | N/A | | **Net cash flows used in financing activities** | (12,839) | (11,830) | -8.5% | | **Free cash flow** | 5,995 | 4,890 | +23% | - Net cash inflow from operating activities in Q2 was **$3.6 billion**, a decrease from **$3.8 billion** in the prior year, primarily due to the timing of income tax payments, increased provision payments, and unfavorable working capital movements[86](index=86&type=chunk) [Balance Sheet](index=17&type=section&id=Balance%20sheet) As of June 30, 2023, the Group's total assets decreased to **$111.0 billion** from year-end 2022, with total equity reducing to **$51.9 billion** due to dividend payments and share repurchases, and net debt significantly increasing from **$7.2 billion** to **$15.4 billion** Key Balance Sheet Items (As of June 30, 2023) | Item (Million USD) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total assets** | 110,979 | 117,453 | | **Total liabilities** | 59,048 | 58,030 | | **Total equity** | 51,931 | 59,423 | | **Net debt** | 15,374 | 7,245 | - The decrease in total assets was primarily due to amortization and impairment of intangible assets, as well as a reduction in cash and marketable securities[100](index=100&type=chunk)[102](index=102&type=chunk) - The reduction in total equity was mainly driven by **$7.3 billion** in dividend payments and **$5.9 billion** in treasury share purchases, partially offset by **$4.6 billion** in net income[109](index=109&type=chunk) [Innovation Review](index=18&type=section&id=INNOVATION%20REVIEW) [R&D Pipeline and Progress](index=18&type=section&id=Innovation%20Review) Novartis focuses on high-value drug development with approximately **130** clinical projects, securing recent approvals for Cosentyx and Entresto, with key late-stage pipeline assets like Kisqali and Pluvicto, and strengthened R&D through acquisitions like Chinook and DTx Pharma - The company's R&D portfolio focuses on approximately **130** clinical development projects, prioritizing medicines with transformative potential[113](index=113&type=chunk) - Recent key approvals include Cosentyx for hidradenitis suppurativa in the EU and Entresto for pediatric heart failure in the EU[114](index=114&type=chunk) - Key late-stage pipeline projects Kisqali (for early breast cancer) and Pluvicto (for pre-taxane metastatic castration-resistant prostate cancer) are planned for regulatory submissions in 2023[118](index=118&type=chunk) - Through business development, the company reached agreements to acquire Chinook Therapeutics (for rare kidney diseases) and DTx Pharma (for neuroscience) to enhance R&D capabilities[119](index=119&type=chunk) - In Sandoz's biosimilar pipeline, the marketing authorization applications for denosumab have been accepted by the FDA and EMA[120](index=120&type=chunk) [Condensed Interim Consolidated Financial Statements](index=21&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Consolidated Income Statements](index=21&type=section&id=Consolidated%20income%20statements) This section presents the unaudited detailed consolidated income statements for Q2 and H1 2023, outlining revenue and expense items from net sales to net income Consolidated Income Statement Summary (H1 2023) | Item (Million USD) | H1 2023 | H1 2022 | | :--- | :--- | :--- | | **Net Sales** | 26,575 | 25,312 | | **Gross Profit** | 18,872 | 18,292 | | **Operating Income** | 5,776 | 5,080 | | **Income before taxes** | 5,509 | 4,711 | | **Net Income** | 4,611 | 3,914 | [Notes to Condensed Interim Consolidated Financial Statements, Including Update on Legal Proceedings](index=29&type=section&id=Notes%20to%20condensed%20interim%20consolidated%20financial%20statements%2C%20including%20update%20on%20legal%20proceedings) The notes detail financial statement preparation, accounting policies, major transactions like DTx Pharma and Chinook acquisitions, the Xiidra divestment, legal proceedings updates for Sandoz's generic pricing and Exforge antitrust cases, and segment reporting for Innovative Medicines and Sandoz - Major transactions include agreements to acquire DTx Pharma (**$500 million** upfront, up to **$500 million** in milestones) and Chinook Therapeutics (**$3.2 billion** upfront, up to **$300 million** in milestones)[142](index=142&type=chunk)[145](index=145&type=chunk) - Legal proceedings update: Sandoz's Deferred Prosecution Agreement (DPA) in the US generic pricing investigation concluded in March 2023, and the Exforge antitrust class action was settled for **$245 million**, paid in Q1 2023[171](index=171&type=chunk)[177](index=177&type=chunk) - Pending divestment: An agreement was reached with Bausch + Lomb to divest the ophthalmic product Xiidra and related assets for a total consideration of **$1.75 billion** in cash and up to **$750 million** in milestones, with related assets reclassified as held for sale[199](index=199&type=chunk)[200](index=200&type=chunk) - Segment reporting structure adjustment: Effective January 1, 2023, Sandoz's biotechnology manufacturing services and the Coartem brand were transferred to the Innovative Medicines segment, with historical data restated[185](index=185&type=chunk) [Supplementary Information](index=48&type=section&id=SUPPLEMENTARY%20INFORMATION) [Core Results (Non-IFRS)](index=50&type=section&id=CORE%20RESULTS) This section provides a reconciliation from IFRS to core results, which exclude items like intangible asset amortization, impairments, acquisition/divestment related items, restructuring costs, and significant legal matters, to better reflect underlying business performance, with Q2 2023 Group core operating income at **$4.7 billion** and core net income at **$3.8 billion** - Core performance measures exclude items management believes impact comparability, such as intangible asset amortization, significant impairments, restructuring costs, legal settlements, and acquisition-related items[236](index=236&type=chunk) Reconciliation of Group IFRS Operating Income to Core Operating Income (Q2 2023) | Item (Million USD) | Amount | | :--- | :--- | | **IFRS Operating Income** | **2,920** | | Add: Amortization of intangible assets | 971 | | Add: Impairments | 440 | | Less: Acquisition/divestment related items | (58) | | Add: Other items (restructuring, legal, etc.) | 395 | | **Core Operating Income** | **4,668** | [Free Cash Flow (Non-IFRS)](index=57&type=section&id=FREE%20CASH%20FLOW) This section defines and reconciles free cash flow, which, effective January 1, 2023, is revised to "net cash flows from operating activities less purchases of property, plant and equipment," resulting in Q2 2023 free cash flow of **$3.3 billion** and H1 of **$6.0 billion** under the new definition - Effective January 1, 2023, the definition of free cash flow was revised to net cash flows from operating activities less purchases of property, plant and equipment, with prior year data restated for comparability[243](index=243&type=chunk)[244](index=244&type=chunk) Free Cash Flow Calculation | Indicator (Million USD) | Q2 2023 | H1 2023 | | :--- | :--- | :--- | | **Net cash flows from operating activities** | 3,576 | 6,533 | | **Less: Purchases of property, plant and equipment** | (301) | (538) | | **Free cash flow** | **3,275** | **5,995** | [Additional Information](index=59&type=section&id=ADDITIONAL%20INFORMATION) This section provides additional data on net debt, share information, and the impact of currency fluctuations, noting that as of June 30, 2023, Group net debt was **$15.4 billion**, and currency fluctuations had a **-2 percentage point** negative impact on Q2 Group sales - As of June 30, 2023, Group net debt was **$15.4 billion**, a significant increase from **$7.2 billion** at year-end 2022[281](index=281&type=chunk)[282](index=282&type=chunk) - Currency fluctuations had a **2 percentage point** negative impact on Q2 Group net sales growth (reported growth of **7%**, constant currency growth of **9%**)[287](index=287&type=chunk)

Andrew Baum Thank you. Please forgive the voice. I'm struggling with COVID. A question for Vas, I suspect you remember, historically, I've described the bases is suffering from [indiscernible] syndrome in always being the early adopter and taking unnecessary risk relative to peers. IÂ'm going to completely contradict myself. The early data from SET with RT CD19 in refractory autoimmune is remarkable. The biology is strong, patient access node patients is much easier in oncology. We understand that Bristol i ...

eBC – early breast cancer. ET – endocrine therapy. iDFS – invasive disease-free survival. 1. Unprobabilized peak sales. 2. Under stage II: N0, T0N1 is excluded; T2N0 only if G3, or G2 with Ki67≥20% or high risk on Oncotype DX / Prosigna / MammaPrint / EndoPredict. 3. Estimated incidence US + EU5. Sources: DRG (US) and Kantar (EU5). TNM and grade information based on SEER AJCC 8th Incidence Report. 9 NOVARTIS Q1 RESULTS | APRIL 25, 2023 | NOVARTIS INVESTOR PRESENTATION APPOINT-PNH: Single-arm Ph3 trial in ad ...

Novartis AG (NYSE:NVS) Q4 2022 Earnings Conference Call February 1, 2023 8:00 AM ET Company Participants Samir Shah - Global Head of Investor Relations Vasant Narasimhan - Chief Executive Officer Harry Kirsch - Chief Financial Officer Conference Call Participants Matthew Weston - Credit Suisse Graham Parry - Bank of America Stephen Scala - Cowen Tim Anderson - Wolfe Research Florent Cespedes - Société Générale Peter Welford - Jefferies Seamus Fernandez - Guggenheim Securities Andrew Baum - Citi Keyur Parekh ...

INNOVATION Improvements across a range of other secondary endpoints: Increasing Hb, reducing patient-reported fatigue and reticulocyte count, maintaining low LDH Duration Company overview Financial review 2023 priorities Appendix Iptacopan 200mg BID1 Met primary endpoint of proportion of patients achieving a sustained increase in Hb of ≥ 2g/dL, in the absence of transfusions, at 24 weeks ... and showed clinically meaningful increases in Hb levels for treatment-naive adult patients with PNH Company overview ...

As filed with the Securities and Exchange Commission on February 1, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 Form 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Translation of Registrant's na ...

Novartis(NVS) - 2022 Q4 - Annual Report ...

Novartis AG (NYSE:NVS) 41st Annual J.P. Morgan Healthcare Conference Call January 9, 2023 11:15 AM ET Company Participants Vasant Narasimhan - Chief Executive Officer Conference Call Participants Richard Vosser - JPMorgan Chase & Co. Richard Vosser Welcome to the Novartis presentation at the 41st JPMorgan Healthcare Conference. I'm Richard Vosser, European pharma analyst at JPMorgan. It's my great pleasure to introduce Vas Narasimhan, the CEO of Novartis. Before I hand over to him for his presentation, I'd ...

Company overview Financial review 2022 priorities Appendix References 1 Investor Relations │ Q3 2022 Results û Q3 2022 Results Investor presentation U NOVARTIS | Reimagining Medicine Company overview Financial review 2022 priorities Appendix References 2 NOVARTIS Q3 RESULTS | OCTOBER 25, 2022 | NOVARTIS INVESTOR PRESENTATION Disclaimer This presentation contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that can generally be identifi ...