Second Quarter 2015 Results. Investor Presentation July 21, 2015

Transcription

1 Second Quarter 05 Results Investor Presentation July, 05

2 Disclaimer This presentation contains forward-looking statements that can be identified by words such as potential, expected, will, planned, or similar terms, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products; potential shareholder returns or credit ratings; or regarding the potential completion of the announced transaction with CSL, or regarding the potential financial or other impact on Novartis of the transactions with GSK, Lilly or CSL, or regarding any potential strategic benefits, synergies or opportunities as a result of these transactions; or regarding potential future sales or earnings of the Novartis Group or its divisions and associated companies; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that any new products will be approved for sale in any market, or that any new indications will be approved for any existing products in any market, or that any approvals which are obtained will be obtained at any particular time, or that any such products will achieve any particular revenue levels. Nor can there be any guarantee that the announced transaction with CSL will be completed in the expected form or within the expected time frame or at all. Neither can there be any guarantee that Novartis will be able to realize any of the potential strategic benefits, synergies or opportunities as a result of the transactions with GSK, Lilly or CSL. Neither can there be any guarantee that the Novartis Group or any of its divisions or associated companies will achieve any particular financial results in the future. Nor can there be any guarantee that shareholders will achieve any particular level of shareholder returns. Neither can there be any guarantee that the Novartis Group, or any of its divisions, will be commercially successful in the future, or achieve any particular credit rating. In particular, management s expectations could be affected by, among other things, unexpected regulatory actions or delays or government regulation generally, including an unexpected failure to obtain necessary government approvals for the announced transaction with CSL, or unexpected delays in obtaining such approvals; the potential that the strategic benefits, synergies or opportunities expected from the transactions with GSK, Lilly or CSL may not be realized or may take longer to realize than expected; the inherent uncertainties involved in predicting shareholder returns or credit ratings; the uncertainties inherent in research and development, including unexpected clinical trial results and additional analysis of existing clinical data; the Company s ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on the Company of the loss of patent protection and exclusivity on key products which will continue this year; unexpected manufacturing or quality issues; global trends toward health care cost containment, including ongoing pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, government investigations and intellectual property disputes; general economic and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; uncertainties involved in the development of new healthcare products; uncertainties regarding potential significant breaches of data security or disruptions of the Company s information technology systems; and other risks and factors referred to in Novartis AG s current Form 0-F on file with the US Securities and Exchange Commission. Novartis is providing the information in this presentation as of this date and does not undertake any obligation to update any forwardlooking statements as a result of new information, future events or otherwise.

3 Agenda Group overview Joseph Jimenez, Chief Executive Officer Financial review Harry Kirsch, Chief Financial Officer Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez, Chief Executive Officer Q&A session Executive team 3

4 In Q 05, financial and innovation momentum continues Sales of USD.7 billion, up +6% versus PY in cc Core operating income +6% in cc Pharmaceuticals momentum, strong Sandoz performance and weak Alcon quarter Entresto and Glatopa launched in the US All growth shown vs. PY in constant currencies (cc), rounded. All numbers refer to continuing operations (incl. the newly acquired oncology assets and the OTC JV in 05) and do not include divested businesses. An explanation of continuing operations can be found on page 4 of the Condensed Interim Financial Report Entresto launched July 7, not in Q 05 4

5 Summary of Q 05 financial results Continuing operations Q Change vs. PY (in USD bn) 05 % USD % cc Net Sales Core Operating Income Operating Income Net Income Core EPS (USD) EPS (USD) Free Cash Flow. -3 Continuing operations are defined on page 4 of the Condensed Interim Financial Report. Constant currencies (cc), core results, and free cash flow are non-ifrs measures. An explanation of these measures and reconciliation tables can be found beginning on page 5 of the Condensed Interim Financial Report. 5

6 Our priorities for 05 are clear Deliver strong Financial Results Strengthen Innovation Complete the Portfolio Transformation Capture Cross-Divisional Synergies Build a High-Performing Organization 6

7 Pharmaceuticals: Strong sales growth and margin expansion in Q Deliver strong Financial Results % Sales Growth Products sales +38% Emerging Growth Markets 3 sales +0% +9% Core operating income Absorbed generic impact e.g., Diovan, Exforge All growth shown vs. PY in constant currencies (cc) Growth Products comprise products launched in a key market (EU, US, Japan) in 00 or later, or products with exclusivity in key markets until at least 09. They include the acquisition effect of the GSK oncology assets. 3 Emerging Growth Markets comprise all markets except the US, Canada, Western Europe, Japan, Australia and New Zealand 7

8 Sandoz: Very strong performance in Q Deliver strong Financial Results % Sales US sales +3%, driven by Glatopa, Dermatology Biopharmaceuticals sales +57% Margin Accretion: ROS improvement of.6 ppts All growth shown vs. PY in constant currencies (cc) Includes biosimilars, biopharmaceutical contract manufacturing and Glatopa +30% Core operating income 8

9 Alcon: Weak Q Deliver strong Financial Results 0% -0% IOL competitive pressure Contact lens care decline Emerging markets slowdown All growth shown vs. PY in constant currencies (cc) Sales Core operating income 9

10 Alcon is taking short and long term actions to turn performance, but will take time Short-term Mid- to long-term 3 Strengthen Innovation New IOL platform: bestin-class material, optics, and mechanics 4 AcrySof PanOptix UltraSert TM Next-Gen pre-loaded IOL 5 Dailies Total RTH58: Positive Ph II data in wet AMD 0

11 Entresto approved and launched in US Strengthen Innovation 3 0 % % 4 Reduction in CV mortality, ~6m Americans with HF 3 ~m eligible patients 4,5 First hospitalizations for HF, 5 McMurray et al. NEJM 04;37: ; Packer et al. Circulation 05;3:54-6 Individual components of primary endpoint 3 Mozaffarian D, Benjamin EJ, Go AS, et al. Heart Disease and Stroke Statistics 05 Update: A Report from the American Heart Association. Circulation. 05;3:e4-e48 4 Decision Resources Patient Base 0 5 LEK research and LCZ696 Dual Workstream Plan in HFrEF and HFpEF, Marketing Sciences. Oct 0

12 Progress in immuno-oncology continues Strengthen Innovation PD-, LAG-3 entered clinic, CSF- dosing imminently, TIM-3 expected in STING and GITR first-in-human expected 06 CTL09: >50 patients dosed; first cells processed at commercial facility 5

13 Glatopa US launch strengthens our Multiple Sclerosis portfolio 3 Strengthen Innovation First FDA approved substitutable generic version of Copaxone 0 mg Launched June 8, 05 with positive reception 4 5 Glatopa Multiple sclerosis Glatopa joins Novartis strong MS portfolio (e.g., Gilenya, Extavia ) 0 mg one-time-daily injection. Copaxone is a registered trademark of Teva 3

14 Portfolio changes on track Complete the Portfolio Transformation Oncology Oncology sales grew 30% (cc) vs. PY in Q Transfer of marketing authorizations complete for ~75% of sales Field forces operational in over 50 markets OTC JV, Vaccines, Animal Health Separations on track, ~3,000 associates transferred Influenza Vaccines divestment to CSL on track for H 05 4

15 NBS is executing on its objectives Capture Cross-Divisional Synergies 9,000 people transferred as of end of Q 5 locations selected for Global Service Centers; offshoring scaling up Implementation underway to reduce IT applications by 40% 5

16 Strong Quality performance across divisions % Inspections good or acceptable Pharmaceuticals 00% Number of inspections 35 3 Alcon 00% 7 4 Sandoz 00% 7 5 Build a High-Performing Organization Results status as of June 30, 05, for continuing operations: Pharmaceuticals, Alcon and Sandoz. The outcome of two FDA inspections of manufacturing sites in India, which were conducted in August 04, are still pending. 6

17 Agenda Group overview Joseph Jimenez, Chief Executive Officer Financial review Harry Kirsch, Chief Financial Officer Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez, Chief Executive Officer Q&A session Executive team 7

18 Net sales grew 6% in the quarter, with core operating leverage in both Q and H Continuing operations Q Change vs. PY H Change vs. PY (in USD m) 05 % USD % cc 05 % USD % cc Net Sales Core Operating Income Operating Income Net Income Core EPS (USD) EPS (USD) Free Cash Flow An explanation of continuing operations can be found on page 4 of the Condensed Interim Financial Report 8

19 Sales volume more than offsetting generic impact Continuing operations Q 05 (growth vs. PY in %) Net sales Core operating income Volume before Gx Price - - Growth before Gx 9 Generics impact -5-3 CC growth 6 6 Currency - -3 USD growth -5-7 Generics impact on sales amounted to USD 0.7 billion for Q 05 9

20 Negative currency impact in Q from strong USD Currency impact vs. PY (in % pts) Net sales Core operating income to -4 Q Q Q3 Q4 Q Q FY Q Q Q3 Q4 Q Q FY FY impact: -% FY impact: -5% Assuming mid-july exchange rates prevail for the remainder of the year 0

21 Core margin improved due to Pharmaceuticals and Sandoz Q 05 Net sales change vs. PY Core operating income change vs. PY Core ROS Core margin change vs. PY (in % cc) (in % cc) (%) (% pts cc) Pharmaceuticals Alcon Sandoz Q continuing operations H continuing operations

22 Alcon Q key performance drivers and full-year outlook Alcon Division net sales growth (% in cc) 5.5% Prior 4 Quarter average % Q 05 underlying 0% Q 05 reported % Q 05 underlying Full-year Alcon sales guidance lowered to low single-digit growth (in cc) IOL competitive pressure Contact lens care decline Lower surgical equipment Phasing Pharma seasonal products Trade inventory reduction Average of Alcon Division Q 04 to Q 05 growth (in cc)

23 Q core margin significantly above prior year due to both portfolio transformation and productivity improvements Core margin USD at period rates (in % pts) +.4pts Q 04 Total Group Core ROS Portfolio Transformation Sales and Productivity Fx Q 05 Continuing Operations Core ROS 3

24 H free cash flow was USD 3.5 bn Continuing operations free cash flow (in USD bn) Key drivers vs. PY Negative currency impact Hedging gains Favorable net working capital H 04 H 05 Free cash flow from net working capital defined as free cash flow from changes in inventory, trade receivables and trade payables 4

25 Net debt increased mainly due to GSK oncology acquisition (in USD bn) Dec 3, 04 Free Cash Flow Total Group including discontinued operations Related to employee participation programs 3 Mainly from tax payments on divestments Dividends Acquired GSK oncology assets Net proceeds from portfolio transformation transactions Proceeds from options exercised Share repurchases Others 3 Jun 30, 05 5

26 Full year outlook for continuing operations confirmed Barring unforeseen events Continuing operations net sales expected to grow mid-single digit (cc): Pharmaceuticals: confirmed at mid-single digit growth (cc) Alcon: revised downward to low-single digit growth (cc) Sandoz: revised upward to high-single digit growth (cc) Continuing operations core operating income expected to grow ahead of sales at a high-single digit rate (cc) 6

27 Agenda Group overview Joseph Jimenez, Chief Executive Officer Financial review Harry Kirsch, Chief Financial Officer Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez, Chief Executive Officer Q&A session Executive team 7

28 Pharmaceuticals Division delivered leverage with solid growth (cc) in both sales and core operating income Q Q Change vs. PY (in USD m) % USD % cc Net Sales Core Operating Income Operating Income Core Operating Income Margin 3.6% 3.6% Operating Income Margin 5.3% 9.3% 8

29 Growth Products now represent 44% of total division sales Pharmaceuticals Growth Products net sales in Q (in USD bn, growth in % cc) +38% cc Q 04 Q 05 % of total division sales 34% 44% 9

30 Emerging Growth Markets represented 6% of total division sales Pharmaceuticals Division net sales in Q (share in %, growth in % cc) 6% +0% vs. PY in Q +5% vs. PY in Q 74% Established Markets Emerging Growth Markets All markets excluding the US, Canada, Western Europe, Japan, Australia, and New Zealand 30

31 Unparalleled growth platform with exclusivity to 09 and beyond 3 Indication Q 05 Net sales (USD m) Q 05 Growth vs. PY (% cc) MS wamd, DME, RVO, mcnv 537 arcc, TSC/SEGA, pnet, HR+/HER abc 43 9 CML 4 Type diabetes mellitus 73 - Severe allergic asthma and CSU/CIU 94 8 arcc 65 n/a COPD BRAF V600+ metastatic melanoma 3 n/a Thrombocytopenia 6 and SAA 6 n/a MF and PV Selected key products for growth of Pharmaceuticals Division Impacted by Galvus in Germany, where distribution was stopped July, 04; excluding Germany, Q 05 growth vs. PY was +5% (cc) 3 Onbrez Breezhaler approved as Arcapta Neohaler in the US 4 Net sales and growth of Onbrez, Seebri and Ultibro 5 Net sales of Tafinlar and Mekinist 6 citp and thrombocytopenia associated with hepatitis C 3

32 Oncology achieved strong growth momentum Oncology Franchise net sales (in USD m, growth in % cc) 95 Q % cc +% cc Q 05 Sales grew 30% vs. PY in Q Base business grew % vs. PY in Q New assets sales (USD 0.5 bn) represented 5% of total Oncology sales Integration of new assets and onboarding of new associates progressing well Base business New assets Continuing Oncology assets unaffected by the GSK transaction Assets acquired in the GSK transaction which closed on March, 05. These include among others Votrient, Promacta, Tafinlar and Mekinist 3

33 Tafinlar / Mekinist : Sales growth, new data in melanoma and breakthrough designation in NSCLC Strong commercial performance Compelling clinical data in BRAF V600+ metastatic melanoma Regulatory milestones USD 3 m net sales in Q 05 Jan 04 combination launched in US 5. months median overall survival Low (%) discontinuation rate EU & JP submissions completed in melanoma 3 Breakthrough therapy designation in BRAF V600E+ NSCLC 4 COMBI-d results in BRAF V600E/K+ metastatic melanoma. Ph III study with 43 patients. Long et al. Lancet 3 May 05 (on-line publication Net sales of Tafinlar and Mekinist 3 Submission of st line combination therapy (Tafinlar + Mekinist ) in unresectable or metastatic melanoma with BRAF V600E or V600K mutations in both EU and Japan achieved in Q 4 FDA Breakthrough Therapy designation for combination therapy in BRAF V600E+ NSCLC obtained in July 05; Tafinlar monotherapy received FDA Breakthrough Therapy designation in this indication in January 04 33

34 Hematology portfolio: Sales growth, launches and approvals USD 4m +% USD 6m +7% USD 98m +68% USD 6m n/a nm Increased usage of Tasigna in st line CML patients in the US ENESTst results confirmed the benefit of st line Tasigna in newlydiagnosed CML Growth driven by US launch of Jadenu ECLIPSE study (Exjade vs. Jadenu ) expected in H 06 Growth in MF indication across geographies Jakavi launched in PV in Germany (Apr) US approval in pediatric citp (Jun) EU approval in SAA expected in H 05 Farydak approved in US (Feb) and Japan (Jul) CHMP positive opinion (Jun) Net sales in Q in USD million and growth in cc vs. PY Jakavi is in-licensed from Incyte Corporation ex-us; Incyte markets product as Jakafi in the US 34

35 Afinitor delivered double-digit growth Afinitor net sales (in USD m, growth in % cc) 384 4% 0% 7% 6% +9% cc 43 5% 8% 0% % +9% +4% +80% +5% Other 5 pnet TSC/SEGA RCC BC Sales grew 9% vs. PY in Q RADIANT-4 met its primary endpoint Regulatory filings expected in H 05 Prevalence of advanced GI / Lung NET is estimated at appr. 80k patients,3 54% 54% +% Pending final label 30-40% of these patients are expected to be eligible 3 RECORD-4 results (Ph II) 4 reinforce efficacy (PFS) in nd line arcc Q 04 Q 05 The primary endpoint was met: significant extension of PFS compared to placebo plus best supportive care (Novartis Press Release, May 05) Estimated prevalence in US, Top-5 EU, Japan 3 Novartis estimate 4 Motzer R, Alyasova A, Ye D, et al. RECORD-4: A multicenter, phase II trial of second-line everolimus in patients with mrcc. J Clin Oncol 33, 05 (suppl; abstract # 458) 5 Indeterminate usage 35

36 Ultibro Breezhaler outperformed competitors, Value share uptake since launch, (in %) 3% % Ultibro Breezhaler Competitor Competitor.7%.3%.0%.6%.8% COPD portfolio 3 grew 57% vs. PY in Q Ultibro was the first to market dual bronchodilator (LABA/LAMA) in the EU and Japan % 0.8% Most recent launches included Italy (May) 0% 0.4% 0.4% 0.% 0.% 0.% Months Since Launch IMS Midas Monthly, April 05; Value share calculated in LABA, LAMA, ICS/LABA, LABA/LAMA, PDE-IV drug classes (note: includes sales from asthma as well) Only markets where both Ultibro and its LABA/LAMA competitors have launched. These six markets in the EU include Germany and the UK 3 COPD portfolio consists of Onbrez, Seebri and Ultibro Breezhaler 36

37 Cosentyx built further momentum in psoriasis Cosentyx demand in the US (Monthly Rx ) 3,000,000,000 0 Feb Mar Apr May Jun Dispensed Rx (IMS) Worldwide sales of USD 30 m in Q US launch Cumulatively >6,500 SRFs 3 in process / processed Patient support programs bridge gap between demand and access Around 30k moderate-to-severe psoriasis patients are estimated to be on biologics 4 New data in difficult-to-treat psoriasis (which affects ~50% of patients), strengthen clinical profile 5,6 Regulatory filings in US and EU completed for AS and PsA in Q Dispensed Rx s as per IMS Approval on 3 January 05 and product commercially available since March 05 3 Service Request Forms (SRFs) 4 Novartis estimate for the segment of patients on biologics (Bx) based on IMS and Decision Resources 5 Gottlieb A, et al. Oral presentation 3 rd World Congress of Dermatology 05, June 05 6 Reich K, et al. Poster presented at 3 rd World Congress of Dermatology 05. Poster #

38 Entresto : First major approval achieved Entresto achieved first approval in the US on July 7 Product shipped and Field Force is interacting with customers Indication includes reduce[s] the risk of cardiovascular death and hospitalization for heart failure Superiority vs. enalapril also included in label CHMP opinion expected in Q4 Submission for HFpEF expected in 09, based on outcome of ongoing PARAGON trial 38

39 Achieved and expected highlights from Pharmaceuticals newsflow H 05 H 05 Cosentyx FDA action in psoriasis Cosentyx EU approval in psoriasis Jakavi CHMP opinion in polycythemia vera Cosentyx Regulatory filings in US and EU for ankylosing spondylitis and psoriatic arthritis Zykadia CHMP opinion in ALK+ NSCLC Jadenu FDA action in new formulation film-coated tablets Tafinlar + Mekinist Submission in EU and Japan for metastatic melanoma Farydak Multiple myeloma FDA approval, PMDA approval, CHMP positive opinion Arzerra Submission for CLL maintenance and CLL relapse in US and EU BKM0 Submission for mbc ER+ (Al resistant / mtor naive) in US, EU & Japan LDE5 FDA action and CHMP opinion in advanced basal cell carcinoma Afinitor Submission for advanced non-functional GI and lung NET in US, EU & Japan Entresto FDA action in chronic heart failure with reduced ejection fraction 3 LCZ696 CHMP opinion in chronic heart failure with reduced ejection fraction QVA49 / NVA37 FDA action in chronic obstructive pulmonary disease (COPD) Arzerra submitted in EU for CLL maintenance in July Positive CHMP opinion for LDE5 (Odomzo ) obtained in June 3 Entresto TM approval obtained in July 39

40 Agenda Group overview Joseph Jimenez, Chief Executive Officer Financial review Harry Kirsch, Chief Financial Officer Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez, Chief Executive Officer Q&A session Executive team 40

41 Financial and innovation momentum continues On track for full year guidance Entresto TM and Glatopa TM launches Strong pipeline progress 4

42 Agenda Group overview Joseph Jimenez, Chief Executive Officer Financial review Harry Kirsch, Chief Financial Officer Pharmaceuticals David Epstein, Division Head, Novartis Pharmaceuticals Closing Joseph Jimenez, Chief Executive Officer Q&A session Executive team 4

43 Appendix

44 Planned filings 05 to 09 * ** *** **** BKM0 + fulv mbc ER+ AI resistant/mtor naive nd line PKC4 AML Afinitor Non-functioning GI and Lung NET 3 Arzerra * CLL 4 (maintenance) Arzerra CLL 4 (relapse) Cosentyx ** Ankylosing spondylitis Cosentyx ** Psoriatic arthritis PKC4 ASM 5 Regulatory application submitted in EU July 05 Regulatory submissions filed in EU and US in Q 05 Also known as OAP030. E0030 (Fovista ) is being developed by Ophthotech Corp. Ophthotech has licensed ex-us commercialization rights to Novartis under a Licensing and Commercialization Agreement Spinifex transaction signed on June 7; closing pending and expected in the second half of 05 New molecule New indication New formulation 44 BYM338 sibm 6 CTL09 Acute lymphoblastic leukemia LEE0 + ltz HR+, HER (-) postmenopausal Adv. BC st line E0030 *** Wet AMD RLX030 Acute heart failure Afinitor TSC 7 seizures BKM0 + fulv mbc ER+ post Al and mtor inhibitor 3 rd line Ilaris Hereditary periodic fevers Lucentis CNV and ME 8 Promacta / Revolade MDS 9 /AML assoc. thrombocytopenia Tafinlar + Mekinist BRAF V600+ NSCLC 0 Tasigna CML treatment free remission Tekturna Heart failure Signifor LAR 3 Cushing s disease KAE609 Malaria LCI699 Cushing s disease ACZ885 Sec. prev. cv events 4 Arzerra NHL 5 (refractory) CTL09 DLBCL 6 Gilenya CIDP 7 Promacta / Revolade MDS 9 Tafinlar + Mekinist BRAF V600+ Melanoma (adjuvant) Votrient Renal cell carcinoma (adjuvant) Zykadia ALK+ NSCLC 0 ( st line, treatment naive). Breast Cancer. Acute myeloid leukemia 3. Neuroendocrine tumors 4. Chronic lymphocytic leukemia 5. Aggressive systemic mastocytosis 6. Sporadic inclusion body myositis 7. Tuberous sclerosis complex 8. Choroidal neovascularization (CNV) and macular edema (ME) secondary to conditions other than macular degeneration, diabetic macular edema retinal vein occlusion and pathologic myopia 9. Myelodysplastic syndrome 0. Non-small cell lung cancer. Chronic myeloid leukemia EGF86 Solid tumors INC80 NSCLC 0 Afinitor DLBCL 6 Arzerra NHL 5 (relapse) Cosentyx nraxspa 8 LEE0+ tmx + gsn/or NSAI + gsn HR+, HER(-) premenopausal Adv. BC st line LEE0 Solid tumors Lucentis ROP 9 QMF49 Asthma QVM49 Asthma Zykadia ALK+ NSCLC 0 (Brain metastasis). Reduction of CV death/hospitalization in chronic heart failure patients 3. Long-acting release 4. Secondary prevention of cardiovascular events 5. Non-Hodgkins lymphoma 6. Diffuse large B-cell lymphoma 7. Chronic inflammatory demyelinating polyradiculoneuropathy 8. Non-radiographic axial spondyloarthritis 9. Retinopathy of prematurity 0. Chronic obstructive pulmonary disease. Obese hypogonadotropic hypogonadism. Preserved ejection fraction ABL00 CML ASB83 Solid and hematological tumors BAF3 Multiple sclerosis BCT97 COPD 0 BGJ398 Solid tumors BGS649 OHH BYL79 Solid tumors CAD06 Alzheimer s disease CJM Immune disorders CNP50 Alzheimer s disease EMA40**** Neuropathic pain FCR00 Renal transplantation HSC835 Stem cell transplantation Combination Abbreviations: fulv fulvestrant ltz letrozole tmx tamoxifen gsn goserelin NSAI Non-steroidal aromatase inhibitor KAF56 Malaria LJM76 Solid tumors PIM447 Hematological tumors QAW039 Asthma QAX576 Allergic diseases QGE03 Asthma BKM0 Solid tumors BYM338 Hip fracture BYM338 Sarcopenia LCZ696 Heart failure (PEF) LEE0+ fulv HR+, HER(-) postmenopausal Adv. BC st / nd line QAW039 Atopic dermatitis Tafinlar + Mekinist BRAF V600+ Colorectal cancer

45 Key Definitions This presentation contains several important words or phrases that we define as below: abc: advanced Breast Cancer AI: Aromatase Inhibitor ALK+ NSCLC: Anaplastic Lymphoma Kinase positive (ALK+) Non-Small Cell Lung Cancer (NSCLC) Approval: In Pharmaceuticals, Alcon and Vaccines in US and EU; each indication and regulator combination counts as approval; excludes label updates, CHMP opinions alone, and minor approvals arcc: advanced Renal Cell Cancer ASH: American Society of Hematology Base business: Continuing Oncology assets unaffected by the GSK transaction BC: Breast Cancer citp: chronic Immune ThrombocytoPenia CML: Chronic Myeloid Leukemia COPD: Chronic Obstructive Pulmonary Disease CHMP: Committee for Medicinal Products for Human Use CSU / CIU: Chronic Spontaneous Urticaria / Chronic Idiopathic Urticaria DME: Diabetic Macular Edema Emerging Growth Markets (EGM): All markets excluding the US, Canada, Western Europe, Japan, Australia, and New Zealand ER+: Estrogen Receptor positive FDA: US Food and Drug Administration Growth Products: Products launched in a key markets (EU, US, Japan) in 00 or later, or products with exclusivity in key markets until at least 09 (except Sandoz, which includes only products launched in the last 4 months). They include the acquisition effect of the GSK oncology assets HFpEF: Heart Failure with preserved Ejection Fraction HR+/HER-: Hormone Receptor positive / Human Epidermal growth factor Receptor negative In cc: In constant currencies LABA: Long-Acting Beta-adrenoceptor Agonists (β -agonists) LAMA: Long-Acting Muscarinic receptor Antagonist mbc: metastatic Breast Cancer mcnv: Choroidal Neovascularization (CNV) secondary to pathologic myopia (myopic CNV) MF: MyeloFibrosis mrcc: metastatic Renal Cell Carcinoma mtor: mammalian Target Of Rapamycin MS: Multiple Sclerosis NEJM: New England Journal of Medicine New assets: Assets acquired in the GSK transaction which closed on March, 05 NSCLC: Non-small cell lung cancer OS: Overall Survival PFS: Progression Free Survival PMDA: Pharmaceuticals and Medical Devices Agency (Japan) pnet: pancreatic NeuroEndocrine Tumor PV: Polycythemia Vera RCC: Renal Cell Carcinoma RVO: Retinal Vein Occlusion SAA: Severe Aplastic Anemia TSC/SEGA: Tuberous Sclerosis Complex Subependymal Giant Cell Astrocytoma wamd: Wet (neovascular) Age-related Macular Degeneration 45