First Quarter 2016 Results
Investor Presentation
April 21, 2016
Disclaimer
This presentation contains forward-looking statements that can be identified by terminology such as such as “potential,” “expected,” “will,” “planned,” or similar
expressions, 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 any potential financial or other impact on Novartis or any of our divisions of the
strategic actions announced in January 2016 to focus our divisions, integrate certain functions and leverage our scale; or regarding any potential financial or other impact
on Novartis as a result of the creation and operation of NBS; or regarding the potential financial or other impact on Novartis of the transactions with GSK, Lilly or CSL; or
regarding potential future sales or earnings of the Novartis Group or any of its divisions; 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 Novartis will be able to
realize any of the potential strategic benefits, synergies or opportunities as a result of the strategic actions announced in January 2016, the creation and operation of
NBS, or the transactions with GSK, Lilly and CSL. Neither can there be any guarantee that Novartis or any of the businesses involved in the transactions will achieve any
particular financial results in the future. Neither can there be any guarantee that shareholders will achieve any particular level of shareholder returns. Nor can there be
any guarantee that the 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; the potential that the strategic
benefits, synergies or opportunities expected from the strategic actions announced in January 2016, the creation and operation of NBS, or the transactions with GSK,
Lilly and 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; our ability to obtain or
maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products
which commenced in prior years and continues this year; unexpected safety, quality or manufacturing issues; global trends toward health care cost containment,
including ongoing pricing pressures, in particular from increased publicity on pharmaceuticals pricing; 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, including the continued increases in value of the US dollar, our reporting currency,
against a number of currencies; 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 our information technology systems; and other risks and factors referred to in
Novartis AG’s current Form 20-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 forward-looking statements as a result of new information, future events or otherwise.
2
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Agenda
3
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
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Solid quarter as we absorb Gleevec® LoE impact and invest for
long-term growth1
 Net sales up +1% (cc), with growth products offsetting Gleevec® impact
 Core operating income down (-5% in cc), reflecting generic erosion as well as
growth investments behind new launches and Alcon
 Launches progressing: Cosentyx® ahead of expectations; encouraging
Entresto™ launches in Europe
 Alcon: growth plan being executed, on track
LoE: Loss of exclusivity
1 All growth shown vs. prior year (PY) in constant currencies (cc). All numbers refer to continuing operations (incl. the newly acquired oncology assets and the OTC JV formed in 2015)
and do not include divested businesses. An explanation of continuing operations can be found on page 32 of the Condensed Financial Report.
4 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Our priorities for 2016
Deliver strong
1
Financial Results
Strengthen
2
3
Innovation
Improve
Alcon performance
4
Capture
5
Build a
Cross-Divisional Synergies
Higher-Performing Organization
5
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Divisional performance
Deliver strong
Financial
Results1
1
Sales +1% despite Gleevec® LoE (+4% ex.
Gleevec®)2
2
Sales +4% driven by Biopharmaceuticals
(+50%, mainly GlatopaTM US)
3
4
Sales -3% growth plan being executed
5
1
2
6
All growth shown vs. PY in constant currencies (cc). All figures reflect the transfers of certain products between divisions, as announced on January 27, 2016.
See page 34 of the Condensed Interim Financial Report for a full explanation.
In the US, Gleevec® lost exclusivity on February 1, 2016. +4% vs. PY excl. Glivec®, excludes all Gleevec® / Glivec® sales worldwide
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Cosentyx® and Entresto™ launches are progressing
1
 Q1 Sales: USD 176 m
 Growing share: US 7%, Germany 17%, Switzerland 15%1
Strengthen
2 Innovation
 New launches in PsA and AS
 US key focus areas
3
• Access: 65% Medicare low co-pay
• Commercial: Physician reach and frequency increased
4
 Encouraging launches in Europe: Germany, Switzerland
 Confident in peak sales
5
1
7
Value share in biologics segment of PsO (IMS PADDS, Feb. 2016)
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Pipeline has exciting near-term milestones
Molecule
Indication
MoA
Expected
Readout
Potential
blockbuster?
LEE011
(ribociclib)
HR+ HER2- advanced
breast cancer
CDK4/6 inhibitor
Q4 2016
(PIII)
✓
OAP030
(Fovista®)
Neovascular AMD
Aptamer anti-PDGF
Q4 2016
(PIII)
✓
AMG 3341
Prophylaxis of
migraine
CGRP receptor
antagonist
H2 2016
(PIIb, PIII)2
✓
RLX030
(serelaxin)
Acute heart failure
Relaxin receptor
agonist
H1 2017
(PIII)
✓
1
Strengthen
2 Innovation
3
4
5
1
2
8
In collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan
PIIb for chronic migraine, PIII for episodic migraine
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
And we are working to expand patient access to biologics with our
biosimilar pipeline
Agency
Expected
Filing
Anemia3
FDA
2016
Adalimumab
Rheumatoid arthritis
FDA
2016
Rituximab
Non-Hodgkin’s
lymphoma
EMA
2016
Adalimumab
Rheumatoid arthritis
EMA
2017
Rituximab
Non-Hodgkin’s
lymphoma
FDA
2017
Molecule
Indication1
Epoetin alfa
Originator2
1
Strengthen
2 Innovation
3
4
5
1
2
3
9
Main indication only
All trademarks are the property of their respective owners
In chemotherapy induced anemia, chronic kidney disease and others
| Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Top talent named to lead future of R&D
1
Research
Development
Prof. Jay Bradner
Dr. Vas Narasimhan
Strengthen
2 Innovation
3
4
5
10 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Alcon growth plan underway, with clear focus on fixing the basics
Accelerate innovation and sales
1
 UltraSertTM and PanOptix® launched in EU and UltraSertTM in US
 Transcend Medical acquisition
 Executing promotional programs in Vision Care
2
Reinforce strong customer relationships
Improve
3
Alcon
performance
4
 Hiring underway for additional customer service roles
 Actions underway to improve customer experience
 Extensive physician discussions to define future state
Improve basic operations
 Projects underway to improve Surgical manufacturing agility
 Deployed global pricing initiatives across all regions
 Further engaging and building confidence with associates
5
11 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Increasing cross-divisional synergies
Focus the divisions
1
 Transferred Ophtha Pharma from Alcon to Pharma
 Transferred 19 mature products from Pharma to Sandoz
2
Integrate drug development
 Integration planning for safety, pharmacovigilance and regulatory
 Transferred Alcon Pharma development to new global function
3
4
Capture
Cross-Divisional
Synergies
5
12 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Centralize manufacturing
 Appointed single Global Head of Technical Operations
 Organizing by technology platform; global support functions
 New organization to be in place by July 1st
These changes also expected to generate significant savings
1
USD 1 billion savings
2
annually by 2020
3
Savings to be used to:
4
 Support margin expansion
 Free up resources for growth priorities
Capture
Cross-Divisional
Synergies
5
13 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
NBS continues to execute on its objectives
1
2
 Consolidation of Facility Services, from >100 suppliers to 3
3
 Selective offshoring ongoing to 5 Global Service Centers
4
Capture
Cross-Divisional
Synergies
 Expansion of NBS to improve in-country commercial efficiency
5
14 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Strong Quality performance across our ~80 sites, with 100% of
inspections good or acceptable
% Inspections good or acceptable1
1
2
3
4
5
Number of
inspections
Pharmaceuticals
100%
8
Alcon
100%
5
Sandoz
100%
19
Build a
Higher-Performing
Organization
1
Results status March 31, 2016. Ongoing MHRA inspection in the UK is still pending. Final outcome to be reported upon closure.
15 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
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
16 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Summary of Q1 2016 financial results
Continuing Operations1
Change vs. PY
% cc
% USD
(in USD m)
Q1
2016
Net Sales
11 600
-3
1
Core Operating Income
Operating Income
3 261
2 451
-11
-12
-5
-5
Net Income
2 011
-13
-4
Core EPS (USD)
1.17
-12
-5
EPS (USD)
0.85
-11
-3
1 362
-7
Free Cash Flow
1
An explanation of continuing operations can be found on page 32 of the Condensed Interim Financial Report
17 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Sales volume more than offset generic impact
Continuing operations Q1 2016
(growth vs. PY in %)
Net sales
Volume before Gx
7
15
Price1
-2
-8
Gx volume impact
-4
Currency
USD growth
-12
1
CC growth
1
Core operating income
-4
-3
Includes the price impact of generic entries
18 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
-5
-6
-11
Currency impact -4% and -6% in Q1, FY outlook -2% and -3%
Currency impact vs. PY
(in % pts)
Net sales
Core operating income
-4
-10
Q1
-3
-6
-8
-11
-12
Q2
Q3
-13
-13
-4
-3
Q2
FY
-14
-17
Q4
Q1
2015
Q2
20161
FY impact: -10%
1
-2
Assuming March average rates prevail for the reminder of the year
19 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
FY
Q1
Q2
Q3
Q4
2015
FY impact: -15%
Q1
20161
Core margin decline mainly due to LoE and growth investments
Net sales
change vs. PY
(in % cc)
Q1 2016
Core operating
income
change vs. PY
Core ROS
(in % cc)
(%)
Core margin
change vs. PY
(% pts cc)
Pharmaceuticals
1
-3
33.7
-1.5
Sandoz
4
6
19.8
0.5
Alcon
-3
-26
17.0
-5.9
Q1 continuing operations
1
-5
28.1
-1.8
20 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Net debt increased by USD 6.5 billion to USD 23.0 billion in Q1
(in USD bn)
-6.5
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
-16.5
1.4
-20
-22
-6.5
-24
Dec 31,
2015
1
Free Cash
Flow
Dividends
Related to equity-based participation plans of associates
21 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
-0.4
-0.2
0.2
Acquisitions &
Portfolio
Proceeds
divestments transformation from options
of businesses transactions
exercised1
costs
-0.4
Share
repurchases
-0.6
-23.0
Others
Mar 31,
2016
Core OpInc expected to decline in H1 due to higher investments,
with growth expected in H2 from sales uptake
Core OpInc vs. PY in cc
(in % pts)
H2 2016: expected mid to
high single digit growth
H1 2016: expected mid to
high single digit decline
 Launch and growth
investments
 Alcon slowdown
versus prior year
22 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
 Cosentyx® and EntrestoTM
sales uptake
 Growth products uptake
 Productivity programs
Full year outlook confirmed
Barring unforeseen events
 Continuing operations net sales expected to be broadly in line with PY (cc)
• Pharmaceuticals: broadly in line with PY to a slight decline (cc)
• Sandoz: low to mid-single digit growth (cc)
• Alcon: low single digit growth (cc)
 Continuing operations core operating income expected to be broadly in line
with PY (cc)
23 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
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
24 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Pharmaceuticals Division net sales +1% and Core OpInc -3% vs. PY1
(in USD bn)
1
Q1
Q1
Change vs. PY
2016
2015
Net Sales
7 729
7 960
-3
1
Core Operating Income
2 602
2 855
-9
-3
Operating Income
2 180
2 450
-11
-4
Core Operating Income Margin
33.7%
35.9%
Operating Income Margin
28.2%
30.8%
% USD
% cc
All figures reflect the transfers of certain products between divisions, as announced on January 27, 2016. See page 34 of the Condensed Interim Financial Report for a full explanation. Pharmaceuticals Division financials
without the adjustment to the new divisional structure would have yielded net sales growth (+3%), core operating income (0%) and operating income (-1%); all in cc vs. PY.
25 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Key growth drivers1 with exclusivity to 2020 and beyond
Q1 2016
Net sales
(USD m)
Q1 2016
Growth vs. PY
(% cc)
MS
698
12%
CML
382
6%
Type 2 diabetes mellitus
283
4%
Severe allergic asthma, CSU/CIU
192
14%
aRCC
166
n/a
PsO, PsA, AS
176
n/a
COPD
146
15%
BRAF V600+ metastatic melanoma
1504
n/a
MF, PV
124
44%
Thrombocytopenia6, SAA
131
n/a
HFrEF
17
n/a
Indication
2
5
1
2
3











Selected key products for growth of Pharmaceuticals Division
In the US, Onbrez® Breezhaler® is approved as Arcapta® Neohaler®, Seebri® Breezhaler® as Seebri® Neohaler® and Ultibro®
Breezhaler® as Utibron® Neohaler®
Net sales and growth of Onbrez®, Seebri® and Ultibro®
26 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
3
4
5
6
Net sales of Tafinlar® + Mekinist®
Approved as Promacta® in the US
cITP and thrombocytopenia associated with hepatitis C
3
Oncology base business1 ex-Glivec® grew 7% vs. PY (in cc)
Oncology net sales
(in USD m, growth in % cc)
+9%
3 030
2 856
 Total Oncology sales grew 9% vs. PY in Q1,
834
Gleevec® / Glivec®
504
assets2
1 070
156
New
+7%
1 630
1 692
Base business1
with base business1 growing 7%
 In the US, Gleevec® volume share remains
>50%3 with volume retention ahead of
benchmark
 Main growth drivers included Tasigna®,
Jakavi® and Jadenu® / Exjade®
Q1 2015
1
2
3
Q1 2016
Continuing Oncology assets unaffected by the GSK transaction and excluding Gleevec® / Glivec®
Assets acquired in the GSK transaction which closed on March 2, 2015. These include, among others, Votrient®, Promacta®, Tafinlar® + Mekinist®
Volume share in the imatinib segment, i.e. Gleevec® and Gx imatinib (Source: Symphony APLD with data up to week of March 18, 2016)
27 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Jakavi® demonstrated promising efficacy in GvHD patients
Before ruxolitinib
3 weeks after ruxolitinib
 Up to 80% of patients with HSCT develop
GvHD
 JAK1/2 signaling is a key pathway leading to
inflammation and tissue damage in GvHD
 Promising efficacy results incl. high ORR and
OS in both acute and chronic SR GvHD1
 Pivotal trial planned (starting by Q1 2017)
Reprinted by permission from Macmillan Publishers Ltd: Zeiser R, et al. Leukemia. 2015;29(10):2062-2068, copyright 2015 (data from a trial with 95 patients with SR GvHD)
Ruxolitinib is in-licensed from Incyte Corp. ex-US for hematology, oncology and GvHD indications
1 ORR was 81.5%; 6-months OS was 79.0% and 97.4% in acute and chronic SR GvHD respectively (Leukemia 2015)
28 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Gilenya® share in MS segment1 steadily increasing
Gilenya® value share in MS segment (US)¹
(%)
13%
 Sales grew 12% vs. PY in Q1
 Both US and ex-US sales grew double digit
12%
 Leading ex-US value share2
11%
 Over 148,000 patients treated to date3
 Gilenya® is increasingly recognized for early
10%
efficacy switch in RMS4
9%
1
Value share defined as % share of the MS segment incl. Aubagio®, Copaxone®, Gilenya®, Glatopa®,
Lemtrada®, Tecfidera®, Tysabri® and approved interferons. Source: IMS PADDS. All trademarks are the
property of their respective owners
29 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
2
3
4
Leading share in the MS segment (as per footnote 1) defined as global sales excl. US (Source: Evaluate Pharma)
Worldwide Novartis estimate in clinical trials and in post-marketing setting
Gilenya® Physician Attitude Trial Usage market research study (March 2016)
Entresto™: US formularies now open after being almost
fully blocked before January – but PAs remain a challenge
Patient access1 – Medicare
Patient access1 – Commercial insurance
(% coverage over time)
(% coverage over time)
100%
100%
9
19
44
75%
43
75%
65
50%
100
91
50%
26
25%
81
26
0%
Jul 15
Oct 15
On formulary; lower co-pay
Jan 16
Apr 16
On formulary; higher co-pay
56
22
23
25%
35
30
9
54
44
23
0%
Jul 15
Oct 15
Jan 16
Apr 16
Not covered (i.e. not listed on formulary)
PA = Prior Authorization
1 Patient access calculated based on EntrestoTM inclusion in national insurance plan formularies. Patient access is total number of patients whose insurance plan includes EntrestoTM on formulary (whether or not a heart failure
patient). Percentage shown is calculated as number of patients covered by an insurance plan with EntrestoTM on formulary, divided by all patients covered by insurance plans (Medicare and Commercial respectively)
30 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Entresto™ launch in Europe off to a much faster start than US
Weekly Rx trend (US only)1
Relative uptake (US and Europe)2
(#)
(% patient penetration)
4,000
TRxs
NRxs
US
1.6%
3,500
CH
3,000
1.2%
2,500
DE
FR
2,000
0.8%
1,500
1,000
0.4%
500
0
1
Source: IMS TM-1 NPA (data till week ending April 1, 2016)
31 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
0.0%
2
Monthly patient penetration calculated as number of patients on Entresto TM divided by pool of HFrEF
patients in country. Estimates based on sales (treated) and prevalence (pool). Data per March 31, 2016
Entresto™ has significant potential across indications
Eligible and potentially eligible patients1,2
(patient potential over time)
- ILLUSTRATIVE -
Post acute MI at risk of HF
PARADISE3 (planned filing 2020+)
PARAGON3 HFpEF (planned filing 2019)
PARADIGM
Approved in US and Europe1
 HFrEF, NYHA II-IV
 CH only: QoL / symptom benefit
New analyses4 showed benefits:
 In both clinically stable and least-stable patients
 Vs. enalapril regardless of background therapy
Estimated 2016 sales of ~USD 200 m; Confident in peak sales of ~USD 5 bn in HFrEF
1
2
Currently eligible patients are defined by the label in each geography
Potentially eligible patients are defined by the indications studied in the ongoing / planned trials in HFpEF and post acute MI
32 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
3 Pivotal
4
trials with outcomes endpoints to support new indications
Novartis press release (April 2, 2016)
With formulary access addressed, now scaling up to
deliver on Entresto™ for appropriate patients in the US
Expand promotion and SoV
1
 Field force expanded by 50%
 Evaluating further PCP field force expansion
 Launched “Tomorrow” direct to consumer campaign
Inform patients and practices about reimbursement process
 Continue EntrestoTM Central1 platform and CoverMyMeds1 services as well as the distribution of blank plan specific
2
PA forms directly to the HCP offices
 Educate on office challenges with PA process and managed care issues, given most cardiology practices have
limited experience with PA process; each payer issues its own PA2
Expand and execute the clinical program “FortiHFy”
3




Two pivotal trials with outcomes endpoints to support new indications (HFpEF 2019, HF post acute MI 2020)
Broaden data in HFrEF beyond PARADIGM population
Generate additional data regarding symptomatic / QoL benefits
Generate real world evidence
1 http://www.entresto.com/info/entresto-central.jsp?usertrack.filter_applied=true&NovaId=4029462161607648418
and https://www.covermymeds.com/main/ (accessed April 11, 2016)
Different insurers have different PAs for the same medicine (e.g. EntrestoTM); cardiology practices face various brands which recently launched and require PAs, like Entresto TM, PCKS9s and Corlanor®. All trademarks
are the property of their respective owners
2
33 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Cosentyx®: Above expectations, outpacing competition
through strong gains in PsO
Weekly TRx1
Value share in biologics segment2
(#; US across indications and specialties)
(%; office based dermatologists only)
45%
4000
3000
30%
2000
15%
1000
0%
0
Feb-15 Mar 15 Apr-15 May 15 Jun-15 Jul-15 Aug-15 Sep-15 Oct 15 Nov-15 Dec 15 Jan-16 Feb-16
Cosentyx®
1
2
Stelara®
Cosentyx®
Humira®
Stelara®
Total TRx data across indications and specialties incl. dermatologists and rheumatologists. (Source: NPA weekly data; data till week ending April 1, 2016)
Biologics segment defined as Humira®, Enbrel®, Simponi®, Stelara®, Cimzia®, Cosentyx®, Otezla®, Infliximab (Source: IMS). All trademarks are the property of their respective owners
34 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Otezla®
Cosentyx®: Early use in PsO ex-US expected to further
expand opportunity
Prior treatment (by treatment class)
0%
20%
Patients naive to conventional systemics
1
40%
60%
Patients naive to biologics 1
Patients who have not been treated with a biologic therapy (i.e. anti TNFs or Stelara®) prior to starting Cosentyx®
Patients who have been treated with one or several biologic therapies prior to starting Cosentyx ®
Note: Novartis analysis based on IMS prescription data and Service Request Forms (SRFs) in the US
2
35 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
80%
Patients switched from biologics 2
100%
Cosentyx®: Building a mega-blockbuster across three indications
PASI 90 response at Week 521,2
Percentage Responders
90
80
76.2%
70
p<0.0001
60
60.6%
50
40
30
Secukinumab 300 mg (n = 334)
20
Ustekinumab (n = 335)
10
0
0
4
8
12 16 20 24 28 32 36 40 44 48 52
Week
1
2
3
Blauvelt A et al. 52-week results from the CLEAR study. Late breaking abstract (AAD March 5, 2016)
≥ 90% improvement from baseline psoriasis area & severity index score. Missing data calculated using
multiple imputation
Novartis analysis based on sales force reports
36 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
 Sales of USD 176 m in Q1
 >25,000 patients on Cosentyx® worldwide3
 Combined industry sales of >USD 15 bn; sales
grew >20% (MAT Nov. 2015 vs PY)4
Rheumatology launch
 Encouraging early uptake in AS/PsA indications
 Anti-IL17A included in GRAPPA and EULAR
treatment guidelines
 Head to head superiority studies planned in PsA
and AS with Cosentyx® vs. Humira®
4
Estimated worldwide industry sales in PsO/PsA/AS. PsO (US, EU, JP) was USD 7.9 bn; PsA (US, EU) was
USD 3.6 bn; AS (US, EU) was USD 3.0 bn (Source: IMS). Novartis estimates the rest of world (and JP in PsA and
AS) to account for at least USD 0.5 bn, making the total segment >USD 15 bn. The vast majority of sales comes
from biologics, incl. anti-TNFs and Stelara®
All trademarks are the property of their respective owners
Achieved and expected highlights from Pharmaceuticals
regulatory newsflow
H1 2016
Cosentyx®
FDA action in ankylosing spondylitis
Cosentyx®
FDA action in psoriatic arthritis
Ilaris®
Regulatory filings in EU and US for hereditary periodic fevers1
Afinitor®
FDA action for advanced non functional NET (GI / lung origin)
PKC412
Regulatory filings in US and EU for both ASM and AML
Tafinlar® + Mekinist®
PMDA action in BRAF V600+ metastatic melanoma
BYM338
Regulatory filings in EU and US for sporadic inclusion body myositis
Tafinlar® +
H2 2016
1
2
Mekinist®
Regulatory filings in US and EU for BRAF V600+ NSCLC
Votrient®
Regulatory filings in US and EU for adjuvant RCC
Afinitor®
EU and PMDA action in advanced non functional NET
LEE011 (+ letrozole)
Submission2 in US 1st line HR+ HER2(-) mBC
Submission of Ilaris® in HPF completed in the US; EU not submitted yet
Submission late 2016 or early 2017 with final analysis based on the predefined progression free survival (PFS) data of the MONALEESA-2 trial, provided that events occur no later than early Q3, 2016
37 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation


()



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
38 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Solid Q1, on track for full year guidance
 Absorbing Gleevec® loss of exclusivity
 Delivering key launches
 Alcon plan being executed
 On track for full year guidance
39 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
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 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
Appendix
Planned filings 2016 to  2020a
2016
2018
2019
CTL019
INC280
BAF312
ABL001
PIM447
NSCLC8
SPMS17
CML9
Hematologic tumors
LEE011 + ltzb
HR+, HER2 (-) postmenopausal
adv. BC2 1st line
Lucentis®e
CNV6
Pediatric acute lymphoblastic leukemia
PKC412
PKC412
OAP030f
AML3
ASM7
Afinitor®
Tafinlar® + Mekinist®
TSC4 seizures
BRAF V600+ NSCLC8
Cushing’s disease
HR+, HER2 (-) postmenopausal
Adv. BC2 2nd line
ASB183
QAX576
Solid and hematologic tumors
Allergic diseases
RLX030
RTH258
KAF156
BGJ398
QGE031
Acute heart failure
nAMD11
Malaria
Solid tumors
CSU/IU23
Cosentyx®
QAW039
BKM120
nrAxSpA16
Asthma
Solid tumors
Primary Sjoegren’s syndrome
CAD106
BYM338
Tasigna®
ACZ885
CLL5 (relapse)
CML9 treatment free remission
Sec. prev. CV events12
LEE011+ fulv
Entresto™
VAY736
Ilaris®d
Votrient®
Arzerra®
Hereditary periodic fevers
Renal cell carcinoma (adjuvant)
NHL13 (refractory)
HR+, HER2 (-) postmenopausal
adv. BC2 1st /2nd line
Heart failure (PEF)18
CTL019
LEE011+ tmx + gsn/or NSAI + gsn
Jakavi®
CJM112
BYM338
GVHD19
Immune disorders
Sarcopenia
LAR10
Cushing’s disease
b)
c)
d)
e)
f)
BYL719 + fulv
LCI699
nAMD11
Arzerra®c
Signifor®
a)
 2020
2017
AMG 334 is not included in this view. AMG 334 is part of the global collaboration
with Amgen to commercialize and develop neuroscience treatments
Submission anticipated late 2016 or early 2017
Submitted in US and EU in Q1 2016
Submitted in US in Q1 2016
Submitted in EU in Q1 2016
Also known as Fovista® (pegpleranib) and E10030. This product is being
developed by Ophthotech Corp. Ophthotech has licensed ex-US
commercialization rights to Novartis under a Licensing and Commercialization
Agreement
New molecule
New indication
New formulation
DLBCL14
HR+, HER2 (-) premenopausal
Adv. BC2 1st line
Lucentis®
Alzheimer’s disease
CNP520
Hip fracture
BYL719
Gilenya®
QMF149
Pediatric MS15
Asthma
ROP20
Tafinlar® + Mekinist®
QVM149
OMB157
EMA401
Entresto™
BRAF V600+ Melanoma (adjuvant)
Asthma
RMS21
Neuropathic pain
Post-acute myocardial infarction
Combination Abbreviations:
fulv
fulvestrant
ltz
letrozole
tmx
tamoxifen
gsn
goserelin
NSAI Non-steroidal aromatase inhibitor
Zykadia™
Zykadia™
ALK+ adv. NSCLC8
(Brain metastases)
ALK+ adv. NSCLC8
line, treatment naive)
(1st
1.
2.
3.
4.
5.
6.
Sporadic inclusion body myositis
Breast cancer
Acute myeloid leukemia
Tuberous sclerosis complex
Chronic lymphocytic leukemia
Choroidal neovascularization (CNV) secondary to
conditions other than macular degeneration and
pathologic myopia
7. Aggressive systemic mastocytosis
8. Non-small cell lung cancer
9. Chronic myeloid leukemia
10. Long-acting release
11. Neovascular age-related macular degeneration
12. Secondary prevention of cardiovascular events
42 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
Non-Hodgkin’s lymphoma
Diffuse large B-cell lymphoma
Multiple Sclerosis
Non-radiographic axial spondyloarthritis
Secondary progressive multiple sclerosis
Preserved ejection fraction
Graft-Versus-Host Disease
Retinopathy of prematurity
Relapsing multiple sclerosis
Non-alcoholic steatohepatitis
Chronic spontaneous urticaria / Inducible urticaria
Diabetic macular edema
Alzheimer’s disease
Solid tumors
FCR001
Jakavi®
Renal transplantation
Early myelofibrosis
HSC835
LEE011
Stem cell transplantation
Solid tumors
KAE609
QAW039
Malaria
Atopic dermatitis
LJM716
RTH258
Solid tumors
DME24
LJN452
Tafinlar® + Mekinist®
NASH22
BRAF V600+ Colorectal cancer
Key definitions and trademarks
This presentation contains several important words or phrases that we define as below:
AML: Acute myeloid leukemia
New assets: Assets acquired in the GSK transaction which closed on March 2, 2015
AS: Ankylosing spondylitis
NET: Neuroendocrine tumor
ASM: Aggressive systemic mastocytosis
NYHA: New York Heart Association (functional classification class I – IV)
Approval: In Pharmaceuticals and Alcon in US and EU; each indication and regulator combination counts
as approval; excludes label updates, CHMP opinions alone and minor approvals
NSCLC: Non-small cell lung cancer
aRCC: advanced renal cell cancer
OS: Overall Survival
AS: Ankylosing Spondylitis
PA: Prior authorization
Base business: continuing Oncology assets unaffected by the GSK transaction
PASI 90: 90% reduction in Psoriasis Area Severity Index from baseline
cc: constant currencies
PsA: Psoriatic arthritis
cITP: chronic immune thrombocytopenia
PsO: Psoriasis
CML: Chronic myeloid leukemia
PY: Prior Year
COPD: Chronic Obstructive Pulmonary Disease
PV: Polycythemia Vera
CSU / CIU: Chronic spontaneous urticaria / Chronic idiopathic urticaria
QoL: Quality of life
Growth Products: Products launched in a key markets (EU, US, Japan) in 2010 or later, or products with
exclusivity in key markets until at least 2019 (except Sandoz, which includes only products launched in the
last 24 months). They include the acquisition effect of the GSK oncology assets
RCC: Renal cell cancer
GvHD: Graft vs. Host Disease
ORR: Overall response rate
SAA: Severe aplastic anemia
SR GvHD: Steroid resistant graft vs host disease
GI: Gastrointestinal
HF: Heart Failure
HFrEF: Heart failure with reduced ejection fraction
HR+/HER2- mBC: Hormone Receptor positive / Human Epidermal growth factor Receptor 2 negative
metastatic breast cancer
Trademarks
Aubagio® and Lemtrada® are registered trademarks of Genzyme Corporation
Cimzia® is a registered trademark of UCB Group of Companies
Copaxone® is a registered trademark of Teva Pharmaceutical Industries Ltd
HSCT: Hematopoietic stem cell transplantation
Corlanor® and Enbrel® are registered trademarks of Amgen Inc.
LoE: Loss of exclusivity
Humira® is a registered trademark of AbbVie Ltd.
MAT: Moving annual total
Jardiance® is a registered trademark of Boehringer Ingelheim
MF: Myelofibrosis
Otezla® is a registered trademark of Celgene Corporation
MI: Myocardial infarction
Stelara® and Simponi® are registered trademarks of Janssen Biotech, Inc.
MS: Multiple sclerosis
Tecfidera® and Tysabri® are registered trademarks of Biogen MA Inc.
43 | Novartis Q1 2016 Results | April 21, 2016 | Novartis Investor Presentation