Novartis : ESG Update Q4 2022

CONTENTS

Click below to navigate through the document

Key takeaways from Novartis in Society Integrated Report

Events in Q4

ESG event: Investor Update on Access and Sustainability

Update on Q4 ratings

Novartis and Medicines for Malaria Venture

Select topics at forthcoming AGM

Top 10 questions from our investors

ESG Update Q4 2022

for investors and analysts

Dear investors and analysts

We hope you and your families have had a restful winter break. In our Q4 ESG update, we share highlights from the recently published Novartis in Society Report, a brief recap from Q4 events - including our ESG Event on November 30, ratings changes, and topics related to the upcoming Annual General Meeting on March 7, 2023.

As with each newsletter, the feedback and questions we have received during this quarter are reflected in the Q&A on pages 9 - 11.

We appreciate your engagement on all ESG-related topics. Thank you.

For further questions or comments please contact:

Samir Shah	Madeleine Szeluch	Nicole Zinsli-Somm
Global Head of	Investor Relations	Investor Relations
Investor Relations	ESG Director	ESG Director a.i
[e-mail]	[e-mail]	[e-mail]
[phone]	[phone]	[phone]

CONTENTS

Click below to navigate through the document

• Key takeaways from Novartis in Society Integrated Report

Events in Q4

ESG event: Investor Update on Access and Sustainability

Update on Q4 ratings

Novartis and Medicines for Malaria Venture

Select topics at forthcoming AGM

Top 10 questions from our investors

ESG UPDATE Q4 2022 | 2

Key takeaways from Novartis in Society Integrated Report

We published our second Novartis in Society Integrated Report on February 1, which provides an overview of our business, strategy and performance during 2022. It also describes how we create value for stakeholders and society. The report can be found here. We share our top 10 takeaways from the Report.

01 A transformative year for Novartis

Novartis is evolving from a diversified healthcare conglomerate into a focused, innovative medicines company. 2022 was a pivotal year in this journey. In 2022, we initiated a structural transformation to align our operating model with our focused strategy. We also announced our intention to spin off our Sandoz Division into a standalone company.

2022 by numbers

5 core Therapeutic Areas with high unmet patient needs

5 technology platforms: Chemistry, Biotherapeutics, RNA Therapy, Radioligand Therapy and Gene and Cell Therapy

4 priority geographies (US, Germany, China, Japan) which account for the majority of expected growth

USD 1.5 billion estimated cost savings by 2024 from the major organizational changes initiated in 2022

02 Our core remains the same

While Novartis pursued bold portfolio change in 2022, core elements of our company remain the same. Our vision is to become the most trusted and valued medicines company in the world, valued not only for our business performance, but for the difference our innovation makes for patients and society.

2022 by numbers
USD 10 billion invested		USD 7.5 billion dividends		49% reduction in
in R&D		paid to shareholders		greenhouse gas emissions
				in our own operations
				(vs. 2016 baseline)

03 Our strategy meets the challenges and opportunities we see in our business environment

Medical technology continues to accelerate, as advanced new treatments emerge to meet the growing demand for high-quality healthcare.

2 billion people in the		Spending on medicines		250,000 deaths
world still lack access to		globally is forecast to		expected to be caused
essential medicines1		rise by 3 - 6%, over the		by climate change
		next 5 years2		between 2030 - 20503

1. Access to Medicines Foundation 2. IQVIA Institute 3. WHO

CONTENTS

Click below to navigate through the document

• Key takeaways from Novartis in Society Integrated Report

Events in Q4

ESG event: Investor Update on Access and Sustainability

Update on Q4 ratings

Novartis and Medicines for Malaria Venture

Select topics at forthcoming AGM

Top 10 questions from our investors

ESG UPDATE Q4 2022 | 3

04 New launches and growth products

Delivering new medicines is at the core of our purpose and value creation as a company. In 2022, we continued to deliver high-value medicines for patients that address leading causes of death and disability around the world.

Highlights
10 million patients		Our cholesterol-lowering		We secured approval for
worldwide are estimated		treatment Leqvio® is		Pluvicto®, our radioligand
to be treated for heart		approved for use in		therapy that treats an
failure and hypertension		70 countries worldwide		advanced form of
with Entresto®				prostate cancer

05 Innovating with patients

We made substantial investments in R&D to advance our pipeline of investigational medicines and bring the next generation of medicines for patients.

Highlights
USD 10 billion invested		44 ongoing Phase III		24 submissions for
in R&D, compared with		programs in our		regulatory approval
USD 9.5 billion in the		development pipeline		in the US, EU, Japan
prior year				and China
06 Solid financial	performance

Despite challenging macroeconomic conditions and an unstable geopolitical environment, we delivered a solid financial performance in 2022, that underscores the progress we are making in executing on our strategy.

Highlights
USD 50.5 billion in group		8% (cc) core		USD 41.3 billion Innovative
net sales, up 4% (cc)		operating income		Medicines Division net
from the prior year		increase driven by sales		sales, up 4% (cc) from
		growth and productivity1		the prior year

07 Leading the way on access to medicines

Access to medicines represents one of the world's biggest healthcare challenges. Many of the most acute issues are in LMICs, but the COVID-19 pandemic also exposed deep structural inequities in higher-income countries.

Highlights

54.6 million patients reached through our access programs and initiatives in 2022

26% increase in patients reached with our strategic innovative therapies compared with the previous year, representing an increase of 119% since 2019

USD 250 million pledged in 2022 over five years (2021 - 2025) to advance new treatments for NTDs and malaria

1. Operating income declined (-13% cc) mainly due to restructuring changes

CONTENTS

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• Key takeaways from Novartis in Society Integrated Report

ESG UPDATE Q4 2022 | 4

08 Investing in our culture

We're on a journey to transform our corporate culture to drive innovation and long-term performance.

Events in Q4

ESG event: Investor Update on Access and Sustainability

Update on Q4 ratings

Novartis and Medicines for Malaria Venture

Highlights

47% of management are women (compared with 42% five years ago)

80+ dedicated employee resource groups

More than 11,000 managers have taken part in our Unbossed Leadership Experience program since 2020

Select topics at forthcoming AGM

Top 10 questions from our investors

09 Reducing our environmental footprint

We continue to reduce emissions, waste and water consumption sent for disposal in our own operations, in line with our 2025 targets. In 2022, we introduced environmental sustainability criteria into suppliers' contracts.

Highlights

49% - reduction in greenhouse gas emissions in our own operations

vs. 2016 baseline

59% - reduction in waste sent for disposal vs. 2016 baseline

42% - reduction in our water consumption vs. 2016 baseline

10 Ethical behavior underpins our business

Our industry faces ethical questions and decisions every day on issues such as patient care, data use and access to medicines.

Highlights

We have a comprehensive Code of Ethics, which we developed together with our employees. In 2022, 98% of employees completed training on our Code of Ethics and more than 33,000 people responded to our global ethics survey

In 2022, we updated and streamlined our

Human Rights Commitment Statement

to focus on four priority areas, and updated our Third Party Code, both aligned with the Novartis Code of Ethics

CONTENTS

Click below to navigate through the document

Key takeaways from Novartis in Society Integrated Report

> Events in Q4

• ESG event: Investor Update on Access and Sustainability

Update on Q4 ratings

Novartis and Medicines for Malaria Venture

Select topics at forthcoming AGM

Top 10 questions from our investors

ESG UPDATE Q4 2022 | 5

Events in Q4

ESG Event: Investor Update on Access & Sustainability

We continue to evolve our strategy, strengthen our governance, and deliver real and meaningful progress on ESG topics. In 2022, we chose to focus our event on sustainability and impact, given the high interest from our investors.

Our ESG Event, held on November 30, included senior speakers from Novartis and

Sir Ronald Cohen, Chair of the Global Steering group for Impact Investment, who discussed impact at Novartis and within the pharmaceuticals sector. Our presentation can be viewed here.

Our Novartis ESG priorities are:

Access to medicines		Human capital		Environmental		Ethical standards
and innovation				sustainability