novartis vas narasimhan jpmorgan presentation

Reimagining MedicineStrategy UpdateVas Narasimhan, CEOJ.P. Morgan Healthcare ConferenceJanuary 11, 2021

Novartis AG

Disclaimer

| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation2

This presentation contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 that can generally be identified bywords such as “potential,” “expected,” “will,” “planned,” “pipeline,” “outlook,” or similar expressions, or by express or implied discussions regarding potential new products, potentialnew indications for existing products, potential product launches, or regarding potential future revenues from any such products; or regarding the development or adoption ofpotentially transformational technologies, treatment modalities and business models; or regarding potential future, pending, announced or completed transactions; or regarding thepotential benefits from and impact of current and future productivity programs on our financial performance and results; or regarding potential future sales or earnings of the Group orany of its divisions, or potential shareholder returns; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Suchforward-looking statements are based on our current beliefs and expectations 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. In particular, our expectations could be affected by, among other things: global trends toward health care cost containment, including ongoing government, payorand general public pricing and reimbursement pressures and requirements for increased pricing transparency; regulatory actions or delays or government regulation generally,including potential regulatory actions or delays with respect to the development of the products described in this presentation; the impact of the COVID-19 pandemic on enrollment in,initiation and completion of our clinical trials in the future, and research and development timelines, including regulatory approvals; the potential that the anticipated benefits from andimpact of current and future productivity programs on our business, including our financial performance and results, may not be realized or may be more difficult or take longer torealize than expected; the potential that the strategic benefits, synergies or opportunities expected from the transactions described may not be realized or may be more difficult ortake longer to realize than expected; dependence on third parties to fulfill manufacturing and supply obligations; the uncertainties involved in predicting shareholder returns; theuncertainties involved in the research and development of new healthcare products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain ormaintain proprietary intellectual property protection; safety, quality, data integrity or manufacturing issues; uncertainties regarding actual or potential legal proceedings, investigationsor disputes; uncertainties involved in the development or adoption of potentially transformational technologies, treatment modalities and business models; our performance onenvironmental, social and governance measures; political, economic and trade conditions; uncertainties regarding future global exchange rates; general political, economic andbusiness conditions, including the effects of and efforts to mitigate pandemic diseases such as COVID-19; uncertainties regarding future demand for our products; uncertaintiesregarding potential significant breaches of data security or data privacy, or disruptions of our information technology systems; and other risks and factors referred to in Novartis AG’scurrent 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 anyobligation to update any forward-looking statements as a result of new information, future events or otherwise.

We are transforming Novartis...

Our focus Our five priorities

Strategy set out in 2018... ...is transforming Novartis

100% focused as a medicines company

Record-high engagement score

Leading pipeline, with 4 advanced therapy platforms

Achieved USD 2bn cost savings over 2017-2020

Establishing a leading digital and data science platform

Improving ESG scores, sector-leader across 3 key indices

Focus ourcompany and capital

Strengthenour core

Acceleratecertaingeographies

Unleash the power of our people

Delivertransformativeinnovation

Go bigon dataand digital

Embraceoperationalexcellence

Build trustwith society


...while delivering strong operational performance...


1. Continuing operations excludes Alcon, includes the businesses of Innovative Medicines and Sandoz as well as the continuing corporate functions. 2. Constant currencies (cc) and core results are non-IFRS measures. 3. Historically Q4 margin lower due to seasonality.

Continuing operations1

2017 % 2018 growth (cc)

2018 % 2019 growth (cc)

2019 % 9M 2020 growth (cc)

9M 2020

Net salesUSD bn, growth cc2 42.3 +5% 44.8 +9% 47.4 +4% 35.9

Core2 OpIncUSD bn, growth cc2 11.7 +7% 12.6 +17% 14.1 +16% 11.9

Innovative Medicines Core2 margin%, growth cc2

31.0% +1.0% pts 32.0% +1.8% pts 33.5% +2.7% pts 36.3%3

...and a robust response to the COVID-19 pandemic


Associates Patients & HCPs Society

Taking care of the health and safety of our employees...• Job safety• ‘Choice with responsibility’• Support productivity and wellbeing

...whilst serving our key stakeholders...• Patient-oriented digital solutions• HCPs multi-channel engagements• Business continuity in our operations

...and playing a pivotal role in supporting the global response• Donations and access support• Research and development• External collaborations

We have focused the company...

Company 4

Company 13

Company 8

Company 14

≥ 20

0<

200

Conglomerate < 75% Pure-play ≥ 75%

SizeMarket cap, $bn

Company 3

Company 1

Company 12

Company 2 Company 11

Company 5Company 9

Company 10

Company 7

Company 6 Rx OtherBubble area = 2019 total company revenue

Rx% of revenues

Note: Companies grouped by strategic archetype, not strictly to scale. Source: Evaluate Pharma, S&P Capital IQ, Annual Reports. Revenues FY 2019, Market Caps as of Jan 1, 2020 except Company 2 (May 8, 2020).Rx = Innovative medicines. Other = vaccines, animal health, generics / biosimilars, consumer health, medical devices / diagnostics, revenues not attributable to a specific segment / TA and other revenues.

TODAY

END 2017


...through a broad range of transactions and partnerships

Innovative Medicines

Sandoz

Digital

NIBR

DivestmentsOut-licensing

⭐ Advanced Therapy Platform (Cell Therapy, Gene Therapy, RLT, RNA)1. For Sandoz Small Molecules, only deals >1m USD consideredAs of December, 2020

Consumer health

⭐⭐ ⭐

⭐

⭐Entresto JP

⭐

⭐ ⭐


Selected deals and total number1 2018-2020⭐

⭐⭐

45

25

45

22

88

⭐

Today, we present investors a differentiated profileDiversified across geographies and TAs, while providing exposure to cutting-edge platforms


1. Only TAs (Therapeutic Areas) with annual 3rd party sales >USD 500m in 2019; TA definition as per Evaluate Pharma; manual adjustments to keep classification consistent vs. previous years. 2. Defined as net sales from one of the mentioned therapy platforms by 2025 according to Evaluate Pharma and publicly available pipeline information. Source: Evaluate Pharma 2020

Company # of TAs1Top-selling drug % total net sales

Blockbusters #

Advanced therapy platforms2 Geographical diversification% of total Rx salesCell Gene RLT RNA

8% 15 ✔ ✔ ✔ ✔Company 1 8% 6 ✔ ✔Company 2 41% 8Company 3 15% 11 ✔ ✔Company 4 27% 4Company 5 13% 7 ✔ ✔Company 6 15% 13 ✔ ✔Company 7 24% 7 ✔ ✔Company 8 14% 9 ✔ ✔Company 9 21% 7 ✔Company 10 9% 5 ✔ ✔Company 11 27% 9 ✔Company 12 18% 9 ✔Company 13 22% 6 ✔Company 14 39% 4 ✔ ✔

101010

999

8666

44

33

2US

Canada & Latin AmericaEU

ex-USAsia, Africa, Australasia

Significant progress to solidify our culture journey towards an inspired, curious and unbossed organization

1. Source: Quarterly Glint Engagement Survey Scores (out of 100). 2. Source: Team Perspectives, December 2020, 67k participants.

75

80

11/1908/1905/19 03/20 05/20 11/2008/20

Pharma benchmark: 70

68

75

11/2003/2005/19 05/2008/19 11/19 08/20

Pharma benchmark: 70

Engagement1 Growth & learning1 Manager effectiveness2

• Rolled out new Values & Behaviors and EVOLVE performance management system, incl. removing ratings

• Coursera: ~450k courses completed by ~50k users in 2020, platform access extended to over 10k family and friends

• Launched TEDxNovartis

• ‘Unbossed Leadership Experience’ re-designed (virtual) and delivered to ~5k leaders in the organization

• Scaling to all 22k people managers

CuriousInspired Unbossed

Culture Sense under finalization to track progress and establish the link between culture and performance


Unleash the power of our people

8284

Q1 ’20Q1 ’19 Q4 ’20

Global benchmark: 77

We have a leading pipeline by key measures

InnovationScale# of projects1

ValueEstimated 2026 sales from products launched 2020-20263

116 Phase 1/2

49 Phase 3/ Registration

>65 NMEs

20Advanced platform therapies in clinical development

~90% Pipeline2 potentially first-in-class / first-in-indication

~80% Target areas of high unmet need2

Company H

Company DCompany C

Company A

Company E

Company B

Company FCompany G

Company I

#2 Replacement power

1. Including Global Health, excluding Sandoz. As of December, 2020. 2. Projects in confirmatory development. 3. Innovative Medicines product sales excl. Vaccines and LCM products (e.g. new formulations, combos with off-patent molecules); compound-based analysis (Ph2 and 3) with additional indications allocated to 1st launch. Source: Novartis peer group analysis based on data from Evaluate Pharma (download from September 24, 2020).


Deliver transformative innovation

In 2020 we advanced our innovation agenda

Beovu® (DME) Jakavi® (Chronic GvHD) Asciminib (CML) Iptacopan (PNH, C3G) (IA)

Major approvalsSelected examples

Major readoutsSelected examples

| J.P. Morgan Healthcare Conference | January 11, 2021 | Novartis Investor Presentation

Hyperlipidemia (EU)

RMS (US)

NSCLC (US, JP)

Asthma (EU, JP)

nr-axSpA (US, EU, JP)Pediatric PsO (EU)AS (CN)

Leqvio® (EU) Kesimpta® (EU, JP) Entresto® HFpEF (US)

Major submissionsSelected examples

SMA IV (EU, JP)

wAMD (EU, JP)

Sickle cell disease (EU)

HR+/HER2- aBC (EU)

CRSwNP (US, EU)

11


2021 catalysts maintaining momentum

Potential catalysts Selected examplesMajor approvals Leqvio® (US)

HyperlipidemiaKesimpta® (EU/JP)RMS

Entresto® (US)HFpEF

Entresto® (JP/CN)HTN

Major submissions1 Alpelisib (BYL719)PROS

Sabatolimab (MBG453)MDS

Jakavi®Acute and chronic GvHD

177Lu-PSMA-617mCRPC

Kymriah®

FL, r/r DLBCL 1st relapseAsciminib (ABL001)CML

Canakinumab3

NSCLC 1L + 2LEntresto®

Post-AMIBeovu®

DME

Major readouts2

(pivotal)177Lu-PSMA-617mCRPC

Kymriah®

r/r DLBCL 1st relapseKisqali®Breast cancer (MONALEESA-2 OS)

CanakinumabNSCLC 1L + 2L

Entresto®

Post-AMICosentyx®

HS

Sabatolimab (MBG453)MDS

Ligelizumab (QGE031)CSU

1. First submission in any market. 2. Readouts enabling submission or label change. 3. Depending on timing of final read-out submission may move to early 2022.



Moving forward a breadth of assets to drive long-term growth...

PharmaceuticalsLifecycle management OncologyAsset Indications

HFpEF, Post-AMI, Essential hypertension (ex US), Pediatric

Derm: HS, L. Planus, Peds PsORheum: jPsA/ER, GCA, Lupus Nephritis

Adjuvant BC

BYL719 PROS, TNBC, Ovarian cancerHER2+ aBC, HNSCC 2/3L

DME, RVO, Diabetic retinopathy

Asset Indications

Iptacopan(LNP023) IgAN, PNH, aHUS, C3G, iMN

Iscalimab(CFZ533) Sjögren's, Kidney Tx, Liver Tx

Ligelizumab(QGE031)

CSU, Pediatric CSU, CINDU, food allergy

Pelacarsen(TQJ230) CVRR-Lp(a)

Branaplam(LMI070) Huntington disease, SMA

Asset Indications

Canakinumab(ACZ885)

NSCLC 1L/2L, NSCLC adjuvant

177Lu-PSMA-617 mCRPC 3L, mCRPC pre-taxane

Sabatolimab(MBG453)

HR-MDS, AML, Maintenance MRD + AML

TNO155Solid tumors, Multiple combinations being explored including 1L KRAS NSCLC

LXH254 BRAF/NRASm Melanoma, mRAS/RAF NSCLC



Selected opportunities

‘Wild Cards’ CSJ117 (Asthma), ECF843 (Dry Eye), LNA043 (Osteoarthritis), QBW251 (COPD), NIS793 (Solid Tumors)

...while strengthening our advanced therapy platforms


1. DLBCL 1st relapse, r/r FL, r/r DLBCL in combo with pembro, 1st line high risk pediatric and young adult ALL. 2. Both pALL and DLBCL.

Research & Development Manufacturing CommercializationClinical programs Pre-clinical Internal sites More info Countries approved Reimbursed

GeneTherapy

4 OAV101 SMA IT 19 3 Libertyville (US) 1m+Square feet footprint of the internal network

37 6OAV201 Rett syndrome Longmont (US)

ADPT03 Sickle cell anemia Durham (US)

CPK850 RP

Cell Therapy

8 CTL019 Multiple1 10 3 Morris Plains (US) 4Continents spanned by Novartis’ manufacturing network

28 232

JEZ567 AML Stein (CH)

LXF821 Glioblastoma multiforme Les Ulis (FR)

MCM998 Plasma cell myeloma

YTB323 Hematological malignancy

RLT 4 177Lu-NeoB Multiple solid tumors 14 6 Millburn (US) 1Additional site under construction in Indianapolis (US)

Lutathera® 38 16177Lu-oxodotreotide GEP-NET 1L G3 Ivrea, Saluggia, Forli (IT)177Lu-PSMA-617 mCRPC Zaragoza (ES)177Lu-PSMA-R2 Prostate cancer IDB (NL)

4 additional clinical programs relating to RNA (including KJX839 and TQJ230)


Strong performance from our growth drivers, with focus on launch excellence for our recent and upcoming launches

Major recent / upcoming launchesKey growth driver sales 9M 2020

nm – not meaningful

573

231

151

491

153

166

300

187

178

152

142

140

SalesUSD Million

Growth vs. PYUSD Million

Growth vs. PYcc

1,781 48%

666 nm

2,886 12%

1,267 24%

236 nm

503 59%

268 164%

153 nm

1,134 17%

333 82%

963 19%

633 30%

Canakinumab Sabatolimab

Asciminib 177Lu-PSMA-617

nr-axSpA HFpEF, HTN


Embrace operational excellence

Progressing at steady pace in NTO / NBS transformations...

15 Sites exited since 2016

126 Warehouses reduced since 2016

26 Sites infrastructures carved out

2 New Operations Centers

>50 Global processes being re-designed

50% DM suppliers reduced since 2016

3 New sites1 online for cell therapies

2.8x Increase in Bio capacity since 2016

>175 USD m invested for new process technology to produce antibiotics API2

Asset intensity reduction

Standardization

Innovation

Select achievements

Continuing on the journey to become a 4th gen, industry-leading enterprise transformation engine

65% NBS associates across 5 Global Service Centers

>15k Novartis associates in Activity-Based Working

>90k Novartis associates using OneNovartis Services

>45k Novartis associates enabled to work remotely

>35k Digital assets hosted on one single platform (FUSE)

State-of-the-art advanced analytics, sourcing, contract management, travel & expenses, HR standardization and automation

Novartis Technical Operations Novartis Business Services

USD 2bn savings delivered 2017-20201. Stein (CH), Les Ulis (FR), FBRI (JP). 2. Investment in Kundl, in collaboration with the Austrian government.



...and delivering on our margin commitment

Mid to high

30s

High30s

32.0

2017 2018 2019 9M 20201 Near-term Mid-term

31.033.5

36.3

Innovative MedicinesCore margin (%)

+ Sales momentum of key growth drivers and operational excellence on upcoming launches

+ USD 2bn expected in the mid-term from NTO productivity program started in 2021

+ Evolution in ways of working

‒ Generic erosion‒ Launch investments

Main drivers moving forward

1. Historically Q4 margin lower due to seasonality.



Establishing a leading digital and data science platform

Scaling major platforms across the value chain, e.g.:

• Data42 (3k+ trials ingested)• Control Towers (SpotOn live

in 5 manufacturing sites)

• Next Gen Engagement (ACTalya live with 6k+ reps)

DS&AI community of 800+ data scientists

Upskilled the organization through leadership programs and learning offeringKept investing to strengthen our data foundations

Rolled out our partnership accelerator—Biome—with openings in UK, India, Canada, China

Signed new scalable partnerships, e.g. Doximity

Progressing on our strategic alliances, e.g.:

• Microsoft: AI Innovation Lab• AWS: TechOps optimization

• Tencent: AI Nurse HF patient solution in China (17k+ patients enrolled, ~400 hospitals)


Key developments in Data & Digital over the past 12 monthsPursue bolder moves

#1 partnerin tech ecosystem

MakeNovartis digital

Scale digital lighthouses

Go big on data and digital

Made significant strides in building trust with society and in integrating ESG across every aspect of our company

Key ESG developments over the past 12 months and selected aspirations

Resolved material legacy compliance issues

Launched Code of Ethics

Ethical Standards

Be recognized in the healthcare sector for Human Rights

Strong COVID-19 response

Integrating D&I efforts across our operations

Corporate Citizenship

Full Carbon, Plastic and Water Neutrality by 2030

Introduced 100+ Emerging Market Brands

Issued sustainability-linked bond

Pricing & Access

200% increase in SITs patient reach by 20251

Expanded our Africa sickle cell disease program

Advancing pipeline of novel malaria treatments

Global Health Challenges

50% increase in our Flagship Programs’ reach by 20251

Launched ESG index

New ESG ManagementOffice and Head of Environmental Sustainability

Integrated reporting and optimized ESG data management

Governance &Transparency

1. As defined in ESG bond prospectus.


Build trust with society

Confident that we will grow top and bottom line every year to 2025 and meet external expectations


Launches2Growth Drivers12019 Actual

Other/Pipeline Sandoz Gx Brands3

47

60

+4% CAGR

33.5%ConsensusIM margin

Analyst consensus salesUSD billion

37.6%

2025 External expectations basedon analyst consensus

1. Cosentyx®, Entresto®, Zolgensma®, Kisqali®, Mayzent®, Tafinlar+Mekinist®, Jakavi®, Beovu®, Xiidra®, Aimovig®, Xolair®. 2. Lutathera®, Kymriah®, Piqray®, Adakveo®, Kesimpta®, Leqvio®, Tabrecta®, Asciminib. 3. Brands with 2024 consensus sales lower than 2019 actual sales (Glivec®, Tasigna®, Afinitor®, Votrient®, Promacta®, Exjade®, Sandostatin®, Galvus®, Gilenya®, Lucentis®). Source: Novartis Investor Relations in-house consensus as of November 12, 2020.

Conclusions


In 2020 we kept executing on our strategy, while delivering strong operational performance

Novartis is now positioned as a focused medicines company with a differentiated profile

We have made tangible progress across our five strategic priorities—which taken together make our proposition unique—and have full confidence in our long-term growth potential

✓✓✓

Strengthen our core

Accelerate certain geographies

Unleash the power of our people Deliver transformative innovation

Embrace operational excellence Go big on data and digital Build trust with society

Focus our company and capital

Thank you

Glossary


aBC Advanced breast canceraHUS Atypical hemolytic uremic syndromeAI Artificial intelligenceAML Acute myeloid leukemiaAPI Active pharmaceutical ingredient AS Ankylosing spondylitisAWS Amazon Web ServicesC3G C3 glomerulopathyCINDU Chronic inducible urticariaCML Chronic myeloid leukemiaCOPD Chronic obstructive pulmonary diseaseCRSwNP Chronic rhinosinusitis with nasal polyposisCSU Chronic spontaneous urticariaCVRR Cardiovascular risk reductionD&I Diversity and inclusionDLBCL Diffuse large B-cell lymphomaDM Direct materialDME Diabetic macular edemaDS&AI Data science and artificial intelligenceESG Environmental, social and governance

FL Follicular lymphomaFY Full yearGCA Giant cell arteritisGvHD Graft versus host diseaseHCP Healthcare providerHF Heart failureHFpEF Heart failure with preserved ejection fractionHNSCC Head and neck squamous cell carcinomaHS Hidradenitis suppurativaHTN HypertensionIA Interim analysisIgAN IgA nephropathyiMN Membranous nephropathyjPsA/ER Juvenile psoriatic arthritis/enthesitis-related arthritisLCM Lifecycle managementmCRPC Metastatic castration-resistant prostate cancerMDS Myelodysplastic syndromesMRD Measurable residual diseaseNBS Novartis Business ServicesNIBR Novartis Institutes for BioMedical Research

NME New molecular entitynr-axSpA Non-radiographic axial spondyloarthritisNSCLC Non-small cell lung cancerNTO Novartis Technical OperationsOS Overall survivalpALL Pediatric acute lymphoblastic leukemiaPNH Paroxysmal nocturnal haemoglobinuriaPost-AMI Post-acute myocardial infarctionPsO PsoriasisRLT Radio ligand therapyRMS Relapsing multiple sclerosisRNA Ribonucleic acidRP Retinitis pigmentosaRVO Retinal vein occlusionSIT Strategic innovative therapiesSMA IV Spinal muscular atrophy intravenousTA Therapeutic areaTNBC Triple negative breast cancerTx TransplantwAMD Wet age-related macular degeneration

novartis vas narasimhan jpmorgan presentation

Documents