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-“Re-birth toward life sciences”

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Table of Contents

Contents About Novartis ...............................................................................................................................................3

COMPANY PRODUCTS: ....................................................................................................................................3

HISTORY OF NOVARTIS....................................................................................................................................3

Pattern of actions by Novartis .........................................................................................................................7

New product development growth strategy .....................................................................................................8

Strategy Changes due to external environment ................................................................................................9

ACQUISITION HISTORY OF NOVARTIS ............................................................................................................. 10

Novartis Organizational Structure .................................................................................................................. 13

A brief of all the structures and its roles in the organization. ........................................................................... 14

MAJOR ISSUES IN MARKETING SECTOR OF NOVARTIS ..................................................................................... 16

NOVARTIS-OFF-LABEL MARKETING AND OTHER MARKETING VIOLATIONS: .................................................. 16

NOVARTIS DEALS GROUP INCLUDED IN FIXING STOCKISTS FOR A YEAR: ....................................................... 17

UNITED STATES CLAIM BLAMES NOVARTIS FOR HEALTH AWARENESS MISREPRESENTATION ........................ 18

FINANCIAL ANALYSIS..................................................................................................................................... 19

NET INCOME ............................................................................................................................................ 21

DRIVER TO RISE IN NET INCOME (2010 onward) ......................................................................................... 22

TOTAL ASSETS........................................................................................................................................... 23

SHARE PRICE............................................................................................................................................. 24

CONCLUSION, RECOMMENDATIONS, FUTURE PROSPECTS .............................................................................. 25

Pipeline .................................................................................................................................................... 25

References ................................................................................................................................................... 26

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About Novartis Novartis is the only healthcare company with leading positions in pharmaceuticals, eye care, generic

medicines, vaccines and diagnostics, as well as consumer and animal health products. Our medicines

reach more than 1 billion people around the world every year.

Novartis is headquartered in Basel, Switzerland. Novartis Group companies employ approximately

130000 associates who are citizens of more than 150 nations. We operate in more than 140 countries

around the world.

COMPANY PRODUCTS:

The company's Pharmaceuticals Division focuses on researching, developing and manufacturing

treatments across a variety of therapeutic areas, including: auto-immunity, cardiovascular, dermatology,

infectious diseases, metabolism, neuroscience, oncology, ophthalmology, respiratory, rheumatology, and

transplantation.

HISTORY OF NOVARTIS

1996 Sygenta is created through the merger of the agriculture business units of Novartis and Astra Zeneca.

Anti-viral products Farnvir and Vectavir are acquired from GSK Beecham.

Novartis American Depositary Shares are listed in NYSE.

Establishment of Novartis Institute of Functional Genomics.

Novartis is created through the merger of Ciba-Geigy and Sandoz to create one of the world’s largest

healthcare companies.

2002 Novartis increases investment in Roche Holding AG to 1/3rd voting shares.

LEK Pharma is acquired for 900 Mn

Novartis divested the Health and functional Food Business.

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Novartis unifies and strengthens its global research by creating the Novartis Institutes for Biomedical research.

2003 Adult Business nutrition business of MEAD Johnson and company is announced.

A majority interest in Idenix Pharma Inc. a US based Biotech Company focused on antiviral and

anti-infective therapies is acquired as part of a strategic expansion into antiviral medicines.

2004

Novartis institute for Tropical Diseases opens in Singapore with a focus on biomedical research for dengue fever and drug resistant tuberculosis.

Novartis acquires two generics companies: the Danish firm Durasacan A/S from AstraZeneca

and Sabex Holdings Ltd of Canada.

Novartis submits Xolair for EU approval for the treatment of Allergic asthma.

The NIBR announce a joint project with the broad institute of MIT and Harvard to research the

genetic causes of type 2 diabetes.

Unification of several Novartis generic pharma businesses joining Pharma and consumer health.

Novartis Foundation for sustainable development celebrates 25th anniversary.

2005 Novartis acquires Hexal AG. Leading Generics Company based in Germany and Eon Labs an

American generics co making Sandoz a world leader in generic pharma.

Novartis reaches agreement to buy the remaining stake in Chiron Co and acquiring.

Novartis and Alnylam Pharma create an alliance focused on discovering innovative therapies

based on RNAi.

2006

Novartis announces the creation of a strategic biomedical R&D Centre in Shanghai, China.

The NITD initiates research on malaria as part of a new public private partnership.

Partnership with WHO Novartis for nonprofit distribution of malaria in developing countries.

The US Department of Health and Human services grants Novartis a contract for up to USD 220 million to build a cell culture-based influenza vaccine production plant in the US. Recognizing

Novartis as a leader in influenza vaccine development.

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Received approval of Omni trope is part of Sandoz strategy to offer follow on biotech products after patent expiry.

2007

Novartis enhances its vaccine pipeline through partnership with intercell. Intercell develops vaccines to prevent and treat infectious diseases.

Novartis is solely focused on health care after completing non-core business disinvestments of the Gerber and Medical Nutrition Business Units to Nestle for USD 5.5 billion and USD 2.5

billion

Novartis is ranked No.1 among Pharma companies in Fortune magazine’s survey.

NITD inaugurates an Indonesian research initiative to study dengue fever, tuberculosis and

malaria.

Tekturna the first new type of high blood pressure medicine in more than a decade.

2008

Novartis reaches agreement with Nestle SA to acquire majority ownership of Alcon Inc. the

world leader in eye care with pharmaceutical, surgical and consumer products.

Novartis opens a new vaccine research Centre institute in Italy. Novartis Vaccines Institute for

Global Health whose focus on the development of vaccines for disease for the developing world.

Novartis is named healthcare super sector leader in 2008 and “World’s most ethical companies”. No. 20 in the most respected companies in the world.

Gleevec is approved for treatment for use after gastrointestinal stromal tumour surgery.

Novartis announces 20% reduction in the price of its anti-malaria medicine Coartem due to efficiency gains in production.

2009 Novartis delivers the 250 millionth treatment of Coartem a highly effective artemisinin based

combination therapy for malaria. From 2001 to the end of 2009, a total of 300 million treatments have been delivered, saving an estimated 750,000 lives in more than 60 malaria-endemic countries.

Novartis was the first company to produce the Influenza a (H1N1) vaccine with modern cell structure

bio technology that complements 50-year old egg based production process.

Novartis announces USD 1 billion investment over five years in China to build the country’s largest

pharma R&D institute.

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Pervacid24Hr launches in pharma and retail stores across the US to treat frequent heartburn for a full

24hrs with one pill a day. The launch marks one of the biggest Rx to OTC switches in the US.

2010

New management is in place for the next phase of the growth.

Buying out the remaining stake in Alcon and merging it into Novartis. The addition of eye care

will strengthen the Novartis healthcare portfolio and provide greater access to this attractive sector.

2011

Vaccines and medicines from Novartis reach an estimated 1 billion patients.

Alcon merger completed

Since 2001, 450 million Coartem treatments delivered to patients saving 1 million lives.

New malaria drug with dual acting class of compound.

No.1 in fortune magazine.

2012

Industry’s first water gradient silicone hydrogel contact lens and Flucelvax, the first cell culture vaccine in the US to help protect against seasonal influenza

Fougera Pharma acquired by Sandoz made it the world’s number one generic dermatology medicines co in the US and globally.

100 million patients reached through access to health care programs valued at USD 2 billion.

2013

Management change.

Novartis' current product portfolio includes more than 50 key marketed products and in 2012, the

company had 13 new products approved in the United States, Europe and Japan.

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Pattern of actions by Novartis

Buying out the remaining stake in Alcon and merging it into Novartis. The addition of eye care will

strengthen the Novartis healthcare portfolio and provide greater access to this attractive sector.

Novartis announces 20% reduction in the price of its anti malaria medicine Coartem due to

efficeincy gains in production.

Novartis announces USD 1 billion investment over five years in China to build the country’s largest

pharma R&D institute.

Pervacid24Hr launches in pharma and retail stores across the US to treat frequent heartburn for a

full 24hrs with one pill a day. The launch marks one of the biggest Rx to OTC swtiches in the US

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Novartis acquires Hexal AG. Leading generics company based in Germany and Eon Labs an American generics co making Sandoz a world leader in generic pharma.

The NIBR (Novartis Institutes for Biomedical research. Announce a joint project with the broad

institute of MIT and Harvard to research the genetic causes of type 2 diabetes.

New management is in place for the next phase of the growth.

Novartis enhances its vaccine pipeline through partnership with intercell. Intercell develops

vaccines to prevent and treat infectious diseases.

Due to the scattered distribution of buyers throughout the world for Novartis, there isn’t much

bargaining leverage for them. There are numerous suppliers that have registered in the portal of Novartis which aims to do business with Novartis. Therefore, it is not easy for the supplier to drive

up their prices.

New product development growth strategy

Status Quo Product

Development

Market Penetration Market

Development

Existing New

Exis

tin

g

New

CUSTOMERS

PRODUCTS

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Strategy Changes due to external environment

Novartis has increased its portfolio with both innovations and acquisitions while focusing on specific

market segments by divesting businesses. It has a strategic focus in eye care, prescription, and generic

pharmaceutical products and has a portfolio of biosimilars in development through its Sandoz business

unit.

In 2013, Novartis announced that it would be closing its La Jolla, California biotherapeutics

development unit, signaling a departure from developing new topical dermatology products. Sandoz, the

generics business of Novartis, announced the acquisition of Fougera Pharmaceuticals in 2012. This

acquisition advanced the portfolio and geographic presence of the Novartis generic dermatology

medicines segment.

The company also announced a licensing and research agreement with Regenerex LLC. Part of the

agreement concerns the novel Facilitating Cell Therapy (FCRx) platform from Regenerex, which is

being used for transplantation product development.

In 2012, Novartis and the University of Pennsylvania entered an agreement regarding the development

of chimeric antigen receptor (CAR) technology for cancer treatment. Novartis licensed worldwide rights

to the lead project, CART-19.

Cancer research companies always get funding from government and WHO and most of the money is

spent in R&D. As a large pharma company it is important to

In 2011, Novartis completed several more acquisitions including:

Zhejiang Tianyuan vaccines company (China); and

Genoptix a leader in diagnostics.

Sales of prescription drugs in China will grow by US$40 billion through 2013 and the entry into the Chinese

market was a great step in helping them improve sales figures.

In August 2010, Novartis completed the full acquisition of Alcon, a leading ophthalmic pharmaceuticals

and device company. Alcon had major corporate centers in Switzerland and Texas. In 2007, Novartis

sold its nutrition businesses, including Gerber and the Medical Nutrition unit, to Nestle S.A.

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Novartis: 1996 – today

The first CEO of Novartis was Dr Daniel Vasella. Vasella was hired by Sandoz back in 1988 and

remained there until 1992 when he was promoted to CEO of its parent company, Sandoz Pharma.

Vasella helped to orchestrate the merger between Sandoz and Ciba-Geigy and was appointed CEO of

the combined entity. He was also on the Board of Directors and was named Chairman in 1999. Vasella

stepped down as Novartis' CEO in January 2010 and was replaced by Joseph Jimenez, who was the

Division Head of Novartis Pharmaceuticals. He also recently announced his retirement as Chairman of

the Board of Directors and was succeeded by Jorg Reinhard in August 2013.

Since its establishment, Novartis has unified and strengthened its global business and research network:

ACQUISITION HISTORY OF NOVARTIS

1996

Sygenta is created through the merger of the agriculture business units of Novartis and Astra Zeneca.

Anti-viral products Farnvir and Vectavir are acquired from GSK Beecham.

Novartis is created through the merger of Ciba-Geigy and Sandoz to create one of the world’s largest healthcare companies.

2002

Novartis increases investment in Roche Holding AG to 1/3rd voting shares.

LEK Pharma is acquired for 900 Mn in Slovenia to help expand its operations there. 2003

A majority interest in Idenix Pharma Inc. a US based Biotech Company focused on antiviral and

anti-infective therapies is acquired as part of a strategic expansion into antiviral medicines.

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2004

Novartis acquires two generics companies: the Danish firm Durasacan A/S from AstraZeneca and Sabex Holdings Ltd of Canada.

2005

Novartis acquires Hexal AG. Leading Generics Company based in Germany and Eon Labs an American generics co making Sandoz a world leader in generic pharma.

Novartis reaches agreement to buy the remaining stake in Chiron Co, USA and acquiring it to

become its subsidiary.

2007

Novartis enhances its vaccine pipeline through partnership with intercell. Intercell develops vaccines to prevent and treat infectious diseases.

2008

Novartis reaches agreement with Nestle SA to acquire majority ownership of Alcon Inc. the

world leader in eye care with pharmaceutical, surgical and consumer products. 2010

New management is in place for the next phase of the growth.

Buying out the remaining stake in Alcon and merging it into Novartis. The addition of eye care

will strengthen the Novartis healthcare portfolio and provide greater access to this attractive

sector.

2011

Alcon merger completed

2012

Fougera Pharma acquired by Sandoz made it the world’s number one generic dermatology

medicines co in the US and globally.

100 million patients reached through access to health care programs valued at USD 2 billion.

2013

Management change.

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"Today, in 2013, over 125,000 people work for Novartis – 47% in Europe, 24% in Africa, Asia and

Australia, 21% in the USA and 8% in Canada and Latin America."

The main portion of employees (over 60,000) work in pharmaceuticals – the company's main focus –

while the rest are split between Alcon, Sandoz, Vaccines and Diagnostics, Consumer Health, Shared

services and Corporate.

The main strategy used by Novartis has been Mergers and Acquisitions. The company has slowly built

its presence in countries where it has seen a long-term growth prospects.

Green field strategy ahs been used in Asia to help counter fake medicines and misappropriation of drugs

being exported to these countries.

Brownfield Acquisitions have been the norm in the rest of the world including Europe and USA where

there is availability of technology and easy knowledge sharing is possible.

The history of Novartis clearly identifies this company heading towards massive internationalization to

help grow its company in order for it to become the world’s biggest pharmaceutical company.

Novartis' mission is to: "discover, develop and successfully market innovative products to prevent and

cure diseases, to ease suffering and to enhance the quality of life".

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Novartis Organizational Structure

The above picture is the current organizational structure of Novartis and has remained similar ever since

its inception in 1996. New acquired companies such as Alcon were placed appropriately.

NIBR

Dr. Mark Fishman

Alcon

Jeff George

Novartis Organizational Structure

Chairman Board of Directors

Dr. Jörg Reinhardt

Internal Audit

Peter Elam

CEO

Joseph Jimenez

CFO

Harry Kirsch

Group Communications

Michael Willi

Group QA

Dr. Erwin Vanhaecke

Corporate Secretary

Dr. Charlotte Pamer-Wieser

Pharma

David Epstein Sandoz

Richard Francis

ECN Members

Corporate Strategy & EA

Paul van Arkel

Vaccines

Dr. Andrin Oswald

OTC

Brian McNamara

Animal Health

Dr. George Gunn

Chief Ethics, Compliance & Policy Officer

Eric Cornut

Corporate Responsibility

Dr. Jürgen Brokatzky-Geiger

Chairman Audit & Compliance Committee

Prof. Srikant Datar

General Counsel

Dr. Felix Ehrat

Human Resources

Steven Baert

Novartis Business Services & Country President Switzerland

André Wyss

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A brief of all the structures and its roles in the organization.

Pharmaceuticals

Novartis pharmaceuticals provide a range of prescription medicines and pursue the discovery and

development of new products. It is comprised of the business units primary care, oncology,

transplantation, ophthalmics, and mature products.

Primary care includes products for cardiovascular disease, central nervous system disorders,

gastroenterology, dermatology, respiratory disease and the area of rheumatology/bone/hormone

replacement therapy.

The Novartis oncology business unit provides a range of therapies and solutions that change the way

cancer patients live. Its portfolio includes products to treat leukemia, forms of gastrointestinal cancer

(GIST), advanced or metastatic breast cancer and multiple myeloma.

Transplantation and immunology is committed to developing a new range of therapeutic products for the

prophylaxis of organ rejection in order to provide the best choice of drugs to the transplant community.

Novartis ophthalmics deals with the research, development and manufacturing of ophthalmic

pharmaceuticals that assist in the treatment of glaucoma, age-related macular degeneration (AMD), eye

inflammation, ocular allergies, dry eye and other diseases and disorders of the eye.

Mature products is responsible for supporting a range of branded, mostly older products to satisfy

patient needs in various therapeutic areas.

Sandoz

Sandoz, the generic pharmaceuticals division of Novartis, develops, produces and markets medicines no

longer protected by patents, along with pharmaceutical and biotechnological active substances.

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Consumer Health

Consumer Health Division comprises the following six business units: Sandoz (Novartis generics), over

the counter (OTC), animal health, medical nutrition, infant and baby and CIBA Vision.

The global activities of Novartis Generics were united under the name Sandoz. Sandoz develops,

manufactures and markets these medicines as well as pharmaceutical and biotechnological active

ingredients.

OTC is involved in the development, production and marketing of self-medication products for the in-

home treatment and prevention of medical conditions and ailments. The main product categories are

cough, cold and allergy treatments, gastrointestinal treatments and dermatological treatments, topical

analgesics, mineral supplements and smoking cessation treatments.

Novartis animal health focuses on the well-being of companion animals and on the health and

productivity of farm animals. Most of its products are available by prescription through veterinarians.

Novartis medical nutrition offers a range of enthral nutrition medical food products and services tailored

to the varying needs of patients, health professionals and carers.

The infant and baby line of products includes care and wellness products featuring baby washes,

shampoos, lotions, dental care products, bottles and products for breastfeeding mothers.

CIBA Vision is concerned with research, development and manufacturing of optical and ophthalmic

products and services, including contact lenses, lens care products and ophthalmic surgical products.

Vaccines and Diagnostics

Vaccines and Diagnostics Division provides products to fight more than 20 vaccine-preventable viral

and bacterial diseases as well as blood-testing equipment.

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MAJOR ISSUES IN MARKETING SECTOR OF NOVARTIS

NOVARTIS-OFF-LABEL MARKETING AND OTHER MARKETING VIOLATIONS:

Novartis was accused of paying illegal kickbacks to health care professionals through the speaker programs and

the advisory boards, but aside from this argument and guilty to one wrong-doing charge of mislabeling in an

agreement that Novartis announced around in February, the company denied its mistake.

Novartis joins a growing list of pharmaceutical companies that have settled government investigations

into health care fraud in the last few years, including Pfizer, which paid $2.3 billion; Eli Lilly, around

$1.4 billion; Allergan, $600 million and AstraZeneca, $520 million and with Bristol-Myers Squibb,

paying $515 million; and Forest Laboratories, $313 million. Pfizer, Lilly, Allergan and Forest pleaded

guilty to crimes in the cases.

The settlement includes a $170 million criminal fine and $15 million in criminal forfeiture by Novartis

Pharmaceuticals, the United States subsidiary. The plea was announced by the office of the United

States attorney in Philadelphia, who had specialized in health care fraud investigations of companies that

promote drugs for uses not approved by the Food and Drug Administration, known as off-label marking.

“Off-label marketing can undermine the doctor-patient relationship and adversely influence the clear

judgment that a doctor’s patients have come to rely on and trust,” said Zane David Memeger, the United

States attorney.

Federal prosecutors said Novartis illegally promoted Trileptal for neuropathic pain and bipolar disease,

singling out psychiatrists and pain specialists who were known to use the drug off-label. Physicians are

legally permitted to use approved drugs for any purpose, but companies are prohibited from promoting

them for conditions not authorized by the F.D.A. Novartis settled the investigation into the other drugs

for $237.5 million.

In a statement, Novartis said it had been cooperating with the investigations since 2005 and had already

corrected its promotional practices. “We are pleased to have reached resolution on this matter,” said

Andy Wyss, president of Novartis Pharmaceuticals. He added that the company would “continue its

commitment to high standards of ethical business conduct and regulatory compliance in the sale and

marketing of our products.”

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NOVARTIS DEALS GROUP INCLUDED IN FIXING STOCKISTS FOR A YEAR:

Stockists of Novartis in the nation's most essential local business cautioned the organization a year ago

of horrible practices in the dispersion of Galvus, a medication at the middle of an extortion submitted by

some sales people in the Swiss pharma titan.

The Pharma Wholesalers Association, (PWA), of the Mumbai locale (which likewise incorporates Pune)

asked Novartis to check certain practices, for example, huge rebates and freebies to merchants to offer

loads of Galvus. ET has a duplicate of the letter.

"We request this prerequisite to understand and dishearten any sort of horrible dispersion work on

common in pharmaceutical production network." said the PWA letter of the tended to the appropriation

chief of Novartis India in June 2012. Stockists told ET that Novartis deals agents were putting forth 20%

markdown to choose merchants for the buy of Galvus.

Stockists in the western district had whined that the deals reps of Novartis had been putting forth

gigantic discounts of the medication with a specific end goal to push deals. They were likewise giving

away the medication for nothing on a few occasions. The affiliation had asked the Swiss drug creator to

outfit the buy subtle elements of every last one of stockists of Novartis since January 2012.

Galvus is a heading against diabetes tranquilizes in the nation with a yearly offers of Rs 200 crore. The

opposition to diabetic business sector medication showcase in India is one of the quickest developing

remedial regions with a yearly development of in excess of 20% this business sector is evaluated to be

Rs 3000 crore.

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UNITED STATES CLAIM BLAMES NOVARTIS FOR HEALTH AWARENESS MISREPRESENTATION

US government has sued Novartis Pharmaceuticals, guaranteeing it offered kickbacks to drug stores to

switch kidney transplant patients from contenders' medications to its own. The common health

awareness misrepresentation claim in US District Court in Manhattan looks for unspecified harms and

common punishments for a plan that the administration said has been done since 2005.

US Attorney Preet Bharara said yesterday that the organization utilized the "draw of kickbacks

camouflaged as refunds" to transform 20 or more drug stores into a deals power for its medication,

Myfortic. He said the organization's activities created general society to pay a huge number of dollars

for kickback-corrupted medications apportioned by drug specialists who had buddied up to Novartis.

Bharara said Novartis is a rehash guilty party, having settled extortion charges focused around kickbacks

short of what three years prior. Novartis said in an announcement that it question the cases and will

guard itself.

It said the examination concerning the organization's associations with strength drug stores identified

with the treatment of Myfortic had been beforehand uncovered. "As a heading medicinal services

organization, Novartis strives to attain elite with high uprightness. NPC is focused on exclusive

requirements of moral business conduct and administrative consistence in the deal and advertising of our

items," the organization said.

In its claim, the legislature said Novartis had camouflaged kickbacks as execution discounts and rebates

to persuade drug stores to switch patients to Myfortic from contender's medications and to contradict the

utilization of a less expensive, nonexclusive immunosuppressant medication.

The administration said Novartis offered one drug specialist in Los Angeles a "reward" discount adding

up to a few hundred thousand dollars to actuate the drug specialist to "shoulder the trouble" of

exchanging 700 to 1,000 transplant patients to Myfortic.

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FINANCIAL ANALYSIS

The financial performance of Novartis has improved over the years compared to its competitors, many

of which are still struggling to gain good profit margin. Over the past 10 years, Novartis has maintained

steady increase in sales, profit and market share. Its share price has been on the increase ever since being

made public in 1996. The mergers and acquisitions undertaken have contributed to the company’s

growth over the years. Currently, Novartis is ranked second in the world in revenue right behind Pfizer

in the pharma industry and number one in sales.

The above chart shows the company’s net sales by segment. The ‘Vaccines and Diagnostics’ segment

has done better compared to the other three segments. This was before they merged with Alcon in 2011.

Novartis was formed by the merger of three companies and Novartis has been actively merging and

acquiring divisions and adding on to its segment.

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The above table shows the geographical of Novartis’ net sales and how it has changed in the course of

ten years. In a time frame of ten years, Europe and America have grown massively thanks to the

innovation and research capabilities in those countries. Whereas, in the region of Asia/Africa/Australia,

the growth has been comparatively slow, because of slow advancement of scientific innovation and

research.

While Novartis's first quarter earnings report is pretty stale at this point, it is worth noting that the

company is logging decent growth at a time when many of its peers are struggling to show much of any

momentum. Revenue was up 2% in the last quarter (or 4% in constant currency), with the core

pharmaceutical business the weakest at 0% and 3% growth. Generics and consumer health are both

growing at mid-single digit rates, while the small vaccine and diagnostics business logged a double-digit

constant currency improvement. Alcon results are still a little sluggish, with growth on par with the

pharmaceutical business.

Due in part to the revenue mix, Novartis’ margins are not quite as impressive as some peers. Operating

income rose 1% (or 6% in constant currency), but the 26% operating margin isn't so impressive relative

to Pfizer (NYSE:PFE) at 42% or Roche (OTC:RHHBY) at 31%. This less impressive margin is due at

least in part to the company's very large generics business, as well as the very low margins of the

vaccines/diagnostics business.

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The above pie chart and table show the comparison of net sales in 2003 and 2013. In 2003, Novartis’

major sales came from Pharmaceuticals (64%) and then from the Consumer Health segment (36%). In

2013, Novartis has now 3 more segments where the Pharmaceuticals and Alcon segment are doing

relatively better.

NET INCOME

NET INCOME (in millions)

YEAR USD

2003 4787

2004 5380

2005 6141

2006 6825

2007 6540

2008 8163

2009 8454

2010 9969

2011 9072

2012 9383

2013 9292

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In a time frame of ten years, Novartis’ net income has risen well compared to its competitors. It reached

its all time high of 9969 million USD during 2010 and 9292 million USD in 2013.

DRIVER TO RISE IN NET INCOME (2010 onward)

Novartis completes CEO succession process with appointment of Joe Jimenez as new CEO and

simplified leadership organization.

More than 30 drug approvals and full pipeline with 145 projects in pharmaceutical clinical

development, of which 60 involve new molecular entities.

Forward productivity program exceeds savings goal by nearly 50% and a year ahead of schedule

Access-to-medicine programs including medication for malaria and leprosy reach 80 million

patients in 2009 with contributions valued at USD 1.5 billion, or 3% of sales

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TOTAL ASSETS TOTAL ASSETS (in

millions)

Year USD

2003 48378

2004 52488

2005 57732

2006 68008

2007 75452

2008 78299

2009 95505

2010 123318

2011 117468

2012 124191

2013 126254

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SHARE PRICE

The above chart shows the share price of Novartis from 2003 onwards up until 2013. As usual, change

in management, mergers and acquisitions have played a role in the fluctuating share price. Mainly to be

noted is the drastic price decline in 2008 and 2009. The major news in 2008 was Novartis’

announcement of taking a 25% stake in Alcon.

News from 2008: Novartis's share price undervalues the business, the Swiss drug maker’s finance chief

was quoted as saying, and the long-term growth prospects for the industry were good.

"Our price-earnings ratio has roughly halved in the last seven years, while earnings per share have risen

by some 100 per cent. Sooner or later this performance will again be reflected in the share price," Chief

Financial Officer Raymund Breu told the Finanz und Wirtschaft newspaper. Breu acknowledged that

some of Novartis's problems were homemade, such as delays in the introduction of a number of new

drugs. But much of the low valuation had to do with lukewarm investor sentiment towards the sector.

Long-term growth prospects for the pharmaceutical industry were good, Breu said, because of an ageing

population, the rise of diseases linked to an unhealthy lifestyle and higher demand for medicines in

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emerging countries. Novartis stock still trades at a premium compared to some other European drug

majors, but analysts have questioned whether that is sustainable given its thin portfolio of new drugs.

CONCLUSION, RECOMMENDATIONS, FUTURE PROSPECTS

Pipeline

Novartis has a leading new product pipeline with more than 200 projects in clinical development,

including 144 in the Pharmaceuticals Division. In pipeline highlights, Novartis received three US FDA

Breakthrough Therapy designations. In addition, results from multiple Phase III studies underscored the

strength of our pipeline in dermatology: AIN457 (secukinumab) showed superior efficacy in moderate-

to severe plaque psoriasis over the current standard of care, and Xolair (omalizumab) produced

clinically meaningful improvement in chronic spontaneous urticaria. Additionally, LBH589

(panobinostat) significantly extended time without disease progression in patients with relapsed or

relapsed and refractory multiple myeloma.

Chairman of the Board, Joerg Reinhardt quoted as saying,

“This success was due primarily to the continued dynamic development of our largest division,

pharmaceuticals, which has one of the industry’s most robust product portfolios. Our eye care division,

Alcon, and our generics business, Sandoz, also contributed to the positive result. With the market launch

of state-of-the-art eye surgery systems, Alcon strengthened its leading position in the fast-growing area

of cataract operations, while Sandoz gained further market share amid accelerated demand for

sophisticated biosimilars.”

Novartis’ continuous effort in innovation, research and corporate social responsibility has given it a

much more than needed boost into the future.

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References

www.novartis.com

www.Wikipedia.com/Novartis

http://users.wfu.edu/mcfallta/DIR0/pharma_patents.pdf

http://www.msfaccess.org/content/infographics-big-pharmas-continued-attack-india-pharmacy-developing-world

http://360.datamonitor.com/Product?pid=ML00017-044

http://www.globalizationandhealth.com/content/10/1/3