“Meet Novartis Management” event
June 17-18, 2014
Disclaimer
This presentation contains forward-looking statements that can be identified by words such as “potential,” “expect,” “expected,” “will,” “could,”
“would,” “committed,” “commitment,” “strategic,” “priorities,” “mandate,” or similar terms, or by express or implied discussions regarding potential
new products, potential new indications for existing products, or regarding potential future revenues from any such products; potential
shareholder returns or credit rating; or regarding the potential completion of the announced transactions with GSK and Eli Lilly, regarding
potential future transactions regarding the Novartis flu vaccines franchise, or regarding potential future sales or earnings of any of the businesses
involved in the announced transactions, or of the Novartis Group, and regarding any potential strategic benefits, synergies or opportunities as a
result of the announced transactions; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on
these statements. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events,
and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There
can be no guarantee that any new products will be approved for sale in any market, or that any new indications will be approved for any existing
products in any market, or that any approvals which are obtained will be obtained at any particular time, or that any such products will achieve
any particular revenue levels. Nor can there be any guarantee that the proposed transactions will be completed in the expected form or within
the expected time frame or at all. Neither can there be any guarantee that Novartis will be able to realize any of the potential strategic benefits,
synergies or opportunities as a result of the transactions. Nor can there be any guarantee that Novartis will enter into an agreement to divest its
flu vaccines franchise in the future, or at any particular time. 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. In particular, management's expectations could be affected by,
among other things, unexpected regulatory actions or delays or government regulation generally, including an unexpected failure to obtain
necessary government approvals for the transactions, or unexpected delays in obtaining such approvals; the potential that the strategic benefits,
synergies or opportunities expected from the transaction may not be realized or may take longer to realize than expected; the potential that the
strategic benefits, synergies or opportunities expected from the divestment of our former blood transfusion diagnostics unit may not be realized
or may take longer to realize than expected; the inherent uncertainties involved in predicting shareholder returns or credit ratings; the
uncertainties inherent in research and development, including unexpected clinical trial results and additional analysis of existing clinical data; the
Company’s ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on the Company of
the loss of patent protection and exclusivity on key products which commenced in prior years and will continue this year; unexpected
manufacturing or quality issues; global trends toward health care cost containment, including ongoing pricing pressures; uncertainties regarding
actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding
sales and marketing practices, government investigations and intellectual property disputes; general economic and industry conditions;
uncertainties regarding the effects of the persistently weak global economic and financial environment, including the financial troubles in certain
Eurozone countries; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; uncertainties
involved in the development of new healthcare products; 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
| Meet Novartis Management | June 17-18, 2014
Today’s agenda
09:30 - 10:00
Introduction: The new Novartis - a more focused company
10:15 – 16:15
Breakout sessions
Group 1
Group 2
Group 3
Group 4
(Room A)
(Room B)
(Room C)
(Room D)
10:15 - 11:15
Pharma
Sandoz
NIBR
Alcon
11:30 - 12:30
Sandoz
Pharma
Alcon
NIBR
12:45 - 13:45
Standing lunch with Management
14.00 - 15:00
NIBR
Alcon
Pharma
Sandoz
15:15 - 16:15
Alcon
NIBR
Sandoz
Pharma
16:30
End of the event
3
| Meet Novartis Management | June 17-18, 2014
The new Novartis:
A more focused company
Joe Jimenez, CEO
Meet Novartis Management
June 17-18, 2014
When we met last November, I had committed to focus
on several areas in 2014 ...
5
1
Actively manage our portfolio
2
Deliver greater synergies between our divisions
3
Deliver superior shareholder returns
| Meet Novartis Management | June 17-18, 2014
... and we’re delivering on that commitment
1
Actively manage our portfolio
 Portfolio transformation announced April 2014
2
Deliver greater synergies between our divisions

3
Deliver superior shareholder returns

6
Creation of Novartis Business Services
announced April 2014
Share buyback initiated, and dividend increased
again in February 2014
| Meet Novartis Management | June 17-18, 2014
How I see our industry evolving:
The world will be larger, older, sicker ...
From 2013-2025
Population
will increase by
Number of
additional >50
year olds
Chronic disease
share of
disease burden
~1
>500
70%
billion
million
Source: Projections from UN; WHO
7
| Meet Novartis Management | June 17-18, 2014
... and will demand more and better healthcare, with
spending projected to double in just over 10 years
Projected global healthcare spend1
USD, trillions
+6.4%2
15.6
7.4
Nominal
healthcare
spending to
double
2013
1
2025
Spend expressed in nominal terms
CAGR
Source: Economist intelligence Unit, World Bank, Global Insights, BMI, OECD, McKinsey Strategy & Trend Analytic Center
2
8
| Meet Novartis Management | June 17-18, 2014
This could lead to two potential scenarios
Brutal
scenario
Slow-down of
economic growth
Greater use of HTA
Disproportionate
spending cuts on
incremental innovation
Increased patient
ability to co-pay
out of pocket
Increased portion of
healthcare expense on
innovative therapeutics
Innovative
scenario
More breakthrough
drugs and devices
9
| Meet Novartis Management | June 17-18, 2014
Whatever the future holds, to succeed, leaders will
need innovation power and global scale
Innovation
power
Global
scale
10
| Meet Novartis Management | June 17-18, 2014
... to produce real
breakthroughs for
unmet medical need
... to compete profitably
across geographies
Our portfolio transformation positions Novartis
for success1
Pharma
Generics
Eye Care
Deliver right medicine,
to right patient,
at right time
1
11
Care for the
aging population
Address access
and healthcare
system demands
Subject to the completion of the transactions with GSK and Eli Lilly announced on April 22, 2014. The transactions with GSK are inter-conditional and are
subject to approval by GSK shareholders and subject to customary closing conditions including regulatory approvals; these are expected to close in H1
2015. The transaction with Eli Lilly is subject to customary regulatory approvals; it is expected to close in Q1 2015
| Meet Novartis Management | June 17-18, 2014
Each of our divisions is well positioned
Pharmaceuticals

Pharma
Eye Care
Generics
Rich and deep pipeline
• Potential first in class and / or best in class NIBR-generated
pipeline e.g., LCZ696, LBH589, AIN457, BYM338

Consistent growth strategy moving from single brand
 presence to growth platform depth
Unparalleled growth platform1 with 41% sales from
Growth Products2 in Q1 2014
• Oncology, Heart Failure, Dermatology, Respiratory, Cell Therapy
1
2
12
Key products for Pharmaceuticals growth
Products launched in 2009 or later, or with exclusivity until at least 2018 in key markets (EU, US, Japan)
| Meet Novartis Management | June 17-18, 2014
Each of our divisions is well positioned
Eye Care
Pharma
Eye Care
Generics
 #1 eye care player; growing, highly profitable
 Strong brand, customer loyalty
Innovation is accelerating; cataract refractive suite,
 daily / color lenses
13
| Meet Novartis Management | June 17-18, 2014
Each of our divisions is well positioned
Generics
Pharma
Eye Care

 Leading biosimilars pipeline
Leader in differentiated generics,
 including innovative device for generic Seretide
Strong presence in emerging markets –
 ahead of closest global competitor
Generics
#2 Generics player globally, with above market growth in
every region in 2013
Note: AirFluSal® is currently not distributed/marketed/sold by Sandoz/Hexal in the German market due to a pending litigation
Seretide® is a registered trademark of GSK
14
| Meet Novartis Management | June 17-18, 2014
®
The transactions would make Novartis more focused ...
Novartis portfolio1
More
focused
From...
To...
6
3
businesses
businesses
To focus management on
leading businesses with global
scale and innovation power
1
15
Subject to the completion of the transactions with GSK and Eli Lilly announced on April 22, 2014. The transactions with GSK are inter-conditional and are
subject to approval by GSK shareholders and subject to customary closing conditions including regulatory approvals; these are expected to close in H1 2015.
The transaction with Eli Lilly is subject to customary regulatory approvals; it is expected to close in Q1 2015
| Meet Novartis Management | June 17-18, 2014
... more profitable
Novartis Group 2013 pro forma1
Core operating income margin2, 3
More
profitable
From...
To...
+250 bps
on 2013 pro forma basis
27.2%
24.7%
Current
1
2
3
16
New Novartis
Pharma, Sandoz, Alcon, retained Corporate units, GSK Oncology and share of profit as part of income from associated companies from the OTC JV
Note that core operating income margin excludes GSK oncology products amortization
Subject to the completion of the transactions with GSK and Eli Lilly announced on April 22, 2014. The transactions with GSK are inter-conditional and are
subject to approval by GSK shareholders and subject to customary closing conditions including regulatory approvals; these are expected to close in H1 2015.
The transaction with Eli Lilly is subject to customary regulatory approvals; it is expected to close in Q1 2015. Excludes blood transfusion diagnostic unit
| Meet Novartis Management | June 17-18, 2014
... with the potential to be faster growing
Faster
growing
Expected Novartis growth1 driven by:
 Additional fast-growing GSK oncology
products
 Investments focused on only three
divisions
 Greater management focus
1
17
Subject to the completion of the transactions with GSK and Eli Lilly announced on April 22, 2014. The transactions with GSK are inter-conditional and are
subject to approval by GSK shareholders and subject to customary closing conditions including regulatory approvals; these are expected to close in H1 2015.
The transaction with Eli Lilly is subject to customary regulatory approvals; it is expected to close in Q1 2015
| Meet Novartis Management | June 17-18, 2014
We created Novartis Business Services to harmonize
and simplify how we provide services to the divisions
Pharmaceuticals
Sandoz
Alcon
Information
Technology
Procurement
Pharma Service
Centers1
1
18
HR
Operations
Group Country
Management
Includes Commercial and Medical Affairs as part of Global Business Services
| Meet Novartis Management | June 17-18, 2014
Real Estate &
Facility Services
Customers
First
Financial Reporting
& Accounting
TechOps
Council
Synergies through NBS are expected to improve our
margin and strengthen in-market performance
NBS to include 1:
 120 countries
Goals
 Harmonize high-quality services at
lower cost
 Accelerate revenue synergies (e.g.,
expanding Customers First globally
with greater Division focus)
 Mandate to reduce historical growth
of G&A
1
19
Effective July 1st, 2014
| Meet Novartis Management | June 17-18, 2014
 Over 7,000 associates
 6 functions and other
cross-divisional services
 Over USD 6 bn spend in
scope
I expect each of our businesses to execute well to
create value for our shareholders
What I expect over next 5 years
Strong Novartis top and bottom line growth, with
leverage
Pharmaceuticals
Leadership in Oncology, Heart Failure,
Dermatology, Respiratory, Cell Therapy
Margin improvement
Alcon
Sandoz
Accelerated top-line growth
Maintain or grow margin
Improved margins
Continued leadership in biosimilars
Barring unforeseen events
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| Meet Novartis Management | June 17-18, 2014
To sum up...
We have shaped Novartis to win in a future world in
which innovation and scale critical to meet demand
The new Novartis1 will be
a more focused company
Each of our divisions is in a solid position
to strengthen their leadership
1
21
Subject to the completion of the transactions with GSK and Eli Lilly announced on April 22, 2014. The transactions with GSK are inter-conditional and are
subject to approval by GSK shareholders and subject to customary closing conditions including regulatory approvals; these are expected to close in H1 2015.
The transaction with Eli Lilly is subject to customary regulatory approvals; it is expected to close in Q1 2015.
| Meet Novartis Management | June 17-18, 2014
The team you will meet today
Pharmaceuticals
Alcon
David
Epstein
Jeff
George
Sandoz
Richard
Francis
NIBR
Mark
Fishman
Other speakers
Other speakers
Other speakers
Other speakers
Eric Cornut: Chief
Commercial Officer
Laurent Attias: Head,
Global Commercial
Strategy
Vas Narasimhan: Head,
Biopharmaceuticals &
Oncology Injectables
Bill Sellers: Global Head,
Oncology research
David Nieto: Chief
Financial Officer
Nick Haggar: Head,
Western Europe, Middle
East & Africa
Tim Wright: Global Head
of Development
Alessandro Riva: Global
Head, Oncology
Development & Medical
Affairs
Robert Warner: Head, US
& Canada
Robert Karsunky: Chief
Financial Officer
Mark McCamish: Head,
Global Biopharmaceuticals
& Oncology Injectables
Development
Peter Goldschmidt: Head,
Sandoz US
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| Meet Novartis Management | June 17-18, 2014
Barbara Weber: Global
Head, Oncology
Translational Medicine
Jeff Porter: Global Head,
Developmental and
Molecular Pathways
Q&A
Pharmaceuticals Division
David Epstein, Division Head Pharmaceuticals
Meet Novartis Management
June 17-18, 2014
Pharma Executive Leadership Team
David Epstein
Pharmaceuticals
Division
Head
Functions
Business Operations
Robert Karsunky
Chief
Financial
Officer
Laura McKeaveney
Human
Resources
Sean Reilly
Legal
Timothy Wright
Global GenMeds
Development
Pierre-Alain Ruffieux
Quality
Assurance
Bruno Strigini
Oncology1
Usman Azam
Cell & Gene
Guido Guidi
Europe
Dirk Kosche
Japan
Carlos D. Garcia
LACan
Christi Shaw
USA
Rainer Boehm
AMAC
Juan Andres
TechOps
Catherine Steele
Communications
& Advocacy
Xudong Yin
China
1
25
Eric Cornut
Chief
Commercial
Officer
| Meet Novartis Management | June 17-18, 2014
Includes Oncology Development
Content
1
Novartis Pharmaceuticals current and projected future
growth
 Unparalleled growth platform
 Highlights on Innovation
 5 new business areas with potential to contribute to future
margin expansion
2
Resource Allocation
 Creating value by freeing up resources for growth & innovation
26
| Meet Novartis Management | June 17-18, 2014
Consistent Pharma strategy: moving from single brand
presence to business areas depth
Business Areas:
Blockbusters
reaching LoE1
(e.g. Diovan®, Zometa®...)
Growth Platform2
with exclusivity
through 2018 (and
beyond):





Oncology
Dermatology
Respiratory
Heart Failure
Cell Therapy
Lucentis®, Gilenya®, Afinitor®, Tasigna®, Galvus®,
Xolair®, Q Family3 and Jakavi®
1
2
3
27
Loss of exclusivity
Key products for Pharmaceuticals Division growth
Includes Onbrez®, Seebri® and Ultibro®
| Meet Novartis Management | June 17-18, 2014
Content
1
Novartis Pharmaceuticals current and projected future
growth
 Unparalleled growth platform
 Highlights on Innovation
 5 new business areas with potential to contribute to future
margin expansion
2
Resource Allocation
 Creating value by freeing up resources for growth & innovation
28
| Meet Novartis Management | June 17-18, 2014
Unparalleled growth platform1 with exclusivity until
2018 and beyond
Q1 2014
Sales
(USD m)
Indication
 Wet age-related macular degeneration, DME2,
620
6%
 Multiple sclerosis
552
31%
 Metastatic renal cell carcinoma, TSC SEGA6,
357
19%
 Chronic myeloid leukemia
337
21%
 Diabetes mellitus, Type 2
308
20%
 Moderate to severe asthma
173
24%
 Chronic obstructive pulmonary disease
9710
99%
57
60%
cRVO3, bRVO4, mCNV5
pNET7, HR+/HER2-8 advanced breast cancer
9
 Myelofibrosis
1
2
3
4
5
Key growth products for the Pharmaceuticals division
Diabetic macular edema
Central retinal vein occlusion
Branch retinal vein occlusion
Choroidal neovascularization (CNV) secondary to pathologic myopia (myopic CNV)
29
Q1 2014
Growth vs. PY
(% cc)
| Meet Novartis Management | June 17-18, 2014
6
7
8
9
10
Tuberous sclerosis complex subependymal giant cell astrocytoma
Pancreatic neuroendocrine tumors
Hormone Receptor positive, Human Epidermal Growth Factor 2 negative
Onbrez® approved as Arcapta® Neohaler® in the US
Combined net sales and growth of Onbrez® , Seebri ® and Ultibro®
Right go-to-market model and capabilities are key for
rapid innovation uptake
Market Evolution
Illustrative
 Diversity of market needs
requires tailored access
efforts
 Build medical and patient
access capabilities
Listing
Pricing
Share
of voice
| Meet Novartis Management | June 17-18, 2014
cost effectiveness –
outcomes pivotal for
speedy access
 Drive profitable go-toTime
30
 True differentiation and
market models
Gilenya®’s sales potential: Orals could account for
>50% of total MS1 demand by 2018
US and EU Multiple Sclerosis
sales forecast
Gilenya® projected sales and
milestones 2010 - 2018
in USD bn
Illustrative
Gilenya®
Extended
Indications3
18
14
Aubagio®
Launch
RRMS2
indication
+30%
CAGR
2013 2014
Orals
2015
2016 2017
Injectables
1
Tecfidera®
Launch
2018
2010
2012
2014
2016
2018
Multiple Sclerosis
Relapsing-Remitting Multiple Sclerosis
3 Primary Progressive multiple Sclerosis – Top line results expected in Q4, Chronic Inflammatory Demyelinating Polyneuropathy (indications not yet approved)
Source: 2013 sales based on internal sales & competitor reported sales. 2014 & beyond: internal estimates
2
31
| Meet Novartis Management | June 17-18, 2014
Gilenya® further consolidates its efficacy profile and
position as the treatment of choice for first efficacy switch1
Gilenya® efficacy in switch patients
Number of new
and newly
% change in brain
enlarged T2
volume
lesions
Annual Relapse
Rate
Risk of 6-m
confirmed
disability
progression
0
% reduction vs. placebo
10
20
30
40
46
48
45
50
60
69
 Gilenya® found to reduce
4 key measures of
disease activity in pretreated patients with
highly active disease
 Gilenya® is the only oral
found to defend against
4 key measures of
Multiple Sclerosis
70
80
1
First efficacy switch covers patients switched from a first line treatment for an efficacy reason
Method: post-hoc analysis of pooled phase 3 data
Patients: high disease activity despite receiving a Disease Modifying Treatment (DMT) in the year before (n=506)
Source: AAN 2014, P3.174, Bergvall et al.
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| Meet Novartis Management | June 17-18, 2014
Novartis building a sustainable and growing Medical
Retina business
Ex-US Medical Retina
sales Forecast
Novartis and Alcon Medical Retina
projected sales and launches
in USD bn
Illustrative
Jetrea®
9
+13%
Launches
Lucentis®
CNV/ME FovistaTM RTH2587
Launch
Pathologies6 Launch9
LFG3168
Launch
CAGR
5
2014 2015 2016 2017 2018 2019
Includes
1
2
3
4
wAMD1,
DME2,
RVO3,
mCNV4
Wet age related macular degeneration
Diabetic macular edema,
Retinal vein occlusion,
Choroidal neovascularization (CNV) secondary
to pathologic myopia (myopic CNV),
5
6
and other
2014
2015
2016
2017
2018
2019
indications5
Other indications include dry age related macular
degeneration, proliferative diabetic retinopathy;
viteromacular adhesion and
other ME/CNV related indications for adults and pediatric
population.
7
8
9
Formerly disclosed as ESBA1008. Next Generation antiVEGF.
Complement Inhibitor for Advanced Dry AMD.
FovistaTM is a registered trademark of Ophthotech. Novartis
licensed FovistaTM from Ophthotech for sales outside the US
Sources: External Analysts Consensus view, Novartis Affiliates, Visiongain 2010 report. Market Definition: Lucentis®, Eylea®, Avastin®, Visudyne®, Macugen®, Ozurdex®, Iluvien®
All Brands are registered names of their respective owners. Note: Genentech has rights to Lucentis® in the US
33
| Meet Novartis Management | June 17-18, 2014
Fovista™1 in combination with anti-VEGF therapy has
potential to further improve outcomes for wAMD patients
Anti-PDGF ‘strips’ pericytes
from neovascular
endothelial cells
In Phase II trial, adding Fovista™
to Lucentis®2 improved vision
gains by 62%3
3
2
Fovista™ is a registered trademark of Ophthotech. Novartis licensed
Fovista™ from Ophthotech for sales outside the US
IMS data.
34
Lucentis®
FovistaTM 0.3mg +
Lucentis®
FovistaTM 1.5mg +
Lucentis®
1.5mg
Fovista™ +
Lucentis®
1
+62% Letter
Gain
Letters Gained
Unprotected endothelium is
subsequently vulnerable to
anti-VEGF therapy resulting
in regression
Letters Gained
P=0.019
Improvement vs. Lucentis®
alone started at week 4 and
continued to increase over time4
| Meet Novartis Management | June 17-18, 2014
4
0.3mg
Fovista™ +
Lucentis®
Lucentis®
0
4
8
12
16
20
24
Week
Monthly Fovista™ and Lucentis® injections. Improvement from baseline
Visual improvement from baseline with combination therapy vs Lucentis® monotherapy. Source: Left
Panel- Ophthotech 2014 R&D Day; Middle/Right Panels- Ophthotech presentation-32nd Annual J.P.
Morgan Healthcare Conference, Jan 13, 2014 . Note: Genentech has rights to Lucentis® in the US
Content
1
Novartis Pharmaceuticals current and projected future
growth
 Unparalleled growth platform
 Highlights on Innovation
 5 new business areas with potential to contribute to future
margin expansion
2
Resource Allocation
 Creating value by freeing up resources for growth & innovation
35
| Meet Novartis Management | June 17-18, 2014
Multiple pipeline products expected to be
first-in-class and/or have the potential to be best-in-class
Project /
Compound
Indication / Disease area
GenMeds
Expected
First-inclass
Potential
Best-inclass
ACZ885
Secondary prevention of cardiovascular events


LCQ908
Familial chylomicronemia syndrome


LCZ696
Chronic heart failure with reduced ejection fraction


LCZ696
Chronic heart failure with preserved ejection fraction


RLX030
Acute heart failure


ACZ885 (Ilaris®)
Hereditary periodic fevers


AIN457
Psoriasis


AIN457
Psoriatic arthritis


AIN457
Ankylosing spondylitis


BYM338
Sporadic inclusion body myositis


Gilenya®
Primary progressive multiple sclerosis


Gilenya®
Chronic inflammatory demyelinating polyradiculoneuropathy (CIDP)


BAF312
Secondary progressive multiple sclerosis (SPMS)
Lucentis®
Retinopathy of Prematurity (ROP)
QGE031
Allergic diseases
36
| Meet Novartis Management | June 17-18, 2014




Multiple pipeline products expected to be
first-in-class and/or have the potential to be best-in-class
Project /
Compound
Indication / Disease area
Oncology
Tasigna®
Expected
First-inclass
Potential
Best-inclass



BKM120
CML Treatment-Free Remission
mBC, ER+/HER2-, mTOR naive, AI resistant, second-line (combo
fulvestrant)
mBC,ER/PR+/HER2-, third line (combo fulvestrant post-mTOR)


CTL019
Relapsed/refractory acute lymphoblastic leukemia (ALL)


Exjade®
New formulation (film-coated Tablets)
Exjade®
New formulation (granules)


Jakavi®
Polycythemia Vera


LBH589
Multiple myeloma, relapse, second line (bortezomib)
LCI699
Cushing's
LDE225
Basal cell carcinoma, first line
PKC412
Aggressive systemic mastocytosis


Afinitor®
mBC, HER2+, first line (trastuzumab/paclitaxel)


Afinitor®
TSC-Seizure, third line


Afinitor®
Advanced non-functional NET, first line


Signifor®
Cushing's (LAR)

Signifor®
Acromegaly (LAR)

BKM120
37
| Meet Novartis Management | June 17-18, 2014





BYM338 potential best-in-class compound for treating
muscle-wasting conditions
Forearm, finger, & wrist
flexor wasting
Sporadic Inclusion Body Myositis (sIBM)
Currently in Phase IIB/III pivotal studies
Filing expected in 2016
Quadriceps wasting
Engel & Askanas, 2005
38
All data are preliminary/investigational.
Efficacy and safety data have not been established.
Source: BYM338B2205 Proof of Concept study in sIBM patients
* Statistically significant difference
| Meet Novartis Management | June 17-18, 2014
Ilaris® already approved for CAPS1, studied in
hereditary periodic fevers2
Currently in Phase IIB/III pivotal studies, Filing expected in 2016
TRAPS
crFMF
HIDS
90% without symptoms at day
1133
57% (ped.) and 89% (adults) with
very good control at day 864
56% of patients with excellent
response at day 1695
100%
1
100%
80%
6
Physician’s Global Assessment (PGA)
Number of patients
Peds.
2
N = 20
80%
Adults
1
3
Moderate
18
40%
13
Mild
Minimal
Absent
20%
very poor
60%
40%
8
8
4
20%
1
Baseline Day 113
Primary endpoint: 95% (19/20) of
patients treated with canakinumab
achieved complete† or almost complete‡
response on day 15 (dose:150q4)
1
1
Bsl.
D86
39
| Meet Novartis Management | June 17-18, 2014
fair
60%
N=9
no control
6
poor
somewhat
5
20%
very
good
0%
Bsl. D86
4
40%
good
Primary endpoint: 86% (6/7) and 100%
(9/9) of patients had ≥50% reduction in
frequency of attacks (dose: 150q4)
4
Cryopyrin Associated Periodic Fever Syndrome
Hereditary Periodic Fevers comprise of a cluster of conditions: Tumor receptor 5
†
factor receptor associated periodic fevers (TRAPS), Colchicine resistant
‡
familial mediterranean fever (crFMF), Hyper IgD syndrome (HIDS)
3 ACZ885D2203;
References: Gattorno et al, 2013; Anton et al. 2013; Gul et al, 2013; Brik et al, 2013
2
poor
3
0%
0%
100%
80%
3
Severe
60%
N=7
N=9
3
Bsl.
good
excellent
D 169
Primary endpoint: Mean number of flares
in the 6 months prior to study = 6.6;
reduced to 0.3 flares during 6-months
treatment (dose: 300q6)
ACZ885D2204 (ped.); ACZ885DTR01 (adults);
ACZ885D2402
Complete response: PGA ≤1 + serological remission (CRP <10 mg/L and/or SAA <10 mg/L);
Almost complete response: PGA ≤1 + partial serological remission ( ≥70% CRP and/or SAA
reduction from BL).
New technology bets have potential to be disruptive
Point-of-Care Testing
 Future portfolio with
opportunities for “personalized
medicines”
 Vivacta1 potentially provides a
diagnostic platform for Point-ofCare (PoC) assessments
 Test results available in less
than 10 minutes
1
Continuous Manufacturing
 Continuous manufacturing for
early-stage technical
development
 Potentially improving product
quality and reducing process
variability
 Complemented with direct-filling
technologies, this could
significantly reduce the
manufacturing footprint
Trials of the Future
 Incorporation of technologies
such as, sensors and eSource,
into clinical trials
 Making clinical trials more
patient friendly with recruitment
in pharmacies
 Integrating electronic health
records to identify and recruit
patients into trials
Vivacta, a privately held point-of-care diagnostic company was acquired by Novartis in Dec. 2012 and integrated into the Pharmaceuticals Division
40
| Meet Novartis Management | June 17-18, 2014
Content
1
Novartis Pharmaceuticals current and projected future
growth
 Unparalleled growth platform
 Highlights on Innovation
 5 new business areas with potential to contribute to future
margin expansion
2
Resource Allocation
 Creating value by freeing up resources for growth & innovation
41
| Meet Novartis Management | June 17-18, 2014
Multiple new business areas to complement already
successful Oncology business
1
2
ONCOLOGY
4
DERMATOLOGY
HEART
FAILURE
5
RESPIRATORY
42
3
| Meet Novartis Management | June 17-18, 2014
CELL
THERAPY
Oncology Business building depth in five different
tumor types/disease areas
2
1
3
DERMATOLOGY1
HEART
FAILURE2
ONCOLOGY
4
Breast
Cancer
43
5
RESPIRATORY3
Melanoma
| Meet Novartis Management | June 17-18, 2014
Renal
Cancer
CELL
THERAPY4
Lung
Cancer
Hemato /
Rare
diseases
Strategic Oncology brands delivering double digit
growth
Q1 2014 Novartis Oncology Sales
in USD m
2
Newly launched
Total
Strategic Brands
Total Oncology 3
1
2
3
44
Constant currencies
INC424/Jakavi® licensed from Incyte for development and commercialization outside the US
Total Oncology includes other products of USD 63 m (-16% CC)
| Meet Novartis Management | June 17-18, 2014
Q1 2014
sales
USD m
Q1 2014
growth
in CC1
384
+6%
357
+18%
337
+21%
208
+5%
57
+60%
NM
NM
1 349
+14%
1 097
-4%
94
0%
74
-68%
2 677
-2%
Strategic Oncology brands account for the majority of
our portfolio – larger than Glivec®
% Oncology net sales
Strategic Brands
39%
47%
50%
42%
41%
11%
9%
FY 2013
Q1 2014
1
43%
Mature Brands2
19%
FY 2012
1
2
45
INC424/Jakavi® licensed from Incyte for development and commercialization outside the US
Mature Brands include Zometa®, Femara®, Desferal®, Navoban®, Aredia®, and Proleukin®
| Meet Novartis Management | June 17-18, 2014
Despite availability of Generic® Imatinib, Tasigna®
market share remains stable in Canada
Historical TRx Shares of TKI Market in Canada (National)
Generic Imatinib
public reimbursement
Ontario: Jun 2013
Generic Imatinib public
reimbursement
Quebec and British
Columbia: Oct 2013
Gleevec Loss of
Exclusivity: Apr 2013
Gleevec®
Tasigna®
Imatinib Gx
Source: IMS B-PRx Report
Sprycel® is a registered trademark of Bristol-Myers Squibb Company
46
| Meet Novartis Management | June 17-18, 2014
Sprycel®
Ontario = 39% of business
Quebec = 25% of business
British Columbia = 13% of business
Jakavi®1 in Polycythemia Vera (PV) Phase 3 met its
primary and key secondary endpoints
Primary Endpoint
Patients, %
Absence of phlebotomy eligibility & ≥ 35% Spleen
Volume reduction at week 32
30
95% CI, 13.7-29.7
20
10
P < .0001
 60% of patients achieved hematocrit
95% CI, 0.0-4.9
20.9%
n = 23
0.9%
n=1
0
Ruxolitinib
(n = 110)
BAT
(n = 112)
control on Ruxolitinib arm vs. 20% on
BAT1 arm without phlebotomy in weeks
8-32
 RESPONSE phase III study also
demonstrated positive Benefit-Risk
profile for Ruxolitinib in PV patients
resistant to or intolerant of HU2
Key Secondary Endpoint
Complete Hematologic Remission (CHR) at week 32
Patients, %
30
95% CI, 16.1-32.7
P = .0028
20
10
23.6%
n = 26
0
Ruxolitinib
(n = 110)
1
2
3
47
 Submitted in EU in June 2014, Japan
BAT
95% CI, 4.4-15.8
8.9%
n = 10
BAT
(n = 112)
INC424/Jakavi® licensed from Incyte for development and commercialization outside the US
Best Available Therapy
Hydroxyurea
| Meet Novartis Management | June 17-18, 2014
submission planned in
2H 2014
Exjade® new film coated tablet and granule developed
to potentially improve patient adherence
Exjade® projected value sales 2014 - 2018
Illustrative
2016
Dispersible Tabs
to be mixed with water
+
Source: 2013 EPASS data
48
| Meet Novartis Management | June 17-18, 2014
2017
Improved pharmacologic properties,
including reduced food effect (Studies
F2103, F2106)

Potential to improve patient adherence
and compliance (Study F2202)

Potential to improve GI tolerability due to
change in excipients (Study F2201)

Anticipated launch US/EU: 2015, ROW:
2016
2018
Film Coated Tabs
Granulates
for adults
to be mixed with food
360mg
2015

180mg
2014
new Formulation
90mg
Current Formulation
&
Broad development plan in HR+ breast cancer with
LEE0111 (Highly Selective CDK4/6 Inhibitor)
ER+/HER2- Breast Cancer2
Trials with LEE011
+
Letrozole
(pre-surgical)
[ongoing]
+
Letrozole
(1st line
[Ph III ongoing]
and Adjuvant)
+
Letrozole
& PI3Ki
(1st line
[Ph I ongoing]
and Adjuvant)
LEE
combination
therapies3
+
Fulvestrant
(2nd line and
post AI)
[Ph I ongoing]
1
2
3
49
+
Afinitor
&
Exemestane
(post AI)
[Ph I ongoing]
Developed by NIBR in collaboration with Astex
Estrogen Positive; Human Epidermal Growth Factor Receptor 2 negative Breast cancer
Other indications: Castration-resistant Prostate Ca, Mantle-Cell Lymphoma
| Meet Novartis Management | June 17-18, 2014
Our broad pipeline of targeted medicines paves the
way for numerous potential combination therapies
3
1
4
2
1
3
50
Under co-development with Array BioPharma
Developed by NIBR with collaboration with Astex
| Meet Novartis Management | June 17-18, 2014
2
4
in-licensed from Incyte Corporation
INC424/Jakavi licensed from Incyte for development and commercialization outside the US
Rational combination therapies with PI3K inhibitors
Combination studies in ovarian, breast cancer, colorectal, multiple myeloma, colorectal cancer,
glioblastoma, melanoma, esophageal squamous cell carcinoma, and head-and-neck cancer
51
| Meet Novartis Management | June 17-18, 2014
Dermatology - Strong commitment to develop
innovative, life-changing dermatology therapies
1
2
ONCOLOGY
4
DERMATOLOGY
HEART
FAILURE
5
RESPIRATORY
52
3
| Meet Novartis Management | June 17-18, 2014
CELL
THERAPY
The biologic market for psoriasis is expected to grow
in value over the next 5 years at 10% CAGR1
1.9M patients with
moderate-severe psoriasis2
*
215k
Patients on Biologic treatment2
G7 market size: USD 4.8 bn
growing at 30% CAGR3
1
2
3
53
Novartis psoriasis forecast (G6 value growth, 2014-2019)
Decision Resources, Patient Epi Database (calibrated with IMS reported yearly sales of biologics)
IMS – 2008-2013 (G7 markets)
| Meet Novartis Management | June 17-18, 2014
Patients with
psoriasis on
biologic treatment
expected to
in 10 years1
*
x2
= 100k patients
AIN457 is the first and only fully human antibody
targeting IL-17A
TNF-a
Inhibitors
Etanercept
Adalimumab
Infliximab
TNF-a
IL-12/IL-23
Inhibitors
Ustekinumab
IL-23
IL-17A
Inhibitors
Secukinumab
IL-17A
Th17 T-cells
 IL-17A is a key
“downstream” inflammatory
cytokine
 IL-17A inhibition is a more
targeted approach to treat
psoriasis1
KERATINOCYTE
Activated
Dendritic cell
1
Garber K. Nat Biotechnol. 2011; 29:563-566
Source: Adapted from Nestle et al. N Engl J Med 2009;361:496-509; Kopf M et al. Nat Rev Drug Discov. 2010;9:703-718
54
| Meet Novartis Management | June 17-18, 2014
AIN457 Ph III program in psoriasis - extensive data
package with over 3,300 patients at submission
Core
submission
package
ERASURE
FIXTURE
CAIN457A2302
CAIN457A2303
Placebo controlled, 738 pts
Placebo & Enbrel® controlled, 1306 pts
Additional
forms
FEATURE
JUNCTURE
CAIN457A2308
CAIN457A2309
Placebo controlled, Prefilled Syringe 177 pts
Placebo controlled, Autoinjector 182 pts
Individualized
or Titrated
Treatment
SCULPTURE CAIN457A2304
STATURE
CAIN457A2307
Extension
studies
Fixed vs start-of-relapse dosing, 966 pts
i.v. vs. s.c. in partial responders, 43 pts
CAIN457A2302E1 Extension for A2302 & A2303, 1220 pts
CAIN457A2304E1 Extension for A2304 & A2307, 740 pts
Prefilled Syringe and Autoinjector planned to be available at launch
Enbrel® is a registered trademark of Amgen Inc.
55
| Meet Novartis Management | June 17-18, 2014
AIN457 delivered clear skin with > 70% patients
achieving PASI 90 to 100
AIN457 (secukinumab) response at week 16
% of patients
PASI 75
PASI 90
86.7
86.1
PASI 100
72.4
69.8
41.6
36.8
BASELINE
FIXTURE
(A2303)
ERASURE
(A2302)
PASI 75
PASI 90
Source: FIXTURE, ERASURE , pictures from secukinumab
Ph III trial patient
EMEA guidelines: “In general, the best evidence of efficacy is the percentage of patients
who achieve the result of “clear or almost clear” (PASI≥90%) on treatment”1
1
56
EMEA Guideline on Clinical Investigation of Medicinal Products Indicated for the Treatment of Psoriasis; November 2004
| Meet Novartis Management | June 17-18, 2014
AIN457 300mg in psoriasis expected to raise the
efficacy bar for patients
FIXTURE study – 52 weeks
PASI 90 to 100
% patients that achieve PASI 90 to 100
Secukinumab 150mg
Secukinumab 300mg
Enbrel®

Superior results vs.
Enbrel®

Safety profile comparable
to Enbrel®

90% of clear or almost
clear response rate
maintained until week 52
with secukinumab 300mg

Monthly maintenance
regimen
80
60
40
20
0
1 2 3 4 8 12 13 14 15 16 20 24 28 32 36 40 44 48 52
Weeks
Source: 52 week results from FIXTURE; Multiple Imputation analysis. Note: Maintenance or response calculated based on FIXTURE CSR LOCF analysis
Enbrel® is a registered trademark of Amgen Inc.
57
| Meet Novartis Management | June 17-18, 2014
AIN457 running H2H global trial vs. Stelara®
(ustekinumab)
CLEAR study: Head-to-head study
of secukinumab vs. Stelara®
Wk 0
Week 16 Primary
Endpoint (PASI
90)
16
Secukinumab
300 mg
severe plaque psoriasis has started
patient enrollment
 Primary endpoint is PASI 90 measured
52
Secukinumab
300 mg
Ustekinumab1
Ustekinumab 45/90 mg
45/90 mg
16
at Week 16 powered for superiority vs.
Stelara® (ustekinumab)
 PASI 90 considered the best evidence
R
Wk 0
 Global phase IIIb study in moderate-to-
52
of efficacy and is a more robust
measure of the extent of skin clearance
compared to the standard efficacy
measures used in most psoriasis
clinical studies2
 Accrual expected to complete in 2H
2014
1
Secukinumab placebo injections will be administered
European Medicines Agency. Guideline on clinical investigation of medicinal products indicated for the treatment of psoriasis.
http://www.ema.europa.eu/docs/en_GB/document_library/Scientific_guideline/2009/09/WC500003329.pdf. Accessed March 2014
Ustekinumab weight based dosing: 45 mg for patients < 100 kg; 90 mg for patients > 100 kg
Stelara® is a registered trademark of Janssen Biotech, Inc.
2
58
| Meet Novartis Management | June 17-18, 2014
Chronic Spontaneous Urticaria (CSU) a clinical
condition with high unmet need
*
720k CSU patients
1.6M patients
diagnosed with CSU
in US and EU51
1
2
3
59
lacking a licensed
treatment option
90%
50%
treated2
refractory to
approved doses
of H1-antihistamines3
Gaig 2004 - Population-based study among 5003 adults in Spain; Tong 1997 - Assessment of autoimmunity in patients with
chronic urticaria + internal estimates
Delong 2008; US cost analysis of 50 non-immunosuppressed patients
Maurer M, et al. Unmet clinical needs in chronic spontaneous urticaria. A GA2LEN task force; report. Allergy 2011; 66: 317–
330 Pigatto & Valsecchi 2000 - Examination of 348 patients with physically induced CU in Italy
| Meet Novartis Management | June 17-18, 2014
*
= 100k patients
Positive launch of Xolair®1 in Chronic Spontaneous
Urticaria2 in EU and US
 Only approved therapy for the up to
50% of patients with CSU with
inadequate response to licensed
doses of H1-antihistamines3
Pruritus
Hives
 Launched since March 2014 in the
US and 8 European countries (incl.
Germany, Austria, Finland, Greece)
 Next wave of European launches in
Switzerland, UK, Italy, Spain and
France
Angioedema
1
Xolair® is developed in collaboration with Genentech Inc.
Chronic spontaneous urticaria (CSU) is known as Chronic idiopathic urticaria (CIU) in the US
3 Sánchez-Borges M, et al. World Allergy Organization Journal. 2012; 5:125–147. Maurer M, Rosén K, Hsieh HJ, et al. Omalizumab for the treatment of chronic
idiopathic or spontaneous urticaria. NEJM. 2013; DOI: 10.1056/NEJMoa1215372
Pictures reproduced with permission from owner M. Maurer (for Pruritus and Hives,) and owner J.Richards (for Angioedema)
2
60
| Meet Novartis Management | June 17-18, 2014
BCC is the most common malignancy among
Caucasians with limited treatment options
 Basal Cell Carcinoma (BCC) is the most
commonly diagnosed human cancer in North
America, Europe, and Australia1-6
 Most patients with BCC can be successfully
treated with topical therapy, curettage,
surgery, or radiation therapy1-7
 Progression of BCC to an advanced stage is
associated with considerable morbidity and
poor survival8-10
 Patients with locally advanced BCC (LaBCC),
not amenable to curative surgery or radiation
therapy, and those with metastatic BCC
(mBCC), have limited treatment options1,2,5-7
1
2
3
4
5
61
American Cancer Society. Skin cancer: Basal and Squamous Cell. 2013
www.cancer.org.
National Comprehensive Cancer Network clinical practice guidelines in
oncology: basal and squamous cell skin cancer. V2.2014. www.nccn.org.
BC Cancer Agency. 2013. http://www.bccancer.bc.ca.
Telfer NR, et al. Br J Dermatol 2008;159:35-48
Hauschild A, et al. Dtsch Dermatol Ges 2013;11 Suppl 3:10-5,11-6
| Meet Novartis Management | June 17-18, 2014
6
Cancer Council Australia/Australian Cancer Network. 2008
www.cancer.org.au.
7 Sekulic A, et al. Curr Opin Oncol 2013;25:218-23
8 Raszewski RL, Guyuron B. Ann Plast Surg 1990;24:170-5
9 Danial C, et al. Br J Dermatol 2013;169:673-6
10 Erivedge (vismodegib) [package insert]. January 2012
LDE225 demonstrated efficacy and established safety
profile
 Results of the randomized Phase 2 study of
LDE225 (sonidegib) in patients with
advanced BCC (BOLT) were presented at
ASCO 2014
• BOLT study met its primary endpoint
(ORR) for both treatment arms in the
target population
• Rapid lesion regression and sustained
clinically meaningful responses were
observed in patients with advanced BCC
Baseline
Week 61
 Sonidegib has AEs consistent with the
known safety profile of Hh inhibitors
 Filed in EU in Q2 2014. Global submissions
ongoing
1
62
Midgen M et al, J Clin Oncol 32:5s, 2014 (suppl; abstr 9009a)
| Meet Novartis Management | June 17-18, 2014
BOLT - pictures from LDE225 trial patient: Patient
with aggressive LaBCC treated with sonidegib
200 mg achieved an overall response or partial
response (PR) by central review within 17 weeks of
treatment
Heart Failure - Opportunity to establish a new world
class business
1
2
ONCOLOGY
4
DERMATOLOGY
HEART
FAILURE
5
RESPIRATORY
63
3
| Meet Novartis Management | June 17-18, 2014
CELL
THERAPY
Acute Heart Failure market growing, driven by aging
population and improved survival rates1
Potential AHF2 eligible patient population events in the US and EU5
*
1.2M
US
EU56
9M
AHF hospital
admissions3
1
2
3
4
5
6
64
830k
1.1M
660k
AHF
discharges3
Normal to
elevated
blood
pressure4
670k
AHF eligible
patients
590k
Mild to
moderate
renal
insufficiency 5
Decision Resources Patient Base; 2012
Acute Heart Failure
Decision Resources Patient Base, July 2013
US: OPTIMIZE HF 2008, EU: ESC Pilot, OFICA French Registry and Italian Registry (Tavazzi), SBP>125 mmHG.
US: ADHERE Registry 2007, EU: EURObservational Research Program (EORP): The Heart Failure Pilot Survey, eGFR>30
ml/min/1.73m2
EU5 countries: France, Germany, Italy, Spain, United Kingdom
| Meet Novartis Management | June 17-18, 2014
1.3M
*
= 1M patients
RELAX-AHF-2 ongoing, expected to complete H2 2016
with interim analysis in 2015
 RELAX-AHF-2 started September 2013
with CV mortality as primary endpoint
 Interim analysis at 60% of events
expected in 2015
 Trial expected to be completed in
H2 2016
 ~6400 patients expected to enroll in
RELAX-AHF-2
65
| Meet Novartis Management | June 17-18, 2014
Large and growing1 HFrEF patient population
Potential CHF2 eligible HFrEF patient population in the US and EU5
US
*
EU5
11M
CHF patients
diagnosed3
RoW
1
2
3
4
66
3.2M
2.7M
2.2M
2.1M
1.8M
1.4M
HFrEF
patients4
Rx
Treated3
3.6M patients
potentially eligible for
LCZ696 (NYHA IIIV)3,4
++
Gibbs LM, Addington-Hall J, Gibbs JS. Dying from heart failure: lessons from palliative care. Many patients would benefit from
palliative are at the end of their lives. BMJ 1998;317:961–962
Chronic Heart Failure
Decision Resources Patient Base 2012
LEK research and LCZ696 Dual Workstream Plan in HFrEF & HFpEF, Marketing Sciences. Oct 2012
| Meet Novartis Management | June 17-18, 2014
*
=1M patients
Two types of heart failure based on Left Ventricular
Ejection Fraction (LVEF)
HF-rEF1
LVEF≤40%
HF-pEF2
LVEF>45%
 PARADIGM-HF with LCZ696 in HF-rEF
stopped early based on compelling
efficacy and primary endpoint having
been met
 ~50% of patients
 ~50% of patients
 Addressed in
 Addressed in
completed trial
1
2
67
upcoming trial
Heart Failure with reduced Ejection Fraction
Heart Failure with preserved Ejection Fraction
| Meet Novartis Management | June 17-18, 2014
 Submission for HF-rEF indication
expected in the US by end of 2014 and
in the EU in Q1 2015
PARAGON-HF study in HFpEF to be initiated in Q3 2014
68
| Meet Novartis Management | June 17-18, 2014

PARADIGM-HF results accepted
for late breaker presentation
August 31 at ESC in Barcelona

US submission for HF-rEF
indication expected in December
2014 with EU submission in
Q1 2015

PARAGON-HF in HF-pEF
expected to commence in Q3
RAAS1 blockade is one of the main standards of care
in Chronic Heart Failure
Percentage of Patients on therapy
79
ARB22
 Current guidelines support use
of RAAS blockers, beta
blockers, and aldosterone
antagonists
80
74
11
75
14
ACE3
68
 If approved, LCZ696 may be
prescribed instead of a RAAS
blocker while other therapies
are maintained
33
60
21
 Hurdles to uptake expected
around market access through
generic competition and
physician habits
RAAS
Blocker1
Beta Aldosterone
Blocker Antagonist
1
RAAS
Blocker
Beta Aldosterone
Blocker Antagonist 
PARADIGM-HF patients were
particularly well-treated, with
beta-blockers (over 90%) and
mineralocorticoid receptor
antagonist (60%), compared
with other recent HF trials4
Renin Angiotensin Aldosteron System
Angiotensin Receptor Blocker
3 Angiotensin Converting Enzyme Antagonist
4 McMurray, JJV et al; Eur. J. Heart Failure, 2014, Baseline Characteristics and Treatment of Patients in Prospective Comparison of ARNI with
ACEI to Determine Impact on Global Mortality and morbidity in Heart Failure trial (PARADIGM-HF)
Source: cvRG 2013
2
69
| Meet Novartis Management | June 17-18, 2014
LCZ696 - expected first-in-class ARNI1 delivering
sacubitril and valsartan
Exclusivity based on several patent
families and Regulatory Data
Protection (RDP)
 LCZ696 complex patent family
(EP, JP granted; US allowed)
2D
scheme
and 3D
structure
 Combination patent family
(US, EP, JP granted)
 Upon approval availability of
• patent term extensions, and
• RDP
 Expected Loss of Exclusivity
LCZ696 is a novel, crystalline complex
comprising sacubitril and valsartan in
their anionic forms, sodium cations
and water molecules
1
70
Angiotensin Receptor Neprilysin Inhibitor
| Meet Novartis Management | June 17-18, 2014
• US: 2026
• EU: 2026
• JP: 2030
Respiratory - Aiming for ex-US COPD leadership
1
2
ONCOLOGY
4
DERMATOLOGY
HEART
FAILURE
5
RESPIRATORY
71
3
| Meet Novartis Management | June 17-18, 2014
CELL
THERAPY
Respiratory - Potential to address needs of large
COPD population1
22 million
About 44% diagnosed
16 million
About 76% treated for
50
COPD
million people
have COPD in
the US and EU5
Expected to be the third leading
cause of death by 2020
Global COPD sales in 2013
12.2bn
expected to grow at
~5.1% 5y CAGR2
1
2
72
IMS PADDS July 2013
Evaluate Pharma: COPD Indication Long-term Outlook 2013-2017
| Meet Novartis Management | June 17-18, 2014
50% of
COPD
patients are
<65 years
Ultibro® Breezhaler® showed superior efficacy
versus Seretide®4 in second head-to-head study1-4
Analysis of FEV1 (L) AUC0-41,2
∆= 0.065L
p<0.001
The LANTERN Trial3:
 Ultibro® Breezhaler® demonstrated
∆= 0.122L
p<0.001
superiority in lung function compared to
Seretide® Accuhaler®4 in COPD patients
with or without exacerbations in the
previous year
 Primary and key secondary objectives met
in pivotal Phase III LANTERN study
 Positive results to be part of the regulatory
submission for Ultibro® Breezhaler® in
China later this year
Day 1
®
Ultibro
QVA149
Breezhaler®
1
2
3
4
73
Week 26
Seretide
Flut/Salm
®
Accuhaler®
Secondary endpoint, full analysis set over the whole treatment period. Primary endpoint was to demonstrate non-inferiority to Seretide post-dose tFEV1 after
26 weeks
Baseline FEV1 is defined as the average of the -45 min and -15 min FEV1 values taken on Day 1 prior to first dose
LANTERN was a double-blind, double-dummy, parallel-group study, 744 pts with moderate-to-severe COPD with or without exacerbations in the previous year
The LANTERN study used Seretide® (salmeterol/fluticasone) 50/500 mcg via the Accuhaler® dry powder inhaler. Seretide® is also known as Advair® and
Accuhaler® is also known as Diskus®. Seretide®, Advair®, Diskus® and Accuhaler® are registered trademarks of the GlaxoSmithKline group of companies
| Meet Novartis Management | June 17-18, 2014
Ultibro® Breezhaler® uptake in Germany among top
10% of Primary Care (PC) launches1
Value Share of PC launches in Germany
Value Share2
5%
Top 10%
Ultibro® Breezhaler®
4%
 Ultibro® Breezhaler® is
approved in over 40 countries
and launched in 13 countries,
including Germany
3%
IMS Primary
Care Launch
Benchmark
range
2%
1%
Bottom 10%
0%
0
1
2
3
4
5
6
7
8
 On May 8, 2014, the German
G-BA granted Ultibro®
Breezhaler® an “additional
benefit” rating vs. Tiotropium
and Formoterol3
9 10 11 12
Months since launch
Bottom 10% of PC launches
Ultibro® Breezhaler®
1
2
3
74
Top 10% of PC launches
Source: IMS Health– Products Launched from Jan. 2009 – Mar. 2012 with 12 months data Market Definition: R3A3+R3F1+R3G3 (LAMA
Only)+R3H2+Ultibro; IMS PADDS – April 2014
Product share calculated based on non-factored COPD market (includes Asthma sales of the respective products) –
LABA+LAMA+ICS/LABA+PDE-IV+LABA/LAMA
G-BA=Gemeinsamer Bundesausschuss/Federal Joint Committee
| Meet Novartis Management | June 17-18, 2014
Cell Therapy: Leading the Transformation
1
2
ONCOLOGY
4
DERMATOLOGY
HEART
FAILURE
5
RESPIRATORY
75
3
| Meet Novartis Management | June 17-18, 2014
CELL
THERAPY
Novartis committed to advancing Cell Therapies
HSC835
Infusion of processed and
expanded cord blood stem
cells into patients lacking
stem cells
FCRx
Infusion of processed donor
leukophoresis product
enriched for facilitator cells
and progenitors
CTL019
Cell based therapy of isolated
T-cells via lentivirus
transfection and infusion into
leukemia patients
Facilitating
cell
Immune cells
from patients
Re-inject
into patient
Re-engineer to
target cancer
Target Indications
Leukemias
Leukodystrophies
Hemoglobinopathies
76
| Meet Novartis Management | June 17-18, 2014
Target Indications
Solid organ transplant
Inherited metabolic diseases
Target Indications
Leukemias
Lymphomas
Immunotherapy: Portfolio Expanding to include
“Hunter” Cell Therapy (CART)
CART a revolutionary approach in developing individualized therapy for
each patient – reprogramming T-cells to “hunt” cancer
 CTL0191 (CART019) - Targets CD19, a
protein found on B-Cells & Shows
promising efficacy in several CLL2 and
B-ALL3 patients
 Pivotal trials in ALL planned to start in
2014 with filing in the US targeted for
2016
1
2
3
77
Disease
Patients
treated
n
Patients
responding
n (%)
ALL
30
27 (90%)4
CLL
32
15 (47%)5
Developed in collaboration with the University of Pennsylvania
Chronic lymphocytic leukemia
B-cell acute lymphoblastic leukemia
| Meet Novartis Management | June 17-18, 2014
Reprogram to
target cancer
4
5
S. Grupp oral session at AACR (Apr 2014)
D Porter ASCO 2014
Novartis Oncology is pursuing personalized cellular
immunotherapy with a portfolio of CARTs
CART Pipeline
CARTs in various stages of Development
 CTL019 is in clinical trials in ALL,
CLL and non-Hodgkin’s lymphoma
 A CART directed against mesothelin in
mesothelioma and pancreatic cancer is
enrolling in Phase I
 A second generation of CTL019 is
being explored in Phase I trials
 A CART directed against EGFR
Hematological and Solid Tumors
specific to glioma is anticipated to enter
the clinic in Q3 2014
 Multiple CART programs are in
discovery and pre-clinical research for
both hematological and solid tumors
78
| Meet Novartis Management | June 17-18, 2014
Significant sales potential for each new business
area in time
ONCOLOGY
Potential MultiBlockbusters
HEART
FAILURE
USD 2 - 3bn
at peak
USD 2 - 5+ bn
at peak
RESPIRATORY
CELL
THERAPY
USD 2 - 4bn
at peak
Potential
Blockbuster+
Barring unforeseen events
79
DERMATOLOGY
| Meet Novartis Management | June 17-18, 2014
Content
1
Novartis Pharmaceuticals current and projected future
growth
 Unparalleled growth platform
 Highlights on Innovation
 5 new business areas with potential to contribute to future
margin expansion
2
Resource Allocation
 Creating value by freeing up resources for growth & innovation
80
| Meet Novartis Management | June 17-18, 2014
We allocate resources to create value, drive margin
increase & accelerate cash flow
Sales
Cost
Profit
Cash
~32b
~22b
Note: 2013 FY actuals in USD
81
| Meet Novartis Management | June 17-18, 2014
~10b
We focus on the “what” and the “how”
Cost
WHAT
~22b
Innovation
Commercial
Manufacturing
~30%
~40%
~30%
HOW
~50% - Personnel costs
82
| Meet Novartis Management | June 17-18, 2014
~50% - Third-party spend
We prioritize resources according to
clearly set criteria
Cost
~22b
WHAT
Innovation
Commercial
Manufacturing
 Therapeutic
differentiation
 Strategic prioritization
 Footprint optimization
 Strength of evidence
 Commercial potential
 Lean manufacturing
 Future potential
 Geographies/ life cycle
 SKU rationalization
HOW
 Redeployment, offshoring, x-divisional shared services
83
 Global category management, e-auctions, SRM, contracting
| Meet Novartis Management | June 17-18, 2014
We allocate R&D resources
according to a differentiation/evidence matrix ...
Therapeutic differentiation
1: Highest
priority
Game
changer
4
2
1
Solid
advance
6
5
3
7
7
7
Weak
7: Lowest
priority
Weak
Moderate
Strong
Strength of evidence (adjusted1)
1
84
Strength of evidence adjusted to account for additional risk (e.g. regulatory, pharma science, IP or dosing)
| Meet Novartis Management | June 17-18, 2014
... aimed at maximizing value generation
Highest
priority
% of development spend
Priority
programs
Therapeutic differentiation
High
>70%
Regular
~20%
Programs ‘under scrutiny’
Low
Lowest
priority
<10%
Weak
2013 actuals % development spend
85
| Meet Novartis Management | June 17-18, 2014
Strong
Strength of evidence
... also resulting in an investment shift toward
Specialty/Oncology
% R&D split
Illustrative
100%
100%
Dev. Onco
Dev. Onco
Dev. Specialty
Dev. Specialty
Dev. Prim. Care
Dev. Prim. Care
Research
Research
PAST
86
| Meet Novartis Management | June 17-18, 2014
PRESENT
R&D spend optimization via productivity
programs
R&D as % of third-party sales
Illustrative
Key initiatives to optimize R&D
 Portfolio prioritization: Invest in
compounds with higher therapeutic
differentiation and greater strength of
evidence; partner less strategic
projects
Research
and
Development
 Organizational restructuring /
Redeployment
 Externalization of clinical trials
monitoring
TODAY
87
FUTURE
| Meet Novartis Management | June 17-18, 2014
 Offshoring clinical trial data
management
In M&S, resources are allocated
according to strategic priority and life cycle ...
% of M&S spend
55% - 65%
Life cycle
Pre-launch
35% - 45%
Launch
Growth
<5%
Sustain
C - Low
%
88
% target allocation of total M&S
| Meet Novartis Management | June 17-18, 2014
B - Medium
Strategic priority
A - High
... we also move resources to high-margin
and/or high-growth business opportunities ...
Specialty/Oncology
BUSINESS
Shifting resources
to Specialty and
Oncology
PRODUCT
LIFE CYCLE
Investing heavily
for portfolio
rejuvenation
% of
total
M&S
Illustrative
Growth brands/
Pre-launch
89
In-market/Gx
% of
total
M&S
Illustrative
Emerging markets
MARKET
OPPORTUNITIES
Building success in
emerging markets
Primary
Developed markets
% of
total
M&S
| Meet Novartis Management | June 17-18, 2014
Illustrative
... contributing to increased SG&A productivity
SG&A as % of sales
Key initiatives to drive SG&A
productivity
Illustrative
 Strategic prioritization framework
 Geography & life-cycle resource
allocation (resources toward
emerging markets, growth products
and Specialty/Oncology)
 Leveraging of new technologies
(e.g. iPads to sales reps, tailored
applications)
 Global category management,
e-sourcing, contracting, etc.
TODAY
90
FUTURE
| Meet Novartis Management | June 17-18, 2014
 G&A productivity through Novartis
Business Services (NBS)
Plus important productivity efforts in
manufacturing
Key initiatives to drive manufacturing
productivity:
 Manufacturing footprint
 Lean manufacturing
 SKU rationalization/pruning
 SRM (supplier relationship
management)
Key factors pressuring COGS:
 Manufacturing complexity
 Royalties (in-licenses)
 QA/compliance
91
| Meet Novartis Management | June 17-18, 2014
In sum, our resource allocation is a key
enabler of margin expansion
Core margin as % of sales
Illustrative
Key enablers to drive margin expansion
 R&D prioritization (therapeutic
differentiation and strength of evidence)
 M&S resource allocation (strategic
prioritization, life cycle and geographies)
 Personnel cost productivity (e.g.
restructuring/redeployment)
 Third-party spend productivity (e.g. global
category management, SRM, e-sourcing)
TODAY
92
FUTURE
| Meet Novartis Management | June 17-18, 2014
Resource allocation process also
managed through CFROI framework
We focus on working capital and CapEx
optimization to accelerate cash flow
USD m profit and cash
Illustrative
Cash Conversion
Cycle
Key enablers to accelerate cash flow
 Continued DSO1 improvement
(disciplined A/R2 management)
 Sustained DPO3 improvement
(e.g. supply chain finance)
 Factoring where economical viable
 Disciplined inventory management
 CapEx optimization
PROFIT
1
2
3
93
Days Sales Outstanding
Account Receivables
Days Payables Outstanding
| Meet Novartis Management | June 17-18, 2014
CASH
Internal KPI suite linked to CFROI ensuring
financial discipline focused on value-creation
94
| Meet Novartis Management | June 17-18, 2014
Potential for 14 or more blockbusters by 2018
Brands with > USD 1 bn worldwide sales
10
14
+
projected blockbusters
others?
LCZ696
blockbusters
Q-family1
AIN457
RLX030
BKM120
Plus potential
additional GSK
Blockbusters2
2013
1
2
95
2014
2015
2016
2017
2018
Includes Onbrez® (approved as Arcapta® in the US), Seebri® and Ultibro®
The transactions with GSK are inter-conditional and are subject to approval by GSK shareholders and subject to customary closing conditions including
regulatory approvals
| Meet Novartis Management | 17-18 June 2014
Planned filings 2014 to  2018
2014
 2018
2015
2016
2017
LBH589*
BKM120
BYM338
DEB025
AUY922
QAX576
Multiple Myeloma
Breast cancer
sIBM9
HCV infection
Solid tumors
Allergic diseases
LCQ908
MEK162
CTL019
KAE609
BAF312
QGE031
FCS1
NRAS Mutant Melanoma
Leukemia
Malaria
Multiple sclerosis
Allergic diseases
LCZ696
PKC412
Fovista®
LCI699
BCT197
BKM120
Heart failure (REF)2
AML4
Wet AMD
COPD17
Solid tumors
Cushing’s
LDE225**
Afinitor®
LEE011
TKI258
BGJ398
BYM338
Advanced Basal Cell Carcinoma
Non-functioning GI and Lung NET5
Breast cancer
Solid tumors
Solid tumors
Hip fracture
LDK378***
Afinitor®
LGX818
ACZ885
BGS649
LCZ696
ALK+ advanced NSCLC3
TSC6 Seizure
BRAF Mutant Melanoma
Sec. Prev. CV events15
OHH18
Heart failure (PEF)19
Afinitor®
AIN457
MEK162 + LGX818
Afinitor®
BYL719
LDE225
HER2+ Breast cancer 1st Line
Ankylosing spondylitis
BRAF Mutant Melanoma
DLBCL16
Solid tumors
Medulloblastoma
Afinitor®
AIN457
RLX030
HER2+ Breast cancer 2nd/3rd Line
Rheumatoid arthritis
Acute Heart Failure
LDE225
Solid tumors
AIN457
Gilenya®
ACZ885
EDP239
LEE011
Psoriatic arthritis
PPMS7
Hereditary Periodic Fevers
HCV infection
Solid tumors
Jakavi® ****
PKC412
ASM8
Gilenya®
HSC835
LGX818
CIDP10
Stem cell transplantation
Solid tumors
LIK066
Lucentis®
Type II diabetes
ROP20
Polycythemia vera
LDK378
Exjade® new formulation
ALK+advanced NSCLC3
chemotherapy naïve, crizotinib naïve
Iron overload
*
**
***
****
CAD106
Alzheimer’s disease
LBH589 submitted in US in Q1 2014
LDE225 filed in EU in Q2 2014
LDK378 filed in US in Q1 2014 (approved in April)
Jakavi (PV) submitted in EU in Q2 2014
Lucentis®
LJM716
MEK162
CNV and ME11
Solid tumors
Solid tumors
MEK162
QAW039
LGSOC12
Asthma
Seebri®
New molecule
1
2
3
New indication
4
5
6
7
New formulation
8
9
Familial chylomicronemia syndrome
Reduced ejection fraction
Non-small cell lung cancer
Acute myeloid leukemia
Neuroendocrine tumors
Tuberous sclerosis complex
Primary progressive multiple sclerosis
Aggressive systemic mastocytosis
Sporadic inclusion body myositis
Asthma
10
Tasigna®
11
CML Treatment free remission
Tekturna®
Heart failure13
Signifor® LAR14
Cushing’s
96
| Meet Novartis Management | June 17-18, 2014
12
13
Chronic inflammatory demyelinating
polyradiculoneuropathy
Choroidal neovascularization (CNV) and macular
edema (ME) secondary to conditions other than
macular degeneration, diabetic macular edema,
retinal vein occlusion and pathologic myopia
Low-grade serous ovarian cancer
Reduction of CV death/hospitalization in chronic
heart failure patients
14
15
16
17
18
19
20
Long-acting release
Secondary prevention of cardiovascular events
Diffuse large B-cell lymphoma
Chronic obstructive pulmonary disease
Obese hypogonadotropic hypogonadism
Preserved ejection fraction
Retinopathy of prematurity
Alcon Division
Jeff George, Division Head Alcon
Meet Novartis Management
June 17-18, 2014
Agenda
Alcon team and key priorities
Surgical
Vision Care Pharmaceuticals
Ophthalmic
Vision Care
98
| Meet Novartis Management | June 17-18, 2014
Alcon – Executive Leadership Team (ELT)
Jeff George
Global Head, Alcon
Commercial Operations
Functions
Robert Warner
Area President,
US & Canada
Riad Sherif
Area President,
EMEA
Sabri Markabi, M.D
SVP, R & D
Chief Medical Officer
Ed McGough
SVP, MFG &
Technical
Operations
Seiichiro Matsumura
Area President,
Japan
Roy Acosta
Area President,
Asia and Russia
David Nieto
Chief Financial Officer
Merrick McCracken
SVP, Human
Resources
Sergio Duplan
Area President,
LACAR
Laurent Attias
Head, Global
Franchises & Marketing
Christina
Ackermann
SVP, Legal
General Counsel
Bettina Maunz
VP, Head of Global
Communications
Sue Whitfill
Head, Global Quality
99
| Meet Novartis Management | June 17-18, 2014
Alcon Key Priorities in 2014 and Beyond
Growth




Innovation
 Seed future growth through pipeline innovation (ESBA1008, LFG316)
 Aggressively pursue & execute external opportunities (BD&L, M&A)
 Expedite key approvals (Centurion, Verion, Air Optix Colors, Simbrinza)
Productivity
& Quality
People &
Culture
Drive IOL share by leveraging technology leadership
Execute on new product launches (e.g., Centurion, DT1, Jetrea)
Accelerate emerging market growth (Asia, LatAm, MEA, Russia & CIS)
Boost brand performance in glaucoma, dry-eye, and contact lenses
 Drive productivity to reinvest in growth
 Embed simplicity, speed, and operational excellence
 Consistently deliver exceptional quality to all stakeholders




Deepen focus on customers and patients
Augment talent and leadership focus
Strengthen empowerment, diversity & inclusion, and recognition
Further strengthen culture of high performance with integrity
100 | Meet Novartis Management | June 17-18, 2014
Eye care is an attractive healthcare segment with
projected mid-single digit market growth
Projected industry sales
49
USD bn
11
37
9
Vision Care
+4%
+7%
13
Surgical
25
+5%
 Cataract procedure growth
 Higher penetration of AT-IOLs1
(astigmatism, presbyopia)
 New equipment platforms (phaco, femtosecond lasers)
+5%
2013
 Shift towards daily disposable contact lenses
 Shift towards premium SiHy (Silicone Hydrogel)
material
 Significant opportunity in emerging markets
9
19
Projected Drivers
Ophthalmic
 Continued expansion of Retina therapies
Pharmaceuticals  Growth in glaucoma combinations offset by LOEs
 Unit volume driven by aging demographics
2018
AT-IOLs – Advanced technology intraocular lens
Sources:
Contact Lens and Lens Care estimates Contact Lens Institute/Euromcontact Factory Sales Sharing Program/Third party/Internal Estimates; Market definition
limited to Soft lens, and disinfectant solutions
Pharmaceuticals estimates according to IMS MIDAS, 2012
Surgical estimates according to 2013 Market Scope, LLC Forecasts
Retina Rx from Evaluate Pharma estimations, 2013
Vitamins estimates based on Nielsen, Japan Euromonitor, and IMS GlobalTrak
1
101 | Meet Novartis Management | June 17-18, 2014
Agenda
Alcon team and key priorities
Surgical
Vision Care Pharmaceuticals
Ophthalmic
Vision Care
102 | Meet Novartis Management | June 17-18, 2014
Surgical: multiple facets expected to drive growth
Projected Industry Growth Drivers
Estimated 2013
surgical industry
sales in USD bn
Projected
 Rising global cataract procedures
industry
CAGR 2013 Rev. Position  Increasing AT-IOL2 penetration
2013-18 USD bn
 Increasing adoption of phacoemulsification
7.2 7%
Cataract
3.0
#1
Projected Alcon Growth Drivers
Vitreoretinal
Refractive
1.0
0.5
5%
0.6
#1
 Launch of Centurion® Vision System for
phacoemulsification
4%
0.31
#2
 Launch of Cataract Refractive Suite
 Increasing Toric AT-IOL2 penetration
Total
7%
1
 Phacoemulsification market development
Includes Other
AT-IOLs – Advanced technology intraocular lens
Source: Surgical estimates according to 2013 Market Scope, LLC Forecasts, Internal estimates
2
103 | Meet Novartis Management | June 17-18, 2014
Centurion® expected to further expand Alcon’s
leadership position in phaco equipment
Key Differentiators
 “Active Fluidics” – major improvement in
Intraocular Pressure (IOP) stability
 Intuitive Touch Screen Graphic User Interface
 Link to Verion™ pre-operative image-guided
planning
Current Stage
 FDA clearance and CE mark in late 2012
 Commercial launch Q4 2013 in US and Europe,
emerging markets following in 2014
104 | Meet Novartis Management | June 17-18, 2014
Alcon’s integrated cataract refractive suite helps
address the need for better refractive outcomes
Elements of the Cataract Refractive Suite
Pre-operative imaging
and planning
Femtosecond laser for
incisions and to
fragment lens
LenSx® disposables
105 | Meet Novartis Management | June 17-18, 2014
Superior intra-operative
visualization
AT-IOLs
New phacoemulsification
platform for enhanced
IOP control
Procedure Items
Alcon offers range of base and AT-IOLs1
IOL Comparison
Base
Advanced technology
Product
Description
Value
1
base
monofocal
USD
Base Value
AT-IOLs – Advanced technology intraocular lenses
106 | Meet Novartis Management | June 17-18, 2014
addresses
astigmatism
3x
Base Value
addresses
presbyopia
5x
Base Value
addresses
astigmatism and
presbyopia
7x
Base Value
Alcon is driving innovation in multi-focal IOLs
ReSTOR® Toric
ReSTOR® 2.5D
Key Differentiators
Key Differentiators
 Corrects astigmatism and
 Shift light energy to the
presbyopia
distance image
 Provides broadest range
(near-intermediate-distance)
of vision
 Improves quality of both
distance and intermediate
vision
 High level of spectacle
independence
Current Stage
Current Stage
 US and Japan launch
 Launched in EU in Q3 2012
 Filed with the FDA in US
expected in
2nd
half of 2014
 Commercially available in all
other markets
107 | Meet Novartis Management | June 17-18, 2014
Opportunity to increase Toric AT-IOL penetration
Current penetration of clinically eligible
> 1D astigmatism procedures
50%
Plan to Improve Toric Penetration
 Maximize patient access by market
 Build clinical confidence via guiding
technology (VERION™) and by
expanding portfolio (ReSTOR®
Toric)
40%
30%
 Patient engagement
20%
10%
Australia US
Japan France Brazil Germany Italy
Sources:
2013 Global IOL Report (Market Scope)
W Hill Keratometry database
108 | Meet Novartis Management | June 17-18, 2014
Alcon’s Phaco Development is key to fueling further
growth in Emerging Markets
Procedures
Penetration1
% Phaco
Goals
 Increase penetration – by
building surgical capacity
1.3M
0.8%
70%
China
6.3M
6.8%
24%
 Standardized phaco
development program
2013 Results
 Program trained
surgeons performed
111k procedures
 Increase usage of phaco -  Program trained
emulsification
surgeons performed
76k procedures
 Partnerships with private
and government teaching
centers
India
455k
0.2%
89%2
 Increased penetration by
building surgical capacity
and patient access to
capable Phaco surgeons
3.5M
6.0%
99%
 Standard of care for
cataract procedures
Russia
US
1
Procedure penetration in all >60 year olds as estimated by UN Population Division
internal estimate
Source: Market Scope 2013
2
109 | Meet Novartis Management | June 17-18, 2014
 4 Pilots focused on
high potential
underserved regions
Agenda
Alcon team and key priorities
Surgical
Vision Care Pharmaceuticals
Ophthalmic
Vision Care
110 | Meet Novartis Management | June 17-18, 2014
Ophthalmic Pharmaceuticals: attractive opportunities
expected to offset loss of exclusivity in several areas
Projected
Projected Industry Growth Drivers
Actual 2013
industry
pharmaceutical industry CAGR 2013 Rev. Position  New Retinal approvals and unmet
sales in USD bn
2013-19 USD bn
clinical need
Glaucoma
5.3
-1%
1.3
#1
 Limited Glaucoma NME innovation and
generic pressure
 Aging demographics drive unit volume
Infection
Inflammation
2.9
2%
1.0
#1
Dry Eye
2.0
9%
0.7
#2
Allergy
Otic
2.3
0%
0.9
#1
 Emerging market adoption of Rx
technology
Projected Alcon Growth Drivers
 Combination Glaucoma growth –
OUS2 and Simbrinza® opportunity
 Dry eye growth potential – Systane®
Retina
Total
6.3 11%
5%
1
2.41
#11
 Pipeline opportunities in anti-VEGF and
Complement Factor – POC stage
 Jetrea® – potential to become new
standard of treatment for VMT3
Including Lucentis®, Novartis group has #1 position
OUS: Outside the US
3 VMT: vitreomacular traction
Source: Pharmaceuticals estimates according to IMS MIDAS, 2012; Retina Rx from Evaluate Pharma estimations, 2013
2
111 | Meet Novartis Management | June 17-18, 2014
Combination glaucoma expected to drive growth
Projected contribution to global glaucoma sales
Illustrative
100%
 Glaucoma combinations
• DuoTrav® and Azarga® continuing
Monotherapies
(Travatan®, Azopt®)
to drive growth ex-US
• Global expansion of Simbrinza®
• 2013 Japan AZORGA® approval
Combinations
(Duotrav®, Azarga®,
Simbrinza®)
2013
112 | Meet Novartis Management | June 17-18, 2014
 Assessing surgical intervention
technologies
2018
Simbrinza® creates new treatment possibilities
 Simbrinza®: beta-blocker-free/ timolol-free fixed
dose combination
 Provides strong IOP lowering
1
Market
US
EU
Regulatory
FDA approval
April 2013
Positive CHMP
Opinion May 2014
Dosage
TID1
BID2
IOP lowering
(%, mmHg)
23-35%
6-9 mmHg
25-37%
7-10 mmHg
TID – Three times daily
BID – Twice daily
Source: G. Katz, JAMA Ophthalmol, April11, 2013, “Three month randomized trial of Fixed Combination Brinzolamide, 1%, and Brimonidine, 0.2%”
2
113 | Meet Novartis Management | June 17-18, 2014
Systane® expected to continue to drive growth
Alcon Systane sales
In USD m
Projected Market Growth Drivers
 Aging population and increasing
400
+19% CAGR
disease awareness
313
275
 Under-penetration as currently 1 in 10
seek treatment
233
Projected Alcon Growth Drivers
200
 Portfolio: Expand Systane® portfolio
across lubricating agents and
preservative options
 Professional Demand: Increase trial
via professional recommendation
0
2011
2012
2013
Source: Internal data
114 | Meet Novartis Management | June 17-18, 2014
 OTC: Increase retail and consumer
awareness
Jetrea® offers eligible patients an option beyond
watchful waiting and surgery
Diagnosis
Indication
Clinical Results
Jetrea® indicated for
treatment of VMT
including when
associated with
MH≤400μm1
26.4% resolution at
28 days across
indicated
population2
Visual acuity Loss
Confirmation of
Vitreomacular traction
(VMT), macular hole
(MH)
1
EU indication for Jetrea®
Stalmans P et al. N Engl J Med 2012; 367: 606-15; Data on file
Note: Novartis and Alcon have the OUS rights to Jetrea®
2
115 | Meet Novartis Management | June 17-18, 2014
RTH2581 has potential to augment wet AMD therapies
Key Differentiators
 Single chain antibody fragment (scFv)
smaller than a Mab or Fab
 Can be formulated to high concentrations
and small volumes
 Suitable for delivery via intravitreal treatment
or sustained, novel drug delivery
®
Current Stage
 Phase II in Wet AMD
 Potential for three VEGF-dependent
®
1
Previously known as ESBA 1008
AMD – Age related Macular Degeneration
3 DME – Diabetic macular edema
4 RVO – Retinal vein occlusion
Avastin® is a registered trademark of Genentech
2
116 | Meet Novartis Management | June 17-18, 2014
indications (wet AMD2, DME3, RVOs4)
Replenish® drug delivery pump may provide an
alternative to intravitreal injection
Key Differentiators
 Fully programmable, refillable pump
 Versatile, can be used with multiple drugs
and formulations
 Rechargeable to support chronic use
 Applicable to back of the eye disorders
Current Stage
 Collaborating with leading technology firm
 First-in Human (FIH) study complete
 Next step: Replenish®/RTH2581 Proof-ofConcept
1
Also known as ESBA1008
Replenish® is a trademark of Replenish, Inc.
117 | Meet Novartis Management | June 17-18, 2014
LFG316 complement inhibitor for geographic atrophy
Key Differentiators
 Advanced form of dry AMD (~8 M patients
WW) characterized by the permanent blind
spots in a patient’s central vision1
 No therapy exists for treatment
 Potential to treat total population vs.
subpopulation with better response to
treatment
Current Stage
 Phase II ongoing, expected 2015 readout
1
Rudnicka, A. et al,"Age and Gender Variations in Age-related Macular Degeneration Prevalence in Populations of European Ancestry: A Meta-analysis,“
Ophthalmology, 2012; 119:571–580.
118 | Meet Novartis Management | June 17-18, 2014
Agenda
Alcon team and key priorities
Surgical
Vision Care Pharmaceuticals
Ophthalmic
Vision Care
119 | Meet Novartis Management | June 17-18, 2014
Vision Care:
Alcon well-positioned to drive strong growth
Projected Industry Growth Drivers
 Shift to products with better outcomes (daily
Estimated 2013 Projected
modality, SiHy materials, Toric & Multi-Focal)
Vision Care
industry
 Unmet need in comfort, vision, and health
industry sales
CAGR 2013 Rev. Position
in USD bn
 Increasing penetration in emerging growth markets
USD bn
13-18
Contact
Lenses
Lens
Care
Total
8.0 5%
1.5
0%
1.8
0.7
4%
#2
#1
Projected Alcon Growth Drivers
 Best-in-class innovation portfolio
• Dailies Total1® global roll-out
• Launch of DACP1 Toric and Multifocal
• AirOptix® Colors Launch
 Base business growth
 Market growth
• Right patient in the right lens
• Address market specific barriers incl. focus on
Emerging Markets
1
DACP: Dailies Aqua Comfort Plus®
Source: Alcon internal estimates
120 | Meet Novartis Management | June 17-18, 2014
Alcon’s product breadth enables the ability to meet the
needs of all contact lens customers
Category
Daily Disposables
Category
Water Gradient
SiHy1
30 Day Continuous
Wear SiHy with
Plasma Surface
Premium Non
SiHy with Blink
Activated Moisture
Premium SiHy with
Plasma Surface
Non SiHy with Blink
Activated Moisture
SiHy with
Plasma Surface
1
SiHy: Silicone Hydrogel
121 | Meet Novartis Management | June 17-18, 2014
Weekly/Monthly
Expansion of Dailies Total1® in Premium/Water
Gradient SiHy category
Comfort continues to be the No. 1 need among contact lens wearers. Nearly 1 of 6
patients eventually discontinue use due to discomfort and dryness
LightStream® Lens
Technology
Highest surface lubricity
and breathability of any
contact lens
Water gradient
Delivering a new era in
comfort
Silicone Hydrogel
Material Chemistry
122 | Meet Novartis Management | June 17-18, 2014
Dailies Total1® technology differentiation allows for
share gain with price premium
Daily disposables Silicone Hydrogel category
US market share in percent
DAILIES TOTAL 1
ACU 1D TRUEYE
100
80
60
40
20
0
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
Source: March 2014 third party data
Note: TrueEye is a trademark of Johnson & Johnson
123 | Meet Novartis Management | June 17-18, 2014
Dailies Aqua Comfort Plus® portfolio expansion
Key Differentiators
 Science: Blink-activated technology to
refresh vision
 Add Toric and Multi-focal options
 Full brand family
Current Stage
 Regulatory approval received for Multi-Focal
and Toric
 US, EU, Japan, Canada, and Australia
launch in H1 2014
124 | Meet Novartis Management | June 17-18, 2014
AirOptix® Colors to complete brand portfolio
Key Differentiators
 Science: Combines plasma surface with
realistic color blend technology
 Provides breathable SiHy lens to consumers
interested in color options
Current Stage
 CE mark received October 2013
 FDA clearance received February 2014
125 | Meet Novartis Management | June 17-18, 2014
Japan represents considerable opportunity
Net sales Dailies Disposable CLEAR
USD m, June 2013, latest 12 months
1,059
883
709
Alcon
share
Japan
EU top 5
Source: Third party soft contact lens research in G7 retail markets
126 | Meet Novartis Management | June 17-18, 2014
US
Expected
Near-Term
Portfolio
Launches




Execution
 Sales force expansion
 Messaging
 Channel pricing
Dailies Total1®
DACP® Professional
DACP® Multifocal and Toric
Air Optix® Colors
Sandoz Division:
A Global Leader in Generics
Richard Francis, Division Head Sandoz
Meet Novartis Management
June 17-18, 2014
Sandoz touched 450 million patient lives in 2013
Source: Sandoz analysis, based on internal financial data and external medical data
128 | Meet Novartis Management | June 17-18, 2014
Agenda
Sandoz performance update
Leadership in differentiated generics
129 | Meet Novartis Management | June 17-18, 2014
Sandoz is a global leader in generics
Top Generic companies, 2013 sales1
USD m
11,071
9,159
 Products marketed in 164 countries
6,252
 Over 26,500 employees worldwide
5,875
 Portfolio of >1,100 compounds
and >24,000 SKUs
2,580
 Rich pipeline with >800 projects
2,237
 Biosimilars pioneer and leader
2,157
 Leader in differentiated generics
(#1 in generic injectables, dermatology,
ophthalmics and antibiotics)
2,095
1,815
1
Pro forma by including all acquired companies; figures reflect sales for generics and OTC businesses only, including API and excluding originator (e.g.
Copaxone ®) and proprietary business (e.g. Women’s Health); Sandoz OTC sales do not include Novartis OTC sales
Note: All trademarks, logos and pictures are the property of the respective owner
Source: Company annual and quarterly reports; Factset
130 | Meet Novartis Management | June 17-18, 2014
Sandoz outperformed the market in all regions in 2013
2013 total net sales growth vs. PY
Market1 Sandoz
Percent in constant currency
Western
6
North America
Central &
Eastern Europe
11
3
Europe2
12
Germany
Asia-Pacific
0
-1
(4)
Latin America
7
1
2
(1)
Middle East &
Africa 19
7
16
Net market growth estimate vs. PY based on IMS gross sales data and management estimates
Excluding Germany
131 | Meet Novartis Management | June 17-18, 2014
9
12
US: Sandoz is only non-Indian player gaining share
US Gx prescription market share
Percent
20
Indian players
Key drivers
 New awards on existing
business and new
launches
15
 Improved share at
retailers (e.g., CVS,
Walgreens)
10
7.2%
 Recovered volume for
5.6%
US sites following quality
remediation
0
Jan 11
Jul 11
Jan 12
Jul 12
Source: IMS NSP data ending Dec-13
Restricted to prescription Gx market as defined by IMS
132 | Meet Novartis Management | June 17-18, 2014
Jan 13
Jul 13
Feb 14
WEMEA and CEE sales grew double-digit, driven by
France, Russia, MEA, UK and Italy
2013 net sales, total business
USD m in actuals, percent growth in CC
Western Europe, Middle East & Africa
2012
France
MEA1
UK
Italy
1,702
78
50
24
21
Switzerland
Fx effect /
Other countries
2013
1
2
12
29
1,955
Central & Eastern Europe
2012
1,300
+23%
Russia
65
+19%
CIS2
+21%
Ukraine
+9%
Poland
+8%
Turkey
+13%
+13%
2013
11
10
+5%
+14%
5 16
1,441
Middle East and Africa
Kazakhstan, Belarus, Armenia, Moldova, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan, Azerbaijan, Uzbekistan, Georgia
133 | Meet Novartis Management | June 17-18, 2014
+24%
15
Fx effect /
Other countries
39
+30%
20
+11%
Asia-Pacific and Latin America also grew double digit
in CC
2013 net sales, total business
USD m in actuals, percent growth in CC
Asia-Pacific
2012
568
Japan
26
18
China
Central
Asia1
Northwest
Asia2
8
4
Australia
1
2
3
3
Fx effect /
Other countries
42
2013
592
Vietnam, Taiwan, Singapore, Hong Kong, Malaysia
Pakistan and Bangladesh
Central America & Caribbean
134 | Meet Novartis Management | June 17-18, 2014
Latin America
2012
276
+19%
Brazil
15
+27%
Venezuela
+11%
Mexico
+13%
CAC3
2
+10%
+2%
Argentina
0
0%
Fx effect /
Other countries
6
+12%
2013
+12%
+49%
15
+23%
12
29
292
2
+16%
Sandoz has outperformed top competitors in emerging
markets, beating the global generics market since 2011
Share of emerging markets1 of total Gx sales
2013, percentage of total sales
Emerging markets1 sales growth
2011-2013 CAGR in CC
X 1.2
Change vs. 2011
Percent points
28
9.2%
+3
7.7%
14
7
1
+2
-2
flat
Market
1
All markets excluding US, Canada, Japan, Australia, New Zealand and Western Europe
Source: IMS MIDAS; Sandoz analysis
135 | Meet Novartis Management | June 17-18, 2014
Sandoz
Sandoz has made strong progress in Quality
FDA inspections – January 2013 to Q1 2014
Les Franqueses, Spain Pallafolls, Spain
Ljubljana, Slovenia
Boucherville, Canada
Broomfield, USA
Hicksville, USA
Schaftenau, Austria
Melville, USA
136 | Meet Novartis Management | June 17-18, 2014
Sandoz generated over USD 2.5 billion in cost savings
between 2009 and 2013
Project Compete actual cost savings
2,585
in USD m
Jan 1, 2009:
Start of Project
Compete
588
545
571
489
150
392
2008
2009
2010
Note: figures reflect only actual cost savings and do not include cost avoidance
137 | Meet Novartis Management | June 17-18, 2014
2011
2012
2013
Total
Sandoz continues to strengthen its leadership in
differentiated products
Global rank
Biosimilars
Injectables
2008
#1
#4
#8
#5
#1
#5
2013
#1
#1
#1
#1
#1
#4
138 | Meet Novartis Management | June 17-18, 2014
Dermatology Ophthalmics Anti-infectives Respiratory
Sandoz has one of the strongest, most global teams
anywhere in generics
Sandoz Executive Committee
Years in position
<1 years
1-3 years
4+ years
Head of Sandoz
Richard Francis
Commercial Operations
Functions
North America
Peter
Goldschmidt
Western Europe
& MEA
Nick Haggar
Finance & IT
Kevin Plummer
TechOps
Jeff Rope
Central and
Eastern Europe
F. Balestrieri
Latin America
Francisco
Ballester
Quality
Assurance
Andreas Brutsche
Product
Development
Josef Egerbacher
Asia-Pacific
Paul Geymayer
AntiInfectives BU
Ernst Meijnders
Human
Resources
Marc Reuss
Legal
Shannon Klinger
Strategic
Planning/BI
Sylke Hassel
Global
Communications
Nathalie Ponnier
Biopharma &
Onco Inject. BU
Vas Narasimhan
139 | Meet Novartis Management | June 17-18, 2014
Agenda
Sandoz performance update
Leadership in differentiated generics
140 | Meet Novartis Management | June 17-18, 2014
Future patent expiries remain strong but shift to
complex products, validating Sandoz strategy
Global sales and projected sales of products in the year prior to patent
expiry by year of patent expiry
Differentiated1
in USD bn
Standard
55
41
42
42
41
34
30
19
20
2006
2007
26
31
30
25
16
USD 198 billion
1
Differentiated includes Dermatology, Biosimilars, Respiratory, Ophthalmics, Oncology
Note: Excluding Vaccines and Diagnostics; Source: Evaluate Pharma, Sandoz analysis, May 2014
141 | Meet Novartis Management | June 17-18, 2014
USD 215 billion
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2005
9
Sandoz has an industry-leading breadth of
technologies
Biosimilars
Injectables
Ophthalmics
Patches/
transdermals/
thin films
Dermatology
Lyophilization
Inhalers
Cytotoxics
API
Innovative
solid
formulations
Implants
Hormones
142 | Meet Novartis Management | June 17-18, 2014
Sandoz has grown its differentiated portfolio strongly –
from one-third to 45% of total sales
Portfolio split between standard generics and differentiated products
Percentage of total sales
CAGR 2008-2013
% in USD
Differentiated products1
Standard generics
32%
68%
2008
1
45%
+11.9%
55%
+0.4%
2013
Sandoz’ definition of differentiated products includes biosimilars and generic injectables, ophthalmics, dermatologics, and respiratory, as well as
difficult-to-make oral solids (e.g., tacrolimus)
143 | Meet Novartis Management | June 17-18, 2014
Biosimilars: Sandoz is the global leader
Highest market share globally
Leading brands
Strong pipeline
2013 global1 biosimilars market share,
percent
2013 global biosimilars
position in their categories
6 molecules in Phase III
clinical trial/ registration
prep. phase
#1
Others
#1
12%
#1
17%
54%
16%
1
Includes products approved in North America, Europe, Japan and Australia
All trademarks, logos and pictures are the property of the respective owner
144 | Meet Novartis Management | June 17-18, 2014
Biosimilars: Sandoz continues to build on the success
of its products – SurePal™ device
 Simple & secure
 Dosages Omnitrope®
5, 10 and 15 mg
 Biosimilars can be differentiated
beyond price
145 | Meet Novartis Management | June 17-18, 2014
Respiratory: AirFluSal® has received first approvals
 Fluticasone-Salmeterol (Gx Seretide®)
in an innovative new device
 First European approvals in 8 countries
following successful completion of DCP1
 Additional approval in South Korea
Decentralised procedure closed with a successful ‘End of Procedure’ notice for AirFluSal® (Gx Seretide®) in Norway, Sweden and Denmark for both high and
mid strengths, and in Germany, Belgium, Hungary, Bulgaria and Romania for the high strength
All trademarks, logos and pictures are the property of the respective owner
1
146 | Meet Novartis Management | June 17-18, 2014
Sandoz is #1 in generic injectables
Top 5 generic companies in Injectables1,2
USD m in constant currency3
2008
5y CAGR
in CC
2013
1,253
2,039
1,017
1,860
945
936
336
1
1,662
147 | Meet Novartis Management | June 17-18, 2014
+14%
+6%
683
+59%
653
-8%
Injectables portfolio defined as all parenteral forms, incl. oncology, anti-infectives, and other therapeutic areas
Generic portfolio defined as per IMS MIDAS classification, excluding hospital solutions and original products
3 At Novartis 2014 Fx rates
Source: IMS MIDAS (gross sales), Sandoz analysis
2
+17%
Sandoz is #1 Gx in Dermatology
Top 5 generic companies in Dermatology1,2
2013, USD m in constant currency3
925
873
592
571
390
1
Dermatology defined as medicines used to treat dermatology conditions or applied on the skin
Generic portfolio defined as unbranded generic sales in the US and all generic sales (branded and unbranded) outside of the US
3 At Novartis 2014 Fx rates
Source: IMS MIDAS (gross sales), Sandoz analysis
2
148 | Meet Novartis Management | June 17-18, 2014
NIBR:
Changing the Practice of Medicine
Mark Fishman, President
Meet Novartis Management
June 17-18, 2014
Key messages
 NIBR discovery of medicines is driven by greatest patient needs and
scientific tractability
 NIBR has had robust output in terms of new medicines with potential major
impact in patients with both common and rare diseases. In terms of
productivity, NIBR is at or above the top tier, as reflected in numbers of
phase III NMEs and success rates through all stages of the pipeline
 New NIBR-derived drugs and drug candidates can have major impact on a
range of disorders including ophthalmologic, autoimmune, metabolic,
musculoskeletal, cardiac, and infectious diseases
 The broad oncology portfolio includes targeted and immune therapies with
numerous opportunities for novel combinations
 A next wave of therapeutics addresses common disorders of aging
 Advanced technology platforms underpin discovery of new targets,
therapeutic modalities, and other breakthroughs
150 | Meet Novartis Management | June 17-18, 2014
Agenda
NIBR: Distinctive Talent and Culture
Success in Discovery and Early Development
Aging and Regenerative Medicine: A New Direction
Robust Oncology Pipeline
Advanced Technologies Underpinning Discovery
151 | Meet Novartis Management | June 17-18, 2014
Novartis Institutes for BioMedical Research (NIBR)
Transforming drug discovery
 Patient-centric research strategy
based on unmet medical need
 World-class research organization
with more than 5,000 scientists
globally
 Focus on molecular pathways shared
by various diseases
 Integration of clinical insights with
mechanistic understanding of disease
 Research-to-Development transition
redefined through fast and rigorous
“Proof-of-Concept” trials
 Strategic alliances with academia and
biotech strengthen preclinical pipeline
152 | Meet Novartis Management | June 17-18, 2014
NIBR Global
Cambridge Headquarters
NIBR Executive Committee
Mark Fishman
MD
President, NIBR
Research
Karin Briner PhD
Global Head,
Discovery
Chemistry
Evan Beckman MD
Global Head,
Translational
Medicine
John Hastewell
PhD
Global Head, NIBR
Biologics Center
Don Ganem MD
Head, Infectious
Diseases
Operations
William Sellers
MD
Global Head,
Oncology Research
Christian Klee
Chief Financial
Officer, Chief
Operating Officer
Barbara Weber MD
Global Head,
Oncology
Translational Med.
Scott Brown
General Counsel
Global Head,
NIBR Patents
Oncology Business Unit
Jeff Porter, PhD
Global Head,
Developmental &
Molecular Pathways
Dhaval Patel MD
Head,
Autoimmunity,
Transpl & Inflamm
153 | Meet Novartis Management | June 17-18, 2014
Ann Taylor MD
Global Head,
Program Office
Mark Sawyer
Global Head,
NIBR Human
Resources
Agenda
NIBR: Distinctive Talent and Culture
Success in Discovery and Early Development
Aging and Regenerative Medicine: A New Direction
Robust Oncology Pipeline
Advanced Technologies Underpinning Discovery
154 | Meet Novartis Management | June 17-18, 2014
Approach: Proof-of-Concept in homogenous populations
followed by expansion to common diseases
Fundamental
Mechanism
155 | Meet Novartis Management | June 17-18, 2014
Sub-set of Broader Population
Disease area distribution of New Molecular Entities
Autoimmunity,
Transplantation &
Inflammation
Respiratory
Diseases
Cardiovascular &
Metabolism
Ophthalmology
Other
Oncology
Musculoskeletal
156 | Meet Novartis Management | June 17-18, 2014
Infectious
Diseases
Examples of output: General medicine
AIN457 (Secukinumab)
LCZ696
LFG316
Anti-IL-17 antibody
Psoriasis
Registration
NEP inhibitor
Heart failure
Registration
Anti-C5 antibody
Geographic atrophy
Phase II
KAF156 and KAE609
QAW039
BYM338
Anti-Plasmodium
Malaria
Phase II
CRTH2 antagonist
Asthma
Phase II
Anti-ActRII antibody
Sarcopenia
Phase II
157 | Meet Novartis Management | June 17-18, 2014
Examples of output: Rare diseases
®
ACZ885 (Ilaris )
BYM338
LCQ908
Anti-IL-1 antibody
Muckle-Wells Syndrome
Registered
Anti-ActRII antibody
Inclusion body myositis
Pivotal
DGAT1 inhibitor
Familial chylomicronemia
Phase III
MCS110
LCI699
QAX576
M-CSF inhibitor
Pigmented villonodular synovitis
Phase II
Aldost. synthase inhibitor
Cushing’s Disease
Phase II
Anti-IL-13 antibody
Eosinophilic esophagitis
Phase II
158 | Meet Novartis Management | June 17-18, 2014
Examples of output: Oncology
®
®
AMN107 (Tasigna )
LDK378 (Zykadia )
LDE225
LEE011
Tyrosine kinase inhibitor
Chronic myelogenous leukemia
Registered
ALK inhibitor
Lung cancer
Registered
Smoothened antagonist
Basal cell carcinoma
Registration
CDK4/6 inhibitor
Breast cancer
Pivotal
LGX818
BGJ398
BYL719
LJM716
RAF inhibitor
Melanoma
Phase III
FGFR inhibitor
Solid tumors
Phase II
PI3K inhibitor
Breast cancer
Phase II
Anti-HER3 antibody
Esophageal cancer
Phase II
159 | Meet Novartis Management | June 17-18, 2014
Leading number of New Molecular Entities currently
in Phase III
20
16
15
13
11
10
10
9
9
7
7
7
6
5
0
Sources: Company websites, EvaluatePharma, FDA gov.
Excludes Vaccines
160 | Meet Novartis Management | June 17-18, 2014
6
4
Success rate of compounds in early development:
pre-clinical through phase II
25%
Novartis
20%
15%
10%
Industry
5%
0%
2002-2006
2003-2007
2004-2008
2005-2009
2006-2010
2007-2011
Source: KMR. “Industry” defined as a group of 14 peer companies participating in Pharma Benchmarking Forum led by KMR
Success rate for both Novartis and Industry are for self-originated projects. Analysis does not include acquired or in-licensed projects
161 | Meet Novartis Management | June 17-18, 2014
2008-2012
More than 120 alliances with biotech and over 300 with
academic institutions. Some highlights:
In-Licensed Compounds
Enanta
NS5A inhibitor
GenVec
Gene therapy adenovector
Incyte
C-MET and JAK programs
Array
MEK inhibitor
University of
Pennsylvania
Chimeric antigen receptormodified T cell (CART)
therapy
Regenerex
Facilitator cell therapy (FCRx)
CoStim
Immune checkpoint
modulators
Ensemble
IL-17
162 | Meet Novartis Management | June 17-18, 2014
New Technologies
Broad Institute
Cancer Cell Line Encyclopedia
ImmunoGen
Antibody-drug conjugates
SomaLogic
Aptamers as research tools for
target and biomarker
discovery
Zalicus
Identify effective drug
combinations (and
corresponding targets) for
various tumor types
Nuevolution
DNA encoded library
Structural
Genomics
Consortium
Chemistry platform
technologies
Peptidream
Template-encoded synthesis
of non-natural peptides
Dana Farber
Cancer
Institute
New targets and mechanisms
for cancer patients
Agenda
NIBR: Distinctive Talent and Culture
Success in Discovery and Early Development
Aging and Regenerative Medicine: A New Direction
Robust Oncology Pipeline
Advanced Technologies Underpinning Discovery
163 | Meet Novartis Management | June 17-18, 2014
CGF166: Inner ear gene therapy for sensorineural
Possible Gen Med example 1 (needs editing)
hearing loss
Inner ear gene therapy to treat hearing loss
 CGF1661 uses a proprietary Adenovirus

gene into the
The atonal gene is a basic
It helix-loop-helix
regenerates hair cells and
transcription
factor required
restores
auditory
function in
for differentiation of
testing
sensory cells during
prenatal development.
partnership with GenVec,
Inc., is gene therapy to
deliver the atonal gene into
supporting cells in the inner
ear. It partially restored
hearing in pre-clinical
models and could be used
to treat patients with severe
sensorineural hearing loss
unresponsive to hearing
aids.
CGF166 starts clinical
testing in 2014
1
Collaboration with GenVec
recovery in a pre-clinical model.
Cochlea
partially
pre-clinical
 Clinical
CGF166, testing
engineeredwill
in begin in 2014
Auditory function recovery
leads to auditory
function
in a CGF166
rodent hearing
loss model
ABR Threshold Recovery (dB)
Sensorineural hearing loss
vector
to deliver
results from
destructionatonal
of
inner ear
inner
earsensory hair cells
25
20
15
10
5
0
-5
Normal
Control
Source: Internal data
| NIBR 2013 Progress & 2014 Goals | Mark C. Fishman, M.D. | December, 2013 | CONFIDENTIAL
164 | Meet31
Novartis
Management | June 17-18, 2014
Injured
untreated
Injured +
CGF166
BYM338: Activin type II receptor blocker for muscle
recovery
 BYM338 (Bimagrumab) is an antibody
designed to enhance muscle growth by
blocking a growth-inhibitory pathway
Improved muscle mass, strength and
physical performance in patients with
sIBM after a single dose of BYM338
 Pivotal trial is ongoing for sporadic
inclusion body myositis (sIBM)
 Also in trials for sarcopenia and
cachexia associated with chronic
obstructive pulmonary disease
All data are preliminary/investigational
Efficacy and safety data have not been established
Source: Internal data
165 | Meet Novartis Management | June 17-18, 2014
LFG316: Targeting age-related macular degeneration
through the complement pathway
 Evidence suggests that complement
No therapy exists for geographic
atrophy, a leading cause of blindness
activation plays a role in AMD
 LFG316 is a high-affinity antibody
What the patient misses
directed at complement component 5
(C5), a key node in the complement
system
 LFG316 is in a Phase II trial as a
potential therapy for geographic
atrophy, an advanced form of dry
AMD
Crystal structure of
LFG316 antibody
fragment binding to C5
LFG316
166 | Meet Novartis Management | June 17-18, 2014
Macular progression
Baseline
C5
Illustrative figure
6 months
Agenda
NIBR: Distinctive Talent and Culture
Success in Discovery and Early Development
Aging and Regenerative Medicine: A New Direction
Robust Oncology Pipeline
Advanced Technologies Underpinning Discovery
167 | Meet Novartis Management | June 17-18, 2014
Key elements of the oncology strategy
 Cancer is a disease of the genome. Combinations of an apparently
limited number of activating pathways cause cancer, its resistance,
and its recurrence
 Novartis has medicines that target most of the key cancer-causing
pathways, and so is well-positioned for the next wave of
combination therapies
 It is anticipated that many cancers may respond well to
immunotherapy, especially when combined with targeted therapies
 We are leading with CART immunotherapy, and building in
checkpoint and other immunotherapies
168 | Meet Novartis Management | June 17-18, 2014
A broad oncology pipeline, with agents covering most
oncogenic pathways
Clinical Studies Planned
Pivotal Trials Planned or
Underway
Clinical Studies Underway
LEE011
CDK4/6 inhibitor
LCL161
IAP inhibitor
HDM201
HDM2/P53
inhibitor
LGK974
Porcupine inhibitor
EGF816
EGFRmut inhibitor
BYL719
PI3K-alpha
inhibitor
CGM097
HDM2/P53
inhibitor
LQN725
FGFR4 inhibitor
CLR457
pan-PI3K inhibitor
LOP628
cKIT ADC
AUY9221
Hsp90 inhibitor
MEK1621
MEK1/2 inhibitor
LGX818
RAF inhibitor
BGJ398
pan-FGFR
inhibitor
CTL0191
CART therapy
AEB071
PKC inhibitor
PCA062
pCAD ADC
LJM716
HER3 mAb
EGFRvIII
CART therapy
LGH447
pan-PIM inhibitor
PD-L1
BKM120
PI3K inhibitor
PD-1
LAG-3
INC2801
1
c-Met inhibitor
In-licensed
169 | Meet Novartis Management | June 17-18, 2014
ABL001
BCR-ABL inhibitor
TIM-3
Immune modulator
MET pathway is activated by multiple mechanisms
in lung cancer
170 | Meet Novartis Management | June 17-18, 2014
INC280: A potent and selective c-MET inhibitor
c-MET:




Assay
Enzyme
In vitro
c-Met
Cellular
IC50 (nM)
0.13 ± 0.05
Cell line
IC50 (nM)
SNU-5
1.1 ± 0.4
171 | Meet Novartis Management | June 17-18, 2014


Activating mutations in various
indications (NSCLC, hPRCC,
etc.)
Gene amplification in gastric and
EGFRi-resistant lung cancer
Autocrine activation in
glioblastoma
Paracrine activation in
hepatocellular carcinoma
Overexpression in triple-negative
breast cancer
Increasing evidence for frequent
role in TKI resistance
C-MET plays an important role in EGFRi resistance
172 | Meet Novartis Management | June 17-18, 2014
Combinations are expected to be the future of targeted
therapy
LDK378 ALK
Frequent pathway
activating genetic
alterations:
 Colorectal cancer
 Non-small cell
lung cancer
 Pancreatic
cancer
 Melanoma
 Breast cancer
LJM716 HER3
Pan-PI3K
PI3Kα
BKM120
BYL719
BGJ398 FGFR
INC280 cMET
RAS
LGX818
PTEN
Jakavi®
JAK
PI3K
RAF
AKT
MEK
JAK1/2
173 | Meet Novartis Management | June 17-18, 2014
MEK162
MEK 1/2
STAT
Combinations will
likely increase
efficacy in multiple
tumor types
BRAF
FOXO
Proliferation/
survival
TSC
ERK
mTOR
CDK4/6
Afinitor®
LEE011
Our broad pipeline of targeted medicines paves the
way for numerous potential combination therapies
174 | Meet Novartis Management | June 17-18, 2014
Rational combination therapies with PI3K inhibitors
Combination studies in ovarian, breast cancer, colorectal, multiple myeloma, colorectal cancer,
glioblastoma, melanoma, esophageal squamous cell carcinoma, and head-and-neck cancer
175 | Meet Novartis Management | June 17-18, 2014
Rational combination therapies with CDK4/6 inhibition
Combination studies in melanoma, breast cancer, non-small cell lung carcinoma,
hepatocellular carcinoma, neuroblastoma, and colorectal cancer
176 | Meet Novartis Management | June 17-18, 2014
Combining MEK162 with LEE011 appears to enhance
anti-tumor effects in mutant melanoma xenograft models
RAF
MEK1/2
MEK162
ERK1/2
LEE011
CCND1
p16
CDK4/6
RB
800
Vehicle
600
400
200
0
20
30
40
50
Days since xenograft implant
E2F
G1
Tumor Volume (mm3) (Mean ± SEM)
NRAS
S
Source: Internal data
177 | Meet Novartis Management | June 17-18, 2014
60
Patient-derived Tumor Xenograft Encyclopedia (PTXE)
Cancer patient surgical samples implanted into immunocompromised mice
Lymphoma 7
Head & Neck 8
Other 21
Colon 81
Sarcoma 75
Stomach 193
Pancreas 116
Liver 63
Brain 12
Endometrium
13
Breast 65
Esophagus 88
Ovary 63
Kidney 31
Lung 57
Melanoma 41
 ~900 models established with limited serial passage
 Genetic characterization: Exome sequence, RNASeq, copy number alterations
178 | Meet Novartis Management | June 17-18, 2014
Mouse XenoPatient clinical trials: survival data
LEE011 and MEK162 in PTX melanoma (all comers)
NRAS
BRAF
CRAF
MEK
MEK162
ERK
LEE011
CCND1
CDK4/6
Source: Internal data
179 | Meet Novartis Management | June 17-18, 2014
Progression free by doubling time
RTKs
Both
LEE011
MEK162
Sequencing patients on MEK162 in NRAS mutant
melanoma suggests combination with LEE011
CDKN2A/B
NRAS
Baseline
180 | Meet Novartis Management | June 17-18, 2014
Treatment day 21
CART: Potentially revolutionary immunotherapy in
blood cancers; now exploring use in a range of tumors
 CARTs1 are autologous patient T-cells
reprogrammed to kill cancer cells
Strategy for CART pipeline development
Leveraging the success of CTL019
 Expand CTL019 and huCTL019 into
additional CD19 positive B cell
malignancies such as diffuse large B-cell
lymphoma
 Attack new CART targets for
hematological tumors that are CD19
negative, including acute myelogenous
leukemia and multiple myeloma
 Expand the use of CART in solid tumors
 In early-stage clinical trials, the response
rate for acute lymphoblastic leukemia is
90% and in chronic lymphocytic leukemia
the response rate nears 50%2
1
2
Collaboration with University of Pennsylvania
S. Grupp, AACR, 2014; D. Porter, ASCO, 2014
181 | Meet Novartis Management | June 17-18, 2014
• Mesothelin for mesothelioma, pancreatic
and ovarian cancer
• EGFRvIII for glioblastoma
 Develop NextGen CARTs that are
regulatable and bi-specific
A suite of immune “checkpoint” antibodies could open a
path to important novel mono and combination therapies
 Immune “checkpoint” antibodies block the inhibitory signals released by
cancer cells that suppress T-cell function
 Combining checkpoint inhibitors may substantially increase efficacy
Four new programs in
T-cell regulation (PD-1,
PD-L1, LAG-3, and TIM-3)
have been added to
ongoing efforts to harness
innate immunity through
regulatory T-cell and
macrophage depletion
182 | Meet Novartis Management | June 17-18, 2014
Approach and efficiency in clinical trials has radically
shortened discovery and development timelines
Phase I first patient to positive Proof-of-Concept
PoC
60 months
HCD122
PoC
45 months
AUY922
Current approach
PoC
65 months
TKI258
BKM120
18 months
PoC
LDE225
18 months
PoC
LDK378
PoC
17 months
BYL719
11 months
US FDA approval 37
months after first
patient dosed
PoC
No selection
Tasigna®
LGX818
6 mo
5 mo
PoC
PoC
183 | Meet Novartis Management | June 17-18, 2014
Selection after dose escalation
Selection starting with first patient
Agenda
NIBR: Distinctive Talent and Culture
Success in Discovery and Early Development
Aging and Regenerative Medicine: A New Direction
Robust Oncology Pipeline
Advanced Technologies Underpinning Discovery
184 | Meet Novartis Management | June 17-18, 2014
Next-Generation patient stratification platforms
Genomics and Pharmacology
The Novartis
Cancer Cell Line
Encyclopedia
contains ~1,000
patient derived lines
annotated by
molecular profiles
and response
DNA Copy Number Gene Expression
Mutation (ECS)
Proteomics
Custom-built aptamer library (3,500 analytes)
Small
blood
sample
185 | Meet Novartis Management | June 17-18, 2014
Multiplex detection chip
Phenotypic screening
Complex cellular assays for new targets and leads
Neuroscience
 Comprehensive
bank of patient
derived neurons
via induced
pluripotent stem
cells
Respiratory
 Novel targets
and leads via
lung organoids
Musculoskeletal
 Clinical candidate for
cartilage regeneration
186 | Meet Novartis Management | June 17-18, 2014
Synaptic defects in
patient-derived nerve cells
Control
Autistic patient
Phenotypic screening
Sensitized pathway assays for new targets and leads
Spinal muscular atrophy
Wnt pathway
 Clinical candidate that
 Multiple cancer and regenerative
medicine targets
promotes mRNA splicing
Normal
SMA
Gene
mRNA
Treated
Drug restores
some normal
splicing
187 | Meet Novartis Management | June 17-18, 2014
 Porcupine inhibitor at Proof-ofConcept stage
Phenotypic screening
Sensitized pathway assays for new targets and leads
Novel anti-malarial drug candidates revealed by cell-based assays
KAE609
Spiroindolone
188 | Meet Novartis Management | June 17-18, 2014
KAF156
Imidazolepiperazine
Expanding drug target space
Novel chemistry
 Expanding expertise in natural product
identification and synthetic engineering
New biological approaches
 Combining multi-functionality in novel
formats
 Expanding capability to novel synthetic
biology apps (e.g., CARTs etc.)
189 | Meet Novartis Management | June 17-18, 2014

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