Chairman’s letter

Dear shareholder,

In 2018, Novartis strengthened its operations, expanded its therapeutic platforms, and accelerated its push into the data and digital healthcare space. Together, these steps are set to increase our ability to develop breakthrough therapies, improve patient outcomes, and support our sales and profit growth to create sustainable value for our shareholders and society as a whole.

Last year, we announced the intention to spin off our eye care division, Alcon; divested a part of the US-based generics business of Sandoz; and sold our remaining consumer healthcare stake to joint venture partner GlaxoSmithKline. These moves were designed to position Alcon as an independent leader in ophthalmology, strengthen the existing operations of Sandoz, and solidify the position of Novartis as a focused pharmaceutical company.

As a science-based healthcare company with cutting-edge global research and development activities, we expect innovative medical approaches in areas such as gene therapy and immunology to hold the potential for the development of curative therapies

We also made substantial investments in breakthrough technologies such as gene therapy, nuclear medicine and data science. These include the acquisitions of gene therapy firm AveXis and radiopharmaceutical companies Advanced Accelerator Applications and Endocyte, which are set to strengthen our position in neuroscience and oncology. As a science-based healthcare company with cutting-edge global research and development activities, we expect innovative medical approaches in areas such as gene therapy and immunology to hold the potential for the development of curative therapies. In domains such as chimeric antigen receptor T-cell (CAR-T) therapy, we have made good progress over the past few years. We also deepened our digital footprint by initiating a range of collaborations to strengthen scientific and commercial operations.

In view of the rising healthcare challenges both in industrialized and in developing and emerging countries, we remain acutely aware of the need to deliver our medicines to more patients. We have a proven track record of supporting individual patient assistance and global drug access programs, such as the Novartis Malaria Initiative and our Novartis Access program, and we remain dedicated to these global activities. We believe they help stabilize healthcare systems and increase trust in Novartis as a reliable healthcare partner.

As much as we are dedicated to the highest scientific standards when developing new medicines, Novartis is also committed to the highest ethical norms regarding the execution and governance of our business. As part of our continual efforts to maintain high integrity and ethical behavior across our company, we have further strengthened our risk and compliance structure and improved our respective processes, including our approach toward the management of cyber risk.

I thank you for the confidence you have placed in our company and am pleased to be able to propose a dividend increase of 2% to CHF 2.85 at the next Annual General Meeting.

Sincerely,
Joerg Reinhardt
Chairman of the Board of Directors