Novartis in Society Integrated Report 2022

Chair’s letter

Medical progress and innovation are evolving with impressive speed even in a world of increasing volatility and uncertainty. In 2022, we initiated a major transformation of our organization to further improve our innovation capabilities and align with our growth strategy as a pure-play medicines company.

We expect these changes to simplify our business, enhance accountabilities and strengthen our commercial activities by enabling us to better focus on our in-market products and high-value pipeline assets. Overall, our efforts are set to support our long-term sales and profit growth and help us create sustainable shareholder value.

Joerg Reinhardt (Photo)

As part of this transformation, which includes our intention to spin off our Sandoz generics and biosimilars Division, we merged our Oncology and Pharmaceuticals commercial organizations and created a new Operations organization that combines our manufacturing and services activities. Besides substantial cost savings, we expect these steps to increase our operational agility and strengthen our business in key markets such as the United States and China.

The organizational changes, which we expect to finalize in 2023, complete the portfolio shift we started in 2014. Over this time, we have divested several non-core businesses and spun off our eye-care division Alcon. With a view to boosting our innovation power, we have also made substantial investments in cutting-edge technology platforms, including gene and cell therapy, radioligand therapy and RNA technology.

Novartis delivered on its sales and operating profit targets last year despite the challenges of a volatile macroeconomic environment and while executing on our ongoing transformation

Novartis delivered on its sales and operating profit targets in 2022 despite the challenges of a volatile macroeconomic environment and while executing on our ongoing transformation, which entailed job reductions due to structural changes. This performance was supported by cost discipline and continued operational streamlining, as well as the strong uptake of recently launched medicines, such as multiple sclerosis treatment Kesimpta, and continued strong demand for our cardiovascular medicine Entresto and psoriasis treatment Cosentyx.

Last year also saw new leadership at the Novartis Institutes for BioMedical Research and our Global Drug Development organization, the research and development (R&D) engines of Novartis, and a renewed focus on improving governance and speeding up the transition between early drug discovery and clinical development. These measures should help further strengthen our portfolio of medicines, which we have consistently broadened in recent years with launches including cancer treatments Pluvicto and Scemblix.

We have also further intensified our efforts to integrate our environmental, social and governance (ESG) activities into our daily business, which we believe is vital for the success of Novartis. Among a variety of steps aimed at reaching as many patients as possible, we renewed our commitment to continue our R&D efforts in neglected tropical diseases and to work further toward the elimination of malaria. In addition, we are partnering with the American Society of Hematology to deepen our efforts to fight against sickle cell disease in Africa.

The Board of Directors also remained vigilant in its governance oversight efforts by putting added emphasis on values such as integrity as Novartis pivots towards becoming a high-performance, pure-play medicines company. Likewise, the Executive Committee and the Board of Directors are keeping up the intensive dialogue with stakeholder groups and working towards achieving our vision to be the most valued and trusted medicines companies in the world.

I thank you for the confidence you have placed in our company and am pleased to be able to propose a dividend increase of 3.2% to CHF 3.20 at the next Annual General Meeting.

Sincerely,

Signature Joerg Reinhardt (Handwriting)

Joerg Reinhardt
Chair of the Board of Directors

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