Novartis in Society Integrated Report 2022

Our strategy

Our strategy as a focused medicines company is to deliver high-value medicines that alleviate society’s greatest disease burdens through technology leadership in R&D and novel access approaches.

We have made significant progress in transforming Novartis from a diversified healthcare conglomerate into a focused medicines company. In doing so, we have divested or spun off non-core businesses and made targeted acquisitions to focus on our core business: discovering and developing new medicines and finding new ways to deliver them to as many people as possible.

In 2022, we continued to execute on our strategy by putting in place a new organizational structure to support innovation, growth and productivity. We also updated our strategic priorities and announced our intention to spin off our Sandoz Division, which paves the way for Novartis to advance as a company focused fully on innovative medicines.

Our strategy (Graphic)

This page highlights how our strategic priorities address our material impact clusters and link to ESG targets. This ensures our strategy is closely aligned with our goal of long-term value creation.

 

Material impact clusters

Relevant ESG targets

Deliver high-value medicines

Delivering new medicines is at the core of our purpose and value creation as a company. We focus on innovative medicines with the potential to transform the treatment of diseases across five core therapeutic areas. To do this, we seek to maximize the value of our key in-market and launch medicines, while finding new ways to deliver them to as many people as possible and investing in R&D to deliver the next generation of therapies for patients. As part of our efforts, we continue our longstanding commitment to reduce the burden of infectious and tropical diseases that predominantly affect underserved populations in LMICs.

Innovation

Access
  • Invest USD 250m to advance R&D for NTDs and malaria (over 5 years from 2021-2025)

  • Implement a global access strategy for all new medicines launched

 

 

 

Embed operational excellence

We aim to drive efficiency and free up resources to invest in innovation for patients. This also underpins our financial performance and makes us more agile – better able to take quick decisions and scale the use of new technologies – with effective cooperation across our business. In everything we do, we maintain high standards of product quality and patient safety, while also working to reduce our environmental footprint.

Patient health and safety

Sustainable financial performance

Ethical business practices

Environmental sustainability
  • Conduct risk assessments for all new eligible suppliers

  • Become carbon neutral in our own operations (Scope 1 and 2) by 2025 1

  • Include environmental criteria in all supplier contracts by 2025

  • Become carbon neutral (Scope 1, 2 and 3) by 2030 and achieve net zero carbon emissions across our value chain by 2040 2

  • Reduce water consumption in our own operations by half by 2025 3

  • No water quality impacts from manufacturing effluents by 2025

  • Become water neutral in our own operations by 2030 4

  • Enhance water quality wherever we operate by 2030

  • Eliminate polyvinyl chloride (PVC) in packaging by 2025 5

  • Reduce the amount of waste sent for disposal by half by 2025 3

  • Become plastic neutral by 2030 6

  • All new products meet sustainable design principles by 2030

 

 

 

Strengthen our foundations

Unleash the power of our people:

We continue to focus on culture as a key enabler of our strategy to drive innovation and long-term performance. For us, this is about building an agile, diverse workforce and making sure we attract and retain the right talent for the future.

Access

People and culture

Ethical business practices

Good governance
  • Implement a global access strategy for all new medicines launched

  • Increase by at least 200% patients reached with strategic innovative medicines in LMICs7 by 2025 (compared with 2019)

  • Increase by at least 50% the number of patients reached with Novartis global health flagship programs8 in LMICs7 by 2025 (compared with 2019)

  • Close the gender pay gap by 2023

  • Achieve gender balance in management by 2023

  • Remove bias from the system by eliminating the use of historical salary data by 2023

  • Create pay transparency for employees by 2023

Scale data science and technology:

We are investing in data science and technology to increase efficiency, support innovation, better respond to the needs of patients and physicians, and ultimately improve the way we develop and deliver our medicines.

Build trust with society:

We aim to increase access to our medicines for underserved populations around the world and follow high standards of ethical behavior wherever we operate.

1

Scope 1 and Scope 2 from energy

2

In accordance with SBTi net-zero standard

3

Vs. 2016 baseline performance

4

All Novartis sites to reduce water consumption in all areas and be water neutral in water-stressed regions by not depleting local water reserves. Water-stressed regions are determined using WWF water risk filter

5

From Novartis owned and operated sites. Defined as secondary and tertiary packaging; primary packaging when feasible

6

Plastic neutral defined as weight of plastic packaging entering the environment for disposal is approximately the same as weight being recovered for recycling

7

Low- and middle-income countries as defined in sustainability-linked bond prospectus annex

8

Malaria, leprosy, Chagas disease, sickle cell disease

Transforming and focusing our company

We have evolved from being a diversified healthcare conglomerate to a focused, innovative medicines company. Announced in April 2022, our new organizational structure aligns the way we operate with this strategy.

The changes – part of our Transforming for Growth initiative – are designed to power our next phase of innovation, growth and productivity. We aim to drive shareholder returns by sharpening our focus on our core business, becoming more agile and efficient, and creating the conditions for growth in our priority markets. The new structure became fully operational in January 2023. Please see "Embed operational excellence" for further details.

In August 2022, we also announced plans to spin off 100% of our Sandoz Division, which we expect to be complete by the second half of 2023. The spin-off will create Europe’s leading producer of generics and a global leader in biosimilars and allow us to concentrate fully on our core business. Spinning off Sandoz is in the best interests of our shareholders as it would create two standalone companies focused on their respective growth strategies.

Completion of the transaction is subject to certain conditions, including consultation with works councils and employee representatives (as required), general market conditions, tax rulings and opinions, final Board of Directors endorsement and shareholder approval in line with Swiss corporate law. The transaction is expected to be tax neutral to Novartis.

2023

Sandoz spin-off

We expect the planned spin-off to be completed by the second half of 2023.

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