SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 
Report on Form 6-K dated January 31, 2024
(Commission File No. 1-15024)
 

 
Novartis AG
(Name of Registrant)
 
 
Lichtstrasse 35
4056 Basel
Switzerland
(Address of Principal Executive Offices)
 


 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
 
Form 20-F: x
   
Form 40-F: o
 
 
Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes: o
   
No: x
 

 




SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Novartis AG
   
     
Date: January 31, 2024
By:
/s/ PAUL PENEPENT
     
 
Name:
Paul Penepent
 
Title:
Head Financial Reporting and Accounting
       
 

 
 
Ad hoc announcement pursuant to Art. 53 LR

FINANCIAL RESULTS | RÉSULTATS FINANCIERS | FINANZERGEBNISSE
 


Novartis International AG
Novartis Global Communications

CH-4002 Basel
Switzerland
https://www.novartis.com
 
  
Novartis delivers strong full year performance, 10% net sales and 18% core operating income growth (cc1), with margin expansion. Continuing innovation momentum with multiple positive Ph3 readouts

 
Full year (continuing operations2)
Net sales grew +10% (cc, +8% USD) with core operating income growing +18% (cc, +11% USD)
Sales growth was mainly driven by continued strong performance from Entresto (+31% cc), Kesimpta (+99% cc), Kisqali (+75% cc), Pluvicto (+261% cc) and Scemblix (+179% cc)
Operating income increased +39% (cc, +23% USD). Net income increased +62% (cc, +42% USD). Free cash flow from continuing operations was USD 13.2 billion (+9% USD)
EPS grew +70% (cc, +49% USD) to USD 4.13. Core EPS was USD 6.47 growing +25% (cc, +18% USD)

 
Fourth quarter (continuing operations)
Net sales grew +10% (cc, +8% USD) with core operating income growing +13% (cc, +5% USD),
Sales growth was mainly driven by continued strong performance from Entresto (+26% cc), Kisqali (+76% cc), Kesimpta (+73% cc), Cosentyx (+21% cc) and Pluvicto (+53% cc)

 
Q4 selected innovation milestones:
o
Fabhalta FDA approval for treatment of adults with PNH (both previously treated and treatment-naïve)
o
Cosentyx FDA approval for the treatment of moderate to severe HS in adults
o
Cosentyx FDA approval for intravenous formulation in three indications (PsA, AS, nr-axSpA)
o
Iptacopan Ph3 APPLAUSE-IgAN met its primary endpoint in IgAN patients
o
Atrasentan Ph3 ALIGN study met its primary endpoint in IgAN patients
o
Iptacopan Ph3 APPEAR-C3G met its primary endpoint in C3G patients
o
Scemblix Ph3 ASC4FIRST study met its primary endpoints in 1L Ph+ CML-CP patients (January)
Dividend, 2024 guidance; updated mid-term guidance
Dividend of CHF 3.30 per share, an increase of 3.1%, proposed for 2023
2024 guidance3 – Net sales expected to grow mid single digit and core operating income expected to grow high single digit
Updated mid-term guidance – Net sales expected to grow 5% cc CAGR 2023-2028 with core operating income margin expanding to ~40%+ by 2027

 

 
Basel, January 31, 2024 - commenting on 2023 results, Vas Narasimhan, CEO of Novartis, said: “Novartis completed its strategic transformation into a pure-play innovative medicines company and continued its relentless pursuit of sustainable shareholder value creation. Our robust operational performance continues, with strong double-digit top and bottom-line growth, for the quarter and full year. We delivered ten positive Ph3 readouts on assets with significant sales potential, over the past year. The very strong performance of our key growth drivers and pipeline underscores the confidence in our growth (5% cc CAGR 2023-2028) and margin (40%+ by 2027) mid-term guidance.”
 

 
Key figures1 
 
Continuing operations
 
Q4 2023
Q4 2022
% change
FY 2023
FY 2022
% change
 
USD m
USD m
USD
cc
 
USD m
USD m
USD
cc
Net sales
11 423
10 576
8
10
 
45 440
42 206
8
10
Operating income
2 582
1 755
47
68
 
9 769
7 946
23
39
Net income
2 638
1 315
101
130
 
8 572
6 049
42
62
EPS (USD)
1.29
0.62
108
140
 
4.13
2.77
49
70
Free cash flow
2 141
3 462
-38
 
 
13 160
12 123
9
 
Core operating income
3 821
3 645
5
13
 
16 372
14 794
11
18
Core net income
3 126
2 963
6
11
 
13 446
11 946
13
19
Core EPS (USD)
1.53
1.39
10
16
 
6.47
5.48
18
25
 
1 Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 49 of the Condensed Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.  . 2 As defined on page 37 of the Condensed Financial Report, Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing Corporate activities and Discontinued operations include operational results from the Sandoz business. 3 Please see detailed guidance assumptions on page 7
 


Strategy Update
 
Our focus
 
During 2023, Novartis completed our transformation into a “pure-play” innovative medicines business. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic,
immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies - the US, China, Germany and Japan.

Our priorities

1.
Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
2.
Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
3.
Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.


Financials

Following the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz business the Company reported its consolidated financial statements for the current and prior years as “continuing operations” and “discontinued operations.”
 
Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing corporate activities. Discontinued operations include the Sandoz Division and selected portions of corporate activities attributable to Sandoz’s business, as well as certain expenses related to the spin-off.
 
Following the spin-off of the Sandoz business, Novartis operates as a single global operating segment focused innovative medicines company.
 
The commentary below focuses on continuing operations. We also provide information on discontinued operations, which mainly includes Sandoz and allocated corporate activities.

Continuing operations

Fourth quarter

Net sales were USD 11.4 billion (+8%, +10% cc) in the fourth quarter driven by volume growth of 13 percentage points. Generic competition had a negative impact of 3 percentage points and pricing had no impact.
 
Operating income was USD 2.6 billion (+47%, +68% cc), mainly driven by higher net sales and lower restructuring charges, partly offset by higher SG&A and R&D investments.
 
Net income was USD 2.6 billion (+101%, +130% cc), mainly driven by higher operating income and non-recurring favorable tax impacts. EPS was USD 1.29 (+108%, +140% cc), benefiting from lower weighted average number of shares outstanding.
 
Core operating income was USD 3.8 billion (+5%, +13% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income growth in USD was impacted by negative 2 percentage points from the effect of mid-December currency devaluation in Argentina1. Core operating income margin was 33.5% of net sales, decreasing 1.0 percentage point (+1.0 percentage point cc).

1 IFRS® Accounting Standards requires for our Argentina subsidiary, as it operates in a hyperinflation economy, to translate for consolidation purposes their full year income statement to our USD presentation currency using the ARS closing rate, and not using the average exchange rate for the period. This results in the 9-months and the Q4 devaluation impact being recognized in Q4.

2





Core net income was USD 3.1 billion (+6%, +11% cc), mainly due to higher core operating income. Core EPS was USD 1.53 (+10%, +16% cc), benefiting from lower weighted average number of shares outstanding.
 
Free cash flow from continuing operations amounted to USD 2.1 billion (-38% USD), compared with USD 3.5 billion in the prior year quarter driven by lower net cash flows from operating activities.

Full year

Net sales were USD 45.4 billion (+8%, +10% cc) in the full year, driven by volume growth of 16 percentage points, partly offset by price erosion of 2 percentage points and the negative impact from generic competition of 4 percentage points.
 
Operating income was USD 9.8 billion (+23%, +39% cc), mainly driven by higher net sales, lower restructuring charges, and income from legal matters, partly offset by higher impairments and higher SG&A and R&D investments.
 
Net income was USD 8.6 billion (+42%, +62% cc), mainly driven by higher operating income and non-recurring favorable tax impacts. EPS was USD 4.13 (+49%, +70% cc).
 
Core operating income was USD 16.4 billion (11%, +18% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income margin was 36.0% of net sales, increasing 0.9 percentage points (+2.4 percentage points cc).
 
Core net income was USD 13.4 billion (+13%, +19% cc), mainly due to higher core operating income. Core EPS was USD 6.47 (+18%, +25% cc), benefiting from lower weighted average number of shares outstanding.
 
Free cash flow from continuing operations amounted to USD 13.2 billion (+9% USD), compared with USD 12.1 billion in 2022 driven by higher net cash flows from operating activities.

Discontinued operations

Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz prior to the spin-off up to the distribution date of October 3, 2023, and certain other expenses related to the spin-off. Included in 2023 is also the IFRS Accounting Standards non-cash, non-taxable net gain on the distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, representing mainly the excess amount of the IFRS Accounting Standards distribution liability, which is the estimated fair value of the Sandoz business distributed to Novartis AG shareholders, over the then carrying value of Sandoz business net assets. There were no operating results for the fourth quarter 2023 following the distribution date. The prior year includes the results for the full period.

Fourth quarter
 
Net income from discontinued operations amounted to USD 5.8 billion, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, compared to USD 151 million in prior year.

Full year

Discontinued operations net sales in 2023 were USD 7.4 billion, compared to USD 9.4 billion in 2022 and operating income amounted to USD 265 million compared to USD 1.3 billion in 2022.

Net income from discontinued operations in 2023 amounted to USD 6.3 billion, compared to USD 906 million in 2022, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders, which amounted to USD 5.9 billion.




 

3




Total Company

Fourth quarter

Total Company net income was USD 8.5 billion in 2023, compared to USD 1.5 billion in 2022 and basic EPS was USD 4.14 compared to USD 0.69 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for total Company amounted to USD 2.5 billion and free cash flow amounted to USD 2.1 billion.

Full year

Total Company, net income amounted to USD 14.9 billion in 2023, compared to USD 7.0 billion in 2022, and basic earnings per share was USD 7.15 compared to USD 3.19 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for the total company amounted to USD 14.5 billion, and free cash flow amounted to USD 13.2 billion.

Q4 key growth drivers

Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q4 growth) including:
Entresto
(USD 1 635 million, +26% cc) sustained robust demand-led growth, with increased patient share across all geographies
Kisqali
(USD 610 million, +76% cc) sales grew strongly across all regions, based on increasing recognition of consistently reported overall survival in HR+/HER2- advanced breast cancer
Kesimpta
(USD 641 million, +73% cc) sales grew across all regions driven by increased demand and strong access
Cosentyx
(USD 1 303 million, +21% cc)  US sales grew (+17%) and ex-US sales (+26% cc), benefitting from lower prior year base (including revenue deduction adjustments in the US)
Pluvicto
(USD 273 million, +53% cc) continued sales growth in the US. Supply now unconstrained, focusing on initiating new patients
Ilaris
(USD 376 million, +29% cc) sales grew across all regions
Leqvio
(USD 123 million, +190% cc) launch is ongoing, with focus on patient on-boarding, removing access hurdles and enhancing medical education
Scemblix
(USD 125 million, +143% cc) continued its strong launch uptake demonstrating the high unmet need in CML
Jakavi
(USD 444 million, +14% cc) sales grew in emerging growth markets, Europe and Japan, driven by strong demand in both myelofibrosis and polycythemia vera indications
Xolair
(USD 378 million, +16% cc) sales grew across all regions
Tafinlar + Mekinist
(USD 486 million, +7% cc) sales grew mainly in the US and emerging growth markets, partly offset by decline in Europe
Promacta/Revolade
(USD 563 million, +4% cc) sales grew mainly in the US driven by increased use in chronic ITP and severe aplastic anemia
Piqray
(USD 131 million, +18% cc) sales grew mainly in the US
Lutathera
(USD 147 million, +13% cc) sales grew across all regions due to increased demand
Emerging Growth Markets*
Grew +18% (cc) overall. China grew (+38% cc) to USD 0.8 billion, due to lower prior year base. For the full year, China grew +17% (cc)
*All markets except the US, Canada, Western Europe, Japan, Australia, and New Zealand
 



4

 

Net sales of the top 20 brands in 2023
 
 
Q4 2023
% change
FY 2023
% change
 
USD m
USD
cc
USD m
USD
cc
Entresto
1 635
27
 26
6 035
30
31
Cosentyx
1 303
21
 21
4 980
4
5
Promacta/Revolade
563
4
 4
2 269
9
10
Kesimpta
641
74
 73
2 171
99
99
Kisqali
610
71
 76
2 080
69
75
Tafinlar + Mekinist
486
5
 7
1 922
9
11
Tasigna
446
-6
- 6
1 848
-4
-3
Jakavi
444
14
 14
1 720
10
12
Lucentis
301
-24
- 25
1 475
-21
-20
Xolair
378
17
 16
1 463
7
9
Ilaris
376
25
 29
1 355
20
22
Sandostatin
316
4
 5
1 314
6
8
Zolgensma
286
-7
- 4
1 214
-11
-9
Pluvicto
273
53
 53
 980
262
261
Gilenya
154
-55
- 55
 925
-54
-54
Exforge Group
156
-2
- 1
 713
-4
-1
Galvus Group
153
-27
- 17
 692
-19
-11
Diovan Group
147
4
 6
 613
-6
-1
Lutathera
147
15
 13
 605
28
28
Gleevec/Glivec
128
-27
- 25
 561
-25
-22
Top 20 brands total
8 943
13
 14
34 935
10
12

 
R&D update - key developments from the fourth quarter
 
New approvals
Fabhalta
(iptacopan)
Approved in the US as the first oral monotherapy for the treatment of adults (both previously treated and treatment-naïve patients) with paroxysmal nocturnal hemoglobinuria (PNH)
Cosentyx
Approved in the US as the first new biologic therapy for the treatment of moderate to severe hidradenitis suppurativa (HS) in adults in nearly a decade
 
Approved in the US as an intravenous formulation in three indications: psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial SpA
 
Results from ongoing trials and other highlights
Scemblix
(asciminib)
Ph3 ASC4FIRST study met both primary endpoints (major molecular response rate  vs. imatinib or investigator-selected tyrosine kinase inhibitors) with clinically meaningful and statistically significant results in newly diagnosed patients with Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase (Ph+ CML-CP). Additionally, Scemblix showed a favorable safety and tolerability profile. Data will be presented at an upcoming medical conference and submitted to regulatory authorities in 2024
 


5



Ph3 ASCEMBL study, median follow-up of almost 4 years, in patients with Ph+ CML-CP continue to support the efficacy, safety and tolerability profile compared with bosutinib in 3L+ setting. Data presented at ASH 2023
Fabhalta
(iptacopan)
Ph3 APPLAUSE-IgAN study interim analysis demonstrated clinically meaningful and highly statistically significant proteinuria reduction in patients with IgA nephropathy. The trial met its pre-specified interim analysis (9 months) primary endpoint, demonstrating superiority vs. placebo in proteinuria reduction, with safety consistent with previously reported data. Novartis plans to review interim data with regulatory authorities for accelerated approval; study continues with final readout at 24 months
 
Ph3 APPEAR-C3G study met its primary endpoint, demonstrating superiority of iptacopan vs placebo in proteinuria reduction at six-month analysis and provided clinically meaningful and statistically significant proteinuria reduction in patients with C3G on top of background therapy. Iptacopan’s safety profile was consistent with previously reported data. Data to be presented at an upcoming medical meeting. Study continues with all patients receiving active therapy for six-months
 
Ph3 APPLY-PNH extension data showed sustained efficacy and long-term safety of Fabhalta in adults with paroxysmal nocturnal hemoglobinuria (PNH). Data showed sustained clinically meaningful hemoglobin-level increases to near-normal (≥12 g/dL), blood transfusion avoidance, and improved patient-reported fatigue in the majority of patients. Comparable benefits were seen in those patients switching from anti-C5 therapy to Fabhalta. Safety profile at 48 weeks was similar to 24 week data. Data presented at ASH 2023
atrasentan
 
Ph3 ALIGN study met its primary endpoint, demonstrating superiority of atrasentan vs placebo in proteinuria reduction at 36-week interim analysis with clinically meaningful and highly statistically significant reduction in proteinuria in IgAN patients receiving supportive care. Safety profile of atrasentan was consistent with previously reported data. Data to be presented at an upcoming medical meeting. Study continues with final readout expected in 2026
remibrutinib
Ph3 REMIX-1 and REMIX-2 trials showed clinically meaningful and statistically significant reduction in weekly urticaria activity (UAS7), itch (ISS7) and hives (HSS7) at Week 12 vs placebo in patients with CSU. Significant improvement in symptom control was seen as early as Week 2 and sustained up to Week 12. Remibrutinib was well-tolerated and demonstrated a favorable safety profile with rates of overall adverse events comparable to placebo and balanced liver function tests across both studies. Studies are ongoing with final (52-week) readout and regulatory submissions in 2024. Data presented at AAAI 2023
Kisqali
(ribociclib)
Final protocol-specified iDFS analysis of Ph3 NATALEE trial (with a median follow-up of 33.3 months and 78.3% of patients having completed ribociclib) reinforces 25% reduction in risk of recurrence across broad population of patients with HR+/HER2- early breast cancer and continues to support regulatory submissions. iDFS benefit remains consistent across key patient subgroups, with stability in secondary endpoints including overall survival (OS). Among patients with stage II and stage III tumors, ribociclib lowered risk of disease recurrence by 30% and 24.5%, respectively. Safety profile was in line with previously reported results. Data presented at SABCS 2023. NATALEE data submitted to the FDA in December 2023
Early-stage business development in core therapeutic areas and technologies
Cardiovascular-Renal-Metabolic:
 Chong Kun Dang (LMW, lead asset CKD-510 for diseases in which the enzyme HDAC6 is thought to play a role, including some cardiovascular diseases)
 SanReno (LMW and mAb, securing worldwide rights for Atrasentan/Zigakibart)
 Argo Biopharma (xRNA, undisclosed targets)
 
Neuroscience:
 Voyager Therapeutics (Gene therapy, strategic collaboration and capsid license agreement for potential Huntington’s Disease and spinal muscular atrophy therapies)

6



Immunology:
Calypso (Biotherapeutics, lead asset CALY-002 a promising anti-IL-15 mAB, to be investigated in a range of autoimmune indications)

Oncology:
Legend Biotech (Cell Therapy, targeting DLL3, a ligand highly expressed in several cancers)

Isomorphic Labs – Leveraging AI including next generation AlphaFold model, to discover novel small molecule therapeutics against undisclosed targets

Capital structure and net debt

Retaining a good balance between investment in the business, a strong capital structure and attractive shareholder returns remains a priority.
 
In 2023, Novartis repurchased a total of 87.5 million shares for USD 8.4 billion on the SIX Swiss Exchange second trading line. These repurchases included 52.8 million shares (USD 4.9 billion) under the USD 15 billion share buyback (announced in December 2021 and completed in June 2023) and 23.0 million shares (USD 2.3 billion) under the new up-to USD 15 billion share buyback announced in July 2023 (which is continuing as planned, with up-to USD 12.7 billion remaining). In addition, 11.7 million shares (USD 1.2 billion) were repurchased to mitigate dilution related to participation plans of associates. Furthermore, 1.6 million shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 13.5 million shares (for an equity value of USD 1.1 billion) were delivered as a result of options exercised and share deliveries related to participation plans of associates. Consequently, the total number of shares outstanding decreased by 75.6 million versus December 31, 2022. These treasury share transactions resulted in an equity decrease of USD 7.4 billion and a net cash outflow of USD 8.6 billion.

As of December 31, 2023, net debt increased to USD 10.2 billion compared to USD 7.2 billion at December 31, 2022. The increase was mainly due to the USD 7.3 billion annual dividend payment, net cash outflow for treasury share transactions of USD 8.6 billion and net cash outflow for M&A / intangible assets transactions of USD 3.3 billion. This increase in net debt was partially offset by USD 13.2 billion free cash flow and a USD 3.0 billion reduction in the net debt position of Novartis related to the Sandoz spin-off.

As of Q4 2023, the long-term credit rating for the Company is A1 with Moody’s Investors Service and AA- with S&P Global Ratings.

2024 outlook

Barring unforeseen events; growth vs prior year in cc
Net sales
Expected to grow mid single digit
Core operating income
Expected to grow high single digit


Key assumptions:
Our guidance assumes that no Entresto generics launch in the US in 2024

Foreign exchange impact

If late-January exchange rates prevail for the remainder of 2024, the foreign exchange impact for the year would be negative 1 percentage point on net sales and negative 3 percentage points on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.


7




Annual General Meeting

Dividend proposal

The Novartis Board of Directors proposes a dividend payment of CHF 3.30 per share for 2023, up 3.1% from CHF 3.20 per share in the prior year, representing the 27th consecutive dividend increase since the creation of Novartis in December 1996. Shareholders will vote on this proposal at the Annual General Meeting on March 5, 2024.

Reduction of share Capital

The Novartis Board of Directors proposes to cancel 87 547 255 shares (repurchased under the authorization of  March 4, 2022) and to reduce the share capital accordingly by CHF 42.9 million, from CHF 1 115 964 098.48 to CHF 1 073 065 943.53.

Elections of the Board Chair and the members of the Board of Directors

The Board of Directors proposes the re-election of all current members of the Board of Directors (including the Board Chair).
 























8




Key figures1

Continuing operations2
Q4 2023
Q4 2022
% change
   
FY 2023
FY 2022
% change
 
USD m
USD m
USD
cc
 
 
USD m
USD m
USD
cc
Net sales
11 423
10 576
8
10
 
Net sales
45 440
42 206
8
10
Operating income
2 582
1 755
47
68
 
Operating income
9 769
7 946
23
39
As a % of sales
22.6
16.6
 
 
 
As a % of sales
21.5
18.8
 
 
Net income
2 638
1 315
101
130
 
Net income
8 572
6 049
42
62
EPS (USD)
1.29
0.62
108
140
 
EPS (USD)
4.13
2.77
49
70
Cash flows from
  operating activities
2 547
3 768
-32
 
 
Cash flows from
  operating activities
14 220
13 039
9
 
Non-IFRS measures
 
 
 
 
 
Non-IFRS measures
 
 
 
 
Free cash flow
2 141
3 462
-38
 
 
Free cash flow
13 160
12 123
9
 
Core operating income
3 821
3 645
5
13
 
Core operating income
16 372
14 794
11
18
As a % of sales
33.5
34.5
 
 
 
As a % of sales
36.0
35.1
 
 
Core net income
3 126
2 963
6
11
 
Core net income
13 446
11 946
13
19
Core EPS (USD)
1.53
1.39
10
16
 
Core EPS (USD)
6.47
5.48
18
25
                     
                     
Discontinued operations2
Q4 2023
Q4 2022
 % change     
FY 2023
FY 2022
% change
 
USD m
USD m
USD
cc
 
 
USD m
USD m
USD
cc
Net sales

2 374
nm
nm
 
Net sales
7 428
9 372
nm
nm
Operating income

194
nm
nm
 
Operating income
265
1 251
nm
nm
As a % of sales

8.2
 
 
 
As a % of sales
3.6
13.3
 
 
Net income
5 842
151
nm
nm
 
Net income
6 282
906
nm
nm
Non-IFRS measures
 
 
 
 
 
Non-IFRS measures
 
 
 
 
Core operating
income

385
nm
nm
 
Core operating
income
1 185
1 871
nm
nm
As a % of sales

16.2
 
 
 
As a % of sales
16.0
20.0
 
 
                     
                     
                     
                     
Total Company
Q4 2023
Q4 2022
% change
   
FY 2023
FY 2022
% change
 
USD m
USD m
USD
cc
 
 
USD m
USD m
USD
cc
Net income
8 480
1 466
nm
nm
 
Net income
14 854
6 955
nm
nm
EPS (USD)
4.14
0.69
nm
nm
 
EPS (USD)
7.15
3.19
nm
nm
Cash flows from
  operating activities
2 547
4 111
nm
nm
 
Cash flows from
  operating activities
14 458
14 236
nm
nm
Non-IFRS measures
 
 
 
 
 
Non-IFRS measures
 
 
 
 
Free cash flow
2 141
3 713
nm
nm
 
Free cash flow
13 179
13 038
nm
nm
Core net income
3 127
3 251
nm
nm
 
Core net income
14 336
13 352
nm
nm
Core EPS (USD)
1.53
1.52
nm
nm
 
Core EPS (USD)
6.90
6.12
nm
nm
                     
nm= not meaningful
                   
 
1 Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 49 of the Condensed Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year.
2 As defined on page 37 of the Condensed Financial Report, Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business and the continuing Corporate activities and Discontinued operations include operational results from the Sandoz business.
Detailed financial results accompanying this press release are included in the Condensed Financial Report at the link below:
https://ml-eu.globenewswire.com/resource/download/a507329c-1dd6-43c6-8a9b-9d0b86d9bf20/

 

 

 
 
9


Disclaimer
 
 
This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that can generally be identified by words such as “may,” “continue,”  “ongoing,” “grow,” “launch,” “expect,”  “deliver,” “transformation,” “focus,” “address,” “accelerate,” “remain,” “scaling,” “guidance,” “outlook,” “long-term,” “driven,” “priority,” “potential,” “can,”  “will,” “propose,” or similar expressions, or by express or implied discussions regarding potential new products, potential new indications for existing products, potential product launches, or regarding potential future revenues from any such products; or regarding results of ongoing clinical trials; or regarding ongoing or future share repurchases; or regarding potential future, pending or announced transactions; regarding potential future sales or earnings; or by discussions of strategy, plans, expectations or intentions, including discussions regarding our continued investment into new R&D capabilities and manufacturing; or regarding our capital structure; or regarding the consequences of the spin-off of Sandoz and our transformation into a “pure-play” innovative medicines company. 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. You should not place undue reliance on these statements. In particular, our expectations could be affected by, among other things: uncertainties regarding the success of key products, commercial priorities and strategy; uncertainties in the research and development of new products, including clinical trial results and additional analysis of existing clinical data; uncertainties regarding the use of new and disruptive technologies, including artificial intelligence; global trends toward healthcare cost containment, including ongoing government, payer and general public pricing and reimbursement pressures and requirements for increased pricing transparency; uncertainties regarding our ability to realize the strategic benefits, operational efficiencies or opportunities expected from our external business opportunities; our ability to realize the intended benefits of our separation of Sandoz into a new publicly traded standalone company; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products; uncertainties in the development or adoption of potentially transformational digital technologies and business models; uncertainties surrounding the implementation of our new IT projects and systems; uncertainties regarding potential significant breaches of information security or disruptions of our information technology systems; uncertainties regarding actual or potential legal proceedings, including regulatory actions or delays or government regulation related to the products and pipeline products described in this press release; safety, quality, data integrity, or manufacturing issues; our performance on and ability to comply with environmental, social and governance measures and requirements; major political, macroeconomic and business developments, including impact of the war in certain parts of the world; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our 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 press release 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.
 
 
All product names appearing in italics are trademarks owned by or licensed to Novartis.
 
 

 
 




10
 

 
About Novartis
 
 
Novartis is an innovative medicines company. Every day, we work to reimagine medicine to improve and extend people’s lives so that patients, healthcare professionals and societies are empowered in the face of serious disease. Our medicines reach more than 250 million people worldwide.
 
 
Reimagine medicine with us: Visit us at https://www.novartis.com and connect with us on LinkedIn, Facebook, X/Twitter and Instagram.
 
 
Novartis will conduct a conference call with investors to discuss this news release today at 14:00 Central European time and 8:00 Eastern Time. A simultaneous webcast of the call for investors and other interested parties may be accessed by visiting the Novartis website. A replay will be available after the live webcast by visiting https://www.novartis.com/investors/event-calendar.
 
Detailed financial results accompanying this press release are included in the condensed financial report at the link below. Additional information is provided on our business and pipeline of selected compounds in late stage development. A copy of today's earnings call presentation can be found at https://www.novartis.com/investors/event-calendar.
 
 
Important dates

March 5, 2024 Annual General Meeting
April 23, 2024 First quarter 2024 results
May 15-16, 2024 Meet Novartis Management 2024 (Cambridge, MA, USA)
July 18, 2024
Second quarter & Half year 2024 results
October 29, 2024 Third quarter & Nine months 2024 results
 













 

 

 

 11









Novartis Fourth Quarter and Full Year 2023 Condensed Financial Report – Supplementary Data

INDEX
Page
COMPANY OPERATING PERFORMANCE REVIEW
Continuing operations
4
Discontinued operations
11
Total Company
11
COMPANY CASH FLOW AND BALANCE SHEET
12
INNOVATION REVIEW
16
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements
18
Consolidated statements of comprehensive income
20
Consolidated balance sheets
21
Consolidated statements of changes in equity
22
Consolidated statements of cash flows
24
Notes to condensed consolidated financial statements, including update on legal proceedings
26
SUPPLEMENTARY INFORMATION
49
CORE RESULTS - Reconciliation from IFRS® Accounting Standards results to non-IFRS measure core results
51
Total Company
52
Discontinued operations
54
FREE CASH FLOW
56
ADDITIONAL INFORMATION
Net debt
59
Share information
59
Effects of currency fluctuations
60
DISCLAIMER
61


2



Company
Key figures
Fourth quarter and full year

(USD millions unless indicated otherwise)
Q4 2023
USD m
Q4 2022
USD m
% change
USD
% change
cc 1
FY 2023
USD m
FY 2022
USD m
% change
USD
% change
cc 1
Net sales from continuing operations
11 423
10 576
8
10
45 440
42 206
8
10
Other revenues
353
390
-9
-11
1 220
1 255
-3
-3
Cost of goods sold
-3 022
-3 041
1
3
-12 472
-11 582
-8
-6
Gross profit
from continuing operations

8 754

7 925

10

14

34 188

31 879

7

11
Selling, general and administration
-3 444
-3 183
-8
-8
-12 517
-12 193
-3
-3
Research and development
-2 567
-2 216
-16
-12
-11 371
-9 172
-24
-22
Other income
450
155
190
172
1 772
696
155
147
Other expense
-611
-926
34
36
-2 303
-3 264
29
31
Operating income
from continuing operations

2 582

1 755

47

68

9 769

7 946

23

39
% of net sales
22.6
16.6
21.5
18.8
Loss from associated companies
-6
-3
-100
-66
-13
-11
-18
1
Interest expense
-217
-207
-5
-12
-855
-800
-7
-11
Other financial income and expense
18
24
-25
nm
222
42
nm
nm
Income before taxes
from continuing operations

2 377

1 569

51

74

9 123

7 177

27

45
Income taxes
261
-254
203
219
-551
-1 128
51
44
Net income from continuing operations
2 638
1 315
101
130
8 572
6 049
42
62
Net income from discontinued operations
5 842
151
nm
nm
6 282
906
nm
nm
Net income
8 480
1 466
nm
nm
14 854
6 955
nm
nm
Basic earnings per share from continuing operations (USD)
1.29
0.62
108
140
4.13
2.77
49
70
Basic earnings per share from discontinued operations (USD)
2.85
0.07
nm
nm
3.02
0.42
nm
nm
Total basic earnings per share (USD)
4.14
0.69
nm
nm
7.15
3.19
nm
nm
Net cash flows from operating activities from continuing operations
2 547
3 768
-32
14 220
13 039
9
Non-IFRS measures 1
Free cash-flow from continuing operations  2
2 141
3 462
-38
13 160
12 123
9
Core operating income from continuing operations
3 821
3 645
5
13
16 372
14 794
11
18
% of net sales
33.5
34.5
36.0
35.1
Core net income from continuing operations
3 126
2 963
6
11
13 446
11 946
13
19
Core basic earnings per share (USD) from continuing operations
1.53
1.39
10
16
6.47
5.48
18
25
 1  Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 49. Unless otherwise noted, all growth rates in this release refer to same period in prior year.
 2  Effective January 1, 2023, Novartis revised its definition of free cash flow, to define free cash flow as net cash flows from operating activities less purchases of property, plant and equipment. To aid in comparability, the prior year free cash flow amounts have been revised to conform with the new free cash flow definition. See page 49 of the Condensed Financial Report.
nm = not meaningful
3

Strategy update
Our focus
During 2023, Novartis completed our transformation into a “pure-play” Innovative Medicines business. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies - the US, China, Germany and Japan.
Our priorities
Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.
Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.
Strengthening foundations: Unleashing the power of our people, scaling data science and technology and continuing to build trust with society.
Financials
Following the September 15, 2023, shareholders’ approval of the spin-off of the Sandoz business the Company reported its consolidated financial statements for the current and prior years as “continuing operations” and “discontinued operations.”
Continuing operations include the retained business activities of Novartis, comprising the Innovative Medicines Division and the continuing corporate activities. Discontinued operations include the Sandoz Division and selected portions of corporate activities attributable to Sandoz’s business, as well as certain expenses related to the spin-off.
Following the spin-off of the Sandoz business, Novartis operates as a single global operating segment focused innovative medicines company.
The commentary below focuses on continuing operations. We also provide information on discontinued operations, which mainly includes Sandoz and allocated corporate activities.
Continuing operations
Fourth quarter
Net sales
Net sales were USD 11.4 billion (+8%, +10% cc) with volume contributing 13 percentage points to growth. Generic competition had a negative impact of 3 percentage points and pricing had no impact. Sales in the US were USD 4.8 billion (+13%) and in the rest of the world USD 6.6 billion (+5%, +8% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 1.6 billion, +27%, +26% cc), Kisqali (USD 610 million, +71%, +76% cc), Kesimpta (USD 641 million, +74%, +73% cc), Cosentyx (USD 1.3 billion, +21%, +21% cc) and Pluvicto (USD 273 million, +53%, +53% cc), partly offset by generic competition mainly for Gilenya and Xiidra divestment.
In the US (USD 4.8 billion, +13%), sales growth was mainly driven by Entresto, Kisqali, Kesimpta, Cosentyx and Pluvicto, partly offset by Xiidra divestment and the impact of generic competition on Gilenya. In Europe (USD 3.7 billion, +3%, +2% cc), sales growth was mainly driven by Kesimpta, Entresto and Kisqali, partly offset by increased generic competition for Lucentis and Gilenya. Sales in emerging growth markets were USD 2.8 billion (+7%, +18% cc) including 0.8 billion sales from China (+37%, +38% cc).
4

Operating income
Operating income was USD 2.6 billion (+47%, +68% cc), mainly driven by higher net sales and lower restructuring charges, partly offset by higher SG&A and R&D investments. Operating income margin was 22.6% of net sales, increasing 6.0 percentage points (+8.7 percentage points in cc).
Core adjustments were USD 1.2 billion, mainly due to amortization and impairments, compared to USD 1.9 billion in prior year. Core adjustments decreased compared to prior year, mainly due to lower restructuring charges.
Core operating income was USD 3.8 billion (+5%, +13% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income growth in USD was impacted by negative 2 percentage points from the effect of mid-December currency devaluation in Argentina1. Core operating income margin was 33.5% of net sales, decreasing 1.0 percentage point (+1.0 percentage point cc). Other revenue as a percentage of sales increased by 0.1 percentage points (cc). Core cost of goods sold as a percentage of sales decreased by 0.2 percentage points (cc). Core R&D expenses as a percentage of net sales decreased by 1.1 percentage points (cc). Core SG&A expenses as a percentage of net sales decreased by 0.1 percentage point (cc). Core other income and expense as a percentage of net sales decreased the margin by 0.5 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 217 million and other financial income and expense to an income of USD 18 million, both broadly in line with prior year.
Core other financial income and expense amounted to an income of USD 137 million compared to USD 50 million in the prior year, mainly due to lower currency losses.
Income taxes
The tax rate for continuing operations in the fourth quarter was -11.0% compared to 16.2% in the prior year. The current year tax rate was favorably impacted by the effect of tax benefits from the write-down in investments in subsidiaries, non-taxable net gains on unrealized foreign currency results, recognition of deferred tax assets on prior years tax loss carryforwards, other items including impact of tax rate changes, and the effect of adjusting to the full year actual tax rate, which was lower than previously estimated. Excluding these impacts the current year tax rate would have been 14.5%. The decrease from the prior year was mainly the result of a change in profit mix.
The core tax rate for continuing operations (core taxes as a percentage of core income before tax) was 16.3% compared to 15.0% in the prior year. The current and prior year core tax rates were both impacted by the effect of adjusting to the full year actual core tax rate. Excluding these impacts, the current and prior year tax rate would have been 15.7% and 15.6% respectively.
Net income, EPS and free cash flow
Net income was USD 2.6 billion (+101%, +130% cc), mainly driven by higher operating income and non-recurring favorable tax impacts. EPS was USD 1.29 (+108%, +140% cc), growing faster than net income, benefiting from lower weighted average number of shares outstanding.
Core net income was USD 3.1 billion (+6%, +11% cc), mainly due to higher core operating income. Core EPS was USD 1.53 (+10%, +16% cc), growing faster than core net income benefiting from lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 2.1 billion (-38% USD), compared with USD 3.5 billion in the prior year quarter driven by lower net cash flows from operating activities.
1 IFRS Accounting Standards requires for our Argentina subsidiary, as it operates in a hyperinflation economy, to translate for consolidation purposes their full year income statement to our USD presentation currency using the ARS closing rate, and not using the average exchange rate for the period. This results in the 9-months and the Q4 devaluation impact being recognized in Q4.
5

Full year
Net sales
Net sales were USD 45.4 billion (+8%, +10% cc) with volume contributing 16 percentage points to growth. Generic competition had a negative impact of 4 percentage points and pricing had a negative impact of 2 percentage points. Sales in the US were USD 18.0 billion (+13%) and in the rest of the world USD 27.5 billion (+5%, +8% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 6.0 billion, +30%, +31% cc), Kesimpta (USD 2.2 billion, +99%, +99% cc), Kisqali (USD 2.1 billion, +69%, +75% cc), Pluvicto (USD 980 million, +262%, +261% cc) and Scemblix (USD 413 million, +177%, +179% cc), partly offset by generic competition mainly for Gilenya.
In the US (USD 18.0 billion, +13%), sales growth was mainly driven by Entresto, Pluvicto, Kesimpta, Kisqali, Scemblix and Leqvio, partly offset by the impact of generic competition on Gilenya. In Europe (USD 15.0 billion, +4%, +4% cc), sales growth was driven by Kesimpta, Entresto, Kisqali, Cosentyx and Leqvio, partly offset by increased generic competition for Lucentis and Gilenya. Sales in emerging growth markets were USD 11.7 billion (+8%, +17% cc), including USD 3.3 billion sales from China (+11%, +17% cc).
Operating income
Operating income was USD 9.8 billion (+23%, +39% cc), mainly driven by higher net sales, lower restructuring charges, and income from legal matters, partly offset by higher impairments and higher SG&A and R&D investments. Operating income margin was 21.5% of net sales, increasing 2.7 percentage points (+5.0 percentage points in cc).
Core adjustments were USD 6.6 billion, mainly due to amortization and impairments, compared to USD 6.8 billion in prior year. Core adjustments decreased compared to prior year, mainly due to lower restructuring charges, other income from legal matters, partly offset by higher impairments.
Core operating income was USD 16.4 billion (+11%, +18% cc), mainly driven by higher net sales, partly offset by higher SG&A and R&D investments. Core operating income margin was 36.0% of net sales, increasing 0.9 percentage points (+2.4 percentage points cc). Other revenue as a percentage of sales decreased by 0.2 percentage points (cc). Core cost of goods sold as a percentage of sales increased by 0.1 percentage points (cc). Core R&D expenses as a percentage of net sales decreased by 1.3 percentage points (cc). Core SG&A expenses as a percentage of net sales decreased by 1.6 percentage points (cc). Core other income and expense as a percentage of net sales decreased the margin by 0.2 percentage points (cc).
Interest expense and other financial income/expense
Interest expense amounted to USD 855 million, broadly in line with prior year.
Other financial income and expense amounted to an income of USD 222 million compared to USD 42 million in the prior year, mainly due to higher interest income partly offset by higher net losses from the impact of IAS 29 “Financial reporting in Hyperinflation Economies.”
Core other financial income and expense amounted to an income of USD 430 million compared to USD 140 million in the prior year, mainly due to higher interest income.
Income taxes
The tax rate was 6.0% compared to 15.7% in the prior year period. The current year tax rate was favorably impacted by the effect of tax benefits from the write-down of investments in subsidiaries, non-taxable net gains on unrealized foreign currency results, recognition of deferred tax assets on prior years tax loss carryforwards, non-taxable income related to legal matters, and other items including impact of tax rate changes. Excluding these impacts, the current year tax rate would have been 15.3% compared with 15.7% in the prior year period. The decrease from the prior year was mainly the result of a change in profit mix.
The core tax rate (core taxes as a percentage of core income before tax) was 15.6% compared to 15.4% in the prior year period. The increase from the prior year was mainly the result of a change in profit mix.
6

Net income, EPS and free cash flow
Net income was USD 8.6 billion (+42%, +62% cc), mainly driven by higher operating income and non-recurring favorable tax impacts. EPS was USD 4.13 (+49%, +70% cc), growing faster than net income, benefiting from lower weighted average number of shares outstanding.
Core net income was USD 13.4 billion (+13%, +19% cc), mainly due to higher core operating income. Core EPS was USD 6.47 (+18%, +25% cc), growing faster than core net income, benefiting from lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 13.2 billion (+9% USD), compared with USD 12.1 billion in 2022 driven by higher net cash flows from operating activities.
Product commentary (relating to Q4 performance)
Cardiovascular, RENAL and METABOLIC
Q4 2023
Q4 2022
% change
% change
FY 2023
FY 2022
% change
% change
USD m
USD m
USD
cc
USD m
USD m
USD
cc
Cardiovascular, renal and metabolic
Entresto
1 635
1 291
27
26
6 035
4 644
30
31
Leqvio
123
42
193
190
355
112
217
217
Other
1
nm
nm
1
nm
nm
Total cardiovascular, renal and metabolic
1 759
1 333
32
32
6 391
4 756
34
36
nm = not meaningful
Entresto (USD 1 635 million, +27%, +26% cc) sustained robust demand-led growth. In the US and Europe, Entresto penetration grew through the continued adoption of guideline-directed medical therapy in heart failure. In China and Japan, Entresto volume growth is fueled by heart failure as well as increased penetration in hypertension. In the US, Novartis is in ANDA litigation with generic manufacturers. Novartis has appealed to reverse the negative US district court decision to uphold the validity of its combination patent covering Entresto and combinations of sacubitril and valsartan, which expires in 2025 (with pediatric exclusivity). No generics have tentative or final approval in the US. Any US commercial launch of a generic Entresto product prior to the final outcome of Novartis combination patent appeal, or ongoing litigations involving other patents, may be at risk of later litigation developments.
Leqvio (USD 123 million, +193%, +190% cc) launch in the US and other markets is ongoing, with focus on patient on-boarding, removing access hurdles and enhancing medical education. Leqvio is now approved in 94 countries. Novartis obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals.
Immunology
Q4 2023
Q4 2022
% change
% change
FY 2023
FY 2022
% change
% change
USD m
USD m
USD
cc
USD m
USD m
USD
cc
Immunology
Cosentyx
1 303
1 080
21
21
4 980
4 788
4
5
Xolair 1
378
323
17
16
1 463
1 365
7
9
Ilaris
376
301
25
29
1 355
1 133
20
22
Other
1
nm
nm
Total immunology
2 057
1 704
21
21
7 798
7 287
7
8
 1  Net sales reflect Xolair sales for all indications.
nm = not meaningful
Cosentyx (USD 1 303 million, +21%, +21% cc) US sales grew (+17%) and ex-US sales (+26% cc), benefitting from lower prior year base (including revenue deduction adjustments in the US). US growth was also driven by recent new indication (HS) and formulation (IV) launches in addition to volume growth of base business (PsO, SpA). Ex-US growth was also driven by robust demand led volume growth, including a lower prior year base in China, as well as the hidradenitis suppurativa (HS) indication launch. Since initial approval in 2015, Cosentyx has shown sustained efficacy and a robust safety profile, treating more than 1 million patients across six systemic inflammatory conditions. Cosentyx is now approved to treat HS in adults in more than 60 countries worldwide, including the EU as of Q2
7

2023 and the US as of October 2023. FDA approved Cosentyx intravenous formulation for the treatment of adults with psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondyloarthritis in October 2023.
Xolair (USD 378 million, ex-US +17%, +16% cc) sales grew across all regions. In November 2023, Novartis received EU approval for the six new Xolair product configurations, including auto injectors and a new 300 mg strength. Novartis co-promotes Xolair with Genentech in the US and shares a portion of revenue as operating income but does not record any US sales.
Ilaris (USD 376 million, +25%, +29% cc) sales grew across all regions. Contributors to growth include strong performance in the Periodic Fever Sydrome (PFS) and Still’s disease indications (SJIA/AOSD) in the US, Europe and Japan, as well as in key markets worldwide.
Neuroscience
Q4 2023
Q4 2022
% change
% change
FY 2023
FY 2022
% change
% change
USD m
USD m
USD
cc
USD m
USD m
USD
cc
Neuroscience
Kesimpta
641
369
74
73
2 171
1 092
99
99
Zolgensma
286
309
-7
-4
1 214
1 370
-11
-9
Mayzent
106
99
7
7
392
357
10
10
Aimovig
69
59
17
14
266
218
22
21
Other
1
nm
nm
Total neuroscience
1 102
836
32
33
4 043
3 038
33
34
nm = not meaningful
Kesimpta (USD 641 million, +74%, +73% cc) sales grew across all regions driven by increased demand and strong access. Kesimpta is a high efficacy B-cell therapy, with a favorable safety and tolerability profile and an at home self-administration for a broad population of RMS patients. Kesimpta is now approved in 87 countries with more than 85,000 patients treated.
Zolgensma (USD 286 million, -7%, -4% cc). Established markets are treating mainly incident patients. Sales declined due to fewer incident patient treatments. Zolgensma is now approved in 51 countries with more than 3,700 patients treated globally through clinical trials, early access programs and in the commercial setting.
Mayzent (USD 106 million, +7%, +7% cc) sales grew mainly in Europe. Sales continued to grow in patients with multiple sclerosis showing signs of progression despite being on other treatments.
Aimovig (USD 69 million, ex-US, ex-Japan +17%, +14% cc) sales grew mainly in Europe driven by increased demand in migraine prevention. Novartis commercializes Aimovig ex-US, ex-Japan, while Amgen retains all rights in the US and in Japan.
8

ONCOLOGY
Q4 2023
Q4 2022
% change
% change
FY 2023
FY 2022
% change
% change
USD m
USD m
USD
cc
USD m
USD m
USD
cc
Oncology
Promacta/Revolade
563
540
4
4
2 269
2 088
9
10
Kisqali
610
357
71
76
2 080
1 231
69
75
Tafinlar + Mekinist 1
486
465
5
7
1 922
1 770
9
11
Tasigna
446
475
-6
-6
1 848
1 923
-4
-3
Jakavi
444
388
14
14
1 720
1 561
10
12
Pluvicto
273
179
53
53
980
271
262
261
Lutathera
147
128
15
13
605
471
28
28
Kymriah
120
139
-14
-14
508
536
-5
-5
Piqray/Vijoice
131
112
17
18
505
373
35
37
Scemblix
125
52
140
143
413
149
177
179
Votrient
77
103
-25
-26
390
474
-18
-17
Adakveo
45
51
-12
-11
195
194
1
0
Tabrecta
41
36
14
13
154
133
16
16
Other
1
2
-50
nm
Total oncology
3 508
3 025
16
17
13 590
11 176
22
23
 1  Majority of sales for Mekinist and Tafinlar are combination, but both can be used as monotherapy.
nm = not meaningful
Promacta/Revolade (USD 563 million, +4%, +4% cc) sales grew mainly in the US driven by increased use in second-line persistent and chronic immune thrombocytopenia and as first-line and/or second-line treatment for severe aplastic anemia, according to the respective label in the countries.
Kisqali (USD 610 million, +71%, +76% cc) sales grew strongly across all regions, based on increasing recognition of its consistently reported overall survival in HR+/HER2- advanced breast cancer. Positive, statistically significant interim and final efficacy results of the iDFS analysis of the early breast cancer pivotal Phase III trial NATALEE were presented at ASCO and SABCS 2023. Additional QOL information presented at ESMO demonstrated that the addition of ribociclib to endocrine therapy did not compromise the QOL of patients. Submissions for approval in early breast cancer were completed in August to EMA and in December to the FDA. Submissions to other regulatory authorities are ongoing. Novartis is in US ANDA litigation with a generic manufacturer.
Tafinlar + Mekinist (USD 486 million, +5%, +7% cc) sales grew mainly in the US and emerging growth markets, partly offset by decline in Europe. Sales growth was driven by demand in BRAF+ adjuvant melanoma and NSCLC indications, while maintaining demand in the highly competitive BRAF+ metastatic melanoma market. In addition, the tumor agnostic indication contributed to growth in the US. Sales in Europe declined mainly due to immune-oncology competition in 1L metastatic setting.
Tasigna (USD 446 million, -6%, -6% cc) sales declined driven by lower demand in Europe.
Jakavi (USD 444 million, ex-US +14%, +14% cc) sales grew in emerging growth markets, Europe and Japan, driven by strong demand in both myelofibrosis and polycythemia vera indications. Incyte retains all rights to ruxolitinib (Jakafi®) in the US.
Pluvicto (USD 273 million, +53%, +53% cc) saw continued sales growth in the US. Pluvicto is the first and only radioligand therapy approved by the FDA for the treatment of adult patients with progressive, PSMA-positive metastatic castration-resistant prostate cancer, who have already been treated with other anticancer treatments (ARPI and taxane-based chemotherapy). Data from the Phase III PSMAfore trial was presented at ESMO. Pluvicto met its primary endpoint with a clinically meaningful and statistically significant benefit in radiographic progression-free survival (rPFS) in patients with prostate-specific membrane antigen (PSMA)-positive metastatic castration-resistant prostate cancer (mCRPC) after treatment with androgen receptor pathway inhibitor (ARPI) therapy, compared to a change in ARPI. In January 2024, Novartis received approval from the FDA for commercial manufacturing of Pluvicto at state-of-the-art radioligand therapy (RLT) manufacturing facility in Indianapolis.
Lutathera (USD 147 million, +15%, +13% cc) sales grew across all regions due to increased demand. The Phase III NETTER-2 trial with Lutathera met its primary endpoint, showing Lutathera is the first radioligand therapy (RLT) to demonstrate clinically meaningful benefit in a first line setting.
Kymriah (USD 120 million, -14%, -14% cc) sales declined mainly in the US and Europe, partly offset by growth in follicular lymphoma indication launch across markets.
9

Piqray/Vijoice (USD 131 million, +17%, +18% cc) sales grew mainly in the US. In addition to PIK3CA-related overgrowth spectrum (PROS), Piqray is the first therapy specifically developed for the approximately 40% of HR+/HER2- advanced breast cancer patients who have a PIK3CA mutation, associated with a worse prognosis.
Scemblix (USD 125 million, +140%, +143% cc) sales grew across all regions, demonstrating the high unmet need for effective and tolerable treatment options for CML patients, who have been treated with 2 or more tyrosine kinase inhibitors. Scemblix has now been approved in more than 60 countries for Philadelphia chromosome positive (Ph+) CML patients in chronic phase treated with 2 or more TKIs. In January 2024, Novartis announced that the ASC4FIRST trial met both primary endpoints, with clinically meaningful and statistically significant results vs. standard-of-care TKIs in newly diagnosed Ph+CML-CP patients while demonstrating a favorable safety and tolerability profile. Data will be presented at an upcoming medical conference and submitted to regulatory authorities in 2024.
Votrient (USD 77 million, -25%, -26% cc) sales declined due to increased competition, especially from immune-oncology agents in metastatic renal cell carcinoma.
Adakveo (USD 45 million, -12%, -11% cc) sales declined due to withdrawal in Europe. Adakveo remains approved for use by the FDA for the reduction in frequency of vasoocclusive crises (pain crises) in adults and pediatric patients aged 16 years or older with sickle cell disease.
Tabrecta (USD 41 million, +14%, +13% cc) sales grew mainly in the US. Tabrecta is the first therapy approved by the FDA to specifically target metastatic NSCLC with a mutation that leads to MET exon 14 (METex14) skipping in any line of treatment. Novartis obtained global rights to develop, manufacture and commercialize Tabrecta under a license and collaboration agreement with Incyte Corporation.
Established BRANDS
Q4 2023
Q4 2022
% change
% change
FY 2023
FY 2022
% change
% change
USD m
USD m
USD
cc
USD m
USD m
USD
cc
Established brands
Lucentis
301
398
-24
-25
1 475
1 874
-21
-20
Sandostatin
316
305
4
5
1 314
1 238
6
8
Gilenya
154
346
-55
-55
925
2 013
-54
-54
Exforge Group
156
159
-2
-1
713
743
-4
-1
Galvus Group
153
209
-27
-17
692
859
-19
-11
Diovan Group
147
142
4
6
613
652
-6
-1
Gleevec/Glivec
128
175
-27
-25
561
745
-25
-22
Afinitor/Votubia
97
106
-8
-7
408
512
-20
-18
Contract manufacturing 1
302
313
-4
-5
1 490
1 200
24
22
Other 1
1 243
1 525
-18
-11
5 427
6 113
-11
-6
Total established brands 1
2 997
3 678
-19
-15
13 618
15 949
-15
-12
 1  Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies’ activities (included in Contract manufacturing) and the Coartem brand (included in Other). The financial information of the Novartis continuing operations and discontinued operations were adapted accordingly in 2022 and 2021, in compliance with IFRS Accounting Standards. See Note 10 for additional information.
    
Lucentis (USD 301 million, ex-US -24%, -25% cc) sales declined in Europe, emerging growth markets and Japan, mainly due to competition.
Sandostatin (USD 316 million, +4%, +5% cc) sales grew in emerging growth markets and Europe mainly due to temporary generic supply shortages, partly offset by decline in the US.
Gilenya (USD 154 million, -55%, -55% cc) sales declined due to generic competition mainly in the US and Europe. Novartis is in litigation against a generic manufacturer on the method of treatment patent in the US, and against generic manufacturers on the dosing regimen patent in Europe.
Exforge Group (USD 156 million, -2%, -1% cc) sales declined mainly in Europe.
Galvus Group (USD 153 million, -27%, -17% cc) sales declined mainly in Europe.
Diovan Group (USD 147 million, +4%, +6% cc) sales grew in emerging growth markets.
Gleevec/Glivec (USD 128 million, -27%, -25% cc) sales declined due to increased generic competition.
Afinitor/Votubia (USD 97 million, -8%, -7% cc) sales declined mainly in Europe and emerging growth markets driven by generic competition.
10

Discontinued operations
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate activities attributable to Sandoz prior to the spin-off up to the distribution date of October 3, 2023, and certain other expenses related to the spin-off. Included in 2023 is also the IFRS Accounting Standards non-cash, non-taxable net gain on the distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, representing mainly the excess amount of the IFRS Accounting Standards distribution liability, which is the estimated fair value of the Sandoz business distributed to Novartis AG shareholders, over the then carrying value of Sandoz business net assets. There were no operating results for the fourth quarter 2023 following the distribution date. The prior year includes the results for the full period.
Fourth quarter
Net income from discontinued operations amounted to USD 5.8 billion, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion, compared to USD 151 million in prior year.
Full year
Discontinued operations net sales in 2023 were USD 7.4 billion, compared to USD 9.4 billion in 2022 and operating income amounted to USD 265 million compared to USD 1.3 billion in 2022.
Net income from discontinued operations in 2023 amounted to USD 6.3 billion, compared to USD 906 million in 2022, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders, which amounted to USD 5.9 billion.
Total Company
Fourth quarter
Total Company net income was USD 8.5 billion in 2023, compared to USD 1.5 billion in 2022 and basic EPS was USD 4.14 compared to USD 0.69 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for total Company amounted to USD 2.5 billion and free cash flow amounted to USD 2.1 billion.
Full year
Total Company, net income amounted to USD 14.9 billion in 2023, compared to USD 7.0 billion in 2022, and basic earnings per share was USD 7.15 compared to USD 3.19 in prior year, driven by the IFRS Accounting Standards non-cash, non-taxable, net gain on distribution of Sandoz Group AG to Novartis AG shareholders of USD 5.9 billion. Net cash flows from operating activities for the total Company amounted to USD 14.5 billion, and free cash flow amounted to USD 13.2 billion.
11

Company Cash Flow and Balance Sheet
Cash flow
Fourth quarter
Net cash flows from operating activities from continuing operations amounted to USD 2.5 billion, compared with USD 3.8 billion in the prior year quarter. This decrease was driven by higher net income from continuing operations adjusted for non-cash items and other adjustments, including divestment gains being more than offset by unfavorable changes in working capital and higher income taxes paid, mainly due to the timing of income tax payments.
Net cash flows from operating activities from discontinued operations decrease of USD 0.3 billion was due to the distribution (spin-off) of the Sandoz business on October 3, 2023.
Net cash outflows used in investing activities from continuing operations amounted to USD 1.0 billion, compared with USD 1.3 billion in the prior year quarter.
The current year quarter net cash outflows used in investing activities from continuing operations were mainly driven by USD 0.5 billion for net purchases of marketable securities, commodities and time deposits; USD 0.4 billion for purchases of property, plant and equipment; and USD 0.4 billion for purchases of intangible assets. These cash outflows were partly offset by cash inflows of USD 0.2 billion from the sale of property, plant and equipment (including proceeds from the sale and leaseback of real estate); and USD 0.1 billion from the sale of financial assets.
In the prior year quarter, net cash outflows used in investing activities from continuing operations of USD 1.3 billion were driven by USD 0.9 billion for net purchases of marketable securities, commodities and time deposits; USD 0.3 billion for purchases of property, plant and equipment; and USD 0.2 billion for purchases of intangible assets. These cash outflows were partly offset by cash inflows of USD 0.1 billion from the sale of intangible assets.
The current year quarter net cash outflows used in investing activities from discontinued operations amounted to USD 0.7 billion, compared with USD 0.1 billion in the prior year quarter. The current year quarter mainly includes the cash outflow of USD 0.7 billion due to the derecognition of cash and cash equivalents of the Sandoz business, following the distribution (spin-off) on October 3, 2023.
Net cash outflows used in financing activities from continuing operations amounted to USD 0.5 billion, compared with USD 4.1 billion in the prior year quarter.
The current year quarter net cash outflows used in financing activities from continuing operations were mainly driven by USD 1.3 billion for net treasury share transactions; and USD 0.1 billion payments of lease liabilities. These cash outflows were partly offset by cash inflows of USD 0.7 billion from the net increase in current financial debts and other net financing cash inflows of USD 0.2 billion.
In the prior year quarter, net cash outflows used in financing activities from continuing operations of USD 4.1 billion were mainly driven by USD 2.7 billion for net treasury share transactions; and USD 1.2 billion from the net decrease in current financial debts. Payments of lease liabilities and other financing cash flows resulted in a net cash outflow of USD 0.2 billion.
The current year quarter net cash outflows used in financing activities from discontinued operations amounted to USD 0.1 billion, compared with USD 0.1 billion net cash inflows in the prior year quarter.
Free cash flow from continuing operations amounted to USD 2.1 billion (-38% USD), compared with USD 3.5 billion in the prior year quarter driven by lower net cash flows from operating activities from continuing operations.
For the total Company, net cash flows from operating activities amounted to USD 2.5 billion, compared with USD 4.1 billion in the prior year quarter and free cash flow amounted to USD 2.1 billion, compared with USD 3.7 billion in the prior year quarter.
Full year
Net cash flows from operating activities from continuing operations amounted to USD 14.2 billion, compared with USD 13.0 billion in 2022. This increase was mainly driven by higher net income from continuing operations adjusted for non-cash items and other adjustments, including divestment gains, which were partly offset by higher income taxes paid, mainly due to the timing of payments.
12

Net cash flows from operating activities from discontinued operations amounted to USD 0.2 billion, compared with USD 1.2 billion in 2022. This decrease was mainly driven by lower net income from discontinued operations adjusted for non-cash items and other adjustments, including divestment gains and the distribution (spin-off) of the Sandoz business on October 3, 2023.
Net cash inflows from investing activities from continuing operations amounted to USD 6.7 billion, compared with USD 1.9 billion in 2022.
The current year net cash inflows from investing activities from continuing operations were driven by net proceeds of USD 10.6 billion from the sale of marketable securities, commodities and time deposits; USD 2.0 billion from the sale of intangible assets (including USD 1.75 billion cash proceeds from the divestment of the ‘front of eye’ ophthalmology assets to Bausch + Lomb); USD 0.3 billion from the sale of financial assets; and USD 0.2 billion from the sale of property, plant and equipment (including proceeds from the sale and leaseback of real estate). These cash inflows were partly offset by cash outflows of USD 3.6 billion for acquisitions and divestments of businesses, net (including the acquisition of Chinook Therapeutics, Inc. for USD 3.1 billion, net of cash acquired USD 0.1 billion, and the acquisition of DTx Pharma Inc. for USD 0.5 billion, net of cash acquired USD 0.1 billion); USD 1.7 billion for purchases of intangible assets; USD 1.1 billion for purchases of property, plant and equipment; and USD 0.1 billion for purchases of financial assets.
In 2022, net cash inflows from investing activities from continuing operations of USD 1.9 billion were mainly driven by net proceeds of USD 4.7 billion from the sale of marketable securities, commodities and time deposits; and USD 0.5 billion from the sale of intangible assets, financial assets and property, plant and equipment. These cash inflows were partly offset by cash outflows of USD 1.3 billion for purchases of intangible assets; USD 0.9 billion for purchases of property, plant and equipment; USD 0.1 billion for purchases of financial assets; and USD 0.8 billion for acquisitions and divestments of businesses, net (primarily the acquisition of Gyroscope Therapeutics Holdings plc for USD 0.8 billion).
Net cash outflows used in investing activities from discontinued operations amounted to USD 1.1 billion, compared with USD 0.4 billion in 2022. The current year mainly includes the cash outflow of USD 0.7 billion due to the derecognition of cash and cash equivalents of the Sandoz business, following the distribution (spin-off) on October 3, 2023.
Net cash outflows used in financing activities from continuing operations amounted to USD 17.6 billion, compared with USD 20.7 billion in 2022.
The current year net cash outflows used in financing activities from continuing operations were mainly driven by USD 8.6 billion for net treasury share transactions; USD 7.3 billion for the dividend payment; USD 2.2 billion for the repayment of two EUR denominated bonds (notional amounts of EUR 1.25 billion and of EUR 0.75 billion) at maturity. Payments of lease liabilities amounted to USD 0.3 billion. These cash outflows were partly offset by cash inflows of USD 0.5 billion from the net increase in current financial debts.
In 2022, net cash outflows used in financing activities from continuing operations of USD 20.7 billion were mainly driven by USD 10.6 billion for net treasury share transactions; USD 7.5 billion for the dividend payment; USD 2.5 billion in aggregate for the repayment of two US dollar bonds; and USD 0.3 billion payments of lease liabilities. These cash outflows were partly offset by cash inflows of USD 0.3 billion from the net increase in current financial debts.
The current year net cash inflows from financing activities from discontinued operations of USD 3.3 billion were mainly driven by USD 3.6 billion cash inflows from bank borrowings (including the USD 3.3 billion Sandoz business borrowings from a group of banks on September 28, 2023) in connection with the distribution (spin-off) of the Sandoz business to Novartis AG shareholders, partly offset by transaction cost payments of USD 0.2 billion. Net cash inflows from financing activities from discontinued operations in 2022 were USD 119 million.
Free cash flow from continuing operations amounted to USD 13.2 billion (+9% USD), compared with USD 12.1 billion in 2022 driven by higher net cash flows from operating activities from continuing operations.
For the total Company, net cash flows from operating activities amounted to USD 14.5 billion, compared with USD 14.2 billion in 2022 and free cash flow amounted to USD 13.2 billion, compared with USD 13.0 billion in 2022.
13

Balance sheet
There has been a significant change to the December 31, 2023 consolidated balance sheet resulting from the presentation of the Sandoz business as a discontinued operations. This follows the September 15, 2023 shareholders’ approval to spin-off of Sandoz business through a dividend in kind distribution to the Novartis AG shareholders (for further details see Note 1, Note 2 and Note 3).
The December 31, 2022 consolidated balance sheet includes the assets and liabilities of the Sandoz business. The December 31, 2023 consolidated balance sheet excludes the assets and liabilities of the Sandoz business in the individual lines, due to the derecognition of the Sandoz business at the date of the October 3, 2023 distribution (spin-off).
The consolidated balance sheet discussion and analysis that follows excludes the impacts of the derecognition of the Sandoz business assets and liabilities at the date of the distribution (spin-off). For information on the assets and liabilities of the Sandoz business derecognized at October 3, 2023, the distribution (spin-off) date, see Note 13.
Assets
Total non-current assets of USD 69.5 billion increased by USD 0.5 billion compared to December 31, 2022, excluding the impact of the derecognition of the Sandoz business non-current assets related to discontinued operations.
Intangible assets other than goodwill decreased by USD 3.3 billion mainly due to amortization and impairments and the divestment of the ‘front of eye’ ophthalmology assets, partially offset by the impact of acquisitions, including Chinook Therapeutics, Inc. and of DTx Pharma Inc., additions, and favorable currency translation adjustments.
Goodwill increased by USD 1.5 billion mainly due to the acquisition of Chinook Therapeutics, Inc and DTx Pharma Inc.
Deferred tax assets increased by USD 1.3 billion mainly due to higher deferred tax assets on intangible assets, inventory and tax loss carryforwards. Property, plant and equipment increased by USD 0.6 billion mainly as additions and favorable currency translation adjustments exceeded depreciation charge and disposals. Right-of-use assets, investments in associated companies, financial assets, and other non-current assets were broadly in line with December 31, 2022.
Total current assets of USD 30.5 billion decreased by USD 1.7 billion compared to December 31, 2022, excluding the impact of the derecognition of the Sandoz business non-current assets related to discontinued operations.
Cash and cash equivalents, marketable securities, commodities, time deposits and derivative financial instruments decreased by USD 4.4 billion mainly due to the dividend payment, and net purchases of treasury shares and intangible assets, partially offset by the cash generated through operating activities.
Inventories increased by USD 0.9 billion. Trade receivables increased by USD 1.3 billion, mainly due to the increase in net sales. Other current assets and income tax receivables were broadly in line with December 31, 2022
Liabilities
Total non-current liabilities of USD 26.8 billion decreased by USD 1.7 billion compared to December 31, 2022, excluding the impact of the derecognition of the Sandoz business non-current liabilities related to discontinued operations.
Non-current financial debts decreased by USD 1.8 billion mainly due to the reclassification of USD 2.1 billion from non-current to current financial debts of a USD denominated bond with notional amount of USD 2.2 billion maturing in 2024.
Non-current lease liabilities, deferred tax liabilities and provisions and other non-current liabilities were broadly in line with December 31, 2022.
Total current liabilities of USD 26.4 billion increased by USD 1.5 billion compared to December 31, 2022 excluding the impact of the derecognition of the Sandoz business non-current liabilities related to discontinued operations.
Current financial debts and derivative financial instruments were broadly in line with December 31, 2022, as the repayment of a 0.5% coupon bond with a notional amount of EUR 750 million and a 0.125% coupon bond with a
14

notional amount of EUR 1.25 billion was largely offset by the reclassification of USD 2.1 billion from non-current to current financial debts of a USD denominated bond with notional amount of USD 2.2 billion maturing in 2024.
Provisions and other current liabilities increased by USD 0.6 billion, mainly driven by an increase of the provisions for deductions from revenue. Trade payables increased by USD 0.9 billion. Current income tax liabilities and current lease liabilities were broadly in line with December 31, 2022.
Equity
The Company’s equity decreased by USD 12.7 billion to USD 46.8 billion compared to December 31, 2022.
This decrease was mainly due to the dividend in kind to effect the distribution (spin-off) of Sandoz Group AG to the Novartis AG shareholders’ of USD 14.0 billion, the cash-dividend payment of USD 7.3 billion and the purchase of treasury shares of USD 8.5 billion. This was partially offset by the net income of USD 14.9 billion, and equity-based compensation of USD 0.9 billion.
Net debt and debt/equity ratio
The Company’s liquidity amounted to USD 14.4 billion as at December 31, 2023, compared with USD 18.9 billion as at December 31, 2022. Total non-current and current financial debts, including derivatives, amounted to USD 24.6 billion as at December 31, 2023, compared with USD 26.2 billion as at December 31, 2022.
The debt/equity ratio increased to 0.53:1 as at December 31, 2023, compared with 0.44:1 as at December 31, 2022. The net debt increased to USD 10.2 billion as at December 31, 2023, compared with USD 7.2 billion as at December 31, 2022.
15

Innovation Review
Novartis continues to focus its R&D portfolio prioritizing high value medicines with transformative potential for patients. We now focus on ~110 projects in clinical development.
Selected Innovative Medicines approvals

Product
Active ingredient/
Descriptor

Indication

Region
Fabhalta
iptacopan
Paroxysmal nocturnal hemoglobinuria
US
Cosentyx
secukinumab
Hidradenitis suppurativa
US
Selected Innovative Medicines projects awaiting regulatory decisions
Completed submissions
Product
Indication
US
EU
Japan
News update
Kisqali
Hormone receptor-positive /
human epidermal growth factor
receptor 2-negative early
breast cancer (adjuvant)
Q4 2023


Q3 2023





– US filing


LNP023
(iptacopan)
Paroxysmal nocturnal
hemoglobinuria
Approved
Q2 2023
Q3 2023
– US approval
Xolair
Food allergy
Q4 2023
– Genentech submission
Selected Innovative Medicines pipeline projects
Compound/
product
Potential indication/
Disease area
First planned
submissions
Current
Phase

News update
Aimovig
Migraine, pediatrics
≥2027
3
AVXS-101
(OAV101)
Spinal muscular atrophy
(IT formulation)
2025
3

Beovu
Diabetic retinopathy
2025
3
CFZ533
(iscalimab)
Sjögren's syndrome
≥2027
2

Coartem
Malaria, uncomplicated (<5 kg patients)


2024


3


– Submission will use the MAGHP procedure
in Switzerland to facilitate rapid approvals in
the developing countries who are included in
the MAGHP procedure
Cosentyx
Giant cell arteritis
2025
3
Polymyalgia rheumatica
2026
3
Rotator cuff tendinopathy
≥2027
3
EXV811
(atrasentan)
IgA nephropathy
2024
3
– Ph3 ALIGN met its primary endpoint
FUB523
(zigakibart)
IgA nephropathy
≥2027
3

JDQ443
(opnurasib)
Non-small cell lung cancer
(mono/combos)
≥2027
3
–Asset submission plan revised following
strategy update
KAE609
(cipargamin)
Malaria, uncomplicated
≥2027
2
Malaria, severe
≥2027
2
KLU156
(ganaplacide
+ lumefantrine)
Malaria, uncomplicated

2026

3

– FDA Orphan Drug designation
– FDA Fast Track designation
Leqvio
Secondary prevention of cardiovascular
events in patients with elevated levels of LDL-C
≥2027
3

Primary prevention CVRR
≥2027
3
LNA043
Osteoarthritis
≥2027
2
– FDA Fast Track designation
16

Compound/
product
Potential indication/
Disease area
First planned
submissions
Current
Phase

News update
LNP023
(iptacopan)
IgA nephropathy

2024

3

– EU Orphan Drug designation
– Ph3 APPLAUSE-IgAN met its primary
endpoint
C3 glomerulopathy





2024





3





– EU Orphan Drug designation
– EU PRIME designation
– FDA Rare Pediatric designation
– China Breakthrough Therapy designation
– FDA Breakthrough Therapy designation
– Ph3 APPEAR-C3G study met its primary
endpoint
IC-MPGN
≥2027
3
Atypical haemolytic uraemic syndrome
≥2027
3
LOU064
(remibrutinib)
Chronic spontaneous urticaria
2024
3

Multiple sclerosis
≥2027
3
CINDU
≥2027
3
Sjögren's syndrome

2
– Further development will not be pursued
to prioritize other key programs in portfolio
Lutathera
Gastroenteropancreatic
neuroendocrine tumors,
1L in G2/3 tumors
2024

3



177Lu-NeoB
Multiple solid tumors
≥2027
1
LXE408
Visceral leishmaniasis
≥2027
2
MBG453
(sabatolimab)
Myelodysplastic syndrome



3

– Ph3 STIMULUS MDS2 did not meet
primary endpoint; Program discontinued to
prioritize other key programs in portfolio
Unfit acute myeloid leukemia
2
Pluvicto
Metastatic castration-resistant
prostate cancer pre-taxane
2024
3

Metastatic hormone sensitive prostate cancer
2025
3
– Event driven trial endpoint
Oligometastatic prostate cancer
≥2027
3
QGE031
(ligelizumab)
Food allergy
≥2027
3

Scemblix
1L Chronic myeloid leukemia
2024
3
– Ph3 ASC4FIRST met both primary endpoints
TQJ230
(pelacarsen)
Secondary prevention of cardiovascular
events in patients with elevated levels
of lipoprotein(a)
2025

3

– FDA Fast Track designation
– China Breakthrough Therapy designation
VAY736
(ianalumab)
Auto-immune hepatitis
≥2027
2

Sjögren’s syndrome
2026
3
– FDA Fast Track designation
Lupus nephritis
≥2027
3
Systemic lupus erythematosus
≥2027
3
1L Immune thrombocytopenia
2026
3
2L Immune thrombocytopenia
2026
3
warm Autoimmune hemolytic anemia
2026
3
Vijoyce
Lymphatic malformations
≥2027
3
– US, EU Orphan Drug designation granted
– Ph3 Study EPIK-L1 recruiting
XXB750
Hypertension
≥2027
2
YTB323
sr Lupus nephritis /
Systemic lupus erythematosus
≥2027
2

1L High-risk large B-cell lymphoma
≥2027
2
17

Condensed Consolidated Financial Statements

Consolidated income statements
Fourth quarter (unaudited)
(USD millions unless indicated otherwise)
Note
Q4 2023
Q4 2022
Net sales from continuing operations
11
11 423
10 576
Other revenues
11
353
390
Cost of goods sold
-3 022
-3 041
Gross profit from continuing operations
8 754
7 925
Selling, general and administration
-3 444
-3 183
Research and development
-2 567
-2 216
Other income
450
155
Other expense
-611
-926
Operating income from continuing operations
2 582
1 755
Loss from associated companies
-6
-3
Interest expense
-217
-207
Other financial income and expense
18
24
Income before taxes from continuing operations
2 377
1 569
Income taxes
261
-254
Net income from continuing operations
2 638
1 315
Net (loss)/income from discontinued operations before gain on
distribution of Sandoz Group AG to Novartis AG shareholders

13

-18

151
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
3, 13
5 860
Net income from discontinued operations
5 842
151
Net income
8 480
1 466
Attributable to:
   Shareholders of Novartis AG
8 480
1 466
   Non-controlling interests
0
0
Weighted average number of shares outstanding – Basic (million)
2 050
2 135
Basic earnings per share from continuing operations (USD) 1
1.29
0.62
Basic earnings per share from discontinued operations (USD) 1
2.85
0.07
Total basic earnings per share (USD) 1
4.14
0.69
Weighted average number of shares outstanding – Diluted (million)
2 065
2 150
Diluted earnings per share from continuing operations (USD) 1
1.28
0.61
Diluted earnings per share from discontinued operations (USD) 1
2.83
0.07
Total diluted earnings per share (USD) 1
4.11
0.68
 1  Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG.
The accompanying Notes form an integral part of the condensed consolidated financial statements
18

Consolidated income statements
Full year (audited)
(USD millions unless indicated otherwise)
Note
FY 2023
FY 2022
Net sales from continuing operations
11
45 440
42 206
Other revenues
11
1 220
1 255
Cost of goods sold
-12 472
-11 582
Gross profit from continuing operations
34 188
31 879
Selling, general and administration
-12 517
-12 193
Research and development
-11 371
-9 172
Other income
1 772
696
Other expense
-2 303
-3 264
Operating income from continuing operations
9 769
7 946
Loss from associated companies
-13
-11
Interest expense
-855
-800
Other financial income and expense
222
42
Income before taxes from continuing operations
9 123
7 177
Income taxes
-551
-1 128
Net income from continuing operations
8 572
6 049
Net income from discontinued operations before gain on
distribution of Sandoz Group AG to Novartis AG shareholders

13

422

906
Gain on distribution of Sandoz Group AG to Novartis AG shareholders
3, 13
5 860
Net income from discontinued operations
6 282
906
Net income
14 854
6 955
Attributable to:
   Shareholders of Novartis AG
14 850
6 955
   Non-controlling interests
4
0
Weighted average number of shares outstanding – Basic (million)
2 077
2 181
Basic earnings per share from continuing operations (USD) 1
4.13
2.77
Basic earnings per share from discontinued operations (USD) 1
3.02
0.42
Total basic earnings per share (USD) 1
7.15
3.19
Weighted average number of shares outstanding – Diluted (million)
2 092
2 197
Diluted earnings per share from continuing operations (USD) 1
4.10
2.75
Diluted earnings per share from discontinued operations (USD) 1
3.00
0.42
Total diluted earnings per share (USD) 1
7.10
3.17
 1  Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG.  
The accompanying Notes form an integral part of the condensed consolidated financial statements
19

Consolidated statements of comprehensive income
Fourth quarter (unaudited)
(USD millions)
Q4 2023
Q4 2022
Net income
8 480
1 466
Other comprehensive income
Items that are or may be recycled into the consolidated income statement
   Net investment hedge, net of taxes
-59
-118
   Currency translation effects, net of taxes
1 320
1 652
Total of items that are or may be recycled
1 261
1 534
Items that will never be recycled into the consolidated income statement
   Actuarial gains/(losses) from defined benefit plans, net of taxes
-217
-1 920
   Fair value adjustments on equity securities, net of taxes
56
-97
Total of items that will never be recycled
-161
-2 017
Total comprehensive income
9 580
983
Total comprehensive income for the year attributable to:
   Shareholders of Novartis AG
9 578
980
   Continuing operations
4 062
630
   Discontinued operations
5 516
350
   Non-controlling interests
2
3
The accompanying Notes form an integral part of the condensed consolidated financial statements
Full year (audited)
(USD millions)
FY 2023
FY 2022
Net income
14 854
6 955
Other comprehensive income
Items that are or may be recycled into the consolidated income statement
   Net investment hedge, net of taxes
-50
91
   Currency translation effects, net of taxes
1 375
-450
Total of items that are or may be recycled
1 325
-359
Items that will never be recycled into the consolidated income statement
   Actuarial gains from defined benefit plans, net of taxes
-160
-103
   Fair value adjustments on equity securities, net of taxes
37
-382
Total of items that will never be recycled
-123
-485
Total comprehensive income
16 056
6 111
Total comprehensive income for the year attributable to:
   Shareholders of Novartis AG
16 050
6 116
   Continuing operations
10 115
5 181
   Discontinued operations
5 935
935
   Non-controlling interests
6
-5
    
The accompanying Notes form an integral part of the condensed consolidated financial statements
20

Consolidated balance sheets

(USD millions)


Note
Dec 31,
2023
(audited)
Dec 31,
2022
(audited)
Assets
Non-current assets
Property, plant and equipment
9 514
10 764
Right-of-use assets
1 410
1 431
Goodwill
23 341
29 301
Intangible assets other than goodwill
26 879
31 644
Investments in associated companies
205
143
Deferred tax assets
4 309
3 739
Financial assets
2 607
2 411
Other non-current assets
1 199
1 110
Total non-current assets
69 464
80 543
Current assets
Inventories
5 913
7 175
Trade receivables
7 107
8 066
Income tax receivables
426
268
Marketable securities, commodities, time deposits and derivative financial instruments
1 035
11 413
Cash and cash equivalents
13 393
7 517
Other current assets
2 607
2 471
Total current assets
30 481
36 910
Total assets
99 945
117 453
Equity and liabilities
Equity
Share capital
825
890
Treasury shares
-41
-92
Reserves
45 883
58 544
Equity attributable to Novartis AG shareholders
46 667
59 342
Non-controlling interests
83
81
Total equity
46 750
59 423
Liabilities
Non-current liabilities
Financial debts
18 436
20 244
Lease liabilities
1 598
1 538
Deferred tax liabilities
2 248
2 686
Provisions and other non-current liabilities
4 523
4 906
Total non-current liabilities
26 805
29 374
Current liabilities
Trade payables
4 926
5 146
Financial debts and derivative financial instruments
6 175
5 931
Lease liabilities
230
251
Current income tax liabilities
1 893
2 533
Provisions and other current liabilities
13 166
14 795
Total current liabilities
26 390
28 656
Total liabilities
53 195
58 030
Total equity and liabilities
99 945
117 453
The accompanying Notes form an integral part of the condensed consolidated financial statements
21

Consolidated statements of changes in equity
Fourth quarter (unaudited)
Reserves

(USD millions)





Note




Share
capital




Treasury
shares




Retained
earnings




Total value
adjustments
Issued share
capital and
reserves
attributable
to Novartis
shareholders



Non-
controlling
interests




Total
equity
Total equity at September 30, 2023
825
-32
42 333
-4 962
38 164
81
38 245
Net income
8 480
8 480
0
8 480
Other comprehensive income
1 098
1 098
2
1 100
Total comprehensive income
8 480
1 098
9 578
2
9 580
Purchase of treasury shares
-10
-1 223
-1 233
-1 233
Exercise of options and employee transactions
4.2
-5
-5
-5
Equity-based compensation
1
249
250
250
Shares delivered to Sandoz employees
as a result of the Sandoz spin-off




30


30


30
Taxes on treasury share transactions
3
3
3
Transaction costs, net of taxes
4.4
-140
-140
-140
Fair value adjustments on financial assets sold
-69
69
Value adjustments related to divestments
-29
29
Other movements
4.5
20
20
20
Total of other equity movements
-9
-1 164
98
-1 075
-1 075
Total equity at December 31, 2023
825
-41
49 649
-3 766
46 667
83
46 750
The accompanying Notes form an integral part of the condensed consolidated financial statements
Reserves

(USD millions)





Note




Share
capital




Treasury
shares




Retained
earnings




Total value
adjustments
Issued share
capital and
reserves
attributable
to Novartis
shareholders



Non-
controlling
interests




Total
equity
Total equity at October 1, 2022
890
-70
64 543
-4 543
60 820
78
60 898
Net income
1 466
1 466
0
1 466
Other comprehensive income
-486
-486
3
-483
Total comprehensive income
1 466
-486
980
3
983
Purchase of treasury shares
-22
-2 685
-2 707
-2 707
Exercise of options and employee transactions
4.2
-1
-1
-1
Equity-based compensation
0
203
203
203
Taxes on treasury share transactions
2
2
2
Fair value adjustments on financial assets sold
1
-1
Value adjustments related to divestments
-34
34
Other movements
4.5
45
45
45
Total of other equity movements
-22
-2 469
33
-2 458
-2 458
Total equity at December 31, 2022
890
-92
63 540
-4 996
59 342
81
59 423
The accompanying Notes form an integral part of the condensed consolidated financial statements
22

Consolidated statements of changes in equity
Full year (audited)
Reserves

(USD millions)





Note




Share
capital




Treasury
shares




Retained
earnings




Total value
adjustments
Issued share
capital and
reserves
attributable
to Novartis
shareholders



Non-
controlling
interests




Total
equity
Total equity at January 1, 2023
890
-92
63 540
-4 996
59 342
81
59 423
Net income
14 850
14 850
4
14 854
Other comprehensive income
1 200
1 200
2
1 202
Total comprehensive income
14 850
1 200
16 050
6
16 056
Dividends
-7 255
-7 255
-7 255
Dividend in kind to effect the spin-off of
Sandoz Group AG

3



-13 962


-13 962


-13 962
Purchase of treasury shares
-51
-8 466
-8 517
-8 517
Reduction of share capital
4.1
-65
94
-29
Exercise of options and employee transactions
4.2
2
144
146
146
Equity-based compensation
6
898
904
904
Shares delivered to Sandoz employees
as a result of the Sandoz spin-off




30


30


30
Taxes on treasury share transactions
14
14
14
Transaction costs, net of taxes
4.4
-214
-214
-214
Changes in non-controlling interests
-4
-4
Fair value adjustments on financial assets sold
-1
1
Value adjustments related to divestments
-29
29
Other movements
4.5
129
129
129
Total of other equity movements
-65
51
-28 741
30
-28 725
-4
-28 729
Total equity at December 31, 2023
825
-41
49 649
-3 766
46 667
83
46 750
The accompanying Notes form an integral part of the condensed consolidated financial statements
Reserves

(USD millions)





Note




Share
capital




Treasury
shares




Retained
earnings




Total value
adjustments
Issued share
capital and
reserves
attributable
to Novartis
shareholders



Non-
controlling
interests




Total
equity
Total equity at January 1, 2022
901
-48
70 989
-4 187
67 655
167
67 822
Net income
6 955
6 955
0
6 955
Other comprehensive income
-839
-839
-5
-844
Total comprehensive income
6 955
-839
6 116
-5
6 111
Dividends
-7 506
-7 506
-7 506
Purchase of treasury shares
-66
-10 844
-10 910
-10 910
Reduction of share capital
4.1
-11
15
-4
Exercise of options and employee transactions
4.2
1
87
88
88
Equity-based compensation
6
848
854
854
Shares delivered to Alcon employees
as a result of the Alcon spin-off



0

5


5


5
Taxes on treasury share transactions
14
14
14
Decrease of treasury share repurchase obligation
under a share buyback trading plan

4.3



2 809


2 809


2 809
Changes in non-controlling interests
-81
-81
Fair value adjustments on financial assets sold
4
-4
Value adjustments related to divestments
-34
34
Other movements
4.5
217
217
217
Total of other equity movements
-11
-44
-14 404
30
-14 429
-81
-14 510
Total equity at December 31, 2022
890
-92
63 540
-4 996
59 342
81
59 423
The accompanying Notes form an integral part of the condensed consolidated financial statements
23

Consolidated statements of cash flows
Fourth quarter (unaudited)
(USD millions)
Note
Q4 2023
Q4 2022
Net income from continuing operations
2 638
1 315
Adjustments to reconcile net income from continuing operations to net cash flows from operating activities from continuing operations
Reversal of non-cash items and other adjustments
7.1
1 791
2 756
Interest received
163
133
Interest paid
-238
-212
Change in other financial receipts
26
-18
Change in other financial payments
-3
-5
Income taxes paid
7.2
-1 093
-334
Net cash flows from operating activities from continuing operations
before working capital and provision changes


3 284

3 635
Payments out of provisions and other net cash movements in non-current liabilities
-353
-323
Change in net current assets and other operating cash flow items
7.3
-384
456
Net cash flows from operating activities from continuing operations
2 547
3 768
Net cash flows from operating activities from discontinued operations
343
Total net cash flows from operating activities
2 547
4 111
Purchases of property, plant and equipment
-406
-306
Proceeds from sale of property, plant and equipment
164
102
Purchases of intangible assets
-377
-192
Proceeds from sale of intangible assets
2
Purchases of financial assets
-29
-29
Proceeds from sale of financial assets
147
12
Acquisitions and divestments of interests in associated companies, net
-3
-2
Acquisitions and divestments of businesses, net
7.4
-8
-7
Purchases of marketable securities, commodities and time deposits
-544
-10 548
Proceeds from sale of marketable securities, commodities and time deposits
32
9 651
Net cash flows used in investing activities from continuing operations
-1 022
-1 319
Net cash flows used in investing activities from discontinued operations
13
-738
-148
Total net cash flows used in investing activities
-1 760
-1 467
Purchases of treasury shares
-1 251
-2 678
Proceeds from exercised options and other treasury share transactions, net
-5
Change in current financial debts
674
-1 196
Payments of lease liabilities
-64
-64
Other financing cash flows, net
150
-161
Net cash flows used in financing activities from continuing operations
-496
-4 099
Net cash flows (used in)/from financing activities from discontinued operations
13
-111
105
Total net cash flows used in financing activities
-607
-3 994
Net change in cash and cash equivalents before effect of exchange rate changes
180
-1 350
Cash and cash equivalents from discontinued operations at September 30, 2023
648
Effect of exchange rate changes on cash and cash equivalents
160
141
Net change in cash and cash equivalents
988
-1 209
Cash and cash equivalents at October 1
12 405
8 726
Cash and cash equivalents at December 31
13 393
7 517
The accompanying Notes form an integral part of the condensed consolidated financial statements
24

Consolidated statements of cash flows
Full year (audited)
(USD millions)
Note
FY 2023
FY 2022
Net income from continuing operations
8 572
6 049
Adjustments to reconcile net income from continuing operations to net cash flows from operating activities from continuing operations
Reversal of non-cash items and other adjustments
7.1
10 369
10 631
Dividends received from associated companies and others
2
1
Interest received
645
252
Interest paid
-751
-667
Other financial receipts
90
71
Other financial payments
-17
-26
Income taxes paid
7.2
-2 787
-1 702
Net cash flows from operating activities from continuing operations
before working capital and provision changes


16 123

14 609
Payments out of provisions and other net cash movements in non-current liabilities
-1 534
-774
Change in net current assets and other operating cash flow items
7.3
-369
-796
Net cash flows from operating activities from continuing operations
14 220
13 039
Net cash flows from operating activities from discontinued operations
238
1 197
Total net cash flows from operating activities
14 458
14 236
Purchases of property, plant and equipment
-1 060
-916
Proceeds from sale of property, plant and equipment
237
158
Purchases of intangible assets
-1 693
-1 323
Proceeds from sale of intangible assets
1 955
170
Purchases of financial assets
-106
-115