Novartis Second Quarter and Half Year 2024

Condensed Interim Financial
Report – Supplementary Data

Novartis Second Quarter and Half Year 2024
Condensed Interim Financial Report –Supplementary Data
INDEX

Page

COMPANY OPERATING PERFORMANCE REVIEWContinuing operations

4

Discontinued operations

10

Total Company

10

COMPANY CASH FLOW AND BALANCE SHEET11INNOVATION REVIEW

15

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements

17

Consolidated statements of comprehensive income

19

Consolidated balance sheets

20

Consolidated statements of changes in equity

21

Consolidated statements of cash flows

23

Notes to condensed interim consolidated financial statements

25

SUPPLEMENTARY INFORMATION

43

CORE RESULTS – Reconciliation from IFRS® Accounting Standards results to non-IFRS measure core results 45
Total Company

46

Discontinued operations

48

FREE CASH FLOW49

ADDITIONAL INFORMATION
Net debt

52

Share information

52

Effects of currency fluctuations

53

DISCLAIMER

54

﻿
2

Company
Key figures
Second quarter and half year

(USD millions unless indicated otherwise)

Q2 2024
USD m

Q2 2023
USD m

Net sales fromcontinuing operations

12 512360-3 173

Other revenues
Cost of goods sold% change
USD% change
cc 1

H1 2024
USD m

H1 2023
USD m

11 4379

11

24 341

308

17

17

651

-3 342

5

4% change
USD% change
cc 1

22 235

9

11

557

17

17

-6 269-6 3331

1

Gross profit fromcontinuing operations

9 699

8 403

15

18

18 72316 45914

16

Selling, general and administration-3 091-3 0910-1-5 931-5 982

1

0

Research and development-2 367-2 304-3-4-4 788-4 8792

2

Other income

273

135

102

100

522

1 098

-52

-53

Other expense

-500

-336

-49

-48

-1 139-1 271

10

11

Operating income fromcontinuing operations

4 014

2 807

43

47

7 387

5 425

36

43

% of net sales

32.1

24.5

30.3

24.4

Loss from associated companies
Interest expense
Other financial income and expense

-2

-2

0

20

-31

-4

nm

nm

-246

-216

-14

-17

-467

-416

-12

-15

-12

41

81

189

-57

2

75

85

Income before taxes fromcontinuing operations

3 841

2 674

44

49

6 970

5 194

34

43

Income taxes

-595

-403

-48

-53

-1 036

-773

-34

-43

Net income fromcontinuing operations

3 246

2 271

43

49

5 934

4 421

34

43

46

nm

nm

190

nm

nm

Net income

3 246

2 317

nm

nm

5 934

4 611

nm

nm

Basic earnings per sharefrom continuing operations (USD)

1.60

1.09

47

52

2.91

2.12

37

47

Net income fromdiscontinued operations

Basic earnings per sharefrom discontinued operations (USD)

0.02

nm

nm

Total basic earnings per share (USD)

1.60

1.11

nm

nm

0.08

nm

nm

2.91

2.20

nm

nm

Net cash flows from operating
activities from continuing operations

4 875

3 517

39

7 140

6 369

12

Free cash flow fromcontinuing operations

4 615

Core operating income
from continuing operations

3 292

40

6 653

5 976

11

% of net sales

4 953

4 240

17

9 490

8 146

16

21

39.6

37.1

39.0

36.6

Core net income fromcontinuing operations

4 008

3 502

14

18

7 689

6 735

14

19

Core basic earnings per sharefrom continuing operations (USD)

1.97

1.69

17

21

3.77

3.23

17

22

Non-IFRS measures 1

19

Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 43. Unless otherwise noted, allgrowth rates in this release refer to same period in prior-year.
nm = not meaningful1﻿
3Strategy
Our focus
In 2023, Novartis completed its 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 andbiotherapeutics), 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 arefocused 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 andcontinuing to build trust with society.

Financials
Following the September 15, 2023, shareholder approval of the spin-off of Sandoz, Novartis reported its
consolidated financial statements 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 andselected portions of corporate activities attributable to Sandoz’s business, as well as certain expenses related tothe spin-off.
While the commentary below focuses on continuing operations, we also provide information on discontinued
operations.

Continuing operations
Second quarter
Net sales
Net sales were USD 12.5 billion (+9%, +11% cc) with volume contributing 15 percentage points to growth. Genericcompetition had a negative impact of 2 percentage points and pricing had a negative impact of 2 percentage
points. Sales in the US were USD 5.1 billion (+14%) and in the rest of the world USD 7.4 billion (+6%, +9% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 1.9 billion, +25%, +28% cc),
Kesimpta (USD 799 million, +63%, +65% cc), Cosentyx (USD 1.5 billion, +20%, +22% cc), Kisqali (USD 717 million,+45%, +50% cc), Leqvio (USD 182 million, +133%, +134% cc) and Pluvicto (USD 345 million, +44%, +44% cc),partly offset by erosion due to generic competition, mainly for Gilenya and Lucentis, and the Xiidra divestment.
In the US (USD 5.1 billion, +14%), sales growth was mainly driven by Cosentyx, Entresto, Kesimpta, Kisqali andPluvicto, partly offset by the impact of generic competition on Gilenya, and the Xiidra divestment. In Europe (USD
3.9 billion, +5%, +6% cc), sales growth was mainly driven by Kesimpta, Entresto, Kisqali, Pluvicto and Leqvio,
partly offset by increased generic competition for Lucentis and Gilenya. Sales in emerging growth markets were
USD 3.3 billion (+12%, +16% cc), including USD 1.1 billion sales from China (+23%, +27% cc).

Operating income
Operating income was USD 4.0 billion (+43%, +47% cc), mainly driven by higher net sales and lower impairments,
partly offset by higher R&D investments. Operating income margin was 32.1% of net sales, increasing 7.6
﻿4percentage points (+7.9 percentage points in cc). Other revenue as a percentage of sales increased by 0.2
percentage points (+0.1 percentage points cc). Cost of goods sold as a percentage of sales decreased by 3.8
percentage points (+4.1 percentage points cc). R&D expenses as a percentage of net sales decreased by 1.2
percentage points (+1.4 percentage points cc). SG&A expenses as a percentage of net sales decreased by
2.3 percentage points (+2.4 percentage points cc). Other income and expense as a percentage of net sales
decreased the margin by 0.1 percentage points (-0.1 percentage points cc).
Core adjustments were USD 0.9 billion, mainly due to amortization, compared to USD 1.4 billion in the prior year.
Core adjustments decreased compared to the prior year, mainly due to lower impairments.
Core operating income was USD 5.0 billion (+17%, +19% cc), mainly driven by higher net sales, partly offset byhigher R&D investments. Core operating income margin was 39.6% of net sales, increasing 2.5 percentage
points (+2.7 percentage points 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 increased by 0.7 percentage points (cc). Core
R&D expenses as a percentage of net sales decreased by 0.5 percentage points (cc). Core SG&A expenses
as a percentage of net sales decreased by 2.3 percentage points (cc). Core other income and expense as apercentage of net sales increased the margin by 0.5 percentage points (cc).

Interest expense and other financial income/expense
Interest expense amounted to USD 246 million and other ﬁnancial income and expense amounted to an incomeof USD 75 million, both broadly in line with prior-year quarter.
Core other ﬁnancial income and expense amounted to an income of USD 60 million compared to an income of
USD 129 million in the prior-year quarter, mainly due to lower interest income.

Income taxes
The tax rate in the second quarter was 15.5% compared to 15.1% in the prior year. The increase from the prioryear was mainly the result of the impact of the enactment of Pillar Two tax legislation in Switzerland, whichbecame effective on January 1, 2024, partially offset by a change in profit mix and the effect of adjusting thecurrent-year tax rate to the estimated full-year tax rate, which was lower than previously estimated.
The core tax rate (core taxes as a percentage of core income before tax) was 15.9% compared to 15.6% in theprior year. The increase from the prior year was mainly the result of the impact of the enactment of Pillar Two tax
legislation in Switzerland, which became effective on January 1, 2024, partially offset by a change in profit mix
and the effect of adjusting the current-year core tax rate to the estimated full-year core tax rate, which was lower
than previously estimated.

Net income, EPS and free cash flow
Net income was USD 3.2 billion (+43%, +49% cc), mainly driven by higher operating income. Basic EPS was USD
1.60 (+47%, +52% cc), benefiting from lower weighted average number of shares outstanding.
Core net income was USD 4.0 billion (+14%, +18% cc), mainly due to higher core operating income. Core EPS was
USD 1.97 (+17%, +21% cc), benefiting from lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 4.6 billion (+40% USD), compared with USD
3.3 billion in the prior-year quarter, driven by higher net cash flows from operating activities from continuing
operations.

First half
Net sales
Net sales were USD 24.3 billion (+9%, +11% cc) with volume contributing 15 percentage points to growth. Genericcompetition had a negative impact of 2 percentage points and pricing had a negative impact of 2 percentage
points. Sales in the US were USD 9.7 billion (+14%) and in the rest of the world USD 14.6 billion (+7%, +10% cc).
Sales growth was mainly driven by continued strong performance from Entresto (USD 3.8 billion, +30%, +32%cc), Kesimpta (USD 1.4 billion, +64%, +66% cc), Cosentyx (USD 2.9 billion, +21%, +23% cc), Kisqali (USD 1.3
billion, +48%, +52% cc), Pluvicto (USD 655 million, +45%, +45% cc) and Leqvio (USD 333 million, +135%,+137% cc), partly offset by erosion due to generic competition, mainly for Lucentis and Gilenya, and the Xiidra
divestment.
﻿5In the US (USD 9.7 billion, +14%), sales growth was mainly driven by Entresto, Cosentyx, Kesimpta, Kisqali,
Pluvicto and Leqvio, partly offset by the impact of generic competition on Gilenya, and the Xiidra divestment. In
Europe (USD 7.6 billion, +4%, +5% cc), sales growth was mainly driven by Kesimpta, Entresto, Kisqali, Jakavi andPluvicto, partly offset by erosion due to generic competition, mainly for Lucentis and Gilenya. Sales in emerging
growth markets were USD 6.7 billion (+14%, +19% cc), including USD 2.1 billion sales from China (+24%, +29% cc).

Operating income
Operating income was USD 7.4 billion (+36%, +43% cc), mainly driven by higher net sales, lower impairments
and restructuring charges, partly offset by prior-year one-time income from legal matters. Operating income
margin was 30.3% of net sales, increasing 5.9 percentage points (+6.8 percentage points in cc). Other revenue
as a percentage of sales increased by 0.2 percentage points (+0.1 percentage points cc). Cost of goods soldas a percentage of sales decreased by 2.7 percentage points (+3.2 percentage points cc). R&D expenses as apercentage of net sales decreased by 2.2 percentage points (+2.6 percentage points cc). SG&A expenses asa percentage of net sales decreased by 2.6 percentage points (+2.7 percentage points cc). Other income andexpense as a percentage of net sales decreased the margin by 1.8 percentage points (-1.8 percentage points cc).
Core adjustments were USD 2.1 billion, mainly due to amortization, compared to USD 2.7 billion in the prior year.
Core adjustments decreased compared to the prior year, mainly due to lower impairments and restructuring
charges, partly offset by prior-year one-time income from legal matters.
Core operating income was USD 9.5 billion (+16%, +21% cc), mainly driven by higher net sales, partly offset byhigher R&D investments. Core operating income margin was 39.0% of net sales, increasing 2.4 percentage
points (+3.1 percentage points 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 increased by 0.5 percentage points (cc). Core
R&D expenses as a percentage of net sales decreased by 0.7 percentage points (cc). Core SG&A expenses
as a percentage of net sales decreased by 2.5 percentage points (cc). Core other income and expense as apercentage of net sales increased the margin by 0.3 percentage points (cc).

Interest expense and other financial income/expense
Interest expense amounted to USD 467 million and was broadly in line with the prior year. Other ﬁnancial
income and expense amounted to an income of USD 81 million compared with an income of USD 189 million
in the prior year, mainly due to higher net losses from the impact of IAS Standards 29 “Financial Reporting inHyperinﬂationary Economies” and lower interest income, partly offset by realized gains on sale of financial
assets.
Core other ﬁnancial income and expense amounted to an income of USD 156 million compared to an income of
USD 247 million in the prior year, mainly due to lower interest income.

Income taxes
The tax rate in the first half was 14.9% compared to 14.9% in the prior year period. The current year tax rate wasfavorably impacted by the effect of changes in uncertain tax positions. The prior-year tax rate was favorably
impacted by the effect of non-taxable income recognized related to a legal matter. Excluding these impacts, thecurrent and prior-year tax rate would have been 16.3% and 15.3% respectively. The increase from the prior year
was mainly the result of a change in profit mix and the impact of the enactment of Pillar Two tax legislation in
Switzerland, which became effective on January 1, 2024.
The core tax rate (core taxes as a percentage of core income before tax) was 16.2% in the first half and 15.5%
in the prior-year period. The increase from the prior year was mainly the result of a change in profit mix and theimpact of the enactment of Pillar Two tax legislation in Switzerland, which became effective on January 1, 2024.

Net income, EPS and free cash flow
Net income was USD 5.9 billion (+34%, +43% cc), mainly driven by higher operating income. EPS was USD 2.91(+37%, +47% cc), benefiting from the lower weighted average number of shares outstanding.
Core net income was USD 7.7 billion (+14%, +19% cc), mainly due to higher core operating income. Core EPS was
USD 3.77 (+17%, +22% cc), benefiting from the lower weighted average number of shares outstanding.
Free cash flow from continuing operations amounted to USD 6.7 billion (+11% USD), compared with USD
6.0 billion in the prior-year period, driven by higher net cash flows from operating activities from continuing
operations.
﻿6

PRODUCT COMMENTARY (RELATING TO Q2 PERFORMANCE)CARDIOVASCULAR, RENAL AND METABOLIC
Q2 2024
USD m

Q2 2023
USD m% changecc

H1 2024
USD m

H1 2023
USD m

Entresto

1 898

1 516

Leqvio

182

78

25

28

3 777

2 915

30

32

133

134

333

142

135

137

2 080

1 594

30

33

4 110

3 057

34

37

% change
USD% change
USD% changecc

Cardiovascular, renal and metabolic

Total cardiovascular,
renal and metabolic

Entresto (USD 1 898 million, +25%, +28% 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 was 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 toreverse the negative US district court decision to uphold the validity of its combination patent covering Entrestoand combinations of sacubitril and valsartan, which expires in 2025 (with pediatric exclusivity). Several generics
have received 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 oflater litigation developments.
Leqvio (USD 182 million, +133%, +134% cc) launch in the US and other markets is ongoing, delivering a
medicine with powerful and consistent LDL-C reduction in two doses per year. Focus remains on increased
account and patient adoption, growing customer confidence in acquisition and access, and continuing medical
education. Leqvio is now approved in 96 countries. Novartis obtained global rights to develop, manufacture andcommercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals.

IMMUNOLOGY
Q2 2024
USD m

Q2 2023
USD m% change
USD% changecc

H1 2024
USD m

H1 2023
USD m% change
USD% changecc

Cosentyx

1 526

1 272

20

22

2 852

2 348

21

23

Xolair 1

427

362

18

22

826

716

15

18

Ilaris

368

316

16

20

724

644

12

17

nm

nm

1

nm

nm

19

22

4 403

19

21

Immunology

Other
Total immunology

1
2 322

1 950

3 708

Net sales reflect Xolair sales for all indications.
nm = not meaningful
1

Cosentyx (USD 1 526 million, +20%, +22% cc) sales grew mainly in the US, driven by strong demand for new
indication (HS) and formulation (IV) launches, in addition to growth in core indications (PsO, PsA, AS andnr-axSpA). Ex-US performance was driven by robust demand-led growth, including the HS indication launch,partly offset by one-off pricing effects. Since initial approval in 2015, Cosentyx has shown sustained efficacy anda robust safety profile, treating more than 1.4 million patients across 8 indications.
Xolair (USD 427 million, ex-US +18%, +22% cc) growth was driven mainly by emerging growth markets andEurope. 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 368 million, +16%, +20% cc) sales grew across all regions, led by US and Europe. Contributors togrowth include strong performance in the Periodic Fever Syndromes and Still’s disease indications.

﻿7

NEUROSCIENCE
Q2 2024
USD m

Q2 2023
USD m% change
USD% changecc

H1 2024
USD m

H1 2023
USD m% change
USD% changecc

Kesimpta

799

489

63

65

1 436

873

64

66

Zolgensma

349

311

12

14

644

620

4

6

Aimovig

77

67

15

16

153

128

20

19

nm

nm

1 225

867

41

43

2 234

38

39

Neuroscience

Other
Total neuroscience

1
1 621

nm = not meaningful

Kesimpta (USD 799 million, +63%, +65% cc) sales grew across all regions driven by increased demand andstrong 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 90 countries
with more than 100 thousand patients treated.
Zolgensma (USD 349 million, +12%, +14% cc) sales grew particularly in the US and continues to treat mainly
incident patients in established markets. Zolgensma is now approved in 55 countries with more than 4 thousand
patients treated globally through clinical trials, managed access programs and in the commercial setting.
Aimovig (USD 77 million, ex-US, ex-Japan +15%, +16% cc) sales grew mainly in Europe driven by increased
demand for migraine prevention. Novartis commercializes Aimovig ex-US and ex-Japan, while Amgen retains allrights in the US and in Japan.

ONCOLOGY
Q2 2024
USD m

Q2 2023
USD m% change
USD% changecc

H1 2024
USD m

Kisqali

717

493

45

50

Promacta/Revolade

544

583

-7

-5

Tafinlar + Mekinist 1

523

496

5

Jakavi

471

435

8

Tasigna446

476

Pluvicto

345

240

Lutathera

175

150

Scemblix

164

106

Kymriah

113

129

Piqray/Vijoice

120

130

Fabhalta

22

H1 2023
USD m% change
USD% change
cc

1 344

908

48

52

1 064

1 130

-6

-4

9

997

954

5

7

13

949

849

12

15

-6

-4

841

938

-10

-9

44

44

655

451

45

45

17

17

344

299

15

16

55

56

300

182

65

67

-12

-11

233

264

-12

-10

246

Oncology

-8

-7

229

nm

nm

28

12

15

6 984

Other
Total oncology

3 640

3 238

-7

-6

nm

nm

1

nm

nm

6 222

12

14

Majority of sales for Mekinist and Tafinlar are combination, but both can be used as monotherapy.
nm = not meaningful
1

Kisqali (USD 717 million, +45%, +50% cc) sales grew strongly across all regions, based on increasing recognitionof its consistently reported overall survival in HR+/HER2- advanced breast cancer, Category 1 NCCN guidelines
recommendation and highest ESMO-Magnitude of Clinical Benefit Scale scores in the CDK4/6 inhibitor class.
Novartis is in US ANDA litigation with a generic manufacturer.
Promacta/Revolade (USD 544 million, –7%, –5% cc) sales declined mainly in the US due to higher revenue
deductions.
Tafinlar + Mekinist (USD 523 million, +5%, +9% cc) sales grew across all regions driven by demand in BRAF+
adjuvant melanoma, NSCLC and tumor agnostic indications, while maintaining demand in the highly competitive
BRAF+ metastatic melanoma market.
Jakavi (USD 471 million, ex-US +8%, +13% cc) sales grew across all regions, driven by strong demand in both
myelofibrosis and polycythemia vera indications. Incyte retains all rights to ruxolitinib (Jakafi®) in the US.

﻿8Tasigna (USD 446 million, –6%, –4% cc) sales declined across most regions due to lower demand.
Pluvicto (USD 345 million, +44%, +44% cc) sales grew mainly in the US and Europe. Pluvicto is the 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 anti-cancer
treatments (ARPI and taxane-based chemotherapy). Pluvicto is now on the market in several EU countries.
Lutathera (USD 175 million, +17%, +17% cc) sales grew across all regions due to increased demand. Following
the presentation of Phase III NETTER-2 data at ASCO GI in January, promotion has started in the US, where the
1L population is within the current indication for Lutathera. Growth in international markets was mainly driven by
Europe and Japan.
Scemblix (USD 164 million, +55%, +56% cc) sales grew across all regions, demonstrating continued high unmet
need for effective and tolerable treatment options for CML patients treated with two or more tyrosine kinase
inhibitors.
Kymriah (USD 113 million, –12%, –11% cc) sales declined in most markets, partly offset by strong performance inpediatric and young adult patients up to 25 years of age with B-cell acute lymphoblastic leukemia (pALL), andfollicular lymphoma indication uptake ex-US.
Piqray/Vijoice (USD 120 million, –8%, –7% cc) sales declined mainly in the US, driven by higher revenue
deduction adjustments.
Fabhalta (USD 22 million) continues to show encouraging early launch indicators in the US, as the first oral
monotherapy for the treatment of adults with paroxysmal nocturnal hemoglobinuria (PNH).

ESTABLISHED BRANDS
Q2 2024
USD m

Q2 2023
USD m% changecc

H1 2024
USD m

H1 2023
USD m

Sandostatin Group

313

331

Lucentis

275

395

-5

-4

668

660

1

3

-30

-28

589

811

-27

-26

Exforge Group

178

184

-3

1

370

370

0

3

Gilenya138

Diovan Group

160

269

-49

-47

313

501

-38

-36

155

3

9

300

313

-4

Galvus Group

150

1

175

-14

-5

299

358

-16

-9

% change
USD% change
USD% changecc

Established brands

Contract manufacturing

271

339

-20

-19

550

714

-23

-23

Other

1 760

1 940

-9

-10

3 521

3 900

-10

-10

Total established brands

3 245

3 788

-14

-13

6 610

7 627

-13

-12

Sandostatin Group (USD 313 million, –5%, –4% cc) sales declined mainly in the US due to timing in inventory
shipments.
Lucentis (USD 275 million, ex-US –30%, –28% cc) sales declined in Europe, emerging growth markets andJapan, mainly due to competition.
Exforge Group (USD 178 million, –3%, +1% cc) sales were largely stable, driven by growth (cc) in emerging
growth markets.
Gilenya (USD 138 million, –49%, –47% cc) sales declined due to generic competition, mainly in the US andEurope.
Diovan Group (USD 160 million, +3%, +9% cc) sales grew mainly in emerging growth markets.
Galvus Group (USD 150 million, –14%, –5% cc) sales declined mainly in Europe.

﻿9Discontinued operations
Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars division, certain corporate
activities attributable to Sandoz and certain other expenses related to the spin-off of the Sandoz business.

Second quarter
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the second
quarter of 2024 related to discontinued operations. In the second quarter of 2023, discontinued operations net
sales were USD 2.4 billion, operating income amounted to USD 113 million and net income from discontinued
operations was USD 46 million. For further details see Note 3 “Significant acquisition of businesses and spinoff of Sandoz business” and Note 11 “Discontinued operations” to the condensed interim consolidated financial
statements.

First half
As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in the first half 2024
related to discontinued operations. In the first half 2023, discontinued operations net sales were USD 5.0 billion,
operating income amounted to USD 351 million and net income from discontinued operations was USD 190
million. For further details see Note 3 “Significant acquisition of businesses and spin-off of Sandoz business” andNote 11 “Discontinued operations” to the condensed interim consolidated financial statements.

Total Company
Second quarter
Total Company net income was USD 3.2 billion in 2024, compared to USD 2.3 billion in 2023 and basic EPS
was USD 1.60 compared to USD 1.11 in the prior-year quarter. Net cash flows from operating activities for total
Company amounted to USD 4.9 billion and free cash flow amounted to USD 4.6 billion.

First half
Total Company net income was USD 5.9 billion in 2024, compared to USD 4.6 billion in 2023 and basic EPS was
USD 2.91 compared to USD 2.20 in the prior year. Net cash flows from operating activities for total Company
amounted to USD 7.1 billion and free cash flow amounted to USD 6.7 billion.

﻿10Company Cash Flow and Balance Sheet
Cash flow
Second quarter
Net cash flows from operating activities from continuing operations amounted to USD 4.9 billion, compared with
USD 3.5 billion in the prior-year quarter. This increase was mainly driven by higher net income from continuing
operations adjusted for non-cash items and other adjustments, including divestment gains, and lower income
taxes paid, mainly due to the timing of income tax payments.
In the prior-year quarter, net cash flows from operating activities from discontinued operations amounted to USD
0.1 billion (Q2 2024: nil).
Net cash outflows used in investing activities from continuing operations amounted to USD 3.2 billion, comparedwith USD 1.0 billion in the prior-year quarter.
The current-year quarter net cash outflows used in investing activities from continuing operations weremainly driven by USD 3.3 billion for acquisitions and divestments of businesses including the acquisition ofMariana Oncology for USD 1.0 billion (USD 1.1 billion, net of cash acquired USD 0.1 billion) and the acquisitionof MorphoSys AG for USD 2.3 billion (USD 2.5 billion, net of cash acquired USD 0.2 billion). Cash outflows forpurchases of intangible assets amounted to USD 0.5 billion and of property, plant and equipment amounted
to USD 0.3 billion. These were partly offset by cash inflows of USD 0.6 billion from the sale of financial assets(including USD 0.6 billion proceeds from the sale of Sandoz Group AG shares by consolidated foundations); andby net proceeds of USD 0.2 billion from the sale of marketable securities, commodities and time deposits.
In the prior-year quarter, net cash outflows used in investing activities from continuing operations of USD 1.0
billion were driven by USD 0.7 billion for the purchases of intangible assets; USD 0.2 billion for purchases ofproperty, plant and equipment; and USD 0.1 billion for acquisitions and divestments of businesses, net.
In the prior-year quarter, net cash outflows used in investing activities from discontinued operations amounted to
USD 0.1 billion (Q2 2024: nil).
Net cash outflows used in financing activities from continuing operations amounted to USD 3.2 billion, comparedwith USD 3.8 billion in the prior-year quarter.
The current-year quarter net cash outflows used in financing activities from continuing operations were mainly
driven by the USD 2.4 billion payment (in April 2024 when it was due) of Swiss withholding tax on the dividend
payment made in the first quarter 2024. Payments for treasury share transactions resulted in a net cash outflow
of USD 1.6 billion and the repayment of a US dollar bond at maturity amounted to USD 2.15 billion. These werepartly offset by cash inflows from the issuance of Swiss franc denominated bonds of USD 2.5 billion (notionalamount of CHF 2.2 billion) and the net increase in current financial debts of USD 0.6 billion.
In the prior-year quarter, net cash outflows used in financing activities from continuing operations of USD 3.8
billion were driven by USD 3.0 billion for treasury share transactions and USD 0.7 billion from the net decrease incurrent financial debts.
In the prior-year quarter, net cash inflows from financing activities from discontinued operations amounted to
USD 0.1 billion (Q2 2024: nil).
Free cash flow from continuing operations amounted to USD 4.6 billion (+40% USD), compared with USD
3.3 billion in the prior-year quarter, 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 4.9 billion, compared with USD
3.6 billion in the prior-year quarter and free cash flow amounted to USD 4.6 billion, compared with USD 3.3 billion
in the prior-year quarter.

First half
Net cash flows from operating activities from continuing operations amounted to USD 7.1 billion, compared with
USD 6.4 billion in the prior-year period. This increase was mainly driven by higher net income from continuing﻿11operations adjusted for non-cash items and other adjustments, including divestment gains, partly offset byunfavorable changes in working capital.
In the prior-year period, net cash flows from operating activities from discontinued operations amounted to USD
0.2 billion (H1 2024: nil).
Net cash outflows used in investing activities from continuing operations amounted to USD 4.1 billion, comparedwith USD 9.7 billion net cash inflows in the prior-year period.
The current year period, net cash outflows used in investing activities from continuing operations weremainly driven by USD 3.6 billion for acquisitions and divestments of businesses including the acquisition ofMariana Oncology for USD 1.0 billion (USD 1.1 billion, net of cash acquired USD 0.1 billion) and the acquisitionof MorphoSys AG for USD 2.3 billion (USD 2.5 billion, net of cash acquired USD 0.2 billion). Cash outflows forpurchases of intangible assets amounted to USD 1.4 billion; of property, plant and equipment amounted to USD
0.5 billion; and of financial assets amounted to USD 0.1 billion. These were partly offset by cash inflows of USD
0.7 billion from the sale of financial assets (including USD 0.6 billion proceeds from the sale of Sandoz GroupAG shares by consolidated foundations); and by net proceeds of USD 0.7 billion from the sale of marketablesecurities, commodities and time deposits.
In the prior-year period, net cash inflows from investing activities from continuing operations of USD 9.7 billion
were driven by the net proceeds of USD 10.9 billion from the sale of marketable securities, commodities and time
deposits; USD 0.3 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 0.9 billion for purchases of intangible assets; USD
0.4 billion for purchases of property, plant and equipment; and USD 0.1 billion for purchases of financial assets.
Acquisitions and divestments of businesses resulted in a net cash outflow of USD 0.1 billion.
In the prior-year period, net cash outflows used in investing activities from discontinued operations amounted to
USD 0.2 billion (H1 2024: nil).
Net cash outflows used in financing activities from continuing operations amounted to USD 8.4 billion, comparedwith USD 12.8 billion in the prior-year period.
The current-year period net cash outflows used in financing activities from continuing operations were mainly
driven by USD 7.6 billion for the dividend payment; USD 2.7 billion for net treasury share transactions; and therepayment of a US dollar bond at maturity of USD 2.15 billion. These were partly offset by cash inflows from theissuance of Swiss franc denominated bonds of USD 2.5 billion (notional amount of CHF 2.2 billion) and the netincrease in current financial debts of USD 1.8 billion.
In the prior-year period, net cash outflows used in financing activities from continuing operations of USD 12.8
billion were mainly driven by USD 7.3 billion for the dividend payment and USD 5.7 billion for net treasury sharetransactions. These cash outflows were partly offset by cash inflows of USD 0.3 billion from the net increase incurrent financial debts.
In the prior-year period, net cash outflows used in financing activities from discontinued operations amounted to
USD 0.1 billion (H1 2024: nil).
Free cash flow from continuing operations amounted to USD 6.7 billion (+11% USD), compared with USD
6.0 billion in the prior-year period 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 7.1 billion, compared with USD
6.5 billion in the prior-year period and free cash flow amounted to USD 6.7 billion, compared with USD 6.0 billion
in the prior-year period.

Balance sheet
AssetsTotal non-current assets of USD 71.8 billion increased by USD 2.3 billion compared to December 31, 2023.
Intangible assets other than goodwill increased by USD 0.9 billion mainly due the impact of the Mariana
Oncology and MorphoSys business acquisitions, partially offset by amortization, impairments and unfavorable
currency translation adjustments.
﻿12Goodwill increased by USD 1.9 billion mainly due the impact of the Mariana Oncology and MorphoSys businessacquisitions, partially offset by unfavorable currency translation adjustments.
Financial assets decreased by USD 0.6 billion mainly due to the sale of Sandoz AG shares by consolidated
foundations. Property, plant and equipment decreased by USD 0.3 billion mainly as depreciation charges andunfavorable currency translation adjustments more than offset additions.
Other non-current assets increased by USD 0.5 billion due to the MorphoSys business acquisition. Deferred
tax assets, right-of-use assets and investments in associated companies were broadly in line with December 31,
2023.
Total current assets of USD 25.7 billion decreased by USD 4.8 billion compared to December 31, 2023.
Cash and cash equivalents decreased by USD 5.5 billion mainly as cash generated through operating activities
was more than offset by the USD 7.6 billion net dividend payment, USD 3.6 billion for the Mariana Oncology andMorphoSys business acquisitions, USD 1.4 billion for investments in intangible assets, and USD 2.7 billion forpurchases of treasury shares, partly offset by USD 2.1 billion net proceeds from changes in financial debts.
Marketable securities, commodities, time deposits and derivative financial instruments decreased by USD
0.5 billion, mainly due to the net sales of marketable securities, commodities and time deposits and fair value
adjustments on derivative financial instruments.
Trade receivables increased by USD 1.1 billion, mainly driven by the increase in net sales. Other current assets
increased by USD 0.4 billion. Inventories and income tax receivables were broadly in line with December 31,
2023.

Liabilities
Total non-current liabilities of USD 28.0 billion increased by USD 1.2 billion compared to December 31, 2023.
Non-current financial debts increased by USD 1.2 billion mainly due to the issuance of Swiss franc denominatedbonds of USD 2.5 billion (notional amount of CHF 2.2 billion) and financial debts acquired through theMorphoSys business acquisition of USD 0.6 billion, partly offset by the reclassification of USD 1.6 billion from
non-current to current financial debts of a USD denominated bond with notional amount of USD 1.0 billion
maturing in 2025 and a CHF denominated bond of notional amount of CHF 0.5 billion maturing in 2025 andfavorable currency impacts.
Non-current lease liabilities, deferred tax liabilities and provisions and other non-current liabilities were broadly inline with December 31, 2023.
Total current liabilities of USD 27.6 billion increased by USD 1.2 billion compared to December 31, 2023.
Current financial debts and derivative financial instruments increased by USD 1.4 billion compared to December
31, 2023, mainly due to the issuance of commercial paper notes under the US commercial paper programs,
the impact of the MorphoSys business acquisition of USD 0.3 billion, and the reclassification of USD 1.6 billion
from non-current to current financial debts of a USD denominated bond with notional amount of USD 1.0 billion
maturing in 2025 and a CHF denominated bond of notional amount of CHF 0.5 billion maturing in 2025, partly
offset by the repayment of a US dollar bond at maturity of USD 2.15 billion.
Trade payables decreased by USD 0.8 billion. Provisions and other current liabilities increased by USD 0.6 billion
mainly driven by the increase in provisions for deductions from revenue, partly offset by reductions in accruals
for compensation and benefits, including social security, and restructuring provisions. Current income tax
liabilities and current lease liabilities were broadly in line with December 31, 2023.

EquityThe Company’s equity decreased by USD 4.8 billion to USD 41.9 billion compared to December 31, 2023.
This decrease was mainly driven by the net income of USD 5.9 billion and favorable impact from equity-based
compensation of USD 0.6 billion being more than offset by the cash-dividend to Novartis AG shareholders
of USD 7.6 billion, the purchase of treasury shares of USD 2.8 billion and unfavorable currency translationdifferences of USD 1.4 billion.

﻿
13Net debt and debt/equity ratio
The Company’s liquidity amounted to USD 8.4 billion as at June 30, 2024, compared with USD 14.4 billion as at
December 31, 2023. Total non-current and current financial debts, including derivatives, amounted to USD 27.2
billion as at June 30, 2024, compared with USD 24.6 billion as at December 31, 2023.
The debt/equity ratio increased to 0.65:1 as at June 30, 2024, compared with 0.53:1 as at December 31, 2023.
The net debt increased to USD 18.8 billion as at June 30, 2024, compared with USD 10.2 billion as at December
31, 2023.

﻿
14

Innovation Review
Novartis continues to focus its R&D portfolio prioritizing high value medicines with transformative potential forpatients. We now focus on ~100 projects in clinical development.

Selected Innovative Medicines approvals
Product

Active ingredient/		
Descriptor
Indication

RegionFabhalta

iptacopan

Paroxysmal nocturnal hemoglobinuria

EU, Japan and China

Lutathera

177

Pediatric GEP-NETs

US

Lu-oxodotreotide

Selected Innovative Medicines projects awaiting regulatory decisions
Completed submissions
Product

Indication

US

KisqaliHormone receptor-positive /Q4 2023
Q3 2023		human epidermal growth factor 				receptor 2-negative early 				breast cancer (adjuvant)				

EU

Japan

Scemblix
1L chronic myeloid leukemia
Q2 2024		
					
				
Fabhalta

IgA nephropathy– US submission and BreakthroughTherapy designation granted– Ph3 data presented at ASCO congress

Q1 2024		

– US submission, priority review granted

Atrasentan
IgA nephropathy
Q2 2024		
				
LutatheraNews update– US submission– Ph3 data presented at ERA congress

Gastroenteropancreatic 		
Q2 2024		
neuroendocrine tumors, 				1L in G2/3 tumors				

CoartemMalaria (<5kg patients)			
					
					

– Submission using MAGHP procedure
in Switzerland to facilitate rapid approvals indeveloping countries

Selected Innovative Medicines pipeline projects
Compound/product

Potential indication/
Disease area

First planned
submissions

Current
Phase

Aimovig

Migraine, pediatrics

≥2027

3

AVXS-101(OAV101)

Spinal muscular atrophy
2025
3(IT formulation)			

Beovu

Diabetic retinopathy

2025

News update

3

CFZ533
Sjögren’s syndrome≥2027
2(iscalimab)				
Cosentyx

Giant cell arteritis

2025

3

Polymyalgia rheumatica

2026

3

Rotator cuff tendinopathy		3				– Project discontinued to prioritize otherkey programs in portfolio

DAK539Myelofibrosis		
3– Morphosys aquisition(pelabresib)				
FUB523
IgA nephropathy≥2027
3(zigakibart)				
JDQ443(opnurasib)

Non-small cell lung cancer 		3(mono/combos)			

KAE609Malaria, uncomplicated≥2027(cipargamin)			
Malaria, severe

≥2027

2
2

KLU156
Malaria, uncomplicated2026
3(ganaplacide 			+ lumefantrine)				
LeqvioSecondary prevention of cardiovascular≥2027
3
events in patients with elevated levels of LDL-C			Primary prevention CVRR

≥2027

3

LNA043

Osteoarthritis

≥2027

2

﻿
15

– Project discontinued to prioritize otherkey programs in portfolio– FDA Orphan Drug designation– FDA Fast Track designation– FDA Fast Track designation

Compound/product

Potential indication/
Disease area

First planned
submissions

Current
Phase

LNP023C3 glomerulopathy20243(iptacopan)			
			
			
			
			
IC-MPGN≥2027

3

Atypical haemolytic uraemic syndrome

≥2027

3

Myasthenia gravis

≥2027

3

LOU064Chronic spontaneous urticaria
2025
3(remibrutinib)				
			

Lu-NeoB

Multiple sclerosis

≥2027

3

CINDU

≥2027

3

177

Multiple solid tumors

≥2027

1

LXE408Visceral leishmaniasis

≥2027

2

Pluvicto

Metastatic castration-resistant2024
3
prostate cancer, pre-taxane			Metastatic hormone sensitive prostate cancer

2025

3

Oligometastatic prostate cancer

≥2027

3

News update– EU Orphan Drug designation– EU PRIME designation– FDA Rare Pediatric designation– China Breakthrough Therapy designation– FDA Breakthrough Therapy designation– Ph3 data presented at ERA congress– Ph3 started– Updated CMC package, filing now anticipatedin 2025– Ph3 52-week data presented at EAACI– Event-driven trial

QGE031
Food allergy≥20273(ligelizumab)				
TQJ230(pelacarsen)

Secondary prevention of cardiovascular
2025
3
events in patients with elevated levels 		
of lipoprotein(a)			

– FDA Fast Track designation– China Breakthrough Therapy designation

VAY736
Auto-immune hepatitis≥2027
2– FDA Fast Track designation(ianalumab)				
Sjögren’s syndrome

2026

3

Lupus nephritis

≥2027

3

Systemic lupus erythematosus

≥2027

3

– FDA Fast Track designation

1L immune thrombocytopenia
≥2027
3
				

– Adjusted submission timeline due toslower recruitment progress

2L immune thrombocytopenia
≥2027
3
				

– Adjusted submission timeline due toslower recruitment progress

Warm autoimmune hemolytic anemia
≥2027
3
				

– Adjusted submission timeline due toslower recruitment progress

Vijoyce

Lymphatic malformations

≥2027

3

XXB750Hypertension

≥2027

2

YTB323Severe refractory lupus nephritis /≥2027
2
Systemic lupus erythematosus			
1L high-risk large B-cell lymphoma

≥2027

﻿
16

2

– US, EU Orphan Drug designation

Condensed Interim Consolidated
Financial Statements
Consolidated income statements
Second quarter (unaudited)Note

Q2 2024

Q2 2023

Net sales from continuing operations

9

12 51211 437

Other revenues

9

360

308

-3 173-3 342(USD millions unless indicated otherwise)

Cost of goods sold
Gross profit from continuing operations

9 699

8 403

Selling, general and administration-3 091-3 091

Research and development-2 367-2 304

Other income

273

135

Other expense

-500

-336

Operating income from continuing operations

4 014

2 807

Loss from associated companies

-2

-2

-246

-216

75

85

Income before taxes from continuing operations

3 841

2 674

Income taxes

-595

-403

Net income from continuing operations

3 246

2 271

3 246

2 317

3 246

2 316

0

1

Weighted average number of shares outstanding – Basic (million)

2 033

2 083

Basic earnings per share from continuing operations (USD) 1

1.60

1.09

Interest expense
Other financial income and expense

Net income from discontinued operations

11

Net income

46

Attributable to:Shareholders of Novartis AG
Non-controlling interests

Basic earnings per share from discontinued operations (USD) 1

0.02

Total basic earnings per share (USD) 1

1.60

1.11

Weighted average number of shares outstanding – Diluted (million)

2 046

2 095

Diluted earnings per share from continuing operations (USD) 1

1.59

Diluted earnings per share from discontinued operations (USD) 1

1.09
0.02

Total diluted earnings per share (USD) 1

1.59

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 interim consolidated financial statements
1

﻿
17

1.11

Consolidated income statements
First half (unaudited)Note

H1 2024

H1 2023

Net sales from continuing operations

9

24 34122 235

Other revenues

9

651

557

Cost of goods sold-6 269-6 333Gross profit from continuing operations

18 72316 459Selling, general and administration-5 931-5 982

Research and development-4 788-4 879(USD millions unless indicated otherwise)

Other income

522

1 098

Other expense-1 139-1 271

Operating income from continuing operations

7 387

5 425

Loss from associated companies

-31

-4

Interest expense

-467

-416

Other financial income and expense

81

189

Income before taxes from continuing operations

6 970

5 194

Income taxes-1 036-773

Net income from continuing operations

5 934

4 421

5 934

4 611

5 934

4 609

0

2

Weighted average number of shares outstanding – Basic (million)

2 038

2 097

Basic earnings per share from continuing operations (USD) 1

2.91

2.12

Net income from discontinued operations

11

Net income

190

Attributable to:Shareholders of Novartis AG
Non-controlling interests

Basic earnings per share from discontinued operations (USD) 1

0.08

Total basic earnings per share (USD) 1

2.91

2.20

Weighted average number of shares outstanding – Diluted (million)

2 052

2 109

Diluted earnings per share from continuing operations (USD) 1

2.89

Diluted earnings per share from discontinued operations (USD) 1

2.10
0.09

Total diluted earnings per share (USD) 1

2.89

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 interim consolidated financial statements

﻿
18

2.19

Consolidated statements of comprehensive income
Second quarter (unaudited)(USD millions)

Q2 2024

Q2 2023

Net income

3 246

2 317

Other comprehensive income
Items that are or may be recycled into the consolidated income statement
Net investment hedge, net of taxes

14

6

Currency translation effects, net of taxes

40

216

Total of items that are or may be recycled

54

222

Actuarial gains/(losses) from defined benefit plans, net of taxes

57-1

Fair value adjustments on equity securities, net of taxes

94-2

Total of items that will never be recycled

151

-3

Total other comprehensive income

205

219

3 451

2 536

Shareholders of Novartis AG

3 453

2 535

Continuing operations

3 453

2 502

Items that will never be recycled into the consolidated income statement

Total comprehensive income
Total comprehensive income for the period attributable to:

33

Discontinued operations
Non-controlling interests-2

1(USD millions)H1 2024

H1 2023

Net income

5 934

4 611

The accompanying Notes form an integral part of the condensed interim consolidated financial statements

First half (unaudited)

Other comprehensive income
Items that are or may be recycled into the consolidated income statement
Net investment hedge, net of taxes

51

-29

Currency translation effects, net of taxes-1 364522

Total of items that are or may be recycled-1 313493

Items that will never be recycled into the consolidated income statement		
Actuarial gains/(losses) from defined benefit plans, net of taxes

136

Fair value adjustments on equity securities, net of taxes

119

-46

255

-105

Total other comprehensive income-1 058388

Total comprehensive income

4 876

4 999

Shareholders of Novartis AG

4 880

4 996

Continuing operations

4 880

4 761

Total of items that will never be recycled-59

Total comprehensive income for the period attributable to:235

Discontinued operations
Non-controlling interests-4

The accompanying Notes form an integral part of the condensed interim consolidated financial statements

﻿
19

3

Consolidated balance sheetsJun 30,2024(unaudited)

Dec 31,2023(audited)

Property, plant and equipment

9 254

9 514

Right-of-use assets

1 368

1 410

Goodwill

25 23423 341Intangible assets other than goodwill

27 77526 879Investments in associated companies

103

205

Deferred tax assets

4 400

4 309

Financial assets

2 023

2 607

Other non-current assets

1 655

1 199

Total non-current assets

71 81269 464Inventories

5 747

5 913

Trade receivables

8 228

7 107

(USD millions)

AssetsNon-current assets

Current assets

Income tax receivables

252

426

Marketable securities, commodities, time deposits and derivative financial instruments

532

1 035

7 903

13 393

Cash and cash equivalents
Other current assets

3 031

2 607

Total current assets

25 69330 481

Total assets

97 50599 945

Share capital

793

825

Treasury shares

-25

-41

Reserves

40 96545 883Equity attributable to Novartis AG shareholders

41 73346 667

Equity and liabilities
EquityNon-controlling interests

169

83

41 90246 750Financial debts

19 66318 436

Lease liabilities

1 560

1 598

Deferred tax liabilities

2 456

2 248

Provisions and other non-current liabilities

4 312

4 523

Total non-current liabilities

27 99126 805Trade payables

4 146

4 926

Financial debts and derivative financial instruments

7 532

6 175

Total equity
Liabilities
Non-current liabilities

Current liabilities

Lease liabilities

232

230

Current income tax liabilities

1 919

1 893

Provisions and other current liabilities

13 78313 166

Total current liabilities

27 61226 390Total liabilities

55 60353 195

Total equity and liabilities

97 50599 945The accompanying Notes form an integral part of the condensed interim consolidated financial statements﻿20Consolidated statements of changes in equity
Second quarter (unaudited)

Reserves(USD millions)

Note

Total equity at April 1, 2024

SharecapitalTreasurysharesRetainedearnings

793-17

43 834

Net income

Issued sharecapital andreserves
attributable
Total value
to Novartis
adjustments shareholders

Noncontrollinginterests

Total
equity39 67581

39 756

3 246

0

3 246

207

207

-2

205

207

3 453

-2

3 451

-4 935

3 246

Other comprehensive income
Total comprehensive income

3 246

Purchase of treasury shares-9

Exercise of options and employee transactions
Equity-based compensation

1-1 663-1 672-1-1-1 672
-1

267

268

268

Shares delivered to Sandoz employees
as a result of the Sandoz spin-off

2

2

2

Taxes on treasury share transactions

-12

-12

-12

Fair value adjustments on financial assets sold143

Impact of change in ownership of consolidated entities

-28

-28

48

48

Other movements

4.3

Total of other equity movements
Total equity at June 30, 2024

793

-143
90

62
48

-8

-1 244-143-1 39590-1 305-25

45 836-4 87141 733169

41 902

Issued sharecapital andreserves
attributable
Retained
Total value
to Novartis
earnings adjustments shareholders

Noncontrollinginterests

Total
equity52 05983

52 142

2 316

1

2 317

219

219

0

219

219

2 535

1

2 536

The accompanying Notes form an integral part of the condensed interim consolidated financial statements						

Reserves(USD millions)

Note

Total equity at April 1, 2023

SharecapitalTreasuryshares842-36

Net income

56 089-4 836

2 316

Other comprehensive income
Total comprehensive income

2 316

Purchase of treasury shares-17-2 994-3 011-3 011Equity-based compensation

1

241

242

242

Fair value adjustments on financial assets sold
Other movements

8
4.3

22

Total of other equity movements
Total equity at June 30, 2023

-8

842

22

22

-16

-2 723-8-2 747-2 747-52

55 682-4 62551 847

The accompanying Notes form an integral part of the condensed interim consolidated financial statements

﻿
21

84

51 931

Consolidated statements of changes in equity
First half (unaudited)

Reserves(USD millions)

Note

Total equity at January 1, 2024

SharecapitalTreasurysharesRetainedearnings

825-41

49 649Net income

Issued sharecapital andreserves
attributable
Total value
to Novartis
adjustments shareholders

Total
equity46 66783

46 750

5 934

0

5 934

-1 054-1 054-4-1 058-1 054

4 880

-4

4 876

-3 766

5 934

Other comprehensive income
Total comprehensive income
Dividends

Noncontrollinginterests

5 934
4.1

-7 624-7 624-7 624-15-2 798-2 813-2 813

26

6
-35

-35

-35

5

547

552

552

Shares delivered to Sandoz employees
as a result of the Sandoz spin-off

12

12

12

Taxes on treasury share transactions

8

8

8

Fair value adjustments on financial assets sold

51

Purchase of treasury shares
Reduction of share capital

4.2

-32

Exercise of options and employee transactions
Equity-based compensation

Impact of change in ownership of consolidated entities
Other movements

4.3

-51

-28

-28

114

114

90

62
114

Total of other equity movements

-32

16

-9 747-51-9 81490-9 724

Total equity at June 30, 2024

793

-25

45 836-4 87141 733169

41 902

Issued sharecapital andreserves
attributable
Retained
Total value
to Novartis
earnings adjustments shareholders

Noncontrollinginterests

Total
equity59 34281

59 423

4 609

2

4 611

387

387

1

388

387

4 996

3

4 999

							

The accompanying Notes form an integral part of the condensed interim consolidated financial statements

Reserves(USD millions)

Note

Total equity at January 1, 2023

SharecapitalTreasuryshares890-92

Net income

63 540-4 996

4 609

Other comprehensive income
Total comprehensive income

4 609

Dividends-7 255-7 255-7 255-35-5 853-5 888-5 88868-20

Exercise of options and employee transactions

2

151

153

153

Equity-based compensation

5

428

433

433

Taxes on treasury share transactions

8

8

8

Fair value adjustments on financial assets sold

16

Purchase of treasury shares
Reduction of share capital

Other movements

-48

4.3

-16
58

58

Total of other equity movements

-48

40

-12 46758-16-12 491-12 491

Total equity at June 30, 2023

842

-52

55 682-4 62551 847

The accompanying Notes form an integral part of the condensed interim consolidated financial statements

﻿
22

84

51 931

Consolidated statements of cash flows
Second quarter (unaudited)(USD millions)

Note

Net income from continuing operations

Q2 2024

Q2 2023

3 246

2 271

2 400

2 567

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

6.1

Dividends received from associated companies and others

1

Interest received
Interest paid

71

117

-255

-220

Change in other financial receipts-53

Change in other financial payments

-65

-4

-473

-973

Net cash flows from operating activities from continuing operations
before working capital and provision changes

4 925

3 705

Payments out of provisions and other net cash movements in non-current liabilities

-288

-243

Income taxes paid

6.2

Change in net current assets and other operating cash flow items

6.3

238

55

4 875

3 517

Total net cash flows from operating activities

4 875

3 576

Purchases of property, plant and equipment

-260

-225

Net cash flows from operating activities from continuing operations
Net cash flows from operating activities from discontinued operations

59

Proceeds from sale of property, plant and equipment
Purchases of intangible assets

37

4

-468

-673

Proceeds from sale of intangible assets

20

Purchases of financial assets

-45

-26

Proceeds from sale of financial assets

647

47

Divestments and acquisitions of interests in associated companies, net

-12

-2

-3 319-84

Purchases of marketable securities, commodities and time deposits

-237

-4

Proceeds from sale of marketable securities, commodities and time deposits

430

3-3 207-960-3 207-1 053Acquisitions and divestments of businesses, net

6.4

Net cash flows used in investing activities from continuing operations
Net cash flows used in investing activities from discontinued operations-93

Total net cash flows used in investing activities
Dividends paid to shareholders of Novartis AG

4.1

Purchases of treasury shares-2 417-1 616

Proceeds from exercised options and other treasury share transactions, net-2 95725

Increase in non-current financial debts

2 473

Repayments of the current portion of non-current financial debts-2 150Change in current financial debts

569

-709

Payments of lease liabilities

-59

-65

Payments from changes in ownership interests in consolidated subsidiaries-47

Other financing cash flows, net

22

-35

-3 200-3 766

Total net cash flows used in financing activities-3 200-3 637

Net change in cash and cash equivalents before effect of exchange rate changes-1 532-1 114

Net cash flows used in financing activities from continuing operations
Net cash flows from financing activities from discontinued operations

129

Effect of exchange rate changes on cash and cash equivalents

-34

-1

Net change in cash and cash equivalents-1 566-1 115

Cash and cash equivalents at April 1

9 469

12 000Cash and cash equivalents at June 30

7 903

10 885The accompanying Notes form an integral part of the condensed interim consolidated financial statements﻿23Consolidated statements of cash flows
First half (unaudited)(USD millions)

Note

Net income from continuing operations

H1 2024

H1 2023

5 934

4 421

4 897

5 249

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

6.1

Dividends received from associated companies and others

1

1

Interest received

235

373

Interest paid

-402

-335

-94

-10

Other financial receipts

27

Other financial payments
Income taxes paid

-1 049-1 268Net cash flows from operating activities from continuing operations
before working capital and provision changes

6.2

9 522

8 458

Payments out of provisions and other net cash movements in non-current liabilities

-631

-926

-1 751-1 163

7 140

6 369

Total net cash flows from operating activities

7 140

6 533

Purchases of property, plant and equipment

-487

-393

Change in net current assets and other operating cash flow items

6.3

Net cash flows from operating activities from continuing operations
Net cash flows from operating activities from discontinued operations

164

Proceeds from sale of property, plant and equipment

38

22-1 397-894

Proceeds from sale of intangible assets

20

130

Purchases of financial assets

-92

-66

Proceeds from sale of financial assets

710

110

Purchases of intangible assets

Divestments and acquisitions of interests in associated companies, net
Acquisitions and divestments of businesses, net

6.4

4

-5

-3 598-107

Purchases of marketable securities, commodities and time deposits

-240

-69

Proceeds from sale of marketable securities, commodities and time deposits

936

11 017-4 1069 745-4 1069 568-7 624-7 255-2 715-5 84325

159

Net cash flows (used in)/from investing activities from continuing operations
Net cash flows used in investing activities from discontinued operations-177

Total net cash flows (used in)/from investing activities
Dividends paid to shareholders of Novartis AG

4.1

Purchases of treasury shares
Proceeds from exercised options and other treasury share transactions, net
Increase in non-current financial debts

2 473

Repayments of the current portion of non-current financial debts-2 150Change in current financial debts

1 789

290

Payments of lease liabilities

-126

-131

Payments from changes in ownership interests in consolidated subsidiaries-47

Other financing cash flows, net

1118-8 364-12 762

Total net cash flows used in financing activities-8 364-12 839

Net change in cash and cash equivalents before effect of exchange rate changes-5 330

3 262

Net cash flows used in financing activities from continuing operations
Net cash flows used in financing activities from discontinued operations-77

Effect of exchange rate changes on cash and cash equivalents

-160

106

Net change in cash and cash equivalents-5 490

3 368

Cash and cash equivalents at January 1

13 393

7 517

Cash and cash equivalents at June 30

7 903

10 885The accompanying Notes form an integral part of the condensed interim consolidated financial statements﻿24

Notes to the Condensed Interim
Consolidated Financial Statements
for the three month and six month period
ended June 30, 2024 (unaudited)
1. Basis of preparation
Following the shareholder approval IFRS AccountingStandards required the Sandoz Division and selected
portions of corporate activities attributable to Sandoz’s
business, as well as certain expenses related to thespin-off (the “Sandoz business”) to be reported as
discontinued operations in the consolidated financial statements. As a result, the Sandoz business has
been presented as discontinued operations in thecondensed interim consolidated financial statements.
This requires the three month and six month period
ended June 30, 2023, consolidated income statement,
consolidated statement of comprehensive income
and consolidated statement of cash flows to present
separately continuing operations from discontinued
operations.
For further information and disclosures, refer toNote 3 and Note 11.

The consolidated financial statements of the Company
are prepared in accordance with International
Financial Reporting Standards (IFRS®) AccountingStandards as issued by the International AccountingStandards Board. They are prepared in accordancewith the historical cost convention, except for items
that are required to be accounted for at fair value.
These Condensed Interim Consolidated Financial
Statements for the three month and six month period
ended June 30, 2024, were prepared in accordancewith International Accounting Standards (IAS®) Standards 34 Interim Financial Reporting and accounting
policies set out in the 2023 Annual Report publishedon January 31, 2024.
At the Novartis AG Extraordinary General
Meeting, held on September 15, 2023, our shareholders approved the spin-off of the Sandoz business.

2. Accounting policies
testing may lead to potentially significant impairment
charges in the future that could have a materiallyadverse impact on the Company’s results of operations and financial condition.
The Company’s activities are not subject to significant seasonal fluctuations.

The Company’s accounting policies are set out in Note
1 to the Consolidated Financial Statements in the 2023
Annual Report and conform with IFRS AccountingStandards as issued by the International AccountingStandards Board.
The preparation of financial statements requires
management to make certain estimates and assumptions, either at the balance sheet date or during theperiod, which affect the reported amounts of revenues,
expenses, assets, liabilities and contingent amounts.
Estimates are based on historical experienceand other assumptions that are considered reasonable under the given circumstances and are regularly
monitored. Actual outcomes and results could differ
from those estimates and assumptions. Revisions toestimates are recognized in the period in which theestimate is revised.
As disclosed in the 2023 Annual Report, goodwill,
and acquired In-Process Research & Development
projects are reviewed for impairment at least annuallyand these, as well as all other investments in intangible assets, are reviewed for impairment wheneveran event or decision occurs that raises concern about
their balance sheet carrying value. The amount of
goodwill and other intangible assets on the Company’s consolidated balance sheet has risen significantly
in recent years, primarily from acquisitions. Impairment

Status of adoption of significant
new or amended IFRS standards orinterpretations
No new IFRS Accounting Standards were adopted
by the Company in 2024. In addition, new IFRS
Accounting Standards amendments or interpretations
that became effective in 2024 did not have a material impact on the Company’s consolidated financial
statements.
Based on the Company’s assessment, there are
no IFRS Accounting Standards, amendments or interpretations not yet effective in 2024 that would be
expected to have a material impact on the Company’s
consolidated financial statements.
In the second quarter of 2024, the following new
IFRS Accounting Standard, which is not yet effective,
was issued by the International Accounting Standards
Board:
﻿25

IFRS 18 Presentation and Disclosures in Financial
Statements• requiring disclosures in the notes to the financial
statements about management-defined performancemeasures (i.e. non-IFRS measures), and• adding new principles for aggregation and disaggregation of information in the primary financial
statements and notes.

IFRS 18 Presentation and Disclosure in Financial
Statements was issued by the International AccountingStandards Board in April 2024. IFRS 18 is effective on
January 1, 2027, and is required to be applied retrospectively to comparative periods presented, withearly adoption permitted. IFRS 18, upon adoption
replaces IAS Standards 1 – Presentation of Financial
Statements.
IFRS 18 sets out new requirements focused on
improving financial reporting by:• requiring additional defined structure to the statement of profit or loss (i.e. consolidated statementof income), to reduce diversity in the reporting,by requiring five categories (operating, investing,financing, income taxes and discontinued operations) and defined subtotals and totals (operating
income, income before financing, income taxes andnet income),

IFRS 18 will not impact the recognition or measurement of items in the financial statements, but it mightchange what an entity reports as its ‘operating profit
or loss’, due to the classification of certain income
and expense items between the five categories of theconsolidated income statement. It might also change
what an entity reports as operating activities, investing
activities and financing activities within the statementof cash flows, due to the change in classification ofcertain cash flow items between these three categories of the cash flows statement. Novartis is currently
assessing the impact of adopting IFRS 18.

3. Significant acquisitions of businesses and spin-off
of Sandoz business
The Company applied the acquisition method of
accounting for businesses acquired, and did not electto apply the optional concentration test to account for
acquired business as an asset separately acquired.

Acquisition of MorphoSys AG

On February 5, 2024, Novartis entered into an agreement to acquire MorphoSys AG (MorphoSys), a
Germany-based, global biopharmaceutical company
developing innovative medicines in oncology. The
acquisition of MorphoSys adds to our oncology
pipeline pelabresib, a late-stage BET inhibitor for
myelofibrosis and tulmimetostat, an early-stage investigational dual inhibitor of EZH2 and EZH1 for solid
tumors or lymphomasis.
On April 11, 2024, Novartis, through a subsidiary, commenced a voluntary public takeover offer(the “Offer”) to acquire all outstanding shares ofMorphoSys for EUR 68 per share, representing a total
consideration of approximately EUR 2.6 billion in cash
on a fully diluted basis. The settlement of the Offer wasconditional on a minimum acceptance threshold of 65
percent of MorphoSys outstanding shares.
Novartis purchased during the Offer acceptanceperiod MorphoSys shares on the market for a total
amount of EUR 0.3 billion (USD 0.3 billion). The closing
conditions of the Offer, including the minimum acceptance threshold of 65 percent were fulfilled by theend of the Offer acceptance period, and the acquisition of MorphoSys closed on May 23, 2024, withthe settlement payment amounting to EUR 1.7 billion(USD 1.9 billion) to the MorphoSys shareholders fortheir tendered shares. Subsequent to May 23, 2024,
Novartis acquired additional MorphoSys outstanding
shares through the Germany statutory two-weekextension period of the Offer (ending on May 30,2024) for EUR 0.3 billion (USD 0.3 billion). As a result,as at May 30, 2024, Novartis held 89.7 percent of the

Significant acquisitions ofbusinesses – 2024
Acquisition of Mariana Oncology

On May 2, 2024, Novartis acquired Mariana Oncology,
a preclinical-stage US based biotechnology company
focused on developing novel radioligand therapies(RLTs) with a portfolio of RLT programs across a rangeof solid tumor indications.
The purchase price consisted of a cash payment of
USD 1.1 billion and potential additional milestones of up
to USD 0.8 billion, which the Mariana Oncology shareholders are eligible to receive upon the achievement ofspeciﬁed milestones.
The fair value of the total purchase consideration
was USD 1.3 billion, consisting of a cash payment of
USD 1.1 billion and the fair value of contingent consideration of USD 0.2 billion. The preliminary purchaseprice allocation resulted in net identiﬁable assets of
USD 0.7 billion, consisting primarily of IPR&D intangible assets of USD 0.3 billion, other intangible assets(scientific infrastructure) of USD 0.4 billion, cash andcash equivalents of USD 0.1 billion and net deferred
tax liabilities of USD 0.1 billion. Goodwill amounted to
USD 0.6 billion.
The results of operations since the date of acquisition were not material.

﻿26

The purchase price consisted of a cash payment of
USD 0.6 billion and potential additional milestones of
up to USD 0.5 billion, which the DTx shareholders are
eligible to receive upon the achievement of specified
milestones.
The fair value of the total purchase consideration was USD 0.6 billion. The amount consisted of acash payment of USD 0.6 billion and the fair value ofcontingent consideration of USD 30 million, which DTx
shareholders are eligible to receive upon the achievement of specified milestones. The purchase priceallocation resulted in net identifiable assets of USD
0.4 billion, consisting primarily of IPR&D intangible
assets of USD 0.4 billion, cash of USD 0.1 billion andnet deferred tax liabilities of USD 0.1 billion. Goodwill
amounted to USD 0.2 billion.
The 2023 results of operations since the date ofacquisition were not material.

total outstanding share capital of MorphoSys. Total
cash paid for the MorphoSys shares purchased by
Novartis through to the end of the statutory two-weekextension period of the Offer amounted to EUR 2.3
billion (USD 2.5 billion). Non-controlling interests represented 10.3 percent of MorphoSys outstanding sharesamounting to USD 0.1 billion and were recognized inequity.
In June 2024, Novartis purchased outside the Offeran additional 1.7 percent of MorphoSys shares for EUR
44 million (USD 47 million). As a result, at June 30,
2024, non-controlling interests in equity were reduced
by USD 17 million and Novartis held approximately
91.4 percent of outstanding MorphoSys shares andnon-controlling interests represented approximately
8.6 percent of the outstanding MorphoSys shares.
On July 4, 2024, Novartis filed a public delisting purchase offer to delist the MorphoSys shares
admitted to trading on regulated markets and acquire
all MorphoSys AG shares and ADS not held directly by
Novartis.
The purchase price allocation is preliminary
pending primarily the outcome of Novartis analysis ofcertain clinical trial data readouts that became available prior to the closing date. The fair value of thetotal purchase consideration for the 89.7 percent
stake was USD 2.5 billion (including cash acquired).
The preliminary purchase price allocation resulted in
net identifiable assets of USD 1.0 billion, consisting
primarily of IPR&D intangible assets of USD 1.1 billion,
financial investments and other receivables of USD
0.6 billion, marketable securities of USD 0.4 billion,
cash and cash equivalents of USD 0.2 billion, financial
debt to third parties of USD 0.9 billion, net deferred
tax liabilities of USD 0.1 billion, and other net liabilities
of USD 0.2 billion. Non-controlling interests amounted
USD 0.1 billion, which were recognized at the non-controlling interest’s proportionate share of MorphoSys
identifiable net assets. Goodwill amounted to USD
1.6 billion. The finalization of the preliminary purchaseprice allocation may lead to a change to the allocation between the identifiable assets, mainly intangible
assets – IPR&D and net deferred taxes, and goodwill.
The results of operations since the date of acquisition were not material.

Acquisition of Chinook Therapeutics, Inc.

On June 12, 2023, Novartis entered into an agreement
to acquire all outstanding shares of Chinook Therapeutics, Inc. (Chinook Therapeutics), a US based
clinical stage biopharmaceutical company with twolate-stage medicines in development for rare, severe
chronic kidney diseases. The acquisition closed on
August 11, 2023.
The purchase price consisted of a cash payment of
USD 3.2 billion and potential additional payments of up
to USD 0.3 billion, which Chinook Therapeutics shareholders are eligible to receive upon the achievement ofspecified milestones.
The fair value of the total purchase consideration was USD 3.3 billion. The amount consisted of an
upfront cash payment of USD 3.2 billion and the fairvalue of contingent consideration of USD 0.1 billion,
which Chinook Therapeutics shareholders are eligible
to receive upon achievement of specified milestones.
The purchase price allocation resulted in net identifiable assets of USD 2.4 billion, consisting primarilyof IPR&D intangible assets of USD 2.5 billion, netdeferred tax liabilities of USD 0.4 billion and other net
assets of USD 0.3 billion, including cash of USD 0.1
billion. Goodwill amounted to USD 0.9 billion.
The 2023 results of operations since the date ofacquisition were not material.

Significant acquisitions ofbusinesses – 2023

Fair value of assets and liabilities
arising from acquisitions ofbusinesses

Acquisition of DTx Pharma Inc.

In the second quarter of 2023, Novartis entered into
an agreement to acquire all outstanding shares ofDTx Pharma Inc. (DTx), a US based, pre-clinical stage
biotechnology company focused on leveraging its
proprietary FALCON platform to develop siRNA therapies for neuroscience indications. DTx’s lead program,DTx-1252 targets the root cause of CMT1A—the overexpression of PMP22, a protein that causes the
myelin sheath that supports and insulates nerves in
the peripheral nervous system to function abnormally.
The transaction also includes two additional pre-clinical programs for other neuroscience indications. The
transaction closed on July 14, 2023.

The following table presents the fair value of theassets and liabilities acquired through acquisitions ofbusiness and the total purchase consideration for the
first half of 2024, and for the year ended December 31,
2023:

﻿
27

Jun 30,2024

Dec 31,
2023

Property, plant and equipment

23

18

Right-of-use assets

32

16

1 746

2 931

Other intangible assets 1

419

15

Deferred tax assets

315

34

Non-current financial and other assets

421

164

Trade receivable and financial andother current assets

658

183

Cash and cash equivalents

236

226

Deferred tax liabilities

-600

-474

Current and non-current financial debts-905(USD millions)In-process research and development

Current and non-current lease liabilities

-41

-51

Trade payables and other liabilities

-289

-231

Net identifiable assets acquired

2 015

2 831

Non-controlling interests-108

Goodwill

2 198

1 094

Total purchase consideration
for acquisitions of businesses

4 105

3 925

1

was recognized at its fair value, which exceeded thecarrying value of the Sandoz business net assets.
The conditions precedent to the spin-off were met
and on October 3, 2023 the spin-off of the Sandoz
business was effected by way of a distribution of a dividend in kind of Sandoz Group AG shares to Novartis
AG shareholders and American Depositary Receipt(ADR) holders (the Distribution). Through the Distribution, each Novartis AG shareholder received 1 SandozGroup AG share for every 5 Novartis AG shares andeach Novartis ADR holder received 1 Sandoz ADR for
every 5 Novartis ADR that they held at the close ofbusiness on October 3, 2023. As of October 4, 2023,
the shares of Sandoz Group AG have been listed on
the SIX Swiss Exchange (SIX) under the stock symbol“SDZ”.
On September 18, 2023, the Sandoz businessentered into financing arrangements with a groupof banks under which on September 28, 2023, itborrowed a total amount of USD 3.3 billion. Theseborrowings consisted of a bridge loan in EUR (EUR
2.4 billion) and term loans in EUR (EUR 0.2 billion) andUSD (USD 0.5 billion). In addition, the Sandoz business borrowed approximately USD 0.4 billion under anumber of local bilateral facilities in different countries.
This resulted in a total gross debt of USD 3.7 billion.
These outstanding borrowings of the Sandoz business legal entities were recognized in the September
30, 2023 consolidated balance sheet within Liabilities
related to discontinued operations and within financing
activities cash flows from discontinued operations.
Prior to the Distribution on October 3, 2023, Sandoz
business legal entities paid approximately USD 3.3
billion in cash to Novartis and its affiliates through aseries of intercompany transactions.
At the Distribution date on October 3, 2023, thedividend in kind distribution liability to effect the Distribution (spin-off) of the Sandoz business amounted
to USD 14.0 billion, measured by reference to the
October 4, 2023 opening Sandoz Group AG shareprice and applying a control premium. The dividend inkind distribution liability was recorded as a reduction
to equity (retained earnings) and remained in excessof the then carrying value of the Sandoz business net
assets, which amounted to USD 8.6 billion.
Certain consolidated foundations own Novartis
AG dividend-bearing shares that restricts their availability for use by Novartis. These Novartis AG sharesare accounted for as treasury shares. Through theDistribution, these foundations received SandozGroup AG shares representing an approximate 4.31%
equity interest in Sandoz Group AG. Upon the loss ofcontrol of Sandoz Group AG through the Distribution
on October 3, 2023, the financial investment in SandozGroup AG was recognized at its initial fair value basedon the opening traded share price of Sandoz GroupAG on October 4, 2023 (a Level 1 hierarchy valuation).
At initial recognition, on October 4, 2023, the SandozGroup AG financial investment had a fair value of USD
0.5 billion, and was reported in the fourth quarter of2023 on the consolidated balance sheet as a financial
asset. Management has designated this investment at
fair value through other comprehensive income.
The total non-taxable, non-cash gain recognizedat the Distribution date of the spin-off of the Sandoz

Other intangible assets represent technologies (scientific infrastructure).

The significant business acquisitions in the first half of2024 were of MorphoSys and Mariana Oncology, bothin the second quarter of 2024. The goodwill arising outof the first half of 2024 acquisitions is not tax deductible and it is attributable to the synergies, accounting
for deferred tax liabilities on acquired assets, and theassembled workforce, and in addition for MorphoSys
the relief from royalties.
In 2023, the significant business acquisitions were
the acquisition of DTx Pharma and Chinook Therapeutics. There were no significant acquisitions ofbusinesses in the first half of 2023. The goodwill
arising out of these acquisitions is attributable to thesynergies, the accounting for deferred tax liabilities on
the acquired assets and the assembled workforce. In
2023, no goodwill was tax deductible.

Spin-off of Sandoz business – 2023
Completion of the spin-off of the Sandoz businessthrough a dividend in kind distribution to Novartis
AG shareholders

On July 18, 2023, Novartis announced that its Boardof Directors had unanimously endorsed the proposed
separation of the Sandoz business to create an independent company by way of a spin-off and to seek
shareholder approval for the spin-off of the Sandoz
business into a separately traded standalone company,
following the complete structural separation of the
Sandoz business into a standalone company (theSandoz business or Sandoz Group AG) and subject tothe satisfaction of certain conditions and Novartis AG
shareholder approval.
At the EGM held on September 15, 2023, Novartis
AG shareholders approved a special distribution
by way of a dividend in kind to effect the spin-off ofSandoz Group AG, subject to the completion of certain
conditions precedent to the distribution. Upon shareholder approval, the Sandoz business was reported as
discontinued operations and the distribution liability﻿28business amounted to USD 5.9 billion, which consists
of:(USD millions)

For additional disclosures on discontinued operations,refer to Note 11.

Oct 3,
2023

Net assets derecognized-8 647

Derecognition of distribution liability

13 962Difference between net assets and distribution liability

5 315

Recognition of Sandoz Group AG sharesobtained through consolidated foundations

492

Currency translation gains recycled into
the consolidated income statement

357

Transaction costs and other items recognized in the
consolidated income statement-304

Gain on distribution of Sandoz Group AG to
Novartis AG shareholders

5 860

4. Summary of equity attributable to Novartis AG
shareholders
Number of outstanding shares(in millions)				Issued share capital andreserves attributable toNovartis AG shareholders(in USD millions)

2024

2023

H1 2024

H1 2023

Balance at beginning of year

2 044.0

2 119.6

46 66759 342

Shares acquired to be canceled

-26.7

-61.3

-2 698-5 767

Other share purchases

-1.1

-1.3

-115

-121

Exercise of options and employee transactions

0.0

2.8

-35

153

Equity-based compensation

8.3

8.5

552

433

Shares delivered to Sandoz employees as a result of the Sandoz spin-off

0.1

Note

12

Taxes on treasury share transactions

88-7 624-7 255

Net income of the period attributable to shareholders of Novartis AG

5 934

4 609

Other comprehensive income attributable to shareholders of Novartis AG-1 054387

Dividends

4.1

Impact of change in ownership of consolidated entities-28

Other movements

4.3

Balance at June 30

2 024.6

2 068.3

114

58

41 73351 847

In July 2023, Novartis entered into a new irrevocable, non-discretionary arrangement with a bank torepurchase Novartis shares on the second trading line
under its new up-to USD 15.0 billion share buyback.
In June 2024, Novartis amended the arrangement
to repurchase an additional 8.7 million Novartis shareson the second trading line to mitigate deliveries under
employee participation programs. Novartis is able
to cancel this arrangement but may be subject to a
90-day waiting period under certain conditions. As ofJune 30, 2024, and December 31, 2023, these waiting
period conditions were not applicable and as a result,
there was no requirement to record a liability under
this arrangement as of June 30, 2024, and December
31, 2023.

4.1. The gross dividend to shareholders of Novartis AG
amounted to USD 7.6 billion. The net dividend payment
to Novartis AG shareholders paid in March 2024
amounted to USD 5.2 billion. The USD 2.4 billion Swiss
withholding tax on the gross dividend was paid at its
due date in April 2024.
4.2. In December 2021, Novartis entered into an irrevocable, non-discretionary arrangement with a bank torepurchase Novartis shares on the second trading line
under its up-to USD 15.0 billion share buyback. The
arrangement was updated in July 2022, December
2022, and May 2023, and concluded in June 2023.
In June 2023, Novartis entered into an irrevocable, non-discretionary arrangement with a bank torepurchase 11.7 million Novartis shares on the second
trading line, which concluded in July 2023.
﻿29

4.3. Other movements include, for subsidiaries inhyper-inflationary economies, the impact of theapplication of IAS Standards 29 “Financial Reportingin Hyperinflationary Economies.”

5. Financial instruments
Fair value by hierarchy
The following table illustrates the three hierarchical levels for valuing financial instruments at fair value as of June30, 2024, and December 31, 2023. For additional information on the hierarchies and other matters, please referto the Consolidated Financial Statements in the 2023 Annual Report, published on January 31, 2024.

Level 1

Level 2

50

50

50

50

50

50

Debt securities

50

Total cash and cash equivalents at fair value

50(USD millions)

Dec 31,
2023

Jun 30,2024

Total
Dec 31,2023

Dec 31,
2023

Jun 30,2024

Level 3Jun 30,2024

Jun 30,2024

Dec 31,
2023

Financial assets
Cash and cash equivalents

Marketable securities
Fund investments

405

405

Derivative financial instruments
Total marketable securities and derivative
financial instruments at fair value

405

60

355

60

355

Current contingent consideration receivables
Current fund investments and equity securities

34

94

Debt and equity securities

275

796

Fund investments

12

7

60

355

465

355

90

65

90

65

22

31

56

125

642

616

924

1 432

191

183

203

190

501

553

501

553

1 334

1 352

1 628

2 175

101

101

101

101

-154

-14

-154

-14

Long-term financial investments
720

Non-current contingent consideration receivables
Total long-term financial investments at fair value

287

803

7

20

Associated companies at fair value through profit or loss
Financial liabilities
Current contingent consideration liabilities
Current other financial liabilities-88

Derivative financial instruments

-54

-91

Total current financial liabilities at fair value

-54

-91

Non-current contingent consideration liabilities

-88
-54

-91

-154

-102

-208

-193

-546

-389

-546

-389

The carrying amount of financial assets included in
the line current fund investments and equity securities of USD 56 million at June 30, 2024 (USD 125
million at December 31, 2023) is included in the line
“Other current assets” of the consolidated balance
sheets. The carrying amount of non-current contingent consideration liabilities of USD 0.5 billion at June30, 2024 (USD 0.4 billion at December 31, 2023) is
included in the line “Provisions and other non-current
liabilities” of the consolidated balance sheets.

In the first half of 2024, there was one transfer of
equity securities from Level 3 to Level 1 for USD 3
million due to Initial Public Offering.
The fair value of straight bonds amounted to
USD 19.4 billion at June 30, 2024 (USD 19.2 billion
at December 31, 2023) compared with the carrying
amount of USD 21.1 billion at June 30, 2024 (USD 20.6
billion at December 31, 2023). For all other financial
assets and liabilities, the carrying amount is a reasonable approximation of the fair value.
The carrying amount of financial assets includedin the line total long-term financial investments at fairvalue of USD 1.6 billion at June 30, 2024 (USD 2.2
billion at December 31, 2023) is included in the line
“Financial assets” of the consolidated balance sheets.

In the second quarter of 2024, consolidated foundations investments in Sandoz AG shares with a fairvalue of USD 449 million were sold, and the USD 144
million gain on disposal was transferred from other﻿30

The Company’s exposure to financial risks has notchanged significantly during the period and there
have been no major changes to the risk management
department or in any risk management policies.

comprehensive income to retained earnings. The fairvalue of the investment in Sandoz Group AG amounted
to USD 61 million at June 30, 2024 (December 31,
2023: USD 595 million) and was sold in the first daysof July 2024.

6. Details to the consolidated statements of cash flows
6.1. Non-cash items and other adjustments from continuing operations
The following table shows the reversal of non-cash items and other adjustments in the consolidated statementsof cash flows.
Q2 2024

Q2 2023

Property, plant and equipment

228

213

Right-of-use assets

61

68

Intangible assets

873

1 427

(USD millions)

Depreciation, amortization and impairments on:

Financial assets 1
Change in provisions and other non-current liabilities

-22

29

204

-53

Losses on disposal on property, plant and equipment; intangible assets; other non-current assets;
and other adjustments on financial assets and other non-current assets, net

72

86

Equity-settled compensation expense

257

222

Loss from associated companies

2

2

Income taxes

595

403

Net financial expense

171

131

Other

-41

39

Total

2 400

2 567

H1 2024

H1 2023

Property, plant and equipment

447

465

Right-of-use assets

124

133

Intangible assets

1 905

2 980

1

Includes fair value changes(USD millions)

Depreciation, amortization and impairments on:

Financial assets 1

675

Change in provisions and other non-current liabilities

367

362

Losses/(gains) on disposal on property, plant and equipment; intangible assets; other non-current assets;
and other adjustments on financial assets and other non-current assets, net

142

-216

Equity-settled compensation expense

517

412

Loss from associated companies

31

4

1 036

773

Net financial expense

386

227

Other

-64

34

Total

4 897

5 249

Income taxes

1

Includes fair value changes

﻿
316.2. Total amount of income taxes paid

In the first half of 2023, the total amount of income
taxes paid by continuing operations was USD 1 268
million (Q2 2023: USD 973 million), and by discontinued operations was USD 110 million (Q2 2023: USD
57 million), which was included within “Net cash flows
from operating activities from discontinued operations”. In the first half of 2023, the total amount ofincome taxes paid by the Company was USD 1 378
million (Q2 2023: USD 1 030 million).

In the first half of 2024, the total amount of income
taxes paid by continuing operations was USD 1 049
million (Q2 2024: USD 473 million), and nil by discontinued operations (Q2 2024: nil). In the first half of2024, the total amount of income taxes paid by theCompany was USD 1 049 million (Q2 2024: USD 473
million).

6.3. Cash flows from changes in working capital and other operating items
included in the net cash flows from operating activities from continuing
operations
Q2 2024

Q2 2023

H1 2024

Increase in inventories

-18

-185

-146

-546

Increase in trade receivables

-501

-447

-1 421-1 147(Decrease)/increase in trade payables

-142

73

-551

99

Change in other current and non-current assets

-105

9

-377

-100

Change in other current liabilities

1 004

605

744

531

238

55

-1 751-1 163(USD millions)Total

H1 2023

6.4. Cash flows arising from acquisitions and divestments of businesses, net fromcontinuing operations
The following table is a summary of the cash flow impact of acquisitions and divestments of businesses.
(USD millions)

Q2 2024

Q2 2023

H1 2024

H1 2023

Total purchase consideration for acquisitions of businesses-3 8070-4 1050Acquired cash and cash equivalents

234

Contingent consideration payable, net

233

280

-10

Payments (incl. prepayments), deferred consideration and other adjustments, net

47

-100

55

-100

-3 293-100-3 534

-110

-26

16

-64

3

-3 319-84-3 598-107

Cash flows used for acquisitions of businesses 1
Cash flows (used for)/from divestments of businesses, net 2
Cash flows used for acquisitions and divestments of businesses, net
1

2

236

The second quarter and the first half of 2024 include the payments for purchases of MorphoSys shares by Novartis during the Offer period totaling EUR 0.3 billion (USD 0.3 billion),see Note 3 for further information.
In the first half of 2024, USD 64 million (Q2 2024: USD 26 million) represented the net cash outflows from divestments in prior years.
In the first half of 2023, USD 3 million (Q2 2023: USD 16 million) represented the net cash inflows from divestments from the 2023 periods and prior years.

Note 3 provides further information regarding significant acquisitions and divestments of businesses. All acquisitions were for cash.

﻿32

7. Legal proceedings update
A number of Novartis companies are, and will likely
continue to be, subject to various legal proceedings,
including litigations, arbitrations and governmental
investigations, that arise from time to time. Legalproceedings are inherently unpredictable. As a result,
the Company may become subject to substantial liabilities that may not be covered by insurance and may inthe future incur judgments or enter into settlementsof claims that could have a material adverse effect on
its results of operations or cash flow. Note 21 to theConsolidated Financial Statements in our 2023 Annual
Report and 2023 Form 20-F contains a summary as ofthe date of these reports of significant legal proceedings to which Novartis or its subsidiaries were a party.
The following is a summary as of July 17, 2024, of significant developments in those proceedings, as well as
any new significant proceedings commenced since thedate of the 2023 Annual Report and 2023 Form 20-F.

matter regarding NPC’s contract pharmacy policy to
the Office of Inspector General of the US Department
of Health and Human Services, which could resultin the imposition of civil monetary penalties on NPC.
The USDC issued a decision rejecting HRSA’s interpretation of the 340B statute, vacating the violation
notification and remanding the matter to HRSA. HRSA
appealed, and the United States Court of Appeals
for the DC Circuit heard argument on the case in
2022. In May 2024, the Court of Appeals for the DC
Circuit issued a decision rejecting HRSA’s interpretation of the 340B statute and upholding NPC’s current
contract pharmacy policy. HRSA has 90 days from thedecision to determine whether to seek review fromthe US Supreme Court or the decision will be final.
In addition, NPC has brought litigation challenging a
number of state statutes purporting to add further
requirements under the 340B program as to the use ofcontract pharmacies in those states.

Investigations and related litigations

In addition to the matters described above, there havebeen other non-material developments in the otherlegal matters described in Note 21 to the Consolidated
Financial Statements contained in our 2023 Annual
Report and 2023 Form 20-F.

340B Drug Pricing Program investigations

In 2021, Novartis Pharmaceuticals Corporation (NPC)
received a notification from the US Health Resources
and Services Administration (HRSA) which statedthat HRSA believes NPC’s contract pharmacy policy
violates the 340B statute, and threatened potential
enforcement action. NPC subsequently sued HRSA
in the U.S. District Court (USDC) for the District ofColumbia to challenge HRSA’s determination and toenjoin HRSA from taking action with respect to NPC’s
contract pharmacy policy. HRSA then referred theNovartis believes that its total provisions for investigations, product liability, arbitration and other legal
matters are adequate based upon currently available
information. However, given the inherent difficulties
in estimating liabilities, there can be no assurance
that additional liabilities and costs will not be incurred
beyond the amounts provided.

8. Operating segment
further details and disclosures on discontinued operations, refer to Note 3 and Note 11.
The Company’s continuing operations is engaged
in the research, development, manufacturing, distribution, and commercialization and sale of innovative
medicines, with a focus on the core therapeutic areas:
cardiovascular, renal and metabolic; immunology;
neuroscience; oncology; and established brands.
Following the spin-off of the Sandoz business, on
October 3, 2023, Novartis operates as a single global
operating segment innovative medicines company
that is engaged in the research, development, manufacturing, distribution and commercialization and saleof innovative medicines. The Company’s research,development, manufacturing and supply of products
and functional activities are managed globally on a
vertically integrated basis. Commercial efforts thatcoordinate marketing, sales and distribution of theseproducts are organized by geographic region, therapeutic area and established brands.

Following the September 15, 2023, shareholders’approval of the spin-off of the Sandoz business, theCompany reported its consolidated financial statements for the current and prior years as “continuing
operations” and “discontinued operations” (see Note 1
and Note 3).
Continuing operations include the retained business activities of Novartis, comprising the innovative
medicines business (previously the Innovative
Medicines Division) and the continuing corporate
activities.
Discontinued operations include the Sandoz
generic pharmaceuticals and biosimilars business(the Sandoz Division) and certain corporate activities
attributable to Sandoz’s business, as well as certain
expenses related to the spin-off. Included in fourth
quarter of 2023 is also the IFRS Accounting Standards
non-cash, non-taxable net gain on the Distribution of
Sandoz Group AG to Novartis AG shareholders. For
﻿33

The determination of a single operating segment
is consistent with the financial information regularly
reviewed by the CODM for purposes of assessing
performance and allocating resources.
See Note 9 for revenues and geographic information disclosures.

The Executive Committee of Novartis (ECN),
chaired by the CEO, is the governance body responsible for allocating resources and assessing thebusiness performance of the operating segment of theCompany on a global basis and is the chief operating
decision-maker (CODM) for the Company.

9. Revenues and geographic information
Net sales
Net sales information
Net sales from continuing operations comprise the following:(USD millions)

Q2 2024

Q2 2023

H1 2024

H1 2023

Net sales to third parties from continuing operations

12 512

11 231

24 34121 776

Sales to discontinued operations

206

Net sales from continuing operations459

12 51211 43724 34122 235Net sales from continuing operations by region1
Second quarterQ2 2024
USD m

Q2 2023
USD m% change
USD% change
cc 2

Q2 2024% of total

Q2 2023% of total

US

5 146

4 498

14

14

41

39

Europe

3 867

3 688

5

6

31

32

Asia/Africa/Australasia

2 594

2 425

7

13

21

21

905

826

10

15

7

8
100

Canada and Latin America
Total

12 51211 4379

11100

Of which in established markets

9 162

8 456

8

10

73

74

Of which in emerging growth markets

3 350

2 981

12

16

27

26

Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western
Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg,
Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
2
Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43.
1

First half

H1 2024
USD m

H1 2023
USD m% change
USD% changecc 2

H1 2024% of total

H1 2023% of total

US

9 734

8 548

14

14

40

38

Europe

7 631

7 351

4

5

31

33

Asia/Africa/Australasia

5 174

4 728

9

15

21

21

Canada and Latin America

1 802

1 608

12

15

8

8

24 34122 235

9

11

100

100

Of which in established markets

17 65016 351

8

9

73

74

Of which in emerging growth markets

6 691

5 884

14

19

27

26

Total

Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western
Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg,
Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
2
Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43.
1﻿34Net sales from continuing operations by core therapeutic area and established brands
Second quarterQ2 2024
USD m

Q2 2023
USD m 1

Entresto

1 898

1 516

25

28

Leqvio

182

78

133

134

2 080

1 594

30

33

Cosentyx

1 526

1 272

20

22

Xolair 3

427

362

18

22

Ilaris

368

316

16

20

Other

1

nm

nm

% change
USD% change
cc 2

Cardiovascular, renal and metabolic

Total cardiovascular, renal and metabolic
Immunology

Total immunology

2 322

1 950

19

22

Kesimpta

799

489

63

65

Zolgensma

349

311

12

14

Aimovig

77

67

15

16

1 225

867

41

43

Kisqali

717

493

45

50

Promacta/Revolade

544

583

-7

-5

Tafinlar + Mekinist

523

496

5

9

Jakavi

471

435

8

13

Tasigna

446

476

-6

-4

Pluvicto

345

240

44

44

Lutathera

175

150

17

17

Scemblix

164

106

55

56

Kymriah

113

129

-12

-11

Piqray/Vijoice

120

130

Fabhalta

22

Neuroscience

Total neuroscience
Oncology

-8

-7

nm

nm

Total oncology

3 640

3 238

12

15

Total promoted brands

9 267

7 649

21

24

Sandostatin Group

313

331

-5

-4

Lucentis

275

395

-30

-28

Exforge Group

178

184

-3

1

Gilenya

138

269

-49

-47

Diovan Group

160

155

3

9

Galvus Group

150

175

-14

-5

Established brands

Contract manufacturing

271

339

-20

-19

Other

1 760

1 940

-9

-10

Total established brands

3 245

3 788

-14

-13

Total net sales from continuing operations

12 51211 437

9

11

Reclassified to conform with 2024 presentation of brands by therapeutic area and established brands.
Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43.
3
Net sales from continuing operations reflect Xolair sales for all indications.
1

2

nm = not meaningful﻿35Net sales from continuing operations by core therapeutic area and established brands
First half
H1 2024
USD m

H1 2023
USD m 1

Entresto

3 777

2 915

30

32

Leqvio

333

142

135

137

4 110

3 057

34

37

Cosentyx

2 852

2 348

21

23

Xolair 3

826

716

15

18

Ilaris

724

644

12

17

Other

1

nm

nm

% change
USD% change
cc 2

Cardiovascular, renal and metabolic

Total cardiovascular, renal and metabolic
Immunology

Total immunology

4 403

3 708

19

21

Kesimpta

1 436

873

64

66

Zolgensma

644

620

4

6

Aimovig

153

128

20

19

Neuroscience

Other

1

Total neuroscience

2 234

nm

nm

1 621

38

39

Oncology
Kisqali

1 344

908

48

52

Promacta/Revolade

1 064

1 130

-6

-4

Tafinlar + Mekinist

997

954

5

7

Jakavi

949

849

12

15

Tasigna

841

938

-10

-9

Pluvicto

655

451

45

45

Lutathera

344

299

15

16

Scemblix

300

182

65

67

Kymriah

233

264

-12

-10

Piqray/Vijoice

229

246

Fabhalta

28

Other

-7

-6

nm

nm

1

nm

nm

Total oncology

6 984

6 222

12

14

Total promoted brands

17 731

14 60821

23

Sandostatin Group

668

660

1

3

Lucentis

589

811

-27

-26

Exforge Group

370

370

0

3

Gilenya

313

501

-38

-36

Diovan Group

300

313

-4

1

Galvus Group

299

358

-16

-9

Established brands

Contract manufacturing

550

714

-23

-23

Other

3 521

3 900

-10

-10

Total established brands

6 610

7 627

-13

-12

Total net sales from continuing operations

24 34122 235

9

11

1
2
3

Reclassified to conform with 2024 presentation of brands by therapeutic area and established brands.
Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43.
Net sales from continuing operations reflect Xolair sales for all indications.

nm = not meaningful﻿36Net sales from continuing operations of the top 20 brands in 2024
Second quarter
US		
Brand classification by
therapeutic area or
Brandsestablished brands
Key indications%%
change change
USD m
USD
cc 1

%
%
change change
USD m
USD
cc 1

Chronic heart failure,
hypertension

947

25

951

25

30

1 898

25

28

Cosentyx
Immunology
		
		
		
		
		
		

Psoriasis (PsO),
ankylosing spondylitis(AS), psoriatic arthritis(PsA), non-radiographic
axial spondyloarthritis(nr-axSPA), hidradenitis
suppurativa (HS)

868

34

658

6

10

1 526

20

22

Kesimpta
Neuroscience		Relapsing-remitting
multiple sclerosis (RRMS)

555

49

244

110

118

799

63

65

Kisqali
Oncology		HR+/HER2metastatic breast cancer

375

67

342

27

35

717

45

50

Promacta/Revolade
Oncology				Immunethrombocytopenia (ITP),
severe aplastic anemia (SAA)

283

-10

261

-3

1

544

-7

-5

Tafinlar + Mekinist
Oncology
		
		
		
		
		

BRAF V600+ metastatic
adjuvant melanoma,
advanced non-small celllung cancer (NSCLC),
tumor agnostic with
BRAF mutation indication

202

3

321

7

13

523

5

9

471

8

13

471

8

13

216

-11

-7

446

-6

-4

427

18

22

427

18

22

Entresto

Cardiovascular,
renal and metabolic

Total

Rest of world%change
USD m USD/cc 1

Jakavi
Oncology
Myelofibrosis (MF),		
polycytomia vera (PV),		
graft-versus-host disease		 (GvHD)
Tasigna
Oncology
Chronic myeloid leukemia
		 (CML)
Xolair 2
Immunology				

Severe allergic asthma (SAA),
chronic spontaneous urticaria(CSU), nasal polyps

IlarisImmunology				Auto-inflammatory (CAPS,TRAPS, HIDS/MKD, FMF,
SJIA, AOSD, gout)

19

174

14

22

368

16

20

187

-8

126

-2

3

313

-5

-4

PSMA-positive mCRPC patients 295
post-ARPI, post-Taxane

30

50

285

274

345

44

44

60

215

-5

-3

349

12

14

275

-30

-28

275

-30

-28

Zolgensma
Neuroscience
Spinal muscular atrophy
		 (SMA)

134

Lucentis
Established brands
		
		
		

Age-related
macular degeneration (AMD),diabetic macular edema (DME),
retinal vein occlusion (RVO)

Exforge Group

Hypertension

Established brands

-1

194

Sandostatin Group
Established brands
Carcinoid tumors,		 acromegaly
Pluvicto
Oncology
		

230

1

-75

177

-2

2

178

-3

1

GEP-NETs
gastroenteropancreatic
neuroendocrine tumors

124

17

51

16

19

175

17

17

LeqvioCardiovascular,
Atherosclerotic
renal and metabolic
cardiovascular disease		 (ASCVD)

94

114

88

159

165

182

133

134

GilenyaEstablished brands
Relapsing multiple sclerosis
		 (RMS)

30

-71

108

-35

-31

138

-49

-47

Scemblix
Oncology				Philadelphia chromosomepositive chronic myeloid
leukemia (Ph+ CML)

105

35

59

111

112

164

55

56

Diovan Group

Hypertension

Lutathera
Oncology				

Established brands

Top 20 brands total
Rest of portfolio
Total net sales from continuing operations
1
2

6

-50

154

8

15

160

3

9

4 630

23

5 368

10

14

9 998

15

18

516

-29

1 998

-3

-3

2 514

-10

-10

5 146

14

7 366

6

9

12 512911

Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43.
Net sales from continuing operations reflect Xolair sales for all indications.

﻿37Net sales from continuing operations of the top 20 brands in 2024
First halfUS		
Brand classification by
therapeutic area or
Brandsestablished brands
Key indications

Total

Rest of world%change
USD m USD/cc 1%%change change
USD m
USD
cc 1

%
%
change change
USD m
USD
cc 1

Chronic heart failure,
hypertension

1 895

30

1 882

29

34

3 777

30

32

Cosentyx
Immunology
		
		
		
		
		
		

Psoriasis (PsO),
ankylosing spondylitis(AS), psoriatic arthritis(PsA), non-radiographic
axial spondyloarthritis(nr-axSPA), hidradenitis
suppurativa (HS)

1 529

30

1 323

13

16

2 852

21

23

Kesimpta
Neuroscience		Relapsing-remitting
multiple sclerosis (RRMS)

970

45

466

127

133

1 436

64

66

Kisqali
Oncology		HR+/HER2metastatic breast cancer

688

69

656

31

37

1 344

48

52

Promacta/Revolade
Oncology				Immunethrombocytopenia (ITP),
severe aplastic anemia (SAA)

549

-7

515

-5

-1

1 064

-6

-4

Tafinlar + Mekinist
Oncology
		
		
		
		
		

BRAF V600+ metastatic
adjuvant melanoma,
advanced non-small celllung cancer (NSCLC),
tumor agnostic with
BRAF mutation indication

386

-1

611

8

13

997

5

7

949

12

15

949

12

15

437

-12

-9

841

-10

-9

826

15

18

826

15

18

Entresto

Cardiovascular,
renal and metabolic

Jakavi
Oncology
Myelofibrosis (MF),		
polycytomia vera (PV),		
graft-versus-host disease		 (GvHD)
Tasigna
Oncology
Chronic myeloid leukemia
		 (CML)
Xolair 2
Immunology				

Severe allergic asthma (SAA),
chronic spontaneous urticaria(CSU), nasal polyps

IlarisImmunology				Auto-inflammatory (CAPS,TRAPS, HIDS/MKD, FMF,
SJIA, AOSD, gout)

18

364

7

16

724

12

17

426

3

242

-2

2

668

1

3

PSMA-positive mCRPC patients 576
post-ARPI, post-Taxane

33

79

nm

nm

655

45

45

23

406

-5

-3

644

4

6

589

-27

-26

589

-27

-26

Zolgensma
Neuroscience
Spinal muscular atrophy
		 (SMA)

238

Lucentis
Established brands
		
		
		

Age-related
macular degeneration (AMD),diabetic macular edema (DME),
retinal vein occlusion (RVO)

Exforge Group

Hypertension

Established brands

-9

360

Sandostatin Group
Established brands
Carcinoid tumors,		 acromegaly
Pluvicto
Oncology
		

404

5

-38

365

1

4

370

0

3

GEP-NETs
gastroenteropancreatic
neuroendocrine tumors

241

15

103

16

17

344

15

16

LeqvioCardiovascular,
Atherosclerotic
renal and metabolic
cardiovascular disease		 (ASCVD)

168

107

165

170

175

333

135

137

GilenyaEstablished brands
Relapsing multiple sclerosis
		 (RMS)

82

-55

231

-27

-25

313

-38

-36

Scemblix
Oncology				Philadelphia chromosomepositive chronic myeloid
leukemia (Ph+ CML)

193

39

107

149

154

300

65

67

Diovan Group

Hypertension

Lutathera
Oncology
		
		

15

-44

285

0

5

300

-4

1

Top 20 brands total

8 725

22

10 6011215

19 32616

18

Rest of portfolio

1 009

-29

4 006

-4

-3

5 015

-11

-10

Total net sales from continuing operations

9 734

14

14 6077

10

24 341911

1
2

Established brands

Constant currencies (cc) is a non-IFRS measure. A definition of non-IFRS measures used by Novartis can be found starting on page 43.
Net sales from continuing operations reflect Xolair sales for all indications.

nm = not meaningful﻿38

Other revenues(USD millions)

Profit sharing income

Q2 2024

Q2 2023

H1 2024

H1 2023

268

246

482

445

Royalty income

5

19

24

41

Milestone income

14

25

20

28

Other 1

73

18

125

43

Total other revenues

360

308

651

557

1

Other includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales.

10. Other interim disclosures
Property, plant and equipment, right-of-use assets and intangible assets
The following table shows additional disclosures related to property, plant and equipment, right-of-use assets
and intangible assets for continuing operations:(USD millions)

Property, plant and equipment impairment charges

Q2 2024

Q2 2023

H1 2024

H1 2023

-9

-31

-10

-58

-222

-437

-455
-133

Property, plant and equipment impairment reversal

39

Property, plant and equipment depreciation charge

-219

48

Right-of-use assets depreciation charge

-61

-68

-124

Intangible assets impairment charges 1

-37

-454

-194

-927

Intangible assets amortization charge

-836

-974

-1 711-2 053

1

The first half of 2023 includes an impairment of USD 0.3 billion due to the write-down of IPR&D related to cessation of clinical development program NIZ985. The second quarterand first half of 2023 include an impairment of USD 0.3 billion for the write-down of a currently marketed product to reflect reduction in recoverable amount.

The following table shows the additions to property, plant and equipment, right-of-use assets andintangible assets for continuing operations excluding
the impact of business acquisitions, which aredisclosed in Note 3:

In the first half of 2024 and 2023, there were no
impairment charges and no reversals of impairment
charges on right-of-use assets, as well as no reversalsof impairment charges on intangible assets.

Q2 2024

Q2 2023

H1 2024

H1 2023

Additions to property, plant and equipment

283

211

506

388

Additions to right-of-use assets

69

49

97

192

Additions to intangible assets other than goodwill

512

521

1 175

716

(USD millions)

Financial debt
Novartis issued the following straight bonds during the second quarter of 2024:
				 Notional
		 amount
CouponCurrency(millions)

Carrying value
June 30, 2024
(USD
Issue pricemillions)				
Maturity 		
year
Issuer1.600%

CHF

650

2027

Novartis AG, Basel, Switzerland

100.138%723

1.650%

CHF

435

2031

Novartis AG, Basel, Switzerland

100.148%483

1.750%

CHF

645

2034

Novartis AG, Basel, Switzerland

100.229%717

1.850%

CHF

280

2040

Novartis AG, Basel, Switzerland

100.268%311

1.850%

CHF

190

2049

Novartis AG, Basel, Switzerland

100.149%

211

﻿
39

31, 2023 and had a maturity date of September 2025)with a new USD 6.0 billion credit facility with a syndicate of banks. This credit facility is intended to be used
as a backstop for the US commercial paper program.
This facility matures in May 2029, and was undrawn as
at June 30, 2024.

In the second quarter of 2024, Novartis repaid the
3.4% coupon bond with a notional amount of USD 2.15
billion issued in 2014 by Novartis Capital Corporation,
USA, in accordance with its terms.
In May 2024, Novartis replaced its existing USD 6.0
billion credit facility with a syndicate of banks (which
was undrawn at its replacement date and December

Research and development commitments
The Company has entered into long-term researchand development agreements with various institutions
related to intangible assets. These agreements provide
for potential milestone payments by Novartis, which
are dependent on successful clinical development, or
meeting speciﬁed sales targets, or other conditions
that are speciﬁed in the agreements.
As of June 30, 2024, the amount and estimatedtiming of the Company’s commitments to makepayments under those agreements, which are shown
without risk adjustment and on an undiscounted basis,
were as follows:(USD millions)

2024

2024

226

2025

209

2026

460

2027

396

2028

566

2029

487

Thereafter

4 855

Total

7 199

Significant pending transaction

In July 2024, Novartis entered into a long-term
research and development agreement which did not
close as of July 17, 2024. This agreement provides forpotential milestones payments by Novartis that may
be capitalized and royalties. Based on their estimatedtiming, the payments for this transaction are expected
to amount to USD 0.1 billion in 2024, USD 0.1 billion in
2026, USD 0.1 billion in 2028, USD 0.1 billion in 2029
and USD 1.0 billion thereafter.

11. Discontinued operations
development, manufacturing, and marketing of genericpharmaceuticals and biosimilars. The Sandoz business
was organized globally into two franchises: Generics
and Biosimilars.
As the Sandoz business spin-off was completed
on October 3, 2023, there were no operating results inthe first half of 2024.

Discontinued operations included the operational
results from the Sandoz generic pharmaceuticals andbiosimilars division and certain corporate activities
attributable to the Sandoz business, as well as certain
other expenses related to the spin-off (refer to Note 3
for further details).
The Sandoz business operated in the off-patent
medicines segment and specialized in the﻿40Net income from discontinued operations(USD millions unless indicated otherwise)

Net sales to third parties from discontinued operations
Sales to continuing operations
Net sales from discontinued operations
Other revenues

Q2 2023

H1 2023

2 391

4 799

58

153

2 449

4 952

6

12

Cost from goods sold-1 263-2 551Gross profit from discontinued operations

1 192

2 413

Selling, general and administration-595-1 147

Research and development

-222

-441

Other income

21

28

Other expense

-283

-502

Operating income from discontinued operations

113

351

Interest expense

-8

-19

Other financial income and expense

-10

-18

Income before taxes from discontinued operations

95

315

Income taxes 1

-49

-125

Net income from discontinued operations

46

190

Income from associated companies

1

1

The tax rate in the second quarter of 2023 and in the first half of 2023 was impacted by non-recurring items such as net increases in uncertain tax positions of the Sandoz businessand non-deductible expenses recognized related to a legal matter. Excluding these impacts, the tax rate would have been 31.5% in the second quarter of 2023 and 28.6% in the firsthalf of 2023.

Supplemental disclosures related to discontinued operations
Net income from discontinued operations

Included in net income from discontinued operations were:(USD millions unless indicated otherwise)

Q2 2023

H1 2023

Depreciation of property, plant and equipment

-48

-99

Depreciation of right-of-use assets

-10

-18

Amortization of intangible assets

-56

-111

Impairment charges on property, plant and equipment-1-2

Impairment charges on intangible assets

-1

-13

Interest income

1

Impairment reversals of property, plant and equipment

11

Additions to restructuring provisions

-11

-16

Equity-based compensation expense related to Novartis equity-based participation plans

-18

-36

In 2023 there were no impairment charges and no reversals of impairment charges on right-of-use assets and noreversals of impairment charges on intangible assets of discontinued operations.

Other information

The following table shows for discontinued operations the additions to property, plant and equipment, rightof-use assets and intangible assets:(USD millions)

Q2 2023

H1 2023

Additions to property, plant and equipment

82

160

Additions to right-of-use assets

24

33

Additions to goodwill and intangible assets

35

56

For additional information related to the October 3,2023 distribution (spin-off) of the Sandoz business to
Novartis AG shareholders, effected through a dividend

in kind distribution of Sandoz Group AG shares to
Novartis AG shareholders and ADR holders, refer toNote 3.

﻿
41

12. Events subsequent to the June 30, 2024,
consolidated balance sheet
Significant pending transaction

Novartis. For disclosure of the MorphoSys businessacquisition, see Note 3.
In July 2024, Novartis entered into a long-term
research and development agreement, which did
not close as of July 17, 2024. See Note 10 for further
information.

On July 4, 2024, Novartis filed a public delisting purchase offer to delist the MorphoSys shares
admitted to trading on regulated markets and acquire
all MorphoSys AG shares and ADS not held directly by﻿42

Supplementary information (unaudited)
Non-IFRS measures as defined by
Novartis

Accounting Standards measures and other measures
as important factors in assessing the Company’s
performance.

Novartis uses certain non-IFRS Accounting Standards
metrics when measuring performance, especiallywhen measuring current-year results against priorperiods, including core results, constant currencies
and free cash flow. These are referred to by Novartis
as non-IFRS measures.
Despite the use of these measures by management
in setting goals and measuring the Company’s performance, these are non-IFRS measures that have nostandardized meaning prescribed by IFRS AccountingStandards. As a result, such measures have limits intheir usefulness to investors.
Because of their non-standardized definitions,the non-IFRS measures (unlike IFRS AccountingStandards measures) may not be comparable tothe calculation of similar measures of other companies. These non-IFRS measures are presented solely
to permit investors to more fully understand how
the Company’s management assesses underlying
performance. These non-IFRS measures are not,and should not be viewed as, a substitute for IFRS
Accounting Standards measures and should be viewed
in conjunction with the consolidated financial statements presented in accordance with IFRS AccountingStandards.
As an internal measure of Company performance,these non-IFRS measures have limitations, and theCompany’s performance management process is not
solely restricted to these metrics.

The following are examples of how these coremeasures are used:• In addition to monthly reports containing financial information prepared under IFRS AccountingStandards, senior management receives a monthly
analysis incorporating these non-IFRS coremeasures.
• Annual budgets are prepared for both IFRS
Accounting Standards and non-IFRS core measures.
As an internal measure of Company performance,
the core results measures have limitations, and theCompany’s performance management process is not
solely restricted to these metrics. A limitation of thecore results measures is that they provide a view of
the Company’s operations without including all events
during a period, such as the effects of an acquisition,divestment, or amortization/impairments of purchased
intangible assets, impairments to property, plant andequipment and restructurings and related items.

Constant currencies

Changes in the relative values of non-US currencies
to the US dollar can affect the Company’s financial
results and financial position. To provide additional
information that may be useful to investors, includingchanges in sales volume, we present information about
our net sales and various values relating to operating
and net income that are adjusted for such foreign
currency effects.
Constant currency calculations have the goalof eliminating two exchange rate effects so that an
estimate can be made of underlying changes in the
consolidated income statement excluding the impact
of fluctuations in exchanges rates:• The impact of translating the income statements ofconsolidated entities from their non-USD functional
currencies to USD• The impact of exchange rate movements on
the major transactions of consolidated entities
performed in currencies other than their functional
currency.

Core results

The Company’s core results – including core operating income, core net income and core earnings per
share – exclude fully the amortization and impairment charges of intangible assets, excluding software,
net gains and losses on fund investments and equity
securities valued at fair value through profit and loss,
impact of IAS Standards 29 “Financial Reporting inHyperinflationary Economies” to other financial income
and expense, and certain acquisition- and divestment-related items. The following items that exceed
a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses;
divestment gains and losses; restructuring charges/
releases and related items; legal-related items; impairments of property, plant and equipment, software, andfinancial assets, and income and expense items thatmanagement deems exceptional and that are or are
expected to accumulate within the year to be over a
USD 25 million threshold.
Novartis believes that investor understanding of
the Company’s performance is enhanced by disclosing
core measures of performance since, core measures
exclude items that can vary significantly from year
to year, they enable better comparison of businessperformance across years. For this same reason,
Novartis uses these core measures in addition to IFRS

We calculate constant currency measures by translating the current year’s foreign currency values forsales and other income statement items into USD(excluding the IAS Standards 29 “Financial Reportingin Hyperinflationary Economies” adjustments to the
local currency income statements of subsidiaries
operating in hyperinflationary economies), using
the average exchange rates from the prior year andcomparing them to the prior year values in USD.
We use these constant currency measures in evaluating the Company’s performance, since they may
assist us in evaluating our ongoing performance fromyear to year. However, in performing our evaluation,
﻿43

a measure of the net cash generated that is available
for investment in strategic opportunities, returning toshareholders and for debt repayment. Free cash flow
is a non-IFRS measure, which means it should not
be interpreted as a measure determined under IFRS
Accounting Standards.

we also consider equivalent measures of performancethat are not affected by changes in the relative value ofcurrencies.

Growth rate calculation

For ease of understanding, Novartis uses a sign
convention for its growth rates such that a reduction in
operating expenses or losses compared with the prioryear is shown as a positive growth.

Additional information

Free cash flow

Net debt

Novartis defines free cash flow as net cash flows fromoperating activities less purchases of property, plantand equipment. This definition provides a performancemeasure focusing on core operating activities andexcludes items that can vary significantly from year toyear, thereby enabling better comparison of businessperformance across years.
Free cash flow is a non-IFRS measure and is notintended to be a substitute measure for net cash flows
from operating activities as determined under IFRS
Accounting Standards. Free cash flow is presented asadditional information because management believes
it is a useful supplemental indicator of the Company’s ability to operate without reliance on additionalborrowing or use of existing cash. Free cash flow is

Novartis calculates net debt as current financial debts
and derivative financial instruments plus non-current
financial debts less cash and cash equivalents andmarketable securities, commodities, time deposits andderivative financial instruments.
Net debt is presented as additional information
because it sets forth how management monitors net
debt or liquidity and management believes it is a usefulsupplemental indicator of the Company’s ability to
pay dividends, to meet financial commitments, andto invest in new strategic opportunities, including
strengthening its balance sheet.
See page 52 for additional disclosures related to
net debt.

﻿
44

Reconciliation from IFRS Accounting Standards results to non-IFRS
measure core results
The following tables provide an overview of the reconciliation from IFRS Accounting Standards results to
non-IFRS measure core results:

Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results – Total
Company(USD millions unless indicated otherwise)

IFRS Accounting Standards operating income from continuing operations
Amortization of intangible assets

Q2 2024

Q2 2023

H1 2024

H1 2023

4 014

2 807

7 387

5 425

768

914

1 575

1 941

37

453

194

926

Impairments
Intangible assets
Property, plant and equipment related to the company-wide
rationalization of manufacturing sites-36

Other property, plant and equipment

-43

6

22

6

22

43

439

200

905

- Income

-103

-59

-215

-63

- Expense

110

1

230

3

7

-58

15

-60

Total impairment charges
Acquisition or divestment of businesses and related items

Total acquisition or divestment of businesses and related items, net
Other items
Divestment gains

-7

-6

-19

-132

Financial assets – fair value adjustments

-22

29

6

75

- Income

-23

-64

-81

-95

- Expense

167

145

258

795

2

50

31

25

-15

-270

Restructuring and related items

Legal-related items- Income-484- Expense
Additional income-3

Additional expense
Total other items
Total adjustments

9

7

114

15

121

138

313

-65
2 721

939

1 433

2 103

Core operating income from continuing operations

4 953

4 240

9 490

8 146

as % of net sales

39.6%

37.1%

39.0%

36.6%

-2

-2

-31

-4

Loss from associated companies
Core adjustments to loss from associated companies, net of tax

26

Interest expense

-246

-216

-467

-416

Other financial income and expense

75

85

81

189

Core adjustments to other financial income and expense

-15

44

75

58

Income taxes, adjusted for above items (core income taxes)

-757

-649

-1 485-1 238Core net income from continuing operations

4 008

3 502

7 689

6 735

Core net income

4 008

3 811

7 689

7 425

Core net income attributable to shareholders of Novartis AG

4 008

3 810

7 689

7 423

Core basic EPS from continuing operations (USD) 2

1.97

1.69

3.77

Core net income from discontinued operations

309

1Core basic EPS from discontinued operations (USD) 1, 2
Core basic EPS (USD) 2
1
2

1.97

690

3.23

0.14

		

0.31

1.83

3.77		

3.54

For details on discontinued operations core results refer to page 48.
Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares used in the basic EPS
calculation outstanding in a reporting period.

﻿
45

Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results – Total
Company
Second quarterQ2 2024
IFRS
AccountingStandards
results

Amortizationof intangible
assets 1

Gross profit from continuing operations

9 699

724

Operating income from continuing operations

4 014

768

43

7

Income before taxes from continuing operations

3 841

768

43

7

Income taxes 5

-595

-145

-5

-3

Net income from continuing operations

Acquisition ordivestment ofbusinesses and2
Impairments related items 3

Otheritems 4Q2 2024
Core results

Q2 2023Core results4

10 427

9 591

121

4 953

4 240

106

4 765

4 151

-9

-757

-649

3 246

4 008

3 502

Net income

3 246

4 008

3 811

Basic EPS from continuing operations (USD) 7

1.60

1.97

1.69

1.60

1.97

1.83

4

-2 445-2 1541-3 090-3 088-2 276-2 129(USD millions unless indicated otherwise)

Net income from discontinued operations 6

309

Basic EPS from discontinued operations (USD) 6, 7
Basic EPS (USD) 7
		

0.14

				

The following are adjustments to arrive at core gross profit from continuing operations
Cost of goods sold-3 173

724

The following are adjustments to arrive at core operating income from continuing operations
Selling, general and administration-3 091

Research and development-2 367

Other income

273

Other expense

-500

44

37

10
-103

-69

101

36

100

185

-209

-170

-15

60

129

6

The following are adjustments to arrive at core income before taxes from continuing operations
Other financial income and expense75						

Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes theamortization of acquired rights to technologies
2
Impairments: research and development includes net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant andequipment3
Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; otherincome and other expense includes transitional service-fee income and expenses related to the Sandoz distribution
4
Other items: cost of goods sold, selling, general and administration, and other income and other expense include restructuring income and charges related to the initiative toimplement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; other income andother expense includes fair value adjustments; other income also includes divestment gains; other financial income and expense includes the impact of IAS Standards 29 “Financial
Reporting in Hyperinflationary Economies” for subsidiaries operating in hyperinflationary economies, currency devaluation losses and an adjustment related to the gain on sale offinancial assets.
5
Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally beapplicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets andacquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although this is not always the case for items arising fromlegal settlements in certain jurisdictions. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 0.9 billion toarrive at the core results before tax amounts to USD 162 million. The average tax rate on the total adjustments was 17.5% since the quarterly core tax charge of 15.9% has been
applied to the pre-tax income of the period.
6
For details on discontinued operations core results refer to page 48.
7Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG.
1﻿
46

Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results – Total
CompanyFirst half
H1 2024
IFRS
AccountingStandards
results

Amortizationof intangible
assets 1

Gross profit from continuing operations

18 723

1 497

Operating income from continuing operations

7 387

1 575

200

15

Income before taxes from continuing operations

6 970

1 575

200

15

414

9 174

7 973

Income taxes 5-1 036

-295

-26

-5

-123

-1 485-1 238Net income from continuing operations

5 934

7 689

6 735

5 934

7 689

7 425

2.91

3.77

3.23

2.91

3.77

3.54

9

-4 763-4 201(USD millions unless indicated otherwise)

Acquisition ordivestment ofbusinesses and2
Impairments related items 3

Otheritems 4

H1 2024
Core results

H1 2023Core results

9

20 22918 591

313

9 490

8 146

Net income from discontinued operations 6

690

Net income
Basic EPS from continuing operations (USD) 7
Basic EPS from discontinued operations (USD)
Basic EPS (USD) 7

0.31

7

The following are adjustments to arrive at core gross profit from continuing operations
Cost of goods sold-6 269

1 497

The following are adjustments to arrive at core operating income from continuing operations
Selling, general and administration-5 931

Research and development-4 788Other income

522

Other expense-1 13978

1-5 930-5 95221

16-4 479-4 182

-215

-151

156

140

209

438

-486

-451

194
6

The following are adjustments to arrive at core income before taxes from continuing operations
Loss from associated companies

-31

26

-5

-4

Other financial income and expense

81

75

156

247

						

Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes theamortization of acquired rights to technologies
2
Impairments: research and development includes net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant andequipment3
Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; otherincome and other expense includes transitional service-fee income and expenses related to the Sandoz distribution
4
Other items: cost of goods sold, selling, general and administration, and other income and other expense includes restructuring income and charges related to the initiative toimplement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research anddevelopment includes contingent consideration adjustments; other income and other expense includes fair value adjustments; other income also includes divestment gains; otherexpense includes legal related items and a fair value adjustment on a contingent receivable and other costs and items; loss from associated companies includes a divestment
adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 “Financial Reporting inHyperinflationary Economies” for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets
and release of provisions for interests on tax matters.
5
Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally beapplicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets andacquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although this is not always the case for items arising fromlegal settlements in certain jurisdictions. Adjustments related to income from associated companies are recorded net of any related tax effect. Due to these factors and the differing
effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 2.2 billion to arrive at the core results before tax amounts to USD 449 million. The average tax
rate on the total adjustments was 20.4% since the estimated full year core tax charge of 16.2% has been applied to the pre-tax income of the period.
6
For details on discontinued operations core results refer to page 48.
7Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG.
1﻿47

Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results – Discontinued
operations
Second quarterQ2 2023Core results(USD millions unless indicated otherwise)

Gross profit from discontinued operations

1 265

Operating income from discontinued operations

428

Income before taxes from discontinued operations

404

Income taxes-95

Net income from discontinued operations

309

Basic EPS from discontinued operations (USD) 1

0.14

The following are adjustments to arrive at core gross profit from discontinued operations
Cost of goods sold

-1 538The following are adjustments to arrive at core operating income from discontinued operations
Selling, general and administration-585

Research and development-220

Other expense-32

The following are adjustments to arrive at core income before taxes from discontinued operations
Other financial income and expense
1-16

Earnings per share (EPS) is calculated on the amount of net income from discontinued operations attributable to shareholders of Novartis AG.

Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results – Discontinued
operationsFirst half
H1 2023Core results(USD millions unless indicated otherwise)

Gross profit from discontinued operations

2 572

Operating income from discontinued operations

935

Income before taxes from discontinued operations

900

Income taxes-210

Net income from discontinued operations

690

Basic EPS from discontinued operations (USD) 1

0.31

The following are adjustments to arrive at core gross profit from discontinued operations
Cost of goods sold-2 392

The following are adjustments to arrive at core operating income from discontinued operations
Selling, general and administration-1 122

Research and development-439

Other income

5

Other expense-81

The following are adjustments to arrive at core income before taxes from discontinued operations
Other financial income and expense
1-17

Earnings per share (EPS) is calculated on the amount of net income from discontinued operations attributable to shareholders of Novartis AG.

﻿
48

Free cash flow
The following table is a reconciliation of the three major categories of the IFRS Accounting Standards consolidated statements of cash flows to the non-IFRS measure free cash flow:
Second quarterQ2 2024

Q2 2023

Free
cash flow

IFRS
AccountingStandards
cash flow

4 875

4 875

3 517
59

59

Total net cash flows from operating activities

4 875

4 875

3 576

3 576

Net cash flows used in investing activities fromcontinuing operations-3 207

2 947

-260

-960
-93

17

-76

Total net cash flows used in investing activities 1-3 207

2 947

-260

-1 053752-301

Net cash flows used in financing activities fromcontinuing operations-3 2003 200

0-3 766

3 766

0

129

-129

0

-3 2003 200

0-3 637

3 637

0(USD millions)

Net cash flows from operating activities fromcontinuing operations

IFRS
AccountingStandards
cash flow

Adjustments

Net cash flows from operating activities fromdiscontinued operations

Net cash flows used in investing activities fromdiscontinued operations

Net cash flows from financing activities fromdiscontinued operations
Total net cash flows used in financing activities 2
Non-IFRS measure free cash
flow from continuing operations

4 615

Non-IFRS measure free cash flowfrom discontinued operations

2

Free
cash flow

3 517

735

-225

3 292
-17

Total non-IFRS measure
free cash flow
1

Adjustments

4 615

3 275

With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities from continuing operations and from discontinued operations are
excluded from the free cash flow.
Net cash flows (used in)/from financing activities from continuing operations and from discontinued operations are excluded from the free cash flow.

﻿49

Free cash flow
First half

H1 2024(USD millions)

Net cash flows from operating
activities fromcontinuing operations

IFRS
AccountingStandards
cash flow

Adjustments

7 140

H1 2023

Free
cash flow

IFRS
AccountingStandards
cash flow

7 140

6 369

6 369

164

164

7 140

6 533

6 533

-487

9 745

-10 138

-393

-177

32

-145

Net cash flows from operating
activities fromdiscontinued operations
Total net cash flows fromoperating activities

7 140

Net cash flows (used in)/from
investing activities fromcontinuing operations-4 106

3 619

Net cash flows used in investing
activities fromdiscontinued operations

Adjustments

Freecash flow

Total net cash flows (used in)/from
investing activities 1-4 106

3 619

-487

9 568

-10 106-538

Net cash flows used in financing
activities fromcontinuing operations-8 3648 364

0-12 762

12 762

0

-77

77

0

-12 839

12 8390

Net cash flows used in financing activities
from discontinued operations
Total net cash flows used infinancing activities 2-8 364

Non-IFRS measure free cash
flow from continuing operations

8 364

0

6 653

Non-IFRS measure free cash flowfrom discontinued operations

5 976
19

Total non-IFRS measure
free cash flow

6 653

5 995

With the exception of purchases of property, plant and equipment, all net cash flows (used in)/from investing activities from continuing operations and from discontinued operations
are excluded from the free cash flow.
2
Net cash flows used in financing activities from continuing operations and from discontinued operations are excluded from the free cash flow.
1﻿
50

The following table is a summary of the non-IFRS measure free cash flow:
Second quarter(USD millions)Operating income from continuing operations

Q2 2024

Q2 2023

4 014

2 807

1 140

1 737

Adjustments for non-cash items
Depreciation, amortization and impairments
Change in provisions and other non-current liabilities

204

-53

Other

288

347

5 646

4 838

Operating income adjusted for non-cash items from continuing operations
Dividends received from associated companies and others

1

Interest received and change in other financial receipts

7164Interest paid and change in other financial payments

-320

-224

Income taxes paid

-473

-973

Payments out of provisions and other net cash movements in non-current liabilities

-288

-243

Change in inventories and trade receivables less trade payables

-661

-559

Change in other net current assets and other operating cash flow items

899

614

Net cash flows from operating activities from continuing operations

4 875

3 517

Purchases of property, plant and equipment

-260

-225

Non-IFRS measure free cash flow from continuing operations

4 615

3 292

4 615

3 275

Non-IFRS measure free cash flow from discontinued operations 1-17

Total non-IFRS measure free cash flow
1

In the second quarter of 2023 the free cash flow from discontinued operations was a cash outflow of USD 17 million consisting of USD 59 million net cash inflows from operating
activities from discontinued operations, less purchases of property, plant and equipment by discontinued operations of USD 76 million.

First half
(USD millions)Operating income from continuing operations

H1 2024

H1 2023

7 387

5 425

2 482

3 653

367

362

Adjustments for non-cash items
Depreciation, amortization and impairments
Change in provisions and other non-current liabilities
Other
Operating income adjusted for non-cash items from continuing operations
Dividends received from associated companies and others
Interest received and other financial receipts
Interest paid and other financial payments
Income taxes paid
Payments out of provisions and other net cash movements in non-current liabilities
Change in inventories and trade receivables less trade payables

595

230

10 831

9 670

1

1

235

400

-496

-345

-1 049-1 268-631-926-2 118-1 594

Change in other net current assets and other operating cash flow items

367

431

Net cash flows from operating activities from continuing operations

7 140

6 369

Purchases of property, plant and equipment

-487

-393

Non-IFRS measure free cash flow from continuing operations

6 653

5 976

6 653

5 995

Non-IFRS measure free cash flow from discontinued operations 1

19

Total non-IFRS measure free cash flow
1

In the first half of 2023, the free cash flow from discontinued operations was a cash inflow of USD 19 million consisting of USD 164 million net cash inflows from operating activities
from discontinued operations, less purchases of property, plant and equipment by discontinued operations of USD 145 million.

﻿
51

Additional information
Net debt

Condensed consolidated changes in net debt
Second quarter

First half

(USD millions)

Q2 2024

Q2 2023(USD millions)H1 2024

H1 2023

Net change in cash and cash equivalents-1 566-1 115

Net change in cash and cash equivalents-5 4903 368-3 087-11 497

Change in marketable securities, commodities,
time deposits, financial debts and derivatives
financial instruments-1 358845

Change in marketable securities, commodities,
time deposits, financial debts and derivatives
financial instruments

Change in net debt

-2 924-270

Change in net debt

-8 577-8 129Net debt at April 1-15 836-15 104

Net debt at January 1-10 183-7 245Net debt at June 30-18 760-15 374

Net debt at June 30-18 760-15 374

Jun 30,2024

Dec 31,
2023

Jun 30,2023

Non-current financial debts-19 663-18 436-18 259

Current financial debts and derivative financial instruments-7 532-6 175-8 289Total financial debts-27 195-24 611-26 548

7 903

13 39310 885

532

1 035

289

8 435

14 42811 174-18 760-10 183-15 374

Components of net debt

(USD millions)Less liquidity
Cash and cash equivalents
Marketable securities, commodities, time deposits and derivative financial instruments
Total liquidity
Net debt at end of period

Share information
Jun 30,2024

Jun 30,2023

Number of shares outstanding

2 024 579 175

2 068 263 550

Registered share price (CHF)

96.17

90.00

106.46100.91Market capitalization (USD billions) 1

216.5

207.0

Market capitalization (CHF billions) 1

194.7

186.1

ADR price (USD)

1Market capitalization is calculated based on the number of shares outstanding(excluding treasury shares). Market capitalization in USD is based on the market
capitalization in CHF converted at the quarter end CHF/USD exchange rate.

﻿
52

Effects of currency fluctuations
Principal currency translation rates
Averagerates
Q2 2024

Averagerates
Q2 2023

Averagerates
H1 2024

Averagerates
H1 2023

Period-end
rates
Jun 30,2024

Period-end
rates
Jun 30,
2023

1 CHF

1.106

1.113

1.125

1.097

1.112

1.112

1 CNY

0.138

0.143

0.138

0.144

0.137

0.138

1 EUR

1.077

1.089

1.081

1.081

1.070

1.086

1 GBP

1.262

1.252

1.265

1.233

1.264

1.262

100 JPY

0.642

0.729

0.658

0.742

0.621

0.692

100 RUB

1.102

1.230

1.101

1.300

1.156

1.133

(USD per unit)

Currency impact on key figures

The following table provides a summary of the currency impact on key Company figures due to their conversion
into US dollars, the Company’s reporting currency, of the financial data from entities reporting in non-US dollars.
Constant currency (cc) calculations apply the exchange rates of the prior year period to the current period financial data for entities reporting in non-US dollars.
Second quarter

Change in
USD %Q2 2024

Change inPercentage
constant point currency
currencies %impactQ2 2024
Q2 2024

Net sales from continuing operations

9

11

-2

Operating income from continuing operations

43

47

-4

Net income from continuing operations

43

49

-6

Basic earnings per share (USD) from continuing operations

47

52

-5

Core operating income from continuing operations

17

19

-2

Core net income from continuing operations

14

18

-4

Core basic earnings per share (USD) from continuing operations

17

21

-4

First half

Change in
USD %H1 2024

Change inPercentage
constant point currency
currencies %impactH1 2024
H1 2024

Net sales from continuing operations

9

11

-2

Operating income from continuing operations

36

43

-7

Net income from continuing operations

34

43

-9

Basic earnings per share (USD) from continuing operations

37

47

-10

Core operating income from continuing operations

16

21

-5

Core net income from continuing operations

14

19

-5

Core basic earnings per share (USD) from continuing operations

17

22

-5

﻿
53

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,” “will,” “continue,” “ongoing,”“grow,” “launch,” “expect,” “deliver,” “focus,” “address,” “accelerate,” “deliver,” “remain,” “scaling,” “guidance,” “outlook,”“long-term,” “priority,” “potential,” “can,” “trajectory” 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 potential future,pending or announced transactions, including completion of the acquisition of MorphoSys AG; regarding potential future
sales or earnings; or by discussions of strategy, plans, expectations or intentions, including discussions regarding ourcontinued 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. There can be no
guarantee that the investigational or approved products described in this press release will be submitted or approved forsale or for any additional indications or labeling in any market, or at any particular time. Nor can there be any guaranteethat such products will be commercially successful in the future. Neither can there be any guarantee expected benefits
or synergies from the transactions described in this press release will be achieved in the expected timeframe, or at all.
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 ongoinggovernment, 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 businessmodels; 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 manufacturingissues; 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 otherrisks and factors referred to in Novartis AG’s most recently filed Form 20-F and in subsequent reports filed with, or
furnished to, the US Securities and Exchange Commission. Novartis is providing the information in this press release as ofthis 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.
This communication is neither an offer to purchase nor a solicitation of an offer to sell shares of MorphoSys. The final
terms and further provisions regarding the delisting purchase offer are available in the offer document published by
Novartis BidCo AG (formerly known as Novartis data42 AG) (the “Bidder”). The offer document has been approved by
the BaFin and has been filed with the U.S. Securities and Exchange Commission (the “SEC”). The solicitation and offer
to buy shares of MorphoSys is only being made pursuant the offer document. In connection with the Offer, the Bidder
and Novartis AG have filed Tender Offer Statement on Schedule TO with the SEC (together with the offer document, an
Offer to Purchase including the means to tender and other related documents, the “Offer Documents”), the management
board and supervisory board of MorphoSys have issued a joint reasoned statement in accordance with sec. 27 of theGerman Securities Acquisition and Takeover Act and MorphoSys has filed a Solicitation/Recommendation Statement
on Schedule 14D-9 with the SEC (together with the joint reasoned statement, the “Recommendation Statements”). THE
MORPHOSYS SHAREHOLDERS AND OTHER INVESTORS ARE URGED TO READ THE OFFER DOCUMENTS AND
THE RECOMMENDATION STATEMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE
READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. The Offer Documents and the
Recommendation Statements have been distributed to all stockholders of MorphoSys in accordance with German and
U.S. securities laws. The Tender Offer Statement on Schedule TO and the Solicitation/Recommendation Statement on
Schedule 14D-9 are available for free at the SEC’s website at www.sec.gov. Additional copies may be obtained for free bycontacting the Bidder or MorphoSys. Free copies of these materials and certain other offering documents are available
on the Bidder’s website at www.novartis.com/investors/morphosys-acquisition or by contacting the Bidder’s investor
relations department at +41 61 324 7944.

﻿54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 interim financial reportat the link below. Additional information is provided on our business and pipeline of selected compounds in latestage development. A copy of today’s earnings call presentation can be found at https://www.novartis.com/
investors/event-calendar.

Important dates

October 29, 2024
November 20-21, 2024
January 31, 2025

Third quarter & nine months 2024 results
Meet Novartis Management 2024 (London, UK)
Fourth quarter & full year 2024 results﻿55