Novartis delivers excellent performance in third quarter

recently launched products generate 20%* of sales; Gilenya approved; Alcon consolidated

Novartis International AG /
Novartis delivers excellent performance in third quarter: recently launched
products generate 20%* of sales; Gilenya approved; Alcon consolidated
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The issuer is solely responsible for the content of this announcement.

Key figures - third quarter and nine months to September 30

% %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
----------------------------------------------------------------
Net sales 12 578 11 086 13 16 36 425 31 341 16 15

Operating income 2 587 2 634 -2 3 9 059 7 345 23 23

Net income 2 319 2 112 10 14 7 704 6 131 26 24

EPS (USD) 0.99 0.93 6 12 3.34 2.69 24 22

Free cash flow
(before dividends) 2 895 2 675 8   8 166 6 097 34

Core

Operating income 3 699 2 959 25 29 10 840 8 233 32 31

Net income 3 146 2 679 17 21 9 226 7 375 25 24

EPS (USD) 1.36 1.17 16 19 4.00 3.24 23 22

----------------------------------------------------------------

Strong financial performance in the third quarter and for nine months
* Net sales up 13% (+16% in constant currencies, or cc) to USD 12.6 billion;
nine months net sales up 16% (+15% cc)
* Operating income fell 2% (+3% cc) to USD 2.6 billion including impairment
and acquisition charges of USD 794 million; nine months operating income up
23% (23% cc)
* Core operating income up 25% (+29% cc) to USD 3.7 billion; Core operating
income margin 29.4% of net sales; nine months core operating income up 32%
(+31 % cc)
* Core EPS improves 16% (+19% cc) to USD 1.36; nine months core EPS up 23%
(+22% cc); third quarter EPS up 6% (+12% cc) to USD 0.99; nine months EPS
+24% (+22% cc)
* Free cash flow before dividends of USD 2.9 billion, nine months free cash
flow USD 8.2 billion

New product and pipeline momentum strengthens growth prospects
* Group´s recently launched products contribute 20%* of net sales (USD 2.3
billion) with 42% growth over the previous year
* Significant innovation momentum underpinned by FDA approval of Gilenya as
first-in-class novel therapy for relapsing multiple sclerosis; Tasigna
received positive CHMP opinion and approval in Switzerland as first-line
therapy; positive Phase III trial data for Onbrez over salmeterol and
positive Phase III data for MenB
* Sandoz launches enoxaparin outpacing all recent injectables launches in the
US; achieves enoxaparin sales of USD 292 million

Basel, October 21, 2010 - Commenting on the results, Joseph Jimenez, CEO of
Novartis, said:
"I am pleased with our excellent performance in the third quarter. Our
innovation momentum and strong execution once more drove strong sales and core
operating income growth. Approvals such as Gilenya, a breakthrough first-line
oral treatment for multiple sclerosis, and Tasigna, a new first-line treatment
for chronic myeloid leukemia, have the potential to change patients´ lives. Data
on new medicines such as MenB, our meningococcal vaccine candidate, give me
confidence that our pipeline will continue to deliver".

GROUP REVIEW

Third quarter
Net sales rose 13% (+16% cc) to USD 12.6 billion with strong contributions from
all businesses. Currency movements depressed the result by 3 percentage points.
Rapid growth of recently launched products across the Group generated USD 2.3
billion in sales, representing 20%* of total sales. Acquisitions contributed 6
percentage points to growth, mainly driven by Alcon, Inc. (Alcon) sales of USD
617 million. Volumes grew by 11 percentage points offset by a negative price
effect of 1 percentage point.

Pharmaceuticals (USD 7.6 billion, +6% cc) maintained solid volume growth of 7%.
Recently launched products contributed USD 1.7 billion in sales, or 22% of
overall sales, representing a 30% (+34% cc) growth over the previous year.
Vaccines and Diagnostics net sales were USD 0.6 billion (+21% cc) on a strong
start to the flu season. Sandoz (USD 2.2 billion, +23% cc) accelerated its
growth from new product launches, particularly enoxaparin, and continued strong
results from the US, Canada, Russia, Italy and biosimilars. All Consumer Health
businesses (USD 1.6 billion, +9% cc) had good performances and grew ahead of
their markets.

Operating income decreased 2% (+3% cc) to USD 2.6 billion. Included in operating
income are intangible asset impairment charges of USD 593 million in R&D
expense, principally due to the termination of two development projects, and
Alcon related charges of USD 217 million. Currency movements, particularly the
strengthening Swiss franc, which increases costs, reduced operating income by 5
percentage points.

Core operating income, which excludes exceptional items and amortization of
intangible assets, rose 25% (+29% cc) to USD 3.7 billion with Alcon contributing
7 percentage points. Performance was strong across all divisions:
Pharmaceuticals grew core operating income by 9%; Vaccines and Diagnostics by
24%; Sandoz by 28%; and Consumer Health by 27%. Core operating income margin
improved by 2.7 percentage points to 29.4% of net sales.

Net income increased by 10% (+14% cc) to USD 2.3 billion, primarily benefitting
from a gain on the revaluation of the initial 25% stake in Alcon of USD 204
million and the impact of exceptional charges made against associated companies
in 2009. Earnings per share (EPS) increased by 6% (+12% cc) to USD 0.99 from USD
0.93 in the 2009 period. EPS grew at a lower rate than net income as net income
includes 100% of Alcon´s results since change of majority ownership whereas EPS
only recognizes the 77% share attributable to Novartis shareholders. Core net
income increased by 17% (+21% cc) to USD 3.1 billion, while core EPS was up 16%
(+19% cc) in the third quarter to USD 1.36 from USD 1.17 in the year-ago period.

The acquisition of an additional 52% of Alcon was completed on August 25 and
Alcon has been consolidated thereafter. Sales of USD 617 million have been
included in the third quarter; operating income (including one time acquisition
effects; see page 18 for details) was USD 101 million and core operating income
was USD 222 million. In addition, costs relating to the acquisition of Alcon
totaling USD 96 million, have been charged to the Corporate segment resulting in
a net contribution to operating income of USD 5 million. Excluding Alcon Group
sales grew by 8% (10% cc), operating income declined 2% (+3% cc) and core
operating income increased by 18% (22% cc). Core operating income margin was
29.1%, an improvement of 2.4 percentage points over 2009.

Nine months to September 30
Net sales were up 16% (+15% cc) to USD 36.4 billion with strong improvements
across all businesses. Recently launched products provided USD 7.9 billion (USD
4.3 billion in the previous year-period), contributing 22%* of total sales.
Volumes grew by 13 percentage points and price contributed a negative 1
percentage point for the nine months period. Acquisitions contributed 3
percentage points to growth, mainly driven by Alcon sales of USD 617 million.

Pharmaceuticals (USD 22.5 billion, +7% cc) maintained strong volume growth of 8
percentage points for the nine months period. Recently launched products
contributed USD 4.7 billion in sales, or 21% of overall sales compared to 16% in
the previous year. Vaccines and Diagnostics grew strongly to USD 2.6 billion
(+151% cc) mainly through A(H1N1) pandemic flu vaccine sales of USD 1.3 billion
in the first half of the year. Sandoz (USD 6.2 billion, +15% cc) realized
double-digit growth versus the prior year supported by strong growth in the US,
Canada, Italy, and in emerging markets. Consumer Health businesses grew 9% (8%
cc) to USD 4.6 billion through delivering solid growth ahead of its respective
markets.

Operating income rose 23% (+23% cc) to USD 9.1 billion on the volume-driven
sales expansion and by contributions of A(H1N1) pandemic flu vaccines. Included
in operating income are exceptional charges, including intangible asset
impairments charged to R&D (USD 762 million) and legal settlements (USD 237
million), offset by a pension gain of USD 265 million. Operating income margin
improved 1.5 percentage points to 24.9% of net sales from 23.4% in the 2009
period.

Core operating income, which excludes exceptional items and amortization of
intangible assets in both periods, rose 32% to USD 10.8 billion, with Alcon
contributing 3 percentage points, and the core operating income margin rose 3.5
percentage points to 29.8% of net sales from 26.3% in the previous year.

Net income advanced 26% (+24% cc) to USD 7.7 billion ahead of operating income
growth. Earnings per share (EPS) rose largely in line with net income to USD
3.34 from USD 2.69 in the 2009 period. Core net income grew 25% (+24% cc) to USD
9.2 billion, while core EPS was up 23% (+22% cc) in the first nine months to USD
4.00 from USD 3.24 in the year-ago period.

Excluding Alcon sales grew for the nine months by 14% (+13% cc), operating
income by 23% (+23% cc) and core operating income by 29% (+28% cc).

Delivering innovation, growth and productivity
The success of Novartis is driven by a commitment to three strategic priorities:
(1) extending our lead in innovation through the research and development of
differentiated new medicines, vaccines and diagnostics; (2) accelerating growth
across all divisions by broadening our product portfolios with new launches and
increasing our presence in new markets; and (3) improving profitability through
productivity by streamlining and simplifying our processes. Our above-market
growth in the third quarter demonstrates that, despite challenges and volatility
in the external environment, we are delivering on these goals.

Extending our lead in innovation
At Novartis, innovation is the core strategic focus and we continue to follow
the science. We are continuing to invest in R&D for the long-term health of our
pipeline: our investment in R&D is 16% of Group sales (20% of Pharmaceuticals
sales), excluding impairment charges, well ahead of other companies, many of
which are reducing their investment in R&D.

This sustained commitment to innovation is delivering differentiated
pharmaceuticals, vaccines and new medicines for patients. We have made major
progress with both new product approvals and additions to our marketed portfolio
in the third quarter, with approvals or positive recommendations for key
products like Gilenya, Tasigna, Tekamlo, TOBI Podhaler, enoxaparin and Aflunov,
as well as significant Phase III data on Onbrez and MenB. We continue to
rejuvenate our portfolio across divisions and disease areas. This demonstrates
the breadth and depth of the Novartis portfolio and our non-dependence on single
products or trials to support future growth.

In a significant breakthrough for patients suffering from multiple sclerosis
(MS), Novartis gained US and Russian regulatory approval in the third quarter
for Gilenya (FTY720), an effective, first-line oral treatment for relapsing
multiple sclerosis, the most common form of the disease. MS is a life-long
debilitating disease affecting 2.1 million patients worldwide. The approval of
Gilenya gives patients a new and convenient treatment option that has shown
significant efficacy in reducing symptoms and preventing relapses.

Our oncology franchise continues to expand its portfolio, as Tasigna (an
improved therapy over Glivec) has received recommendation for approval in the EU
and approval in Switzerland as a first-line treatment for patients with
Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML), a form of
blood cancer. Tasigna is already available as a first line treatment for Ph+ CML
in the US. In addition, results from Phase I//II studies of the Novartis Janus
kinase (JAK) inhibitor, with the investigational name INC424, indicate that it
has significant benefits in treating myelofibrosis, a life-threatening type of
blood cancer characterized by bone marrow failure and debilitating symptoms.
Both the FDA and the EMA have granted INC424 orphan status in treating
myelofibrosis.

Novartis has several other drugs in its pipeline that have promise for patients
with unmet needs. SOM230 became the first medical therapy to show efficacy in
treating Cushing´s disease in a Phase III trial. Cushing´s disease is a
debilitating hormonal disorder for which there are currently no approved
medicines. In another Phase III study, Onbrez Breezhaler was shown to be
significantly better in the treatment of chronic obstructive pulmonary disease
(COPD) than salmeterol, one of the current mainstays of treatment. Onbrez
Breezhaler is already approved in more than 40 countries, including the European
Union. The Phase III study evaluating AIN457 for non-infectious uveitis in
patients with Behcet´s disease did not meet its primary endpoint and the data do
not support submission of AIN457 for this indication.  We will continue to
explore AIN457 in other indications.

Our Vaccines & Diagnostics Division published a Phase III study in the third
quarter demonstrating that the vaccine MenB has the potential to fill a long-
recognized global unmet need for a broad-coverage vaccine against the B
serogroup of meningococcal meningitis (MenB), a deadly disease that often occurs
in infants. Novartis is on track to file by the end of 2010 for MenB in Europe.

Sandoz achieved a significant milestone in the third quarter, winning approval
of enoxaparin, the first generic version of the blockbuster anti-thrombotic
Lovenox®. Enoxaparin, an injectable, was launched immediately following
approval. The successful development and launch of this first-to-market generic
shows the ability of Sandoz to broaden its portfolio with complex new
differentiated products.

Accelerating growth
New and recently launched products were a key driver of overall growth in the
third quarter providing USD 2.3 billion of net sales in the 2010 period,
representing 20%* of net sales compared to 15% in the 2009 quarter. For the
first nine months, recently launched products generated USD 7.9 billion of net
sales, representing 22%* of net sales compared to 14% in the previous year.
Pharmaceuticals recently launched products were up 34% cc contributing 22% of
total sales in the third quarter. Sandoz has also been very strong in optimizing
new launches: US retail generics and biosimilars (+76% cc) delivered excellent
growth due to successful first-to-market launches including enoxaparin,
tacrolimus and losartan. Our ability to execute successful, large-scale launches
quickly after regulatory approval is critical to meeting the diverse needs of a
global patient population.

Gilenya (FTY720), the breakthrough oral treatment for relapsing forms of
multiple sclerosis (MS), was launched in the United States in early October.
Gilenya offers MS patients for the first time a safe and effective oral first-
line treatment option and will make a significant difference in the quality of
life of many MS patients. Oncology has continued to build momentum since the
launch of Afinitor (achieving sales of USD 67 million in the third quarter) for
the treatment of patients with renal cell carcinoma (RCC), with promising data
in the treatment of pancreatic tumors, as well as subependymal giant cell
astrocytomas (SEGA) tumors in patients with tuberous sclerosis, which was filed
in the EU and the US. In the third quarter, in the cardiovascular and metabolism
franchise, Diovan (+2% cc) continued to perform very well despite competition
from generic Cozaar®  in the US and Europe. Tekturna (+42% cc) continued to grow
strongly and Exforge (+33% cc) also had strong growth in all global markets.
Galvus (+114% cc) sales grew strongly in the third quarter. In Europe, Galvus is
outpacing the overall dipeptidyl peptidase 4 (DPP-4) market.

Sandoz achieved strong overall sales growth of 18% (+23 % cc) in the third
quarter versus the same period in 2009, driven by strong performance in North
America, Europe, emerging markets and biosimilars. Much of this growth was
driven by the success Sandoz has had in gaining market share in injectables and
biosimilars. Newly launched products, such as enoxaparin, losartan, and
tacrolimus, have been key in driving year-to-date growth. Of particular note is
the third quarter launch of enoxaparin, the first-to-market generic version of
the anti-thrombotic drug Lovenox®, which was the most successful injectables
launch in the US ever. The continued strong growth in biosimilars was led by
products such as Omnitrope, which has made steady gains against originator
growth hormone deficiency treatments, as well as the launches of oncology
indications of Binocrit (epoetin alfa) and Zarzio (filgrastim), setting the
stage for further expansion of Sandoz´s position as the biosimilars market
leader.

Menveo, a breakthrough vaccine for meningococcal disease, has been launched in
the US, EU and select other countries in Latin America and Asia-Pacific. Menveo
is an important tool in the prevention of meningitis, a potentially deadly
disease affecting almost half a million people annually. Potential indication
expansions are on track and are expected to help strengthen the brand even
further.

The Novartis Consumer Health medicine Prevacid24HR, an over-the-counter
treatment for heartburn, continued to establish itself with a market share of
20% in the fast-growing proton pump inhibitors (PPI) market segment which has
grown 35% year-to-date. Another Novartis Consumer Health treatment, Voltaren,
used for joint and muscle pain, is now the number one self-medication brand in
Germany, and grew by nearly 12% in the third quarter. CIBA Vision also continued
to grow in its AirOptix contact lens brand.

Broadening our presence in emerging markets is a key element of our growth
strategy. In the third quarter, we continued to serve more patients and
customers in these markets, growing as a Group by 13%* over the previous year
period. Our growth rates in the top six emerging markets, which includes China,
Russia, Brazil, India, South Korea and Turkey, remained also solid at 13%*.
Sandoz achieved especially strong results in emerging markets, increasing its
geographic footprint with double-digit growth in the emerging market regions of
Central and Eastern Europe, Asia-Pacific and the Middle East and Africa.

Driving productivity

Productivity is an essential component of performance. All parts of the business
have extensive productivity programs to generate operating leverage. This
provides the foundation for improved profitability while enabling investment for
the future. Sustained growth cannot come without investment.

For the nine months period, core operating income margin increased 3.5
percentage points to 29.8%. Sales of A(H1N1) pandemic flu vaccines contributed
approximately 2.1 percentage points of improvement, although most of this
benefit will erode in the fourth quarter given the size of A(H1N1) sales in the
fourth quarter of 2009.

Of the remaining core operating income margin improvement of 1.4 percentage
points, Cost of Goods Sold were negative 0.8 percentage points and productivity
programs generated 2.5 percentage points, of which approximately 0.9 percentage
points was reinvested. The key contributions to productivity were purchasing
savings with an increasing portion of purchasing now being done through global
cross-divisional programs and e-sourcing, and the continued trending down of
sales and marketing costs.
For the third quarter, core operating income margin grew by 2.7 percentage
points with no distortion from A(H1N1) pandemic flu vaccines. Cost of Goods Sold
absorbed 0.6 percentage points, other income and expenses were positive 1.4
percentage points, while productivity programs generated 3.1 percentage points,
with approximately 1.7 percentage points being reinvested.

Alcon, Inc.
In the third quarter, Novartis completed its purchase of an additional 52% of
Alcon from Nestlé resulting in 77% ownership of Alcon establishing Novartis´
position as the global leader in eye care. Alcon strategically complements
Novartis´ portfolio, adding a world class, dynamic eye care business to its
Pharmaceuticals, Vaccines and Diagnostics, Sandoz generics and Consumer Health
divisions.

Opportunities for collaboration are now being explored, although any
implementation will recognize the arm´s-length principle. These may include
utilizing the companies´ complementary field forces around the potential launch
of Lucentis for diabetic macular edema (DME). In addition, joint sourcing and
procurement programs could leverage the combined purchasing volume of both
companies. Other potential opportunities include optimization of lens care
manufacturing and research collaborations.

Cash flow and net indebtedness
The sustainability of our strategy lies with the generation of cash flow that
provides the resources for reinvestment and creates shareholder return. Free
cash flow before dividends generated in the third quarter totaled USD 2.9
billion, an increase of 8% over the previous year, and for the nine months
amounted to USD 8.2 billion, rising 34% over the previous year.

Cash flow continues to be driven by a continued focus on the cash conversion
cycle and operational cash flow improvements. Cash flow from operating
activities remained flat at USD 3.2 billion in the third quarter (25.7% of net
sales), and in the nine months period increased to USD 9.5 billion (26.1% of net
sales).

Following completion of the acquisition of 52% of Alcon on August 25 for USD
28.3 billion, the company has gone from a net cash position to a net debt
position. As of September 30, net debt stood at USD 19.0 billion. The long-term
portion of the Alcon financing was put in place in 2008, 2009 and the first
quarter of 2010 (with maturities spanning 3 to 10 years), with the final amount
of approximately USD 8.2 billion being financed through an expanded US
commercial paper program. The commercial paper financing recognizes both
attractive funding rates and the strong cash generation of the business,
allowing fast repayment of the commercial papers. As of September 30, USD 7.5
billion was outstanding on the US commercial paper program. The long-term credit
rating for the company continues to be AA (Standard & Poor´s AA-; Moody´s Aa2).

2010 outlook
(Barring unforeseen events)
At the half-year stage we raised our sales guidance to mid- to high-single-digit
in constant currency, excluding Alcon. For the full year, Group sales will
include four months of Alcon and this is expected to take constant currency
sales growth into the low- to mid-teens. Excluding Alcon, we maintain our
previous guidance. The fourth quarter of 2009 includes A(H1N1) pandemic flu
vaccine sales totaling USD 1.0 billion, which will not recur in 2010.

Group and core operating income margins are both expected to increase for the
full year in 2010 as a result of business growth and the net benefit of
productivity gains after reinvestments. The inclusion of Alcon is expected to be
slightly negative to operating income margin and slightly positive to core
operating income margin.

For the nine months, the impact of 2010 exchange rates on reported sales and
operating income was broadly neutral. In the third quarter, however, the impact
was negative 3 percentage points on sales and negative 5 percentage points on
operating income. During the third quarter, the US dollar weakened against most
currencies, although it remains relatively strong against the euro. As a result,
if current exchange rates prevail for the remainder of the year, the impact on
sales and operating income for the year as a whole should remain broadly
neutral.

HEALTHCARE BUSINESS REVIEW

Pharmaceuticals
  % %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
--------------------------------------------------------------------
Net sales 7 565 7 217 5 6 22 526 20 765 8 7

Operating income 1 844 2 211 -17 -12 6 508 6 486 0 0

  As % of net sales 24.4 30.6     28.9 31.2

Core operating income 2 568 2 364 9 12 7 635 6 853 11 10

  As % of net sales 33.9 32.8     33.9 33.0
--------------------------------------------------------------------

Third quarter

Net sales
Net sales grew 6% in constant currencies to USD 7.6 billion driven by 7
percentage points volume expansion, partly offset by government cost-containment
measures in Europe and the bi-annual price cut in Japan. Recently launched
products provided USD 1.7 billion of net sales in the 2010 period, growing 34%
cc over the same period last year. Products launched since 2007 - which include
Lucentis, Exforge, Exelon Patch, Exjade, Reclast/Aclasta, Tekturna/Rasilez,
Tasigna, Afinitor, Onbrez Breezhaler, Ilaris and Fanapt - now comprise 22% of
division sales compared to 18% in the 2009 quarter.

Portfolio rejuvenation benefited all regions, particularly Europe (USD 2.6
billion, +6% cc), generating 29% of its net sales from recently launched
products. Volume growth in Europe was 12 percentage points with a negative price
effect of 6 percentage points due to recent government cost-containment
measures. The US (USD 2.6 billion, +6% cc), as well as Latin America and Canada
(USD 0.8 billion, +16% cc), maintained solid growth rates. Japan´s performance
(USD 0.8 billion, -3% cc) was impacted by the bi-annual price cuts and the
angiotensin II receptor blocker (ARB) market slowdown. The six top emerging
markets (USD 710 million, +7% cc) were led by particularly strong growth in
India (+26% cc) and Russia (+20% cc).

All strategic products contributed to the business expansion. Oncology (USD 2.5
billion, +9% cc), the largest franchise, was led by sustained growth of
Gleevec/Glivec (USD 1.0 billion, +6% cc), Femara (USD 343 million, +6% cc), and
Sandostatin (USD 318 million, +8% cc). Recently launched products made important
contributions: Tasigna (USD 109 million, +97% cc), Afinitor (USD 67 million),
Exjade (USD 182 million, +7% cc). Cardiovascular and Metabolism (USD 2.0
billion, +10% cc) maintained strong momentum supported by Exforge (USD 222
million, +33% cc), Tekturna (USD 113 million, +42% cc) and Galvus (USD 101
million, +114% cc). Diovan sales (USD 1.5 billion, +2% cc) also held up well,
despite Cozaar® generic entry in the US and the ARB market slowdown in Japan.
Neuroscience and Ophthalmics (USD 0.9 billion, +13% cc) saw rapid growth from
Lucentis (USD 398 million, +22% cc) and Extavia (USD 26 million, +102% cc).

Operating income
Operating income decreased 12% in constant currencies (-17% in USD) to USD 1.8
billion. The operating income margin of 24.4% of net sales declined 6.2
percentage points, primarily impacted by intangible asset impairment charges for
Albuferon and Mycograb totalling USD 584 million (Albuferon: USD 228 million,
Mycograb: USD 356 million).

Core operating income grew 12% in constant currencies (+9% in USD) ahead of
sales to USD 2.6 billion. The core operating income margin of 33.9% of net sales
increased 1.1 percentage points compared to the same period in 2009. Cost of
Goods Sold improved 0.5 percentage points driven by productivity gains partly
offset by higher royalties. R&D increased 0.3 percentage points, mainly driven
by phasing of clinical trial activities. Marketing & Sales expenses improved by
0.5 percentage points and is now 27.3% of net sales benefiting from continuing
productivity efforts, while General & Administration expenses remained stable.
Other Income and Expense improved by 0.5 percentage points mainly due to one-
time expenses in the same period last year.

Nine months to September 30

Net sales
Net sales expanded 7% in constant currencies to USD 22.5 billion driven by 8
percentage points of volume expansion partially offset by 1 percentage point of
negative price. Products launched since 2007 provided USD 4.7 billion of net
sales in the 2010 period, representing 21% of net sales compared to 16% in the
2009 period (+43% cc).

Europe remained the largest region (USD 8.0 billion, +8% cc) particularly
benefiting from recently launched products generating 27% of net sales. While
volumes in Europe grew 12 percentage points, reported sales were affected by
price erosion of 4 percentage points. The US (USD 7.5 billion, +6% cc)
maintained solid growth rates, as did Latin America and Canada (USD 2.1 billion,
+14% cc). Japan´s performance (USD 2.4 billion) was in line with prior year
despite the bi-annual price cuts and the ARB market slowdown. Top six emerging
markets realized double-digit growth with the exception of Turkey, which was
impacted by cost-containment measures.

Operating income
Operating income growth was flat compared to the prior year (USD 6.5 billion).
The operating income margin of 28.9% of net sales was impacted by R&D impairment
charges consisting mainly of Albuferon, Mycograb and PTZ601 totalling USD 736
million and litigation charges of USD 178 million, partly offset by the Famvir
settlement with Teva.

Core operating income grew 10% in constant currencies (+11% in USD) ahead of
sales to USD 7.6 billion. The core operating income margin of 33.9% of net sales
improved by 0.9 percentage points. Other revenues decreased 0.1 percentage
points and Cost of Goods Sold increased 0.4 percentage points, mainly driven by
higher royalties. R&D improved 0.3 percentage points, mainly driven by phasing
of clinical trial activities. Marketing & Sales and General & Administration
expenses improved by a total of 1.2 percentage points benefiting from continuing
productivity efforts. Other Income and Expense remained broadly stable (-0.1
percentage points) compared to the same period last year.

Pharmaceuticals product review

Cardiovascular and Metabolism

  % %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
------------------------------------------------------------------------
Hypertension medicines

Diovan 1 483 1 464 1 2 4 477 4 399 2 1

Exforge 222 171 30 33 653 475 37 37

Tekturna/Rasilez 113 83 36 42 305 202 51 53
------------------------------------------------------------------------
Subtotal 1 818 1 718 6 7 5 435 5 076 7 6

Galvus 101 50 102 114 267 115 132 136

Lotrel 80 75 7 4 224 244 -8 -9
------------------------------------------------------------------------
Total strategic products 1 999 1 843 8 10 5 926  5 435 9 8

Established medicines 264 320 -18 -17 836 997 -16 -17
------------------------------------------------------------------------
Total 2 263 2 163 5 6 6 762 6 432 5 4
------------------------------------------------------------------------

All comments below focus on third quarter movements.

Our broad cardiovascular and metabolic portfolio continues to grow steadily with
overall sales growth of 6% versus previous year. Within hypertension, Novartis
continues to drive sales as the valsartan group of products shows consistent
worldwide growth, reaching a market share of 15.7% of the hypertension market
segment based on the three months from June to August 2010. The Tekturna/Rasilez
group continues to grow steadily, supported by strong growth, particularly in
the European Union.

Diovan Group (USD 1.5 billion, +2% cc) maintained strong performance despite the
introduction of generic losartan and the slowdown in growth in Japan´s ARB
market. Worldwide sales were up 2% in the third quarter versus last year. In the
US, Diovan Group reached sales of USD 627 million (+4% cc) in the quarter,
maintaining the Diovan Group´s leadership of the ARB segment with a 40.8% share
in August year-to-date 2010 (+1.9 percentage points compared to August year-to-
date 2009; source: IMS Health).

Exforge Group (USD 222 million, +33% cc) showed strong worldwide growth fueled
by continued prescription demand in the EU, US and other key regions, and
ongoing Exforge HCT launches in the main European and Latin American markets.
Exforge, a single-pill combination of Diovan (valsartan) and the calcium channel
blocker amlodipine, has delivered sustained worldwide growth since its launch in
2007. Exforge HCT, the first modern triple hypertension medication, which adds a
diuretic in a single pill, was introduced in the US in 2009 and has gained
approvals in over 20 countries worldwide.

Tekturna/Rasilez (USD 113 million, +42% cc) maintained its strong growth driven
by its excellent performance in the EU, especially France and Germany. In
August, the US Food and Drug Administration (FDA) approved Tekamlo, a single-
pill combination of aliskiren and amlodipine, with EU review of this treatment
ongoing. In September, the decision was made to withdraw a separate application
for EU Marketing Authorization for Rasival, the combination of aliskiren and
valsartan. The application was withdrawn following the Committee for Medicinal
Products for Human Use (CHMP) request to provide additional data satisfying the
relevant EU guidelines. Novartis was unable to provide the requested data within
the timeframe of the review process. The potential for the resubmission of
Rasival will be re-evaluated in the near future.

Galvus/Eucreas (USD 101 million, +114% cc), oral treatments for type 2 diabetes,
continued to deliver strong growth, driven mainly by combination treatment
Eucreas/Galvusmet which delivered 72% of total sales and grew at +123% (cc)
during the third quarter versus the prior year. Growth across the Galvus group
of products is coming from launches in France, Japan, Korea and Turkey, as well
as ongoing strong performance in Europe, notably in Germany, Spain, Greece and
Portugal.

Oncology

  Q3 2010 Q3 2009 % change 9M 2010 9M 2009 % change

  USD m USD m USD cc USD m USD m USD cc
-------------------------------------------------------------------------------
Gleevec/Glivec 1 015 974 4 6 3 122 2 858 9 8

Zometa 363 376 -3 -3 1 116 1 077 4 3

Femara 343 329 4 6 1 025 925 11 11

Sandostatin 318 300 6 8 940 839 12 11

Exjade 182 174 5 7 553 469 18 17

Tasigna 109 56 95 97 273 144 90 89

Afinitor 67 26 nm nm 163 38 nm nm

Other 54 61 -11 -9 144 180 -20 -21
-------------------------------------------------------------------------------
Total 2 451 2 296 7 9 7 336 6 530 12 11
-------------------------------------------------------------------------------
 nm - not meaningful

Gleevec/Glivec (USD 1.0 billion, +6% cc) has sustained growth through continued
expansion in Ph+ chronic myeloid leukemia (CML) as well as adjuvant (post-
surgery) treatment of gastrointestinal stromal tumors (GIST). Gleevec/Glivec, a
targeted therapy for certain forms of CML and GIST, was approved in 2009 for use
in adjuvant treatment of patients following complete gross resection of GIST and
has since received approvals for this indication in more than 55 countries.

Tasigna (USD 109 million, +97% cc) has been growing rapidly through geographic
and market expansion with approvals in over 85 countries as a second-line
therapy for patients with certain forms of Ph+ CML resistant or intolerant to
prior therapy including Gleevec/Glivec. Tasigna is now approved in the US and
Switzerland, for the treatment of adult patients with newly diagnosed Ph+ CML in
chronic phase. In September, the CHMP issued a positive opinion recommending EU
approval of Tasigna in this indication. Regulatory submissions in the first-line
indication have also been submitted in Japan and other countries around the
world.  Trials are also underway examining the use of Tasigna in CML patients
with suboptimal response to Glivec and in patients with metastatic and/or
unresectable Kit+ GIST. In October, Novartis signed a collaboration agreement
with Cepheid for the commercialization and further development of a test for
monitoring of bcr-abl gene transcript. This diagnostic is expected to help
physicians optimize treatment of patients with CML, indicating the depth of
patients´ response to tyrosine kinase inhinitor (TKI) treatments.

Zometa (USD 363 million, -3% cc) volume expansion offset by negative EU and
Japanese pricing, continued to come from improved compliance and increased use
of this intravenous bisphosphonate therapy in patients with certain types of
cancer which have spread to the bone. The US FDA has extended its review of the
supplemental New Drug Application for Zometa in the adjuvant (post-surgery)
treatment of premenopausal women with early breast cancer in conjunction with
hormonal therapy from the fourth quarter of 2010 to the first quarter of 2011.
The extension is the result of a major amendment to the application to include
an additional 12 months of data to provide a median of five years of follow up
of the pivotal Austrian Breast & Colorectal Cancer Study Group Trial 12 (ABCSG-
12). This information has also been submitted to European regulatory
authorities. Zoledronic acid, the active ingredient in Zometa (4mg), is also
available under the trade names Reclast/Aclasta (5mg) for use in non-oncology
indications with different dosing.

Femara (USD 343 million, +6% cc), a treatment for early stage or advanced breast
cancer in postmenopausal women, achieved strong ongoing growth in key markets,
including Germany, France, UK and Japan.

Sandostatin (USD 318 million, +8% cc), a treatment for acromegaly, benefited
from the increasing use of Sandostatin LAR in treating symptoms of patients with
neuroendocrine tumors (NET).

Exjade (USD 182 million, +7% cc) has continued to expand with strong growth
based on new patients, expanded access and increased dosing in the US and key
markets around the world. Exjade is currently approved in more than 100
countries as the only once-daily oral therapy for transfusional iron overload.

Afinitor (USD 67 million) continued regulatory submissions with a filing in the
EU with the trade name Votubia for patients with subependymal giant cell
astrocytomas (SEGA) associated with tuberous sclerosis. Afinitor has priority
review status in the US for this indication, and Afinitor/Votubia has received
orphan drug status in the US and EU. Afinitor, an oral inhibitor of the mTOR
pathway, is an approved treatment for advanced renal cell carcinoma (kidney
cancer) following VEGF-targeted therapy. Regulatory submissions are also on
track this year in advanced neuroendocrine tumors. Afinitor is being studied in
other tumor types with Phase III trials underway in tuberous sclerosis, breast
cancer, gastric cancer, hepatocellular carcinoma and lymphoma. Everolimus, the
active ingredient in Afinitor, is also available under the trade names
Zortress/Certican for use in non-oncology indications.

Neuroscience and Ophthalmics

  % %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
-----------------------------------------------------------------------
Lucentis 398 335 19 22 1 139 858 33 30

Exelon/Exelon Patch 244 251 -3 0 747 687 9 8

Comtan/Stalevo 152 141 8 9 443 402 10 9

Extavia 26 14 86 102 84 26 nm nm

Other 111 108 3 6 343 343 0 -1
-----------------------------------------------------------------------
Total strategic products 931 849 10 13 2 756  2 316 19 17

Established medicines 137 145 -6 -6  419  426 -2 -5
-----------------------------------------------------------------------
Total 1 068 994 7 10 3 175  2 742 16 14
-----------------------------------------------------------------------
nm - not meaningful

Lucentis (USD 398 million, +22% cc) maintained strong growth reflecting its
position as the only approved medicine to significantly improve vision in
patients with wet age-related macular degeneration (AMD). Novartis has filed an
application in the EU for Lucentis for the treatment of visual impairment due to
diabetic macular edema (DME) and is preparing for filing in the EU for the
treatment of macular edema following retinal vein occlusion (RVO). Lucentis is
approved in more than 85 countries for the treatment of wet AMD.

Exelon/Exelon Patch (USD 244 million, 0% cc)) growth was flat versus the
previous year. Due to increasing demand for Exelon Patch, the transdermal form
of the medicine generates now more than 70% of total Exelon sales in the third
quarter compared to 56% in the same period in 2009. Exelon Patch is approved for
the treatment of mild-to-moderate Alzheimer´s disease dementia in more than 75
countries, including more than 20 countries where it is also approved for
dementia associated with Parkinson´s disease.

Extavia (USD 26 million, +102% cc) continued to grow within key markets, notably
Germany, Russia, Italy, Spain and the US. Extavia, the Novartis-branded version
of Betaferon®/Betaseron® for relapsing forms of multiple sclerosis, was launched
in the EU and US in 2009, and has been approved in over 30 countries.

Gilenya was approved as a first-line treatment for relapsing forms of multiple
sclerosis in the US and for relapsing remitting multiple sclerosis in Russia.
Novartis has launched Gilenya in the US with plans to launch in Russia in early
2011. Additionally, Gilenya is currently under regulatory review in the EU,
where it was filed in December 2009, and with health authorities worldwide,
including Canada, Switzerland, Turkey, Brazil and Australia.

Respiratory

  %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 % change

  USD m USD m USD cc USD m USD m USD cc
---------------------------------------------------------------------------
Xolair 97 78 24 32 267 218 22 24

TOBI 70 76 -8 -5 207 219 -5 -5

Onbrez 8 0 nm   nm 16 0      nm nm

Other 0 -2 nm nm 0 -1 nm   nm
---------------------------------------------------------------------------
Total strategic products 175 152 15 20 490 436 12 13

Established medicines 37 40 -8 -4 126 136 -7 -9
---------------------------------------------------------------------------
Total 212 192 10 15 616 572 8 8
---------------------------------------------------------------------------
nm - not meaningful

Xolair (USD 97 million, +32% cc), a biotechnology drug for severe persistent
allergic asthma in Europe and moderate-to-severe persistent allergic asthma in
the US, continues to show strong growth in major European markets and Latin
America. Xolair is approved in more than 85 countries, with Phase III trials
initiated in September 2010 to support a regulatory submission in China. Xolair
Liquid, a new formulation in pre-filled syringes that will ease administration,
is planned to be launched in January 2011 in the EU. Preparations are on track
to start Phase III studies for a new indication, chronic idiopathic urticaria,
in early 2011.

Onbrez Breezhaler (QAB149, indacaterol) (USD 8 million) has demonstrated
promising performance following EU approval in December 2009 as a once-daily
long-acting beta-2 agonist (LABA) for adults with chronic obstructive pulmonary
disease (COPD). Onbrez Breezhaler is now available in eight European markets,
with further EU launches planned during 2010, and is approved in more than 40
countries worldwide. Following a Complete Response Letter received in the US in
October 2009, Novartis has completed additional studies to further characterize
the dosing regimen for indacaterol.  Incremental benefits have been observed
with indacaterol in escalating doses from 75 mcg up to 300 mcg, with higher
doses showing increasing benefit for patients, particularly those with more
severe disease. Following an FDA request to explore the lower part of the dose
response curve, data supporting the 75 and 150 mcg doses were submitted in the
US at the end of September. Regulatory submissions have also been completed in
Japan and China.

Integrated Hospital Care

  % %
  Q3 2010 Q3 2009 change 9M 2010 9m 2009 change

  USD m USD m USD cc USD m USD m USD cc
-----------------------------------------------------------------------
Neoral/Sandimmun 207 227 -9 -8 636 675 -6 -8

Reclast/Aclasta 143 125 14 15 408 325 26 25

Myfortic 122 93 31 30 330 256 29 25

Zortress/Certican 35 32 9 19 105 82 28 29

Ilaris 6 1 nm   nm 16 1 nm nm

Other 74 62 19 19 214 165 30 27
-----------------------------------------------------------------------
Total strategic products 587 540 9 10 1 709  1 504 14 12

Established medicines 237 249 -5 -6  661  706 -6 -9
-----------------------------------------------------------------------
Total 824 789 4 5 2 370 2 210 7 5
-----------------------------------------------------------------------
nm - not meaningful

Reclast/Aclasta (USD 143 million, +15% cc) is the only once-yearly osteoporosis
therapy available in over 90 countries. Reinforcing its efficacy and safety
profile, new long-term data from a pivotal fracture trial show Aclasta preserved
bone mass in patients who received annual infusions for six years and the risk
of new morphometric spine fractures was reduced by 52% when measured as a
secondary endpoint compared to those who stopped treatment at three years.
Aclasta is approved for up to six indications worldwide, treating a broad
spectrum of patients from those with early bone loss to patients with more
severe forms of this metabolic bone disease. Zoledronic acid, the active
ingredient in Reclast/Aclasta, is also available under the trade name Zometa for
use in oncology indications.

Zortress/Certican (USD 35 million, +19% cc), a transplantation medicine to
prevent organ rejection in adult kidney and heart transplantation, continues to
grow based on its availability in more than 80 countries and its US launch for
adult kidney transplantation in April, 2010, under the brand name Zortress and
is currently in two Phase III studies with global participation in heart
transplantation, and also a worldwide study for liver transplantation.
Everolimus, the active ingredient in Zortress/Certican, is also available under
the trade name Afinitor for use in an oncology indication.

Ilaris (ACZ885, canakinumab) (USD 6 million) is a biologic medicine approved in
more than 40 countries to treat adults and children aged four years and older
suffering from cryopyrin-associated periodic syndrome (CAPS), a group of rare
auto-inflammatory disorders that affect approximately one in one million people.
ACZ885 is also in phase III development for the treatment of acute flares
associated with gouty arthritis. Trials in other diseases, including type 2
diabetes and systemic juvenile idiopathic arthritis (SJIA), are also ongoing.

Vaccines & Diagnostics

  % %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
---------------------------------------------------------------------
Net sales 632 543 16 21 2 557 1 037 147 151

Operating income 68 23 196 276 865 -211 nm nm

  As % of net sales 10.8 4.2     33.8 -20.3

Core operating income 126 102 24 42 1 187 66 nm nm

  As % of net sales 19.9 18.8     46.4 6.4
---------------------------------------------------------------------
nm - Not meaningful

Third quarter

Net sales
Net sales were USD 632 million for the third quarter (+21% cc) compared with USD
543 million in the prior period. The flu season started strongly with revenue of
approximately USD 327 million recognized in the period. Novartis Vaccines was
able to ship approximately 35 million doses of seasonal influenza vaccine to US
customers, an increase of over 40% from the prior period, allowing health care
professionals to initiate protection of their patients well in advance of this
year´s flu season.

Further expansion of the vaccines business in the emerging markets and the first
sales of Menveo outside of the US drove the continued growth of the portfolio.

Operating income
Operating income was USD 68 million for the third quarter 2010 compared to USD
23 million for the prior year period driven by strong seasonal flu sales.

Core operating income for the period was USD 126 million compared to USD 102
million in the prior year. Higher flu sales were impacted by poor yields
resulting in higher than expected production costs. Marketing and sales spend
increased in the quarter to support the global launch of Menveo. In addition,
there was higher research and development investment to accelerate MenB and
early pipeline candidates.

Nine months to September 30

Net sales
Net sales were USD 2.6 billion for the first nine months 2010 (+151% cc)
compared to USD 1.0 billion for the year-ago period. Deliveries for supply
contracts with governments around the world for A (H1N1) pandemic flu vaccines
and adjuvants generated net sales of USD 1.3 billion, significantly driving the
increase over the year-ago period. Excluding A (H1N1) pandemic, the business
experienced strong growth (+20% cc) driven by the strong start to the flu
season, expansion of the vaccines business in the emerging markets and first
sales of Menveo.

Operating income
Operating income in the period was USD 865 million compared to an operating loss
of USD 211 million in the year-ago period, driven substantially by contributions
of A (H1N1) pandemic vaccines, whereas in the prior year period there were
significant expenses related to the start-up of pandemic production.

Core operating income was USD 1.2 billion up from USD 66 million for the same
period in 2009.

Sandoz

  Q3 2010 Q3 2009 % 9M 2010 9M 2009 %
change change

  USD m USD m USD cc USD m USD m USD cc
-------------------------------------------------------------------
Net sales 2 177 1 850 18 23 6 151 5 350 15 15

Operating income 415 312 33 34 1 014 850 19 18

  As % of net sales 19.1 16.9     16.5 15.9

Core operating income 492 385 28 29 1 306 1 039 26 24

  As % of net sales 22.6 20.8     21.2 19.4
-------------------------------------------------------------------

Third quarter

Net sales
Sandoz accelerated its growth (USD 2.2 billion, +18%, +23% cc) versus prior year
as 30 percentage points of volume expansion came from new product launches,
particularly enoxaparin (generic Lovenox®), which achieved sales of USD 292
million. The inclusion of EBEWE Pharma´s specialty generics business contributed
4 percentage points in the quarter. Continued strong results from the US,
Canada, Russia, Poland, Italy, the Middle East and North Africa; and biosimilars
performance, which more than offset the price erosion of 7 percentage points.

US retail generics and biosimilars (+76% cc) continued to deliver excellent
growth due to successful execution of first-to-market launches including
enoxaparin, tacrolimus, losartan and lansoprazole. German retail generics and
biosimilars (-15% cc) declined compared to the prior year due to negative market
growth driven by the impact of statutory health insurance tenders and new lower
reference prices. Western Europe retail generics and biosimilars (+13%) grew
positively despite government price cuts. Emerging markets growth accelerated
particularly in the Middle East, Turkey and Africa (+41% cc) and Asia-Pacific
(+19% cc), with Central and Eastern Europe continuing to grow strongly at +19%
cc. Sandoz sustained its top position in biosimilars (+41% cc) with good
momentum based on key launches in the oncology indications of Binocrit (epoetin
alfa) and Zarzio (filgrastim) as well as continued growth in Omnitrope (human
growth hormone).

Operating income
Operating income grew 33% (+34 cc) to USD 415 million, as the operating income
margin improved 2.2 percentage points to 19.1% of net sales. Operating income
margin increased 0.4 percentage points faster than core operating income margin
improvement of 1.8 percentage points mainly due to a lower level of intangible
asset impairments in 2010 than in the prior year quarter.

Core operating income rose 28% to USD 492 million, resulting in the core
operating income margin increase of 1.8 percentage points to 22.6% of net sales.
Gross profit margin decreased 3.1 percentage points mainly due to a
significantly different sales mix than in the prior year quarter plus higher
inventory write-offs. Marketing & Sales (15.8% of net sales; +1.2 percentage
points) improved core operating income margin as they rose slower than sales due
to higher productivity, while fully funding investments in growing businesses.
R&D costs declined (6.0% of net sales; +2.2 percentage points) and also improved
core operating income margin due to the recovery of co-development expenses from
an external partner as well as continued productivity savings. The savings were
achieved even as Sandoz has continued to invest in the development of
differentiated generics, such as biosimilars, oncological injectables and
respiratory products. General & Administration costs (3.7% of net sales; +1.4
percentage points) decreased due to ongoing cost-containment measures. Other
Income & Expense decreased (1.8% of net sales; +0.1 percentage points) mainly
due to sundry asset disposals.

Nine months to September 30

Net sales
Sandoz achieved double-digit sales growth in the first nine months (USD 6.2
billion, +15%, +15% cc) versus prior year supported by strong growth in US
retail generics and biosimilars (+46% cc) and emerging markets such as Central
and Eastern Europe (+15% cc), Asia-Pacific (+21% cc) and the Middle East, Turkey
and Africa (+19% cc). Sales volumes expanded 22 percentage points due to new
product launches, the inclusion of EBEWE Pharma´s specialty generics business
(contributing 5 percentage points) and continued strong results from biosimilars
which together more than compensated for price erosion of 7 percentage points.

Operating income
Operating income in the first nine months grew 19% versus prior year to USD 1.0
billion. The operating income margin increased 0.6 percentage points to 16.5% of
net sales. The operating income margin increase in the first nine months as
compared to the growth in core operating income margin of 1.8 percentage points
reflected the acquisition-related charges for the integration of EBEWE Pharma,
one-time charges for the termination of a co-development agreement and
provisions for legal settlements.

Core operating income rose 24% cc to USD 1.3 billion, as the core operating
income margin improved by 1.8 percentage points to 21.2% of net sales. There
were lower sales to other divisions   (-0.4 percentage points), higher Other
revenues (+0.1 percentage points) and higher Cost of Goods Sold (-1.1 percentage
points). These impacts however were more than offset by a number of positive
factors, including: Marketing & Sales costs, which were lower by 0.4 percentage
points due to productivity improvements partly offset by investments in growth
areas; R&D costs, which decreased (improving +1.2 percentage points) as
productivity savings funded continued investment in the development of
differentiated generics; General & Administration costs, which decreased (+1.1
percentage points) due to ongoing cost reduction measures; and Other Income and
Expenses, which were positive at 0.5 percentage points due to lower legal fees.

Consumer Health

  % %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
-------------------------------------------------------------------
Net sales 1 587 1 476 8 9 4 574 4 189 9 8

Operating income 386 303 27 32 944 809 17 16

  As % of net sales 24.3 20.5     20.6 19.3

Core operating income 410 323 27 30 1 016 870 17 16

  As % of net sales 25.8 21.9     22.2 20.8
-------------------------------------------------------------------

Third quarter

Net sales
All three Consumer Health businesses - OTC, Animal Health and CIBA Vision -
contributed to higher net sales in the third quarter of 2010 (USD 1.6 billion,
+8%, +9% cc), as the three businesses continued growing ahead of their
respective markets.

Pain medicines were key contributors in OTC. In Europe, Voltaren has been a key
business driver, becoming the largest self-medication brand in the German market
with a year-to-date 44% market share in the topical analgesic market. In the US,
Excedrin and Triaminic are gaining share as a result of solid advertising and
promotional campaigns.

Prevacid24HR has become a strong competitive brand in the high-growth US Proton
Pump Inhibitor (PPI) category. This category has grown 35% year-to-date and
Prevacid24HR maintained a market share of 20% of the US OTC PPI market in the
third quarter. Pantoloc Control, the PPI licensed throughout Europe in early
2010, has now been successfully launched as expected in all 14 European markets
targeted.

CIBA Vision maintained its growth rate, expanding in all regions driven by sales
growth of AirOptix, which was among the top performers worldwide in its sector,
helping CIBA Vision to increase its share in the global contact lens market to
23%. The US business increased its market share over 3 percentage points to a
record 27%, up from just over 23% in 2009.

Animal Health grew ahead of its market in the US, helped by a strong performance
of its top brands Interceptor and Sentinel in the US parasiticides segment and
Milbemax in key European markets. Cattle vaccines in the US Farm Animal Business
have gained share year-to-date, as well.

The US (USD 0.5 billion, +13% cc) delivered a strong performance across all
three businesses, while Europe (USD 0.7 billion, +8% cc) achieved robust growth
on the leadership of Germany, and Italy. Net sales in the top six emerging
markets grew by 12% (+9% cc) to USD 123 million, with a solid single digit
growth in Brazil and double-digit growth in the remaining five markets.

Operating income

Operating income rose 27% (+32% cc) to USD 386 million, with the operating
income margin expanding by 3.8 percentage points in the third quarter of 2010 to
24.3% of net sales.

Core operating income grew 27% (+30% cc) to USD 410 million, with a strong
operating leverage, resulting in a growth of the core operating income margin by
3.9 percentage points to 25.8% of net sales. Gross profit margin (69.3% of net
sales; +1.7 percentage points) improved as a result of pricing and productivity
gains. Marketing & Sales expenses (32.8% of net sales; -0.1 percentage points),
increased to support investments for new product launches as well as sales force
expansions across all the businesses. Investment in R&D (5.6% of net sales; flat
as percentage points) continues to strongly support product development across
all Consumer Health businesses. General & Administrative expenses (5.8% of net
sales; flat as percentage points) are contributing to the strong operational
leverage as a result of productivity actions across all the businesses. Other
Income & Expense (0.7% of net sales; +2.3 percentage points) improved as a
result of the divestment of a non-core brand in OTC US as well as a one-time
expense in the year-ago period.

Nine months to September 30

Net sales
Sales grew 9% (8% cc) to USD 4.6 billion and all Consumer Health businesses
delivered solid growth ahead of their respective markets.

CIBA Vision continues to be the industry´s fastest-growing contact lens and lens
care company on the strength of AirOptix across all the regions. OTC grew on the
back of Excedrin and Triaminic in the US, Voltaren in Europe and from the new
introductions Prevacid24HR and Pantoloc Control in the gastrointestinal
category. Animal Health growth has been led mainly by a strong performance in
Interceptor and Sentinel in the US and Milbemax in Europe, plus good growth of
cattle vaccines in the US livestock market.

Operating income

Operating income rose 17% (16% cc) to USD 944 million, with the operating income
margin improving versus the same period in 2009 by 1.3 percentage points to
20.6% of net sales in 2010.

Core operating income rose 17% (16% cc) to USD 1.0 billion, with strong
operating leverage, driving the core operating income margin up by 1.4
percentage points to 22.2% of net sales versus the same period in 2009. Gross
profit margin improvements, productivity gains, and income from an OTC US non-
core brand divestment have been the growth drivers, partially offset by higher
investments in Marketing & Sales to support new product launches and sales force
expansions.

Alcon, Inc.

  Q3 2010 and 9M 2010

  USD m
---------------------------------------------
Net sales 617

Operating income 101

  As % of net sales 16.4

Core operating income 222

  As % of net sales 36.0
---------------------------------------------

Third quarter and nine months to September 30

Net sales
On August 25, 2010, Novartis acquired an additional 52% of Alcon, raising its
stake to a 77% controlling interest in Alcon and thereafter has consolidated
Alcon´s financial results. Sales consolidated for this period amounted to USD
617 million.

Operating income
Alcon contributed USD 101 million to Novartis operating income.

This amount includes an additional charge of USD 95 million relating to the
estimated fair value revaluation of inventory as of the change in majority
ownership date; USD 7 million amortization of intangible assets and USD 19
million of costs resulting from the change in majority ownership.

Excluding these items, core operating income totaled USD 222 million.

FINANCIAL REVIEW

Third quarter and nine months to September 30
  % %
  Q3 2010 Q3 2009 change 9M 2010 9M 2009 change

  USD m USD m USD cc USD m USD m USD cc
--------------------------------------------------------------------------------
Net sales 12 578 11 086 13 16 36 425 31 341 16 15

Divisional operating income 2 814 2 849 -1 3 9 432 7 934 19 18

 Corporate income & expense, net -227 -215 6 4 -373 -589 -37 -37

Group operating income 2 587 2 634 -2 3 9 059 7 345 23 23

as % of net sales 20.6 23.8     24.9 23.4

 Income from associated companies 368 -21 nm   629 186 238

Financial income 27 51 -47   90 94 -4

Interest expense -188 -173 9   -496 -395 26

Taxes -475 -379 25   -1 578 -1 099 44
--------------------------------------------------------------------------------
Net income 2 319 2 112 10 14 7 704 6 131 26 24
--------------------------------------------------------------------------------
EPS (USD) 0.99 0.93 6 12 3.34 2.69 24 22
--------------------------------------------------------------------------------
Core operating income 3 699 2 959 25 29 10 840 8 233 32 31

as % of net sales 29.4 26.7     29.8 26.3

Core net income 3 146 2 679 17 21 9 226 7 375 25 24

Core EPS (USD) 1.36 1.17 16 19 4.00 3.24 23 22
--------------------------------------------------------------------------------
nm - Not meaningful

Third quarter and nine months to September 30 excluding Alcon, Inc.
  % %
  Q3 2010 Q3 2009 change 9M 2010 9M2009 change

  USD m USD m USD cc USD m USD m USD cc
------------------------------------------------------------------
Net sales 11 961 11 086 8 10 35 808 31 341 14 13

Operating income 2 582 2 634 -2 3 9 054 7 345 23 23

as % of net sales 21.6 23.8     25.3 23.4

Core operating income 3 477 2 959 18 22 10 618 8 233 29 28

as % of net sales 29.1 26.7     29.7 26.3

Third quarter

Net sales
Net sales rose 13% (+16% cc) to USD 12.6 billion with strong contributions from
all businesses. Currency movements depressed the result by 3 percentage points.
Rapid growth of recently launched products across the Group generated USD 2.3
billion in sales, representing 20%* of total sales.  Acquisitions contributed 6
percentage points to growth, mainly driven by the Alcon sales of USD 617
million. Volumes grew by 11 percentage points offset by a negative price effect
of 1 percentage point.

Corporate income & expense, net
Corporate income & expense, which includes the costs of the Group headquarters
and costs for corporate research, was impacted by one-time stamp duty and
transaction expenses related to the purchase of the additional 52% of Alcon
shares of USD 96 million in the third quarter. Excluding this, expenses were
39% below the previous year partially as a result of releasing USD 38 million of
environmental and other provisions.

Group operating income
Operating income decreased 2% (+3% cc) to USD 2.6 billion. Currency movements,
particularly the strengthening Swiss franc, which increases costs, reduced
operating income by 5 percentage points. Included in operating income are
intangible asset impairment charges in R&D expenses of USD 593 million
principally due to the termination of two development projects, and Alcon
related charges of USD 217 million.

Income from associated companies
The income from associated companies in the third quarter of 2010 of USD 368
million compares to a net loss of USD 21 million in 2009. Alcon, Inc, accounted
for as an associated company until August 25, and thereafter fully consolidated,
contributed USD 235 million compared to a loss of USD 62 million in the prior
year period. Included in this total is a revaluation gain of USD 204 million to
the currently estimated fair value of the initial 25% Alcon, Inc interest
acquired on July 7, 2008, required as a result of acquiring majority control on
August 25, 2010. 2009 included an exceptional impairment charge of USD 92
million. The Roche investment contributed  USD 138 million in the third quarter
compared to USD 43 million in the prior year period which was impacted by a
restructuring charge of USD 97 million related to the Genentech acquisition. The
following is a summary of the individual components included in the income from
associated companies:

  Q3 2010 Q3 2009 9M 2010 9M 2009

  USD m USD m USD m USD m
--------------------------------------------------------------------------------
 Share of estimated Roche reported net income 173 176 480 461

 Catch-up for actual Roche previous year net
income       -40

 Genentech restructuring impact   -97 -43 -97

 Amortization of intangible assets -35 -36 -101 -98
--------------------------------------------------------------------------------
 Net income effect from Roche 138 43 336 226
--------------------------------------------------------------------------------
 Share of Alcon, Inc reported US GAAP net income 118 139 400 368

 Catch-up for actual up to August 25, 2010
Alcon, Inc net income -15   -13 5

 Revaluation of initial 25% interest to
estimated deemed fair value 204   204

 Intangible asset impairment charge   -92   -92

 Amortization of intangible assets -72 -109 -289 -326
--------------------------------------------------------------------------------
 Net income effect from Alcon, Inc up to August
25, 2010 235 -62 302 -45
--------------------------------------------------------------------------------
 Net income from other associated companies -5 -2 -9 5
--------------------------------------------------------------------------------
 Income from associated companies 368 -21 629 186
--------------------------------------------------------------------------------

Core results for associated companies for the third quarter, which exclude
exceptional items and the amortization of intangible assets in both periods,
decreased from USD 313 million in the 2009 third quarter to USD 286 million in
the current year quarter.

Financial income and interest expense
Financial income decreased from USD 51 million in third quarter of 2009 to USD
27 million in the current third quarter as lower returns on financial
investments outweigh the improved currency result. Interest expense increased
from USD 173 million to USD 188 million due to the additional fund-raising.

Taxes
The tax rate (taxes as percentage of pre-tax income) was 17.0% in the third
quarter compared to 15.2% in the 2009 period.

Net income
Net income advanced 10% (+14% cc) to USD 2.3 billion ahead of operating income
growth. Core net income grew 17% (+21%) to USD 3.1 billion.

Earnings per share
Earnings per share (EPS) rose 6% (+12% cc) to USD 0.99 from USD 0.93 in the
2009 period while core EPS was up 16% (+19% cc) to USD 1.36 from USD 1.17 in the
year-ago period. The increase in EPS is less than the increase in net income due
to 23% of the net income related to Alcon being excluded from the EPS
calculation.

The average number of shares outstanding in the third quarter rose 1% to
2,288.1 million from 2,268.2 million in the year-ago period while a total of
2,289.6 million shares were outstanding at September 30.

Nine months to September 30

Net sales
Net sales were up 16% (+15% cc) to USD 36.4 billion with strong improvements
across all businesses. Recently launched products provided USD 7.9 billion
(versus USD 4.3 billion in the previous year-period), contributing 22%* of total
sales. Volumes grew by 13 percentage points and price contributed a negative 1
percentage point for the nine months period. Acquisitions contributed 3
percentage points to growth, mainly driven by Alcon sales of USD 617 million.

Group operating income
Operating income rose 23% (+23% cc) to USD 9.1 billion on the volume-driven
sales expansion and by contributions of A(H1N1) pandemic flu vaccines. The
operating income margin improved 1.5 percentage points to 24.9% of net sales
from 23.4% in the 2009 period. Included in operating income are exceptional
charges including intangible asset impairments charged to R&D (USD 762 million)
and legal settlements (USD 237 million), offset by a pension gain of USD 265
million.

Income from associated companies
The income from associated companies for the nine-month period of 2010 increased
from USD 186 million to USD 629 million. The increase is attributable to higher
contributions from the Alcon and Roche investments due to exceptional charges
incurred in the prior year period as well as the revaluation gain to the
currently estimated fair value of the initial 25% Alcon interest acquired on
July 7, 2008.

Core results for associated companies, excluding the exceptional charges due to
the Genentech restructuring for Roche and the intangible impairment charge and
revaluation gain for Alcon as well as the amortization of intangible assets for
both investments, increased from USD 799 million to USD 873 million.

Financial income and interest expense
Financial income decreased by 4% from USD 94 million to USD 90 million. In order
to accommodate the payment for the Alcon acquisition financial investments were
kept short-term which resulted in lower yields. Interest expense increased by
26% to USD 496 million from USD 395 million in the prior year period as a result
of the issuance of US dollar bonds in February 2009 and March 2010, a Euro bond
in June 2009 and the increase of short-term debts through the commercial paper
program.

Taxes
The tax rate (taxes as percentage of pre-tax income) was 17.0% in the first nine
months of 2010 compared to 15.2% in the 2009 period.

Net income
Net income advanced 26% (+24% cc) to USD 7.7 billion ahead of operating income
growth. Core net income grew 25% (+24% cc) to USD 9.2 billion.

Earnings per share
Earnings per share (EPS) rose largely in line with net income to USD 3.34 from
USD 2.69 in the
2009 period, while core EPS grew 23% (+22% cc) to USD 4.00 from USD 3.24. The
average number of shares outstanding in the first nine months 2010 rose 1% to
2,284.4 million from 2,266.2 million in the year-ago period, while a total of
2,289.6 million shares were outstanding at September 30.

Balance sheet
The full consolidation of Alcon has had a significant impact on the Group´s
consolidated balance sheet. Non-current assets have increased by USD 35.1
billion since December 31, 2009, of which the major items result from the
preliminary purchase price allocation for the Alcon acquisition, which increased
indentified intangible assets by USD 24.2 billion and goodwill by USD 18.1
billion. Furthermore, there was a reduction in the amount of investments in
associated companies (included in financial and other non-current assets) by USD
10.1 billion. Current assets decreased by USD 6.0 billion mainly due to USD 9.5
billion lower cash and marketable securities as these funds were used to acquire
the additional 52% of Alcon. Trade accounts receivable, inventories and other
current assets increased by USD 3.5 billion also mainly due to the consolidation
of Alcon. As a result of the consolidation of Alcon and other factors, total
assets amounted to USD 124.6 billion at September 30, 2010, an increase of USD
29.1 billion compared to the end of 2009.

Similarly, the consolidation of Alcon and related financing for the additional
52% interest has had a significant impact on the Group´s liabilities and equity.
Financial debts increased by USD 13.0 billion, which was mainly used to fund the
Alcon acquisition. Other current and non-current liabilities increased by USD
7.4 billion of which USD 4.4 billion are additional deferred tax liabilities
primarily related to the Alcon identified intangible assets. Principally due to
these factors, total liabilities increased by USD 20.4 billion to USD 58.4
billion at September 30, 2010. The Group´s equity rose by USD 8.8 billion since
the prior year-end to USD 66.2 billion at September 30, and includes the 23%
Alcon additional non-controlling interests of USD 6.1 billion. Other movements
in equity were the net income of USD 7.7 billion, which was partially offset by
the dividend payment for 2009 of USD 4.5 billion and actuarial losses of USD
1.4 billion. An additional increase of USD 1.0 billion was due to the net sale
of treasury shares and share-based compensation as well as positive translation
effects.

The Group´s debt/equity ratio rose to 0.41:1 at September 30, compared to
0.24:1 at the end of 2009, reflecting the higher financial debt for the funding
of the Alcon acquisition. The Group´s financial debt of USD 27.0 billion
consisted of USD 12.6 billion in current and USD 14.4 billion in non-current
liabilities. Overall liquidity, including USD 3.2 billion consolidated with
Alcon, decreased to USD 8.0 billion from USD 17.4 billion at the end of 2009.
Net debt at September 30 was USD 19.0 billion compared to net liquidity of USD
3.5 billion at the end of the previous year.

Cash flow
Cash flow from operating activities for the first nine months rose USD 1.8
billion to USD 9.5 billion based on higher earnings from operations.

The cash flow from investing activities resulted in a net outflow of USD 15.2
billion in 2010. The outflow for acquisitions was USD 26.7 billion. This amount
comprised USD 26.1 billion (net of USD 2.2 billion cash received) for the
purchase of the additional 52% investment in Alcon and USD 0.5 billion for the
acquisition of Corthera, Oriel and for deferred payments related to the EBEWE
acquisition. The outflow of cash for investments in property, plant & equipment
and in intangible and other assets amounted to USD 1.0 billion and USD 0.5
billion respectively. These outflows were partially compensated by the net
inflow from the sale of marketable securities of USD 12.8 billion.

Cash inflow from financing activities was USD 8.2 billion as the USD 12.3
billion proceeds from the bonds and the commercial paper programs were partially
offset by the dividend payment of USD 4.5 billion.

Free cash flow before dividends rose 34% to USD 8.2 billion, the increase
principally coming from the improved cash flow from operating activities.

INNOVATION REVIEW

Novartis has one of the industry´s most competitive pipelines with 143 projects
in pharmaceutical clinical development, of which 56 involve new molecular
entities.

Among developments in the third quarter of 2010:

* The FDA approved Gilenya, a novel, first-line oral treatment for relapsing
forms of multiple sclerosis - the most common forms of the disease. The drug
has been shown previously to significantly reduce the relapse rate compared
to intra-muscular interferon beta 1a, the current standard of care, and also
to delay disability progression versus placebo. Moreover, Gilenya has a
well-studied safety and tolerability profile that has been characterized in
over 2,600 clinical trial patients.
* The CHMP gave a positive opinion for the approval of Tasigna for the
treatment of newly diagnosed patients with chronic myeloid leukemia (CML).
The formal EMA approval is expected by the end of this year. Tasigna is
already approved in the US and Switzerland, for the treatment of adult
patients with newly diagnosed Ph+ CML in chronic phase. Regulatory
submissions in the first-line indication have also been submitted in Japan
and other countries around the world.
* The FDA approved Tekamlo (aliskiren and amlodipine) tablets, a single-pill
combination for the treatment of high blood pressure combining the only
approved direct renin inhibitor, Tekturna (aliskiren), with the widely used
calcium channel blocker, amlodipine. Tekamlo has been shown to significantly
reduce blood pressure as compared to amlodipine or Tekturna alone.
* The CHMP gave a positive opinion for the approval of tobramycin inhalation
powder (TOBI Podhaler) for the suppressive therapy of chronic pulmonary
infection due to Pseudomonas aeruginosa in adult and children age six years
and older with cystic fibrosis. Formal EMA approval is expected by the end
of this year.
* Submission for US approval of Diovan (valsartan) for the prevention of new
onset diabetes in hypertensive patients with impaired glucose tolerance and
increased cardiovascular risk was achieved in July.
* SOM230 (pasireotide) demonstrated significant efficacy in a Phase III trial
in reducing the level of urinary free cortisol (UFC) in patients suffering
from Cushing´s disease, a potentially fatal and debilitating hormonal
disorder. This pivotal trial is the largest study to date of a medical
therapy in Cushing´s disease.
* A dossier for EU approval of Afinitor (everolimus) in patients with
subependymal giant cell astrocytoma (SEGA) associated with tuberous
sclerosis was also filed in July 2010; the FDA granted everolimus priority
review for this indication. The FDA action date is October 29.
* Results from a Phase III study involving Afinitor in pancreatic
neuroendocrine tumors (NET), a rare and aggressive form of cancer with
limited treatment options, showed that Afinitor extended median progression-
free survival from 4.6 to 11 months versus placebo and reduced the risk of
cancer progression by 65%. The results of this study, RADIANT-3, were shared
at World Congress of Gastrointestinal Cancer (WCGI) on July 1, 2010.
* Results from the Phase III RADIANT-2 study showed Afinitor plus Sandostatin
LAR extended time without tumor growth from 11.3 to 16.4 months when
compared to Sandostatin LAR alone in patients with advance neuroendocrine
tumors (hazard ratio=0.77 [95% confidence interval, 0.59 to 1.00]; p=0.026).
The study did not meet the primary endpoint of progression-free survival.
Analyses using a well-established statistical model to adjust for imbalances
in the treatment arm showed Afinitor plus Sandostatin LAR significantly
reduced risk of disease progression.
* The Phase III study examining AIN457 for non-infectious uveitis in patients
with Behcet´s disease did not meet its primary endpoint and the data do not
support submission of AIN457 for this indication. Based upon analysis of
these data, Novartis will stop the extension study in Behcet´s uveitis while
continuing to explore other indications.
* Novartis decided to discontinue further development of Mycograb (efungumab),
an antifungal agent that was being developed for invasive candidiasis in
adult patients. Novartis and Human Genome Sciences also agreed to stop
further development of albinterferon alfa-2b for the treatment of chronic
hepatitis C viral infection. Further development of QAX028 in chronic
obstructive pulmonary disease (COPD) was also discontinued in August. These
decisions reflect the enhanced focus on portfolio prioritization and
productivity within the company.
* Top line Phase III results (Study 2301) from SMC021 in osteoarthritis did
not meet the first of three co-primary endpoints. Further analysis of the
data is ongoing. The Phase III study in osteoporosis continues.

Q3 2010 selected major approvals: US, Europe and Japan
----------------------------------------------------------------------
Product Active ingredient Indication Approval date
----------------------------------------------------------------------
Gilenya fingolimod Multiple sclerosis US - September
----------------------------------------------------------------------
Tekamlo aliskiren, amlodipine Hypertension US - August
----------------------------------------------------------------------

Selected projects awaiting regulatory decisions
--------------------------------------------------------------------------------
    Completed submissions
---------------------------
Product Indication US EU Japan News update
--------------------------------------------------------------------------------
Afinitor Subependymal Q2 2010 Q3 2010   - EU filing
giant cell achieved in July
astrocytomas - US approval
associated with expected by end of
tuberous 2010 based on
sclerosis priority review
status
--------------------------------------------------------------------------------
Diovan Prevention of Q3 2010     - US filing
new onset achieved in July
diabetes
--------------------------------------------------------------------------------
Exelon Patch Alzheimer´s Approved Approved Q1 2010 - New drug
disease dementia application in
Japan (NDA-J) is
under review.
Pharmaceuticals
and Medical
Devices Agency
(PMDA) decision
may come as early
as April 2011
--------------------------------------------------------------------------------
Gilenya Multiple Approved Q4 2009   - FDA approval
  sclerosis received in
September with
first-line
indication for
relapsing forms of
multiple sclerosis
- The European
Medicines Agency
(EMA) regulatory
review and other
filings worldwide
are ongoing
--------------------------------------------------------------------------------
Lucentis Diabetic macular   Q4 2009   - Phase III
edema RESTORE data
presented in May
2010 at the
European
Association for
the Study of
Diabetic Eye
Complications
- Regulatory
feedback expected
in Q4 2010
--------------------------------------------------------------------------------
Onbrez Chronic Q4 2008 Approved Q3 2010 - Clinical trials
obstructive to address US Food
pulmonary and Drug
disease Administration
(FDA) complete
response letter
(October 2009)
completed in Q3
and data generated
from these trials
was submitted to
the FDA in late
September
- Japan filing
achieved in July
--------------------------------------------------------------------------------
Tasigna Newly diagnosed Approved Q4 2009 Q1 2010 - Positive
chronic myeloid Committee for
leukemia Medicinal Products
for Human Use
(CHMP) opinion
received in
September
- Swiss approval
in August after
fast-track review
- ENESTnd 24 month
median follow-up
data expected to
be presented at
the American
Society of
Hematology in
December
--------------------------------------------------------------------------------
Tekturna and Hypertension Approved Q4 2009   - FDA approval
amlodipline received in August
- EU CHMP opinion
expected in Q1
2011and formal
approval in Q2
2011
- Application of
Rasival withdrawn
from EMA
--------------------------------------------------------------------------------
Tekturna, Hypertension Q1 2010 Q2 2010   - EU submission
amlodipine and achieved in May
Hydro- 2010
chlorothiazide
--------------------------------------------------------------------------------
TOBI Podhaler Cystic fibrosis   Q4 2009   - Positive CHMP
opinion received
in September
--------------------------------------------------------------------------------
    Completed submissions
---------------------------
Product Indication US EU Japan News update
--------------------------------------------------------------------------------
Zometa Adjuvant breast Q4 2009 Q4 2009   - FDA extended the
cancer review of sNDA of
Zometa in the
adjuvant (post-
surgery) treatment
of premenopausal
women with early
breast cancer in
conjunction with
hormonal therapy
from Q4 2010 to Q1
2011.  Extension
is the result of a
major amendment to
the application to
include an
additional 12
months of data to
provide a median
of five years of
follow up of the
pivotal Austrian
Breast &
Colorectal Cancer
Study Group Trial
12 (ABCSG-12)
study. This
information has
also been
submitted to
European
regulatory
authorities.
--------------------------------------------------------------------------------

Selected pharmaceutical pipeline projects
--------------------------------------------------------------------------------
Potential
Project/ indication/ Disease Planned Current News update
Compound area submissions Phase
--------------------------------------------------------------------------------
ACZ885 Refractory gout 2010 III - On track for
acute flares 2010 submission
------------------------------------------------------------------
  Systemic onset 2011 III
juvenile idiopathic
arthritis
------------------------------------------------------------------
Type 2 diabetes   II
?2014
------------------------------------------------------------------
Secondary ?2014 III - Phase III start
prevention of planned end 2010
cardiovascular
events
--------------------------------------------------------------------------------
Afinitor Neuroendocrine 2010 III - On track for
tumors 2010 submission
- RADIANT 3 study
in pancreatic
neuroendocrine
tumors (NET) met
primary endpoint;
results shared at
World Congress of
Gastrointestinal
Cancer in July 2010
- RADIANT-2 study
did not meet the
primary endpoint of
progression-free
survival. Analyses
using a well-
established
statistical model
to adjust for
imbalances in the
treatment arm
showed Afinitor
plus Sandostatin
LAR significantly
reduced risk of
disease progression
- Results of
RADIANT-2 and
 RADIANT-3 were
shared at the
European Society
for Medical
Oncology in October
2010
------------------------------------------------------------------
Tuberous sclerosis 2011 III
complex AML
------------------------------------------------------------------
ER+ breast cancer 2012 III
------------------------------------------------------------------
HER2+ breast cancer 2013 III
------------------------------------------------------------------
Gastric cancer 2012 III
------------------------------------------------------------------
HCC (Hepatocellular 2013 III
cancer)
------------------------------------------------------------------
Lymphoma ?2014 III
--------------------------------------------------------------------------------
AFQ056 Parkinson´s   II - Phase III program
disease-       L- 2013 start planned for
dopa induced 2011
dyskinesia
------------------------------------------------------------------
Fragile X syndrome 2012 II - Adult pivotal
study to start
4Q 2010
--------------------------------------------------------------------------------
Potential
Project/ indication/ Disease Planned Current News update
Compound area submissions Phase
--------------------------------------------------------------------------------
AG0178 Major depressive 2012 III - Sublingual Phase
disorder III program
initiated May 2010
--------------------------------------------------------------------------------
AIN457 Non-infectious 2011 III - Phase III study
uveitis examining AIN457
for non-infectious
uveitis in patients
with Behcet´s
disease did not
meet its primary
endpoint and the
data do not support
submission of
AIN457 for this
indication; based
upon analysis of
these data,
Novartis will stop
the extension study
in Behcet´s uveitis

------------------------------------------------------------------
  Psoriasis 2013 II - Phase III start
planned for 2011
------------------------------------------------------------------
  Rheumatoid 2013 II - Phase III start
arthritis planned for 2011
--------------------------------------------------------------------------------
ASA404 2nd line non-small 2012 III - Interim analysis
cell lung cancer in Q4 2010
--------------------------------------------------------------------------------
BAF312 Multiple sclerosis ?2014 II - Phase II data
expected in Q1 2011
--------------------------------------------------------------------------------
Certican Prevention of organ 2011 III
rejection - liver
--------------------------------------------------------------------------------
DEB025 Hepatitis C 2013 II - Phase III start
planned in Q4 2010
--------------------------------------------------------------------------------
Exjade Non transfusion 2011 II
dependent
Thalassemia
--------------------------------------------------------------------------------
HCD122 Hematological ?2014 I
tumors
--------------------------------------------------------------------------------
INC424 Myelofibrosis 2011 III - Results from a
Phase I/II study
published in The
New England Journal
of Medicine in
September showed
approximately 75%
of myelofibrosis
patients receiving
INC424 twice-daily
experienced rapid
reduction in spleen
size, which was
durable for more
than one year of
follow-up
------------------------------------------------------------------
Polycythemia vera ?2014 II - Global Phase III
study expected to
begin in October
with US patients;
first ex-US patient
study expected to
start in Q1 2011
--------------------------------------------------------------------------------
LBH589 Hodgkin´s lymphoma 2010 III - On track for
2010 submission
  - Updated Phase II
pivotal study data
presented at the
American Society of
Clinical Oncology
and European
Hematology
Association
congresses
------------------------------------------------------------------
Multiple myeloma 2013 III - Phase I data oral
LBH589 in
combination with
Velcade
(bortezomib)
presentation at
American Society of
Clinical Oncology
--------------------------------------------------------------------------------
  Hematological ?2014 II
tumors
--------------------------------------------------------------------------------
LCQ908 Diabetes and ?2014 II
metabolism
--------------------------------------------------------------------------------
LCZ696 Heart failure ?2014 III - Phase II data
published in Lancet
and presented at
the American
College of
Cardiology in March
2010. Demonstrated
blood pressure
lowering and
supports heart
failure potential.
- Phase III M&M
study ongoing since
Dec 2009
------------------------------------------------------------------
Hypertension ?2014 II
--------------------------------------------------------------------------------
LDE225 Gorlin´s syndrome 2012 II
--------------------------------------------------------------------------------
Lucentis Retinal vein 2010 III - EU submission on
occlusion   track for Q4 2010
--------------------------------------------------------------------------------
Potential
Project/ indication/ Disease Planned Current News update
Compound area submissions Phase
--------------------------------------------------------------------------------
NVA237 Chronic obstructive 2011 III
pulmonary disease
--------------------------------------------------------------------------------
PKC412 Aggressive systemic 2011 II
mastocytosis
------------------------------------------------------------------
  Acute myeloid 2013 III
leukemia
--------------------------------------------------------------------------------
PRT128 Acute coronary ?2014 II - Results from
syndrome INNOVATE-PCI Phase
Chronic coronary II study were
heart disease presented at the
European Society of
Cardiology congress
in August 2010.
 Planned to
initiate a Phase
III clinical
development program
in  chronic
coronary heart
disease in Q1 2011
--------------------------------------------------------------------------------
PTK796 Complicated skin 2012 III
and soft tissue
infections
--------------------------------------------------------------------------------
QMF149 Chronic obstructive ?2014 II - Filing now
pulmonary disease planned for ?2014.
Delay due to device
switch to Concept 1

------------------------------------------------------------------
  Asthma ?2014 II - Filing now
planned for ?2014.
Delay due to device
switch to Concept 1
--------------------------------------------------------------------------------
QTI571 Pulmonary arterial 2011 III
(Imatinib) hypertension
--------------------------------------------------------------------------------
QVA149 Chronic obstructive 2012 III
pulmonary disease
--------------------------------------------------------------------------------
RLX030 Acute heart failure 2013 III
--------------------------------------------------------------------------------
SMC021 Osteoarthritis 2011 III - Top line Phase
III results (Study
2301) from SMC021
in osteoarthritis
did not meet the
first of three co-
primary endpoints
. Further analysis
of the data is
ongoing.
------------------------------------------------------------------
Osteoporosis 2011 III - On track for
2011 submission.
- Blinded two-year
interim analysis
 expected end 2010
--------------------------------------------------------------------------------
SOM230 Cushing´s disease 2010 III - On track for
2010 submission in
EU and H1 2011 in
US
-  Phase III study
met endpoint in
patients taking
SOM230 900 µg;
results presented
at the European
Neuroendocrine
Association in
September
------------------------------------------------------------------
Acromegaly 2011 III
------------------------------------------------------------------
Refractory / 2011 III
resistant carcinoid
syndrome
--------------------------------------------------------------------------------
Tasigna Gastrointestinal ?2014 III
stromal tumor
------------------------------------------------------------------
cKIT melanoma 2012 III
--------------------------------------------------------------------------------
TKI258 Solid tumors 2013 II
--------------------------------------------------------------------------------
Xolair Chronic idiopathic 2013 II - Phase III planned
urticaria to start in Q1 2011
--------------------------------------------------------------------------------

Selected vaccine pipeline projects
--------------------------------------------------------------------------------
Project/ Compound Potential Planned Current News update
indication/ submissions Phase
Disease area
--------------------------------------------------------------------------------
Menveo Prevention of 2010 (US) III  US filing
meningococcal 2011 (EU) planned Q4 2010
disease
(serogroups A, C,
Y and W-135) in
infants
--------------------------------------------------------------------------------
MenB Multi-component 2010 (EU) III - Results from
(meningococcal vaccine for initial Phase
serogroups B) prevention of III study
meningococcal presented in
disease September at
(serogroup B) International
Pathogenic
Neisseria
Conference
- EU submission
planned to be
filed by year-
end

--------------------------------------------------------------------------------
Optaflu Seasonal 2011 (US) III
  influenza (cell
culture subunit
vaccine)
--------------------------------------------------------------------------------
Fluad Seasonal 2010 (EU) III - Trial results
influenza   to be published
(subunit vaccine   at Infectious
with MF59 2012 (elderly Diseases Society
adjuvant) US) of America in
October 2010
- Phase III
trial started

--------------------------------------------------------------------------------

Disclaimer
These materials contain certain forward-looking statements relating to the
Group´s business, which can be identified by terminology such as "pipeline, "
"momentum, " "prospects, " "potential, " "commitment, " "strategic, " "priorities, "
"recommendation, " "promise, " "will, " "on track, " "promising, " "potentially, "
"expected, " "opportunities, " "outlook, " "guidance, " "priority review, "
"preparing for filing, " "planned, " or similar expressions, or by express or
implied discussions regarding potential new products, potential new indications
for existing products, or regarding potential future revenues from any such
products, or potential future sales or earnings of the Novartis Group or any of
its divisions, business units, or consolidated entities; or regarding potential
growth opportunities from the acquisition of a 77% majority ownership in Alcon
or regarding the potential full acquisition and merger with Alcon; or by
discussions of strategy, plans, expectations or intentions. You should not place
undue reliance on these statements. Such forward-looking statements reflect the
current views of the Group regarding future events, and involve known and
unknown risks, uncertainties and other factors that may cause actual results to
be materially different from any future results, performance or achievements
expressed or implied by such statements. There can be no guarantee that any new
products will be approved for sale in any market, or that any new indications
will be approved for existing products in any market, or that such products will
achieve any particular revenue levels. Nor can there be any guarantee that the
Novartis Group, or any of its divisions, business units, or consolidated
entities will achieve any particular financial results. Neither can there be any
guarantee that the proposed full acquisition and merger with Alcon will be
completed in the expected form or within the expected time frame or at all. Nor
can there be any guarantee that Novartis will be able to realize any of the
potential synergies, strategic benefits or opportunities as a result of either
Novartis´ acquisition of a 77% majority ownership in Alcon, or as a result of
the proposed full acquisition and merger with Alcon. In particular, management´s
expectations could be affected by, among other things, unexpected clinical trial
results, including additional analyses of existing clinical data or unexpected
new clinical data; unexpected regulatory actions or delays or government
regulation generally; the Group´s ability to obtain or maintain patent or other
proprietary intellectual property protection; disruptions from the Alcon 77%
implementation, and any potential merger making it more difficult to maintain
business and operational relationships, and relationships with key employees;
uncertainties regarding actual or potential legal proceedings, including, among
others, litigation seeking to prevent the full acquisition and merger from
taking place, product liability litigation, litigation regarding sales and
marketing practices, government investigations and intellectual property
disputes; competition in general; government, industry, and general public
pricing and other political pressures; uncertainties regarding the after-effects
of the recent global financial and economic crisis; uncertainties regarding
future global exchange rates and uncertainties regarding future demand for our
products; uncertainties involved in the development of new pharmaceutical
products; the impact that the foregoing factors could have on the values
attributed to the Group´s assets and liabilities as recorded in the Group´s
consolidated balance sheet; and other risks and factors referred to in Novartis
AG´s current Form 20-F on file with the US Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or expected. Novartis
is providing the information in these materials as of this date and does not
undertake any obligation to update any forward-looking statements as a result of
new information, future events or otherwise.

About Novartis
Novartis provides healthcare solutions that address the evolving needs of
patients and societies. Focused solely on healthcare, Novartis offers a
diversified portfolio to best meet these needs: innovative medicines, cost-
saving generic pharmaceuticals, preventive vaccines, diagnostic tools and
consumer health products. Novartis is the only company with leading positions in
these areas. In 2009, the Group´s continuing operations achieved net sales of
USD 44.3 billion, while approximately USD 7.5 billion was invested in R&D
activities throughout the Group. Headquartered in Basel, Switzerland, Novartis
Group companies employ approximately 100.000 full-time-equivalent associates and
operate in more than 140 countries around the world. For more information,
please visithttp://www.novartis.com.

Important dates
November 17, 2010 Novartis Strategy and Innovation Forum

January 27, 2011 Fourth quarter and full-year 2010 results

All product names appearing in italics are trademarks owned by or licensed to
Novartis Group Companies.
*All figures with an asterisk are excluding Alcon

Please find full media release in English attached and on the following link:
http://hugin.info/134323/R/1453762/394235.pdf

Further language versions are available through the following links:

German version is available through the following link:
http://hugin.info/134323/R/1453748/394230.pdf

French version is available through the following link:
http://hugin.info/134323/R/1453758/394234.pdf

[HUG#1453762]

--- End of Message ---

Novartis International AG
Postfach Basel null

WKN: 904278;ISIN: CH0012005267;

Media release (PDF):
http://hugin.info/134323/R/1453762/394235.pdf

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Source: Novartis International AG via Thomson Reuters ONE

Wertpapiere des Artikels:
CH0012005267