Novartis in Society Integrated Report 2021

1 Novartis in Society Integrated Report 2021. 2021 at a glaNce Novartis in Society Integrated Report | 1. About this Report 2021 at a glance About this Report Welcome to the first Novartis in Society Integrated Report . This Report highlights progress 766 m 21 3. against our strategy and describes how we create value for our stakeholders. It is intended 2021 at a glance for all Novartis stakeholders, particularly shareholders, investors, and environmental, social and governance (ESG) professionals. Chairman's letter Patients reached Major approvals (US, EU, Breakthrough therapy This Report combines our Novartis in Society ESG Report and Annual Review. It is published with Novartis medicines Japan, China) designations CEO's Letter in conjunction with our regulatory disclosure documents: our Annual Report filed with the including two new molecular entity from the FDA.

2 Approvals from the US Food and SIX Swiss Exchange, and our Form 20-F filed with the US Securities and Exchange Com- Our approach Drug Administration (FDA). mission (SEC). Details of our annual reports can be found at Who we are Our Novartis in Society Integrated Report contains three main sections: bn bn bn Our business environment Our approach, including details of our business environment, stakeholders, strategy and risk management Our stakeholders Net sales Core operating income Total dividends paid Our performance, including financial performance and performance against our five growing 4% in constant growing 6% in constant to shareholders (USD). Materiality assessment strategic priorities: deliver transformative innovation, embrace operational excellence, currencies from 2020 (USD) currencies from 2020 (USD).

3 Our strategy go big on data and digital, unleash the power of our people, and build trust with Society How we create value Corporate governance and our approach to executive compensation How we manage risk Content of this Report is subject to approval by the Governance, Nomination and Corporate Our performance Responsibilities Committee of the Novartis Board of Directors prior to publication. PricewaterhouseCoopers AG (PwC) has provided limited independent assurance on specific data and on our materiality assessment in this Report (see pages 114-115). 71 bn Treatments supplied 300 000. Patients using AI Nurse 78. Employee engagement Financial through Novartis facilities our cardiovascular disease app score in Q4 (out of 100), All financial data is taken from our Annual Report , prepared in accordance with International in China 5 points higher than the Innovation Financial Reporting Standards (IFRS), as issued by the International Accounting Standards industry benchmark Board (IASB).

4 This Report has been prepared in accordance with the GRI Standards: Core Operational excellence option. We used other frameworks as references, including the Integrated Reporting Frame- work and SASB Standards provided by the Value Reporting Foundation. Further details of Data and digital our compliance with the GRI and SASB Standards can be found on pages 102-107. Our people Build trust with Society In addition, Novartis supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Our TCFD disclosure can be found on pages 108-111. 1 bn Antimalarial treatments 40 m Doses produced 34%. Greenhouse gas Governance All information reflects the continuing operations of the Novartis Group, including the various delivered in the past two decades in of the Pfizer-BioNTech vaccine emissions changes in the Group's portfolio of activities in prior years.

5 Unless otherwise stated, data reduced vs. 2016 baseline endemic countries, more than 90% of for COVID-19. Compensation in this Report relates to our financial year, which runs from January 1 to December 31. which were supplied without profit (Scope 1 and Scope 2). Environmental data is based on nine-month actual data (January to September 2021) plus Appendices three-month estimates. This data will be restated with actual figures on our website during the second half of 2022. Please note that all product names printed in italics in this Report are trademarks owned by, or licensed to, the Novartis Group. Ratings and recognition Access to Dow Jones Sustainalytics World's 25 Best Bloomberg Medicine Index Sustainability Workplaces Gender-Equality World Index Index Novartis ranked second Novartis was included in Novartis leads in the Novartis was included in Novartis was included for in 2021, retaining our both the DJSI World and pharmaceutical Fortune's World's 25 Best the third year in a row 2018 position Europe indices subindustry group Workplaces list cover photo Silvia Bally, a Novartis employee at a production facility in Stein, Switzerland 2021 at a glaNce Novartis in Society Integrated Report | 3.

6 Contents About this Report 2021 at a glance 1. 2021 at a glance Chairman's letter 4. Chairman's letter CEO's letter 5. CEO's Letter Our approach Our approach Who we are 6. Our business environment 10. Who we are Our stakeholders 12. Our business environment Our 2021 materiality assessment 13. Our strategy 14. Our stakeholders How we create value 18. Materiality assessment How we manage risk 22. Our strategy Our performance How we create value Financial performance 28. How we manage risk Deliver transformative innovation 35. Embrace operational excellence 45. Our performance Go big on data and digital 55. Financial Unleash the power of our people 61. Build trust with Society 69. Innovation Governance Operational excellence Our corporate governance approach 89.

7 Data and digital Our Board of Directors 92. Our people Our Executive Committee 93. Build trust with Society Compensation Governance Compensation Report summary 96. Compensation Appendices Appendices Novartis GRI Content Index 102. Sustainability Accounting Standards Board (SASB) Index 106. Task Force on Climate-related Financial Disclosures (TCFD) 108. External initiatives and membership of associations 112. Selected adaptive development projects 113. Supplier spend 2021 113. Independent Assurance Report 114. Photo Jian Zhang cooks in his kitchen in Shenyang, China. Mr. Zhang, who has heart failure, is one of approximately 300 000. people in China using AI Nurse, a digital health app that makes it easier for patients to manage cardiovascular disease progression.

8 4 | Novartis in Society Integrated Report Novartis in Society Integrated Report | 5. Our impact on the world remains extraordinary, with 766 million Chairman's letter patients reached in 2021. Vas Narasimhan About this Report Novartis delivered a solid perfor- future amid the rising global need for States to address health disparities mance in 2021. Strong demand for innovative chronic therapies as we all with the intention to create more 2021 at a glance heart failure medicine Entresto, continue to strengthen patient equitable and sustainable healthcare psoriasis and autoimmune disease engagement. systems and support the United Chairman's letter treatment Cosentyx, and recently Nations' efforts to achieve the launched therapies such as multiple We started a strategic review of our Sustainable Development Goals.

9 CEO's Letter sclerosis drug Kesimpta helped us Sandoz generics division with the increase sales and net profit as we goal of strengthening its operational The Board of Directors took further Our approach maintained cost discipline. Looking performance and maximizing share- action to strengthen governance. ahead, we are confident we can holder return. Also, we divested our We paved the way for comprehensive CEO's letter Who we are maintain our momentum as we remain investment in Roche Holding AG, ESG oversight and changed the focused on operational excellence reflecting our strategy to create a leadership of the Compensation Our business environment focused medicines company. and science-based innovation. Committee and the Governance, Nomination and Corporate Responsi- Our stakeholders With more than 12 new drug approvals Acute pressure on societies and bilities Committee.

10 We also nominated by the US Food and Drug Administra- healthcare systems due to the COVID- a new Board member. Together with 2021 was another year of rapid change Our pipeline promises innovation for integrating our data and digital teams Materiality assessment tion in the past five years, we are 19 pandemic remains high. In this the Executive Committee, the Board for the biopharmaceutical industry and years to come. We have built depth in within Customer & Technology Our strategy committed to our long-term research challenging environment, our focus of Directors will continue the intensive the world. The pandemic continues to five therapeutic areas and are building Solutions to maximize efficiency as and development (R&D) strategy , on operational excellence and shift dialogue with all stakeholder groups disrupt care for patients across the scale in five next-generation technol- we scale value-driving projects.