Novartis Corporate Responsibility targets and results 2017

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1 Novartis Corporate Responsibility targets and results 2017 CR at Novartis CR priorities Target Explore outcomes-based business models for major diseases in at least 10 out of our top 25 markets (3 in 2016, 3 in 2017, 4 in 2018). Target achieved: In total, more than 30 outcome-based models and partnerships have been implemented in a variety of disease areas in at least 10 countries to achieve better value for patients, healthcare systems and Novartis. We have also worked on a groundbreaking collaboration with the Medicare & Medicaid Services (CMS) for our innovative CAR-T therapy, Kymriah. Expanding Access To Healthcare Social business models Launch Novartis Access in 30 countries and reach 20 million patients by the end of In 2016, introduce Novartis Access in five additional countries and file 400 submissions to prepare launch in 20 countries. Target on track: In 2017, Novartis Access signed Memoranda of Understanding with Pakistan, Uganda and Cameroon. In just two years, since the program s launch in 2015, we have delivered more than monthly treatments in four countries and have submitted 502 products in 24 countries. Equitable pricing models Initiate filing submission of approximately 50 local, affordable brands of existing medicines during , and launch approximately 45 affordable original brands of existing medicines in Target not achieved in 2017: As of December 2017 more than 35 local affordable brands have been launched across Africa, Asia, South America. Number of new launches have more than doubled in 2017 (26 new launches in 2017) versus launches in period (11 launches in ). 29 new submissions filed in 2017 shows our commitment to the local affordable brand strategy and planned increase in number of new launches in 2018.

2 Zero-profit models By 2017, complete one pilot of SMS For Life 2.0 involving at least 300 healthcare facilities and initiate additional pilots in at least two countries in sub- Saharan Africa. Pilots are to deliver training on medicine stock management as well as disease surveillance to healthcare workers via tablet computers. Target not achieved in 2017: In Kaduna State, Nigeria, the pilot implementation was completed with deployment to 251 primary health facilities in 2017; the full administration is with Kaduna State. In December 2017, SMS for Life 2.0 was rolled out to 33 healthcare facilities in Zambia with the aim of reaching 500 healthcare facilities during Disease elimination By 2020, demonstrate that the transmission of leprosy and malaria can be interrupted, and the new interventions pioneered by the Novartis Foundation and partners can be integrated into national programs. Pioneer Targeted Parasite Elimination in Namibia to build the knowledge to shrink the malaria map by Target on track: The Targeted Malaria Parasite Elimination trial, supported by the Novartis Foundation, was completed in 2017 and final data are currently being analyzed. An evaluation will be available in With regard to leprosy elimination, implementation of the Leprosy Post-Exposure Prophylaxis (LPEP) Program is on track. Engagement with countries to integrate LPEP into their national leprosy program strategies is ongoing. École polytechnique fédérale de Lausanne (EPFL) and the Novartis Foundation have successfully concluded a collaboration for the optimization, development and performance validation of a quantitative molecular diagnostic test (quantitative PCR) using the leprosy-specific repetitive element (RLEP) gene. Novartis Foundation and the Philippines Department of Health Leprosy Task Force have supported and successfully generated evidence on the accuracy of the digital health tool LEARNS to guide the local integration, uptake, scale-up and sustainability in the country. Phase 1 and 2 evaluations are completed, and finalization of the toolkit was completed by the end of Target on track: The Targeted Parasite Elimination trial was completed in 2017 and final data are currently being analyzed. An evaluation will be available in 2018.

3 Intensify the fight against leprosy by demonstrating the feasibility of an innovative approach toward zero transmission of leprosy in several sites across Asia, Africa and Latin America; and by continuing to provide free multidrug therapy (MDT) to all leprosy patients through WHO by Target on track: Target on track: All LPEP (leprosy post-exposure prophylaxis) program country sites are launched, with implementation on track in Indonesia, India, Nepal, Myanmar, Tanzania, Sri Lanka, Cambodia and Brazil. Seven countries are high endemic and one country is low endemic (Cambodia). Progress toward the overall target number of screened index cases and contacts is on track. The dissemination of an interim analysis was submitted to the 2017 European Congress for Tropical Medicine and International Health in October and at COR-NTD 2017 and the LPEP annual meeting 2017 in November. Engagement with countries to integrate LPEP into national leprosy program strategies is ongoing. In 2017, 227,040 patients have received multidrug therapy free of charge. Health system strengthening By 2025, develop and validate at least one innovative healthcare delivery model that addresses the double burden of disease in underserved populations and contributes to the WHO goal of 25% reduction in noncommunicable diseases (NCDs) mortality by Develop roadmap in Ghana for nationwide scaling of telemedicine project, in expansion phase to reach national scale by 2017 by inclusion in Ghana Health Services. By 2017, address large burden of hypertension in Ghana to test a community-based model using information communication technology (ICT) to enhance capacity of private sector, Ghana Health Service (GHS) and individuals. Target on track: Two innovative healthcare delivery models are being implemented: The Telemedicine project and the Community-based Hypertension Improvement Project (ComHIP) in Ghana. Both projects are making progress toward integration into the existing Ghana Health Service system. Target achieved: Novartis Foundation and Ghana Health Services have been in direct partnership since Q National stakeholder meetings have taken place and a national Telemedicine Working Group was created to best engage national telecom and insurance groups. The training of the trainers for 5 regions with operational Telemedicine Consultation Centers took place in October. A new Accra Telemedicine Consultation Center is expected to be installed in January In 2018, almost 6 million people in Ghana are expected to be covered by telemedicine services. Full national coverage of telemedicine services is planned to be possible by Target achieved: Baseline results for the Community-based Hypertension Improvement Project (ComHIP) were accepted and published in the BioMed Central of April Discussions with the Eastern Regional Director have been initiated to identify an additional district for the scale-up of the ComHIP program.

4 By 2017, provide recommendations on developing digital health strategies for the sector, including key publications to give guidance on policy and programmatic implementation when incorporating information communication technology (ICT)/digital health in low and middle-income countries (LMICs). Sign collaborative agreements with governments at a Federal / Regional level or with key institutions in key countries in Latin America to drive investment for the respective country and elevate health-related efforts for its citizens in order to position Novartis as trusted/strategic partner. The focus for is to manage the progress and results of current agreements signed in the region (e.g. Mexico) and explore developing similar initiatives in other countries. Build alliance called Pacientes Todos (We re all Patients) with other pharmaceutical companies to develop a holistic approach for capacity building for patient advocacy groups (PAGs) in Latin America (through an online platform and local/ regional workshops) in 4 countries by Capability building includes workshops on sustainability of the organizations & funding, communication strategy, advocacy and ultimately implementing learnings through a key advocacy initiative. Target achieved: The Broadband Commission Working Group, co-chaired by the Novartis Foundation, published the report Digital Health: A call for Government Leadership and Cooperation between ICT and Health. The report was presented at the Mobile World Congress in February 2017, in Barcelona. Several international and regional events were leveraged since then in order to promote and disseminate the report and its recommendations. Target achieved: Novartis signed a Memorandum of Understanding (MoU) with the Ministry of Health of Argentina, focused on Chagas disease, innovation and digital, and R&D. An MoU was also signed with the City of Quito, Ecuador. Novartis Brazil has formed a Heart Failure League to help support hearth failure patients. In Colombia, Novartis is supporting the collaboration with the Colombian agency of Health Technology Assessment (HTA), the Instituto de Evaluación Tecnológica en Salud (IETS), on HTA reform via the industry association. In Mexico, there are many activities ongoing governing key account collaborations. Beyond this, Novartis is currently exploring possible signing of MoUs in Panama, Guatemala and El Salvador. Target not achieved by 2017: The current focus is to change this strategy from being led by Novartis to having it led by the regional industry association for Latin America (FIFARMA). There is initial buy-in by member companies, and the focus is to now develop an action plan for Research & Development Assess safety and efficacy of anti-malarial development compounds KAE609 and KAF156 as treatment and prevention of malaria, considering existing and new combination partners. Target on track: Phase 2b clinical trial testing the combination of KAF156 with Lumefantrine Solid Dispersion Formulation is underway, with First Patient First Visit achieved early August 2017 in Mali. Dose-escalation safety profiling study with KAE609 was initiated in November 2017.

5 By 2019, continue to develop key clinical compounds, such as clofazimine to treat drug resistant tuberculosis and make successful compounds available at affordable costs in developing world countries where the diseases are endemic. Target on track: Discussions with health authorities and the WHO to identify key impacted countries and how to meet their needs in implementing updated WHO treatment guidelines on drug-resistant tuberculosis are ongoing. We have made progress in identifying suitable reference countries for registration of clofazimine. Activities are on schedule. Doing Business Responsibly People By the end of 2019, globally apply a competencybased learning for all our associates to help significantly improve the impact for each learning experience. Target on track: The Novartis Competency Architecture continues to be embedded, with adoption as part of the UP4Growth program. Work is ongoing on a supporting Knowledge and Skills framework that aims to reduce duplication across the company and support improved access to targeted learning interventions. Health, safety and environment In 2017, record zero Serious Injury or Fatality cases (SIFs). Target not achieved for 2017: We recorded a SIF (Serious Injury and Fatality) case in August Hazardous and Non Hazardous waste efficiency (Intensity per Production): improve efficiency of nonrecycled total operational waste per production, based on 2010, by 30% by Target achieved: The total operational hazardous and non-hazardous waste that was not recycled, per production intensity for 2017, is 31.3% below the baseline year Efforts have been ongoing at sites to reduce operational waste. The most impressive results were from our Alcon Johns Creek manufacturing site, where production processes were improved to recycle hazardous waste solvent streams in place of incineration, resulting in a 76% reduction in total non-recycled operational waste per production vs Overall, the target was achieved in Q Novartis is committed to maintaining this achievement and working to exceed the established 2020 target.

6 Reduce total GHG emissions (total Scope 1 and Scope 2 GHG emissions), including carbon offsets, based on 2010: - 30% in % in 2030 Target on track: 2016 performance data of total reduction in GHG emissions shows progress since last year of -19.5% versus the 2010 baseline, including sinks from forestry projects. We remain on track to achieve the 30% reduction target, as accelerated reductions are expected in 2018 and 2019 via offsite renewable power purchase agreements that are finalized or in negotiation. Keep Drug Substance effluents from Novartis manufacturing sites 10-fold below predicted no-effect limits (PNEC): Complete assessment of Drug Substance effluent loads from all sites in 2016 Work with divisional TechOps and sites in to reduce loads with mitigation measures, where needed, to ensure limits are not exceeded Conduct assessments to fully quantify organizational and product environmental footprint in and implement actions with Procurement to reduce the footprint from Target on track: The current results from the annual effluent risk assessment in 2017 show that 43% of reporting sites are already fulfilling the 2020 target, and that another 37% have not yet fulfilled the 2020 target and remedial actions are planned, where applicable. The remaining 20% of sites have yet to complete their effluent risk assessment to determine risk in receiving surface water, per the planned activities in the HSE&BCM 2017 Plan. Target on track: Compared to the previous two years, a more sophisticated ESCHER 2017 assessment on Carbon and Water Footprint of our direct material and indirect services was performed. The input enables Novartis to report more completely and accurately on the Scope 3 emissions according to the categories laid out in the GHG Protocol. A total of 6 out of the 15 categories were identified as relevant to Novartis. For 3 of these categories (purchased goods & services, upstream transportation & distribution, capital goods) which are responsible for > 90% of our Scope 3 emissions, the accuracy and completeness of the data were improved. In addition, the environmental impact analysis which quantifies all environmental externalities for Novartis was refined and updated providing more transparency and consistency regarding the underlying data. A primary data collection was performed in 2017 as a pilot. Key suppliers were engaged (focusing on API suppliers as well as Finished Drugs and Logistics) across multiple regions and countries through the reputable CDP program. Through this program, we successfully engaged our value chain partners and gained valuable insights regarding opportunities for future collaboration and improvement of our joint environmental performance.

7 By 2020, fully embed Serious Injury and Fatality prevention programs at site level with all identified actions in regards to safety control closed and fully embed contractor safety management standards across the Novartis group. Target on track: The new Novartis HSE&BCM Manual was released on September The manual describes the Novartis HSE&BCM Management System, establishes high-level expectations and operating requirements for the management of HSE&BCM hazards, aspects, risks and opportunities, and outlines roles and responsibilities for key groups and functions across our businesses. Three new HSE&BCM global operating procedures focusing on Serious Injury and Fatality (SIF) prevention were released as part of the new HSE&BC Management System: Confined Spaces; Hazardous Energies and Working at Height. In addition, a Contractor Safety Initiative linked with Third-Party Risk Management (TPRM) Project will ensure adequate evaluation, awarding and onboarding process of contractors.