TIDM68CT 
 
 
 
   NOVARTIS FINANCE S.A. / Novartis delivered solid sales and profit growth 
in the first quarter of 2014; strong innovation reinforces growth 
prospects as company transforms portfolio . Processed and transmitted by 
NASDAQ OMX Corporate Solutions. The issuer is solely responsible for the 
content of this announcement. 
 
 
   -- Net sales of USD 14.0 billion up 1%[1] (+3% cc[2]) with all divisions 
      contributing to growth (cc); core operating leverage (cc) driven by 
      Pharmaceuticals and lower Corporate costs 
 
          -- Operating income of USD 3.5 billion (+22%, +31% cc), including a 
             USD 0.9 billion pre-tax gain from the divestment of the blood 
             transfusion diagnostics unit 
 
          -- Core[2] operating income of USD 3.7 billion (0%, +6% cc) 
 
          -- Core EPS of USD 1.31 (+1%, +6% cc) 
 
          -- Free cash flow[2] of USD 0.8 billion (-38%) 
 
 
   -- Progress in innovation, including key approvals, recommendations and 
      positive data 
 
          -- Xolair approved in EU and US for chronic spontaneous/idiopathic 
             urticaria (CSU/CIU) 
 
          -- Phase III trial of LCZ696 in chronic heart failure closes early 
             due to strength of interim results 
 
          -- Bexsero recommended for inclusion in UK's National Immunisation 
             Programme and received FDA Breakthrough Therapy designation in the 
             US 
 
          -- Acquired CoStim Pharmaceuticals to accelerate cancer immunotherapy 
             program and strengthen combination therapies 
 
 
   -- Portfolio rejuvenation continued, reinforcing our ability to grow through 
      patent expiries 
 
          -- Growth products[3] contributed USD 4.3 billion or 31% of Group net 
             sales (+17% USD) 
 
          -- Strong performance in Emerging Growth Markets[3] (+9% cc), led by 
             China (+17% cc) 
 
 
   -- Novartis announced portfolio transformation and shared services 
      organization 
 
          -- Portfolio review resulted in agreements with GSK and Lilly on 
             transformative transactions 
 
          -- Novartis Business Services intended to provide harmonized, quality 
             services at lower cost 
 
 
   -- 2014 Group outlook unchanged 
 
 
 
 
 
 
Key figures                    excluding Diagnostics[1]    Reported 
                   Q1 2014      Q1 2013        % change    Q1 2013 
                    USD m        USD m        USD     cc    USD m 
Net sales            14 022          13 879       1     3    14 016 
Operating income   3 489[4]           2 849      22    31     2 896 
Net income         2 968[4]           2 393      24    30     2 422 
EPS (USD)           1.21[4]            0.97      25    30      0.98 
Free cash flow          765           1 240     -38           1 298 
Core 
Operating income      3 657           3 651       0     6     3 714 
Net income            3 212           3 209       0     6     3 248 
EPS (USD)              1.31            1.30       1     6      1.32 
 
   [1] Changes from prior year based on pro forma 2013 data, excluding the 
blood transfusion diagnostics unit. See page 2. 
 
   [2] Constant currencies (cc), core results, and free cash flow are 
non-IFRS measures. An explanation of these non-IFRS measures and 
reconciliation tables can be found beginning on page 36 of the Condensed 
Interim Financial Report. 
 
   [3] Growth products are defined on page 2, and Emerging Growth Markets 
are defined on page 6. 
 
   [4] Includes the USD 0.9 billion pre-tax gain from the divestment of the 
blood transfusion diagnostics unit. 
 
   Basel, April 24, 2014 - Commenting on the results, Joseph Jimenez, CEO 
of Novartis, said: 
 
   "Novartis delivered a solid quarter, with all divisions contributing to 
growth. We made progress in innovation, including EU and US approval of 
Xolair in chronic spontaneous urticaria and significant milestones for 
Bexsero. The transformational deals announced on Tuesday position the 
company for future success based on our sharpened focus, innovation 
power and financial strength." 
 
   GROUP REVIEW 
 
   Strategy update 
 
   Subsequent to the quarter end, on April 22, Novartis announced that it 
had reached definitive agreements with GlaxoSmithKline plc (GSK) and Eli 
Lilly and Company (Lilly) on a set of transactions. 
 
   In an inter-conditional transaction with GSK: (1) Novartis agreed to 
acquire GSK oncology products and to become GSK's preferred 
commercialization partner for its oncology pipeline for a USD 14.5 
billion payment and up to USD 1.5 billion contingent on a development 
milestone; (2) Novartis and GSK agreed to create a world-leading 
consumer healthcare business in a joint venture of which Novartis would 
own 36.5%; and (3) Novartis divested its Vaccines Division (excluding 
flu) to GSK for up to USD 7.1 billion plus royalties. The USD 7.1 
billion consists of USD 5.25 billion upfront and up to USD 1.8 billion 
in milestones. In addition, Novartis agreed to divest its Animal Health 
Division to Lilly for approximately USD 5.4 billion. 
 
   These transactions are consistent with our strategy to lead through 
science-based innovation and would further accelerate our future growth. 
The acquisition of GSK oncology products would strengthen the 
Pharmaceuticals Division and Oncology business, leveraging its 
development and commercial capabilities. The creation of a world-leading 
consumer healthcare business with GSK would offer scale, complementary 
portfolios and complementary geographic footprint. The divestiture of 
Novartis Vaccines (excluding flu) to GSK would maximize the value of the 
Vaccines pipeline, including Bexsero, and create a global vaccines 
leader. The divestiture of the Animal Health Division to Lilly would 
recognize the full value of the business and an appropriate share of 
expected synergies, while creating a global animal health leader under 
Lilly's ownership. 
 
   These transactions would provide a strong financial proposition for 
Novartis. From year one after closing, we expect an improvement in 
growth rates of sales, core operating income and core operating income 
margin, with each component of the deals creating value. 
 
   All transactions are subject to closing conditions, including anti-trust 
approvals, and the GSK transaction is subject to approval by GSK 
shareholders. The transaction with Lilly is expected to close by the end 
of the first quarter of 2015 and the transaction with GSK is expected to 
close during the first half of 2015. 
 
   First quarter 
 
   Group net sales grew on strong execution of growth products[1] 
 
   Novartis completed the divestment of the blood transfusion diagnostics 
unit contained within its Vaccines and Diagnostics Division on January 
9, 2014. The former Vaccines and Diagnostics unit is now called the 
Vaccines Division, effective from January 1, 2014. The pro forma data 
contained within this release excludes, from January 1, 2013, the 
results of the blood transfusion diagnostics unit from the 2013 Novartis 
Group and Vaccines and Diagnostics divisional data.[2] All comparisons 
to prior year for Group and Vaccines are versus pro forma. 
 
   Group net sales increased 1% (+3% cc) to USD 14.0 billion in the first 
quarter. Currency had a negative impact of 2 percentage points, mainly 
due to the weakened yen and weakening emerging market currencies against 
the US dollar, partly offset by a stronger euro. Growth products 
contributed USD 4.3 billion or 31% of Group net sales, up 17% (USD) over 
the prior-year quarter. 
 
   Group operating income increased 22% (+31% cc) to USD 3.5 billion, 
mainly due to a USD 0.9 billion exceptional gain from the divestment of 
the blood transfusion diagnostics unit to Grifols S.A. The negative 
currency impact of 9 percentage points was mainly due to the further 
strengthening of the Swiss franc and weakening of the yen and emerging 
market currencies in the first quarter. Operating income margin 
increased by 4.4 percentage points to 24.9% of net sales. The 
adjustments made to Group operating income to arrive at core operating 
income amounted to USD 0.2 billion (2013: USD 0.8 billion). 
 
   Core operating income was USD 3.7 billion (0%, +6% cc). Core operating 
income margin in constant currencies increased 0.9 percentage points due 
to improved core margins in Pharmaceuticals and lower corporate costs; 
currency had a negative impact of 1.1 percentage points, resulting in a 
net decline of 0.2 percentage points to 26.1% of net sales. 
 
   Group net income of USD 3.0 billion was up 24% in reported terms, and up 
30% in constant currencies, largely due to higher operating income 
driven by the exceptional divestment gain and higher income from 
associated companies, offset by higher net financial expenses and higher 
income tax due to the exceptional divestment gain. EPS was up 25% (+30% 
cc) to USD 1.21 in line with net income. 
 
   Group core net income of USD 3.2 billion was stable in reported terms, 
but up 6% in constant currencies, from core operating income performance 
and higher income from associated companies, offset by higher net 
financial expenses. Core EPS increased 1% (+6% cc) to USD 1.31, in line 
with core net income. 
 
   The free cash flow of USD 0.8 billion was USD 0.5 billion below the 
prior-year quarter, mainly due to the unfavorable timing of tax and 
revenue deduction payments, as well as currency effects. 
 
   [1] "Growth products" comprise products launched in 2009 or later, or 
products with exclusivity until at least 2018 in key markets (EU, US, 
Japan) (except Sandoz, which includes only products launched in the last 
24 months). Previously, we had defined "growth products" as products 
launched in 2008 or later, or products with exclusivity until at least 
2017 in key markets. The new definition is used in all comparisons to 
prior year. 
 
   [2] The pro forma data does not purport to present what the actual 
results of operations would have been had the transaction actually 
occurred on January 1, 2013. Further details on the discontinuing 
operations classification will be provided during the second quarter of 
2014. 
 
   Pharmaceuticals net sales reached USD 7.8 billion (-1%, +1% cc) in the 
first quarter, with volume growth of 6 percentage points and a positive 
price impact of 1 percentage point mostly offset by the impact of 
generic competition (-6 percentage points, mainly for Zometa/Aclasta, 
which completed a full year of generic impact in the US). Quarterly 
volume growth was impacted by a slowdown of Gleevec/Glivec sales in the 
US. Growth products, including Gilenya, Afinitor, Tasigna, Galvus, 
Lucentis, Xolair, the Q Family[1] and Jakavi, together generated USD 3.2 
billion (+17% cc) or 41% of division net sales, compared to 35% in the 
prior-year period. 
 
   Operating income declined 13% (-7% cc) to USD 2.2 billion, mainly due to 
USD 252 million in net restructuring charges related to the US field 
force, the Suffern plant closure in the US and the redeployment 
initiatives announced in the first quarter, and additional restructuring 
initiatives outside of the US and Switzerland. Core operating income was 
USD 2.5 billion (-1%, +4% cc), mainly due to lower production costs 
offsetting the impact of increased royalties, primarily for Gilenya, and 
generic erosion. Core operating income margin in constant currencies 
increased 1.0 percentage points; currency had a negative impact of 1.2 
percentage points, resulting in a net decrease of 0.2 percentage points 
to 32.5% of net sales. 
 
   Alcon net sales were USD 2.6 billion (+3%, +6% cc) in the first quarter, 
with strong growth in the Surgical franchise tempered by moderate growth 
in Ophthalmic Pharmaceuticals. Surgical performance (+6%, +9% cc) was 
driven by equipment growth, due in part to Alcon's new cataract surgery 
phacoemulsification platform, the Centurion Vision System, and demand 
for other equipment platforms. Ophthalmic Pharmaceuticals (0%, +3% cc) 
had a high prior-year base for allergy, which was offset by continued 
growth in the dry eye category. Vision Care grew (+4%, +5% cc) as a 
result of robust sales in contact lenses, led by Dailies Total1. 
 
   Alcon operating income was USD 380 million (-8%, +3% cc). Core operating 
income was USD 925 million (-2%, +3% cc). Core operating income margin 
in constant currencies decreased by 0.9 percentage points mainly due to 
product mix; currency had a negative impact of 0.9 percentage points, 
resulting in a net decrease of 1.8 percentage points to 35.0% of net 
sales. 
 
   [1]The Q Family includes Onbrez Breezhaler/Arcapta Neohaler, Seebri 
Breezhaler and Ultibro Breezhaler. 
 
   Sandoz net sales increased 3% (+4% cc) to USD 2.3 billion, as volume 
growth of 14 percentage points more than compensated for 10 percentage 
points of price erosion. Asia (excluding Japan), Latin America and Japan 
delivered double-digit sales growth. Sandoz also continued to strengthen 
its leading position globally in biosimilars (USD 117 million, +23% cc). 
 
   Sandoz operating income increased by 12% (+21% cc) to USD 282 million, 
primarily driven by lower exceptional items. Core operating income 
declined by 10% (-6% cc) to USD 387 million. Core operating income 
margin in constant currencies decreased by 1.7 percentage points, mainly 
due to an unfavorable sales mix. Currency had a negative impact of 0.7 
percentage points, resulting in a net decrease of 2.4 percentage points 
to 16.7% of net sales. 
 
   Vaccines net sales were up 13% (+12% cc) on a pro forma basis to USD 215 
million for the first quarter, driven by the meningitis franchise, 
particularly Menjugate shipments to Latin America, strong Menveo sales, 
and the launch of Bexsero in several European private markets as well as 
Australia and Canada, which more than offset the strong late season flu 
sales from 2013 that were not repeated in 2014. Operating income was USD 
680 million for the quarter compared to a loss of USD 204 million in 
2013, driven by the USD 879 million exceptional gain from the divestment 
of the blood transfusion diagnostics unit to Grifols S.A. Core operating 
loss was USD 156 million compared to a loss of USD 161 million in the 
same period last year, primarily as a result of higher sales and other 
revenues, partially offset by continued investment in the R&D pipeline. 
 
   Consumer Health, which comprises OTC and Animal Health, saw net sales 
increase 5% (+8% cc) to USD 1.0 billion in the first quarter, driven by 
strong performance of key global brands and US product re-launches in 
both divisions. Operating income amounted to USD 41 million compared to 
USD 11 million in the prior-year quarter, as higher gross margin from 
incremental sales and lower restructuring expenses at the Lincoln 
manufacturing facility were partially offset by commercial investments 
behind the growth of key brands and product re-launches. Core operating 
income decreased 21% (+3% cc) to USD 60 million. Core operating income 
margin in constant currencies decreased by 0.4 percentage points, 
primarily due to small non-core brand divestments in the prior-year 
period; currency had a negative impact of 1.5 percentage points, largely 
driven by erosion of emerging market currencies, principally Russia, 
resulting in a net decrease of 1.9 percentage points to 5.8% of net 
sales. 
 
   Executing on innovation, growth and productivity 
 
   A consistent focus on three core priorities - innovation, growth and 
productivity - guides every aspect of our long-term strategy. In the 
first quarter, we made significant progress in each of these areas. 
 
   Innovation: Strong momentum across the portfolio continued in the first 
quarter 
 
   The first quarter saw continued pipeline progress with positive 
regulatory decisions and significant clinical trial data released. Key 
developments are included below. 
 
   New approvals and positive opinions 
 
 
   -- Xolair approved in EU and US for chronic spontaneous/idiopathic urticaria 
      Xolair (omalizumab) was approved in the EU and US as the first and only 
      licensed therapy for the up to 50% of patients with chronic spontaneous 
      urticaria (CSU, known as chronic idiopathic urticaria or CIU in the US) 
      who do not respond to approved doses of antihistamines. 
 
 
   -- Bexsero recommended for inclusion in National Immunisation Programme in 
      the UK; received FDA Breakthrough Therapy designation in the USThe Joint 
      Committee on Vaccination and Immunisation in the UK recommended routine 
      vaccination of infants with Bexsero to help protect against meningitis B 
      (MenB). The UK will introduce a nationwide vaccine campaign with Bexsero 
      as soon as possible, following the public procurement process. In the US, 
      Bexsero received FDA Breakthrough Therapy designation in April, after 
      Novartis provided nearly 30,000 doses of the vaccine in response to two 
      MenB outbreaks on US college campuses. Novartis plans to file for US 
      licensure of Bexsero as early as the second quarter of 2014, subject to 
      guidance from the FDA. 
 
 
   -- Lucentis approved in Japan for fourth indicationLucentis (ranibizumab) 
      was approved by Japanese regulatory bodies to treat patients with 
      diabetic macular edema (DME), a leading cause of vision loss in diabetes 
      patients. Lucentis is the first anti-VEGF therapy approved for DME in 
      Japan. 
 
 
   Regulatory submissions and filings 
 
 
   -- Novartis submitted revised filing dossier for RLX030 in acute heart 
      failure to CHMPNovartis submitted the re-examination dossier for RLX030 
      (serelaxin) for acute heart failure (AHF) to the CHMP following a 
      negative opinion in January 2014. In accordance with CHMP process, a 
      revised opinion could be issued by the end of May 2014. 
 
 
   -- Novartis to work with FDA on path forward for RLX030 in acute heart 
      failure The FDA's Cardiovascular and Renal Drugs Advisory Committee voted 
      against recommending approval of RLX030 for the treatment of AHF in the 
      US. The FDA is expected to provide a formal response in May on whether 
      RLX030 will receive a US license. 
 
 
   Results from important clinical trials and other highlights 
 
 
   -- LCZ696 trial in chronic heart failure closes early based on strength of 
      interim results The Data Monitoring Committee unanimously recommended 
      early closure of the Phase III PARADIGM-HF trial, indicating LCZ696 
      patients with chronic heart failure with reduced ejection fraction 
      (HF-REF) who received LCZ696 lived longer without being hospitalized for 
      heart failure than those who received standard care with ACE-inhibitor 
      enalapril. PARADIGM-HF is the largest ever trial of a heart failure 
      treatment. 
 
 
   -- Phase III study of Jakavi in polycythemia vera met primary endpoint 
      Pivotal trial results of Jakavi (ruxolitinib) showed improvement in two 
      key measures of disease control in patients with polycythemia vera, a 
      rare blood cancer with limited treatment options. Data will be presented 
      at an upcoming medical congress and submitted to worldwide regulatory 
      authorities this year. 
 
 
   -- LDE225 pivotal study in advanced basal cell carcinoma met primary 
      endpointResults from the Phase II trial showed that investigational oral 
      compound LDE225 (sonidegib) achieved clinically significant tumor 
      response in advanced basal cell carcinoma, including disappearance of the 
      tumor in some patients within six months of treatment. 
 
 
   -- AIN457 (secukinumab) showed high efficacy in two Phase III psoriasis 
      studiesResults from two pivotal Phase III studies in moderate-to-severe 
      plaque psoriasis showed that AIN457 demonstrated consistent high efficacy 
      when administered with convenient pre-filled syringe or autoinjector/pen, 
      meeting primary and secondary endpoints. Additionally, a new Phase IIIB 
      head-to-head study of AIN457 versus Stelara(R) (ustekinumab) initiated 
      patient enrollment. 
 
 
   -- LDK378 data in ALK+ NSCLC published in NEJM Clinical trial results 
      published in The New England Journal of Medicine (NEJM) showed that 
      LDK378 (ceritinib) achieved an overall response rate of 58% and a median 
      progression-free survival of seven months in adults with anaplastic 
      lymphoma kinase positive (ALK+) metastatic non-small cell lung cancer 
      (NSCLC). 
 
 
   -- Sandoz completed patient enrollment for Phase III biosimilar etanercept 
      trialPatient enrollment was completed in only eight months for the Phase 
      III trial of biosimilar etanercept (Enbrel(R)) in patients with 
      moderate-to-severe chronic plaque-type psoriasis. 
 
 
   -- Cancer immunotherapy research program accelerated with acquisition of 
      CoStimNovartis strengthened its competitive position in the field of 
      immune-oncotherapy with the acquisition of biotechnology company CoStim 
      Pharmaceuticals Inc. CoStim's novel immune modulating targets and 
      technology complement the investigative CART cell therapy technology 
      Novartis is already developing in collaboration with the University of 
      Pennsylvania. 
 
 
   Growth: Strong commercial execution and global presence continued to 
drive growth 
 
   In the first quarter, key growth drivers - including growth products 
like Gilenya, Afinitor, Tasigna, Galvus, Lucentis and Xolair, as well as 
Emerging Growth Markets and biosimilars - continued to demonstrate the 
strength of our portfolio across disease areas and geographies. 
 
   Growth products 
 
 
   -- Growth products contributed 31% of Group net sales in the first quarter, 
      up 17% (USD) over the previous-year quarter. In Pharmaceuticals, growth 
      products contributed 41% of division net sales in the quarter, up 17% in 
      constant currencies over the 2013 period. 
 
 
   Emerging Growth Markets 
 
 
   -- Net sales in our Emerging Growth Markets - which comprise all markets 
      except the US, Canada, Western Europe, Japan, Australia and New Zealand - 
      grew 9% (cc) on a pro forma basis, led by China (+17% cc). 
 
 
   Productivity: Continued focus on efficiency to improve margins 
 
   Ongoing productivity initiatives relate to procurement and resource 
allocation across the portfolio, as well as R&D, our manufacturing 
network and supporting infrastructure. Improving productivity and 
leveraging synergies across divisions will help us support the bottom 
line. 
 
 
   -- Novartis today announces the creation of a shared services organization, 
      Novartis Business Services (NBS), to improve profitability and free up 
      resources that can be reinvested in growth and innovation. NBS will 
      consolidate a number of business support services currently spread across 
      divisions, including IT, Financial Reporting and Accounting, Real Estate 
      & Facility Services, Procurement, Payroll and Personnel Administration 
      and the Pharmaceuticals Global Business Services. This move will allow 
      the divisions to focus more on customer-facing activities. Associates who 
      are in the divisions to be divested (Vaccines and Animal Health) or 
      involved in the consumer healthcare joint venture with GSK (Novartis OTC) 
      will be off-scope in relation to NBS activities. However, NBS will 
      continue to provide some existing services to these divisions prior to 
      closing of the transactions. Novartis has appointed André Wyss as 
      Global Head of NBS, a newly created Executive Committee position 
      reporting directly to CEO Joe Jimenez. Wyss has had a distinguished, 
      30-year career with Novartis as an operating executive in Europe, the US 
      and emerging markets. 
 
 
   -- We also generated savings of approximately USD 300 million in Procurement 
      in the first quarter by leveraging our scale. 
 
 
   -- In addition, we continued to optimize our manufacturing footprint with 
      the announced closure of our Pharmaceuticals manufacturing site in 
      Suffern, NY (USA) in January 2014 and the planned divestment[1] of our 
      pharmaceutical manufacturing site in Taboão da Serra (Brazil). We 
      have also announced the partial restructuring of our sites in Vacaville, 
      California (USA), and Larchwood, Iowa (USA) bringing the total number of 
      production sites that have been or are in the process of being 
      restructured or divested to 23. Related to this initiative, we recorded 
      exceptional charges of USD 65 million in the first quarter of 2014. This 
      brings total exceptional charges to USD 580 million cumulatively since 
      the program began in the fourth quarter of 2010. 
 
 
   In total, our productivity initiatives generated gross savings that 
contributed approximately USD 540 million in the first quarter, putting 
us on track to achieve our productivity target of 3-4% of net sales in 
2014. 
 
   [1] The signing of the transaction was announced on March 19, 2014. 
Closure of the transaction is subject to approval by relevant 
authorities. 
 
   Quality: Continued focus on quality remediation 
 
   The continued focus on quality system upgrades across the network is 
resulting in significant improvements. In the first quarter, a total of 
65 health authority inspections of manufacturing sites across the 
network were completed, 12 of which were conducted by the FDA. All were 
deemed acceptable or good. These outcomes validate the intense approach 
and emphasis on driving sustainable solutions that Novartis is taking to 
quality assurance. 
 
   Capital structure and net debt 
 
   Retaining a good balance between investment in the business, a strong 
capital structure and attractive shareholder returns will remain a 
priority in the future. Strong cash flows and a sound capital structure 
have allowed Novartis to focus on driving innovation, growth and 
productivity across its diversified healthcare portfolio, while keeping 
its double-A credit rating as a reflection of financial strength and 
discipline. 
 
   During the first quarter of 2014, 41.0 million treasury shares were 
delivered as a result of options exercised related to employee 
participation programs. Novartis aims to offset the dilutive impact of 
these programs on an ongoing basis and has so far repurchased 21.3 
million shares (USD 1.7 billion) on the SIX Swiss Exchange first trading 
line in the first quarter of 2014. In addition, Novartis repurchased 5.2 
million shares (USD 0.4 billion) on the second trading line in the same 
period under the announced share buy-back of USD 5.0 billion spread over 
two years. An additional 2.8 million shares were repurchased from 
employees. 
 
   During the first quarter of 2014, Novartis issued two bonds for a total 
amount of USD 4.0 billion split into maturities of 10 years (USD 2.15 
billion with a coupon of 3.4%) and 30 years (USD 1.85 billion with a 
coupon of 4.4%) under its debt shelf program in the US. The 4.125% 
coupon USD 2.0 billion bond issued in February 2009 was repaid at 
maturity in February 2014. 
 
   As of March 2014, the net debt stood at USD 13.5 billion compared to USD 
8.8 billion at December 31, 2013. The increase of USD 4.7 billion was 
driven by the dividend payment of USD 6.8 billion, share repurchases of 
USD 2.4 billion and other net cash outflow items of USD 0.4 billion. 
This was partially compensated by the free cash of USD 0.8 billion, the 
proceeds from options exercised of USD 2.4 billion and USD 1.7 billion 
divestment proceeds. 
 
   The long-term credit rating for the company continues to be double-A 
(Moody's Aa3; Standard & Poor's AA-; Fitch AA). 
 
   2014 Group outlook 
 
   Barring unforeseen events 
 
   Our outlook for full year 2014 remains unchanged. Group net sales in 
2014 are expected to grow at a low to mid-single digit rate (cc), after 
absorbing the impact of generic competition, which is expected to be as 
much as USD 2.7 billion compared to USD 2.2 billion in 2013[1]. Group 
core operating income is expected to grow ahead of sales (cc) in 2014. 
 
   If March average exchange rates prevail for the remainder of the year, 
the currency impact for the year would be negative 1% on sales and 
negative 4% on core operating income. 
 
   [1] This assumes, for forecasting purposes, that a Diovan monotherapy US 
generic launch will occur at the beginning of the third quarter of 2014. 
Outlook excludes the blood transfusion diagnostics unit in 2013 and 
2014. 
 
   Summary Financial Performance 
 
 
 
 
Group                               Excluding Diagnostics[1]    Reported 
                        Q1 2014      Q1 2013        % change    Q1 2013 
                         USD m        USD m        USD     cc    USD m 
Net sales                 14 022          13 879       1     3    14 016 
Operating income        3 489[2]           2 849      22    31     2 896 
 As % of net sales       24.9[2]            20.5                    20.7 
Core operating income      3 657           3 651       0     6     3 714 
 As % of net sales          26.1            26.3                    26.5 
 
 
 
 
Pharmaceuticals         Q1 2014  Q1 2013   % change 
                         USD m    USD m    USD   cc 
Net sales                 7 807    7 877     -1    1 
Operating income          2 221    2 539    -13   -7 
 As % of net sales         28.4     32.2 
Core operating income     2 539    2 573     -1    4 
 As % of net sales         32.5     32.7 
 
 
 
 
Alcon                   Q1 2014  Q1 2013   % change 
                         USD m    USD m    USD   cc 
Net sales                 2 642    2 566      3    6 
Operating income            380      412     -8    3 
 As % of net sales         14.4     16.1 
Core operating income       925      944     -2    3 
 As % of net sales         35.0     36.8 
 
 
 
 
Sandoz                  Q1 2014  Q1 2013   % change 
                         USD m    USD m    USD   cc 
Net sales                 2 318    2 259      3    4 
Operating income            282      251     12   21 
 As % of net sales         12.2     11.1 
Core operating income       387      431    -10   -6 
 As % of net sales         16.7     19.1 
 
 
 
 
Vaccines                           Excluding Diagnostics[1]    Reported 
                        Q1 2014     Q1 2013        % change    Q1 2013 
                         USD m       USD m        USD     cc    USD m 
Net sales                   215             190      13    12       327 
Operating income         680[2]            -204      nm    nm      -157 
 As % of net sales           nm              nm                      nm 
Core operating income      -156            -161       3     4       -98 
 As % of net sales           nm              nm                      nm 
 
 
 
 
Consumer Health         Q1 2014  Q1 2013   % change 
                         USD m    USD m    USD   cc 
Net sales                 1 040      987      5    8 
Operating income             41       11     nm   nm 
 As % of net sales          3.9      1.1 
Core operating income        60       76    -21    3 
 As % of net sales          5.8      7.7 
 
   [1] Changes from prior year based on pro forma 2013 data, excluding the 
blood transfusion diagnostics unit. See page 2. 
 
   [2] Includes the USD 879 million pre-tax gain from the divestment of the 
blood transfusion diagnostics unit. 
 
   nm - not meaningful 
 
   http://hugin.info/134323/R/1779399/608031.pdf 
   Novartis Q1 2014 Condensed Interim Financial Report - Supplementary Data 
 
 
 
 
INDEX                                                 Page 
GROUP AND DIVISIONAL OPERATING PERFORMANCE Q1 2014 
Group                                                    2 
Pharmaceuticals                                          4 
Alcon                                                   10 
Sandoz                                                  12 
Vaccines                                                13 
Consumer Health                                         14 
CASH FLOW AND GROUP BALANCE SHEET                       15 
INNOVATION REVIEW                                       17 
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
Condensed consolidated income statements                24 
Condensed consolidated statements of comprehensive 
 income                                                 25 
Condensed consolidated balance sheets                   26 
Condensed consolidated changes in equity                27 
Condensed consolidated cash flow statements             28 
Notes to condensed interim consolidated financial 
 statements, including update on legal proceedings      29 
SUPPLEMENTARY INFORMATION                               36 
CORE RESULTS 
Reconciliation from IFRS to core results                38 
Group                                                   39 
Pharmaceuticals                                         40 
Alcon                                                   41 
Sandoz                                                  42 
Vaccines                                                43 
Consumer Health                                         44 
Corporate                                               45 
ADDITIONAL INFORMATION 
Condensed consolidated changes in net debt / Share 
 information                                            46 
Free cash flow                                          47 
Net sales of the top 20 Pharmaceuticals products        48 
Pharmaceuticals sales by business franchise             49 
Net sales by region                                     50 
Currency translation rates/Income from associated 
 companies                                              51 
Pro forma information                                   52 
DISCLAIMER                                              54 
 
   Disclaimer 
 
   The foregoing release contains forward-looking statements that can be 
identified by words such as "prospects," "momentum," "pipeline," 
"outlook," "inter-conditional," "would," "subject to," "strategy," 
"expect," "ongoing," "to grow," "to work," "recommendations," 
"recommended," "breakthrough therapy," "expected," "will," "priority," 
"could," "planned," or similar terms, 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; potential shareholder returns or credit rating; or 
regarding the potential completion of the announced transactions with 
GSK and Eli Lilly, regarding potential future transactions regarding the 
Novartis flu vaccines franchise, or regarding potential future sales or 
earnings of any of the businesses involved in the announced transactions, 
or of the Novartis Group, and regarding any potential strategic benefits, 
synergies or opportunities as a result of the announced transactions; or 
by discussions of strategy, plans, expectations or intentions. You 
should not place undue reliance on these statements. Such 
forward-looking statements are based on the current beliefs and 
expectations of management regarding future events, and are subject to 
significant known and unknown risks and uncertainties. Should one or 
more of these risks or uncertainties materialize, or should underlying 
assumptions prove incorrect, actual results may vary materially from 
those set forth in the forward-looking statements. 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 any existing products 
in any market, or that any approvals which are obtained will be obtained 
at any particular time, or that any such products will achieve any 
particular revenue levels. Nor can there be any guarantee that the 
proposed transactions will be completed in the expected form or within 
the expected time frame or at all. Neither can there be any guarantee 
that Novartis will be able to realize any of the potential strategic 
benefits, synergies or opportunities as a result of the transactions. 
Nor can there be any guarantee that Novartis will enter into an 
agreement to divest its flu vaccines franchise in the future, or at any 
particular time.  Neither can there be any guarantee that Novartis or 
any of the businesses involved in the transactions will achieve any 
particular financial results in the future. In particular, management's 
expectations could be affected by, among other things, unexpected 
regulatory actions or delays or government regulation generally, 
including an unexpected failure to obtain necessary government approvals 
for the transactions, or unexpected delays in obtaining such approvals; 
the potential that the strategic benefits, synergies or opportunities 
expected from the transaction may not be realized or may take longer to 
realize than expected; the potential that the strategic benefits, 
synergies or opportunities expected from the divestment of our former 
blood transfusion diagnostics unit may not be realized or may take 
longer to realize than expected; the inherent uncertainties involved in 
predicting shareholder returns or credit ratings; the uncertainties 
inherent in research and development, including unexpected clinical 
trial results and additional analysis of existing clinical data; the 
Company's ability to obtain or maintain proprietary intellectual 
property protection, including the ultimate extent of the impact on the 
Company of the loss of patent protection and exclusivity on key products 
which commenced in prior years and will continue this year; unexpected 
manufacturing or quality issues; global trends toward health care cost 
containment, including ongoing pricing pressures; uncertainties 
regarding actual or potential legal proceedings, including, among others, 
actual or potential product liability litigation, litigation and 
investigations regarding sales and marketing practices, government 
investigations and intellectual property disputes; general economic and 
industry conditions; uncertainties regarding the effects of the 
persistently weak global economic and financial environment, including 
the financial troubles in certain Eurozone countries; uncertainties 
regarding future global exchange rates; uncertainties regarding future 
demand for our products; uncertainties involved in the development of 
new healthcare products; and other risks and factors referred to in 
Novartis AG's current Form 20-F on file with the US Securities and 
Exchange Commission. Novartis is providing the information in this press 
release as of this date and does not undertake any obligation to update 
any forward-looking statements as a result of new information, future 
events or otherwise. 
 
   All product names appearing in italics are trademarks owned by or 
licensed to Novartis Group Companies. Stelara(R) and Enbrel(R) are 
registered trademarks of their respective owners. 
 
   About Novartis 
 
   Novartis provides innovative healthcare solutions that address the 
evolving needs of patients and societies. Headquartered in Basel, 
Switzerland, Novartis offers a diversified portfolio to best meet these 
needs: innovative medicines, eye care, cost-saving generic 
pharmaceuticals, preventive vaccines, over-the-counter and animal health 
products. Novartis is the only global company with leading positions in 
these areas. In 2013, the Group achieved net sales of USD 57.9 billion, 
while R&D throughout the Group amounted to approximately USD 9.9 billion 
(USD 9.6 billion excluding impairment and amortization charges). 
Novartis Group companies employ approximately 135,000 
full-time-equivalent associates and sell products in more than 150 
countries around the world. For more information, please visit 
http://www.novartis.com. 
 
   Important dates 
 
 
 
 
June 17-18, 2014  Meet Novartis Management event in Switzerland 
July 17, 2014     Second quarter results 2014 
October 28, 2014  Third quarter results 2014 
 
   Please find full media release in English attached and on the following 
link: 
 
   http://hugin.info/134323/R/1779399/608104.pdf 
 
   Further language versions are available through the following links: 
 
   German version is available through the following link: 
 
   http://hugin.info/134323/R/1779401/608106.pdf 
 
   French version is available through the following link: 
 
   http://hugin.info/134323/R/1779400/608105.pdf 
 
   IFR (PDF): http://hugin.info/136453/R/1779496/608115.pdf 
   Media release (PDF): http://hugin.info/136453/R/1779496/608116.pdf 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: NOVARTIS FINANCE S.A. via Globenewswire 
 
   HUG#1779496 
 
   --- End of Message --- 
 
   NOVARTIS FINANCE S.A. 
 
   Posfach Basel 
 
   WKN: 904278;ISIN: XS0432810116;