Press Release: Novartis reports strong Q2 with double-digit sales growth and core margin expansion; raises FY 2025 core operating income guidance

Ad hoc announcement pursuant to Art. 53 LR

-- Q2 net sales grew +11% (cc1, +12% USD) with core operating income1 up

+21% (cc, +20% USD)

-- Sales growth driven by continued strong performance from Kisqali

(+64% cc), Entresto (+22% cc), Kesimpta (+33% cc), Scemblix (+79%

cc), Leqvio (+61% cc) and Pluvicto (+30% cc)

-- Core operating income margin1 reached 42.2%, +340 basis points

(cc), mainly driven by higher net sales

-- Q2 operating income grew +25% (cc, +21% USD); net income up +26% (cc,

+24% USD)

-- Q2 core EPS1 grew +24% (cc, +23% USD) to USD 2.42

-- Q2 free cash flow1 of USD 6.3 billion (+37% USD) driven by higher net

cash flows from operating activities

-- H1 net sales up +13% (cc, +12% USD) and core operating income up +24% (cc,

+21% USD)

-- Q2 selected innovation milestones:

-- Pluvicto Phase III PSMAddition study positive readout in PSMA+

mHSPC

-- Vanrafia (atrasentan) FDA accelerated approval for IgAN

-- OAV101 IT US and EU submissions for SMA

-- Votoplam Phase II PIVOT-HD study positive readout in Huntington's

disease

-- Remibrutinib Phase II study positive readout in food allergy

-- Initiating up-to USD 10 billion share buyback to be completed by year-end

2027

-- Full-year 2025 guidance2 raised for core operating income

-- Sales expected to grow high single digit (unchanged)

-- Core operating income expected to grow low teens (from low

double-digit)

1. Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 40 of the Condensed Interim Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2. Please see detailed guidance assumptions on page 7.

Basel, July 17, 2025 -- Commenting on Q2 2025 results, Vas Narasimhan, CEO of Novartis, said:

"Novartis delivered another strong quarter, with double-digit sales and core operating income growth. We continue to drive strong performance on our ongoing launches for Kisqali, Pluvicto, and Scemblix, demonstrating the replacement power in our portfolio. We also delivered important pipeline milestones including a third positive Phase III readout for Pluvicto in hormone-sensitive prostate cancer and global filings for OAV101 IT in SMA. Our robust balance sheet and confidence in our mid and long-term growth enable us to initiate an up-to USD 10 billion share buyback as part of our commitment to balanced capital allocation."

Key

figures

Q2 2025 Q2 2024 % change H1 2025 H1 2024 % change

USD m USD m USD cc USD m USD m USD cc

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

Net sales 14 054 12 512 12 11 27 287 24 341 12 13

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

Operating

income 4 864 4 014 21 25 9 527 7 387 29 33

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

Net income 4 024 3 246 24 26 7 633 5 934 29 31

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

EPS (USD) 2.07 1.60 29 32 3.91 2.91 34 37

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

Free cash

flow 6 333 4 615 37 9 724 6 653 46

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

Core

operating

income 5 925 4 953 20 21 11 500 9 490 21 24

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

Core net

income 4 710 4 008 18 19 9 192 7 689 20 22

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

Core EPS

(USD) 2.42 1.97 23 24 4.69 3.77 24 27

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

Strategy

Our focus

Novartis is a "pure-play" innovative medicines company. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies -- the US, China, Germany and Japan.

Our priorities

1. Accelerate growth: Renewed attention to deliver high-value medicines

(NMEs) and focus on launch excellence, with a rich pipeline across our

core therapeutic areas.

2. Deliver returns: Continuing to embed operational excellence and deliver

improved financials. Novartis remains disciplined and shareholder-focused

in our approach to capital allocation, with substantial cash generation

and a strong capital structure supporting continued flexibility.

3. Strengthen foundations: Unleashing the power of our people, scaling data

science and technology and continuing to build trust with society.

Financials

Second quarter

Net sales were USD 14.1 billion (+12%, +11% cc), with volume contributing 12 percentage points to growth. Generic competition had a negative impact of 2 percentage points, pricing had a positive impact of 1 percentage point, and currency had a positive impact of 1 percentage point.

Operating income was USD 4.9 billion (+21%, +25% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches and net expense from legal matters.

Net income was USD 4.0 billion (+24%, +26% cc), mainly driven by higher operating income, partly offset by higher net financial expense. EPS was USD 2.07 (+29%, +32% cc), benefiting from the lower weighted average number of shares outstanding.

Core operating income was USD 5.9 billion (+20%, +21% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches. Core operating income margin was 42.2% of net sales, increasing 2.6 percentage points (3.4 percentage points cc).

Core net income was USD 4.7 billion (+18%, +19% cc), mainly due to higher core operating income, partly offset by higher income taxes and net financial expense. Core EPS was USD 2.42 (+23%, +24% cc), benefiting from the lower weighted average number of shares outstanding.

Free cash flow amounted to USD 6.3 billion (+37% USD), compared with USD 4.6 billion in the prior-year quarter, driven by higher net cash flows from operating activities.

First half

Net sales were USD 27.3 billion (+12%, +13% cc), with volume contributing 14 percentage points to growth. Generic competition had a negative impact of 2 percentage points, pricing had a positive impact of 1 percentage point, benefiting from revenue deduction adjustments mainly in the US, and currency had a negative impact of 1 percentage point.

Operating income was USD 9.5 billion (+29%, +33% cc), mainly driven by higher net sales and contingent consideration adjustments, partly offset by higher investments behind priority brands and launches.

Net income was USD 7.6 billion (+29%, +31% cc), mainly driven by higher operating income, partly offset by higher income taxes and net financial expense. EPS was USD 3.91 (+34%, +37% cc), benefiting from the lower weighted average number of shares outstanding.

Core operating income was USD 11.5 billion (+21%, +24% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches. Core operating income margin was 42.1% of net sales, increasing 3.1 percentage points (3.7 percentage points cc).

Core net income was USD 9.2 billion (+20%, +22% cc), mainly due to higher core operating income, partly offset by higher income taxes and net financial expense. Core EPS was USD 4.69 (+24%, +27% cc), benefiting from the lower weighted average number of shares outstanding.

Free cash flow amounted to USD 9.7 billion (+46% USD), compared with USD 6.7 billion in the prior-year period, driven by higher net cash flows from operating activities.

Q2 priority brands

Underpinning our financial results in the quarter is a continued focus on key growth drivers (ranked in order of contribution to Q2 growth) including:

Kisqali (USD 1 177 million, +64% cc) sales grew strongly across

all regions, including +100% growth in the US with

strong momentum from the recently launched early breast

cancer indication as well as continued share gains

in metastatic breast cancer

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

Entresto (USD 2 357 million, +22% cc) sustained robust, demand-led

growth globally

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

Kesimpta (USD 1 077 million, +33% cc) sales grew across all

regions driven by increased demand and strong access

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

Scemblix (USD 298 million, +79% cc) sales grew across all regions,

demonstrating the continued high unmet need in CML

and continued strong momentum from the recently launched

early-line indication in the US

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

Leqvio (USD 298 million, +61% cc) continued steady growth,

with a focus on increasing account and patient adoption,

and continuing medical education

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