Novartis International AG / Novartis delivers strong financial performance in second
quarter, underpinned by increased momentum in innovation processed and transmitted by
Hugin AS. The issuer is solely responsible for the content of this announcement.

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Double-digit growth in the second quarter with excellent contributions from all
divisions

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Net sales up 11% (+12% in constant currencies, or cc)to USD 11.7 billion; first half up
18% (+15% cc) to USD 23.8 billion

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Operating income grows 25% (+24% cc) to USD 3.0 billion; core operating income up 23%
(+23% cc) to USD 3.3 billion

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Core margin improves by 2.7 percentage points to 28% of net sales

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EPS up 18% (+17% cc) to USD 1.06; core EPS rises 14% (+14% cc) to USD 1.20

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Free cash flow before dividends up 24% (USD 2.4 billion); first half free cash flow up
54% to USD 5.3 billion

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Strong performance driven by continued portfolio rejuvenation and innovation

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Unanimous FDA Advisory Committee recommendation for FTY720 approval as therapy for
multiple sclerosis

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US approval of Tasigna as first-line therapy for chronic myeloid leukemia

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Group’s recently launched products contribute 21% of net sales (USD 2.4 billion); USD
5.5 billion for first half

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Oncology franchise showcased at ASCO with 170 abstracts highlighting investigational
uses of current therapies and new agents

Key figures

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Net sales 11 716 10 546 11 12 23 847 20 255 18 15
Operating income 2 961 2 364 25 24 6 472 4 711 37 33
Net income 2 437 2 044 19 18 5 385 4 019 34 29
EPS (USD) 1.06 0.90 18 17 2.34 1.76 33 28
Free cash flow[1] 2 368 1 916 24 5 271 3 422 54
Core[2]
Operating income 3 276 2 663 23 23 7 141 5 274 35 32
Net income 2 771 2 394 16 15 6 080 4 696 29 25
EPS (USD) 1.20 1.05 14 14 2.65 2.06 29 24

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[1] Before dividends

[2] Core results for operating income, net income and earnings per share (EPS) eliminate
the amortization of intangible assets, the impact of acquisition-related factors and
other significant exceptional items. See page 44 for further information.

Basel, July 15, 2010 – Commenting on the results, Joseph Jimenez, CEO of Novartis, said:
“I am pleased that Novartis once again delivered strong above-market, double-digit
growth in the second quarter of 2010. Our results were driven by our success in
innovation across the portfolio, as recently launched products comprised 21% of Group
sales. We are making great progress on all three strategic priorities of innovation,
growth and productivity.”

GROUP REVIEW

Second quarter

Novartis delivered a strong performance in the second quarter of 2010 – with the rapid
expansion of recently launched products and important regulatory approvals achieved for
new medicines – as the Group made progress on its agenda on innovation, growth and
productivity.

Net sales rose 11% (+12% cc) to USD 11.7 billion with currency movements depressing the
result by 1 percentage point. Rejuvenation of the portfolio continued with recently
launched products generating sales of USD 2.4 billion – 21% of total sales including
A(H1N1) pandemic vaccines. For the Group, volume grew by 12 percentage points, price was
a negative 1 percentage point and acquisitions contributed 1 percentage point.
Pharmaceuticals (USD 7.7 billion, +8% cc) advanced in all regions and maintained solid
volume growth. Vaccines and Diagnostics (USD 0.6 billion, +135% cc) achieved
considerable gains, including USD 0.2 billion from recognition of A(H1N1) pandemic
vaccine sales. Sandoz (USD 2.0 billion, +13% cc) grew on successful new product launches
and the contribution of EBEWE Pharma. All Consumer Health businesses (USD 1.5 billion,
+7% cc) had strong performances.

Operating income rose 25% (+24% cc) to USD 3.0 billion including 1 percentage point from
favorable currency movements. Operating income includes a pension gain of USD 265
million, offset by provisions for litigation and legal settlements of USD 231 million
and impairments of assets of USD 82 million. The operating income margin improved 2.9
percentage points to 25.3% of net sales from 22.4% in the 2009 period. Core operating
income, which excludes exceptional items and amortization of intangible assets in both
periods, rose 23% (+23% cc) to USD 3.3 billion, and the core operating income margin
rose 2.7 percentage points to 28.0% of net sales.

Earnings per share (EPS) increased 18% (+17% cc) to USD 1.06 while core EPS was up 14%
(14% cc) in the second quarter to USD 1.20.

First half

In the first half of the year, Novartis Group net sales rose by 18% (+15% cc) to USD
23.8 billion. Recently launched products generated sales of USD 5.5 billion, 23% of net
sales. Sales benefitted from 3 percentage points in currency movements. Volume grew by
16 percentage points, price was negative 2 percentage points and acquisitions
contributed 1 percentage point. All regions of our Pharmaceuticals organization advanced
(USD 15 billion, +8% cc) and maintained solid volume growth. Recognition of A(H1N1)
pandemic vaccine sales provided USD 1.3 billion for Vaccines and Diagnostics, which
achieved significant growth overall (USD 1.9 billion, +287% cc). Sandoz had a strong
first half and grew (USD 4.0 billion, +11% cc) due to the successful launch of new
products and the acquisition of EBEWE Pharma. All Consumer Health businesses (USD 3.0
billion, +7% cc) outperformed their markets.

Operating income rose 37% (+33% cc) to USD 6.5 billion including 4 percentage points of
favorable currency movements. Included in operating income is a one-time pension gain of
USD 265 million offset by litigation charges totaling USD 237 million and impairments
totaling USD 147 million. The first half of 2010 operating income margin improved 3.8
percentage points to 27.1% of net sales, up from 23.3% in the first half of 2009. Core
operating income, which excludes exceptional items and amortization of intangible assets
in both periods, rose 35% (+32% cc) to USD 7.1 billion. The first half of 2010 core
operating income margin rose 3.9 percentage points to 29.9% of net sales.

Earnings per share (EPS) in the first half of 2010 increased by 33% (+28% cc) to USD
2.34, while core EPS was up 29% (+24% cc) to USD 2.65 in the first half of 2010.

Delivering innovation, growth and productivity

Our above-market success in the second quarter of 2010 reinforces our focus on three
strategic priorities, which together enable us to deliver life-saving medicines for
patients and greater value for investors. These priorities are: (1) extending our lead
in innovation by focusing on diseases with significant unmet need and delivering
positive patient outcomes; (2) accelerating growth across all divisions through tailored
commercial models that leverage our broad portfolio and expansion in emerging markets;
and (3) driving productivity across our business to continue improving margins and
reinvesting for future growth.

By focusing on these three areas, Novartis achieved strong growth in the second quarter
despite challenges and volatility in the external environment. The diversity of our
portfolio and our capacity to innovate across it provides a degree of insulation from
dynamics such as the debt crisis and the increasing drive by governments toward
healthcare cost containment.

Novartis has continued to deliver above-market growth by capturing the opportunities of
rising global demand for medicines. At the core of this success is a sustained
commitment to innovation, which has resulted in breakthrough products across our
portfolio offering patients opportunities for improved health outcomes. Our ability to
thrive in a challenging environment is consistent with our goal of becoming the world’s
most successful and respected healthcare company.

Extending our lead in innovation

Consistent R&D investment, differentiated new medicines and an industry-leading number
of product approvals are the drivers of innovation at Novartis. We continue to
strengthen our pipeline and have 58 new molecular entities in development.

We are encouraged by the recent unanimous recommendation by the US FDA Advisory
Committee for approval of FTY720, an oral therapy for the treatment of multiple
sclerosis, a life-long debilitating disease affecting 2.5 million patients worldwide.
Clinical trials demonstrated the efficacy and safety of FTY720, with participants
showing reduced relapses and delayed disease progression.

Our oncology franchise continues to strengthen its competitive position – 170 abstracts
were presented at the American Society of Clinical Oncology (ASCO) meeting -
demonstrating the scale and breadth of our portfolio. Tasigna, our second drug under
priority review by the FDA this year, was approved for first-line treatment of newly
diagnosed chronic myeloid leukemia (CML), providing a major advance for patients with
blood cancer. At ASCO, we presented strong data that showed Tasigna surpassing Glivec in
slowing disease progression for newly diagnosed CML patients. Demonstrating the
potential efficacy of Afinitor against multiple cancers, a study presented at ASCO
showed successful reduction of benign brain tumors (subependymal giant cell
astrocytomas) associated with tuberous sclerosis in 75% of patients, which led to filing
in the US and priority review designation. Separate Phase III study data released July
1, 2010 showed that Afinitor more than doubles the time without tumor growth in advanced
pancreatic neuroendocrine tumor patients. Additionally, RADIANT 2, a placebo-controlled
Phase III study of Afinitor in combination with Sandostatin LAR versus Sandostatin LAR
alone in patients with advanced carcinoid tumors missed the primary endpoint by a very
small statistical margin (progression-free survival Hazard Ratio = 0.77 in favor of
Afinitor, p = 0.026 versus p=0.024 predefined). An imbalance in baseline between the two
treatment arms was observed and will be further investigated. Full data will be
discussed with the Health Authorities in the context of the upcoming submission. Another
key ASCO study demonstrated that the addition of Zometa to first-line chemotherapy
treatment improved survival by 16% for newly diagnosed patients with multiple myeloma.

Our research strategy utilizes a unique disease pathways approach that can lead to the
discovery of medicines effective across many therapeutic areas. This strategy generally
starts with small indications where the pathway is best characterized before branching
out into commercially larger fields. Consistent with this focused research strategy, new
Phase II data demonstrates that ACZ885, currently marketed as Ilaris for the rare
disease cryopyrin-associated periodic syndrome (CAPS), provided highly statistically
significant risk reduction of acute flares in gout patients compared to the
anti-inflammatory standard of care.

Sandoz continues to have success expanding its pipeline and portfolio of differentiated
products. In the second quarter, Sandoz completed the acquisition of Oriel Therapeutics,
providing exclusive rights to three promising projects for asthma and chronic
obstructive pulmonary disease (COPD) as well as access to their novel FreePath(TM) drug
delivery technology and Solis(TM) dry powder inhaler. Completion of the EBEWE
acquisition last year has also positioned Sandoz to play a leading role in the rapidly
growing market for generic oncology injectables.

Sandoz is the only generics company with 3 biosimilar products on the market providing
invaluable insight into the successful exploitation of this major strategic opportunity:
Zarzio, a treatment for low white blood cell count associated with chemotherapy
treatment or advanced HIV infection, which was most recently launched in France,
extending Sandoz’s presence in biosimilars; Omnitrope, a treatment for children and
adults with growth hormone deficiency, and Binocrit, a life-saving anemia medicine for
patients suffering from kidney failure or undergoing chemotherapy. Sales of biosimilars
grew by 66% in the second quarter.

In Vaccines and Diagnostics, we held positive discussions with the EMA regarding our
multi-component meningococcal B vaccine (MenB) submission and are on track for filing,
while in the US discussions with the FDA regarding the Phase III trial continue. MenB is
important for Novartis, as the global meningitis market is large (USD 1.1 billion) and
growing (expected to reach USD 2.7 billion by 2016). More importantly, the vaccine,
developed via Novartis’ pioneering “reverse vaccinology,” has the potential, when
approved, to fill a major unmet need for a broadly protective vaccine for children and
infants two months and older.

Accelerating growth

Our momentum in innovation will sustain growth, with 21% of Group sales coming from
recently launched products, already exceeding the anticipated loss of sales from
products whose patents will be expiring over the next few years. As these products and
the pipeline develop, the Novartis portfolio will increasingly become comprised of
specialty care medicines.

To continue to win in a challenging environment with new pricing pressures, we are
tailoring our commercial model and leveraging our broad portfolio to address the needs
of and provide value to customers and patients in each market. We are also developing
new ways of partnering with governments and large payors to realize shared objectives
and improved patient outcomes.
Pharmaceuticals grew 8% (+8% cc) in the second quarter – growth in volume was 9% with an
overall price effect of negative 1 percentage point. The rejuvenation of the product
portfolio continues strongly, with growth of recently launched products reaching USD 1.6
billion, representing 43% growth over the second quarter of 2009. In Europe, where
pricing pressures have been most intense, overall growth was 8 %, with volume gains of
12 percentage points demonstrating the quality of the new product portfolio.

Sandoz continued to build momentum in the second quarter, achieving robust double-digit
growth in constant currencies. Much of the global growth was due to strong performance
by the recent launches of losartanand metaxalone and the continued performance from
tacrolimus. We also had particularly notable success in the US this quarter, where
growth was up 37%, representing a significant turnaround from negative growth numbers in
2008. A key driver of growth for Sandoz was our ongoing global strength in biosimilars;
sales in the second quarter were up 66% over the previous year.
While global sales of (A)H1N1 vaccines are now largely complete, our vaccines business
is maintaining momentum with the launch of Menveo, a vaccine for meningococcal disease.
In the second quarter, Menveo gained access to a majority of public accounts in the US,
resulting in promising early uptake. In Europe, where Menveo is predominantly a travel
vaccine, the first positive policy recommendations were received within a few months of
approval. Additional approvals were achieved in Latin America and the first Asian
markets. Indication expansions are on track to further strengthen the brand in 2011.

The Novartis Consumer Health businesses continue to be driven by strong growth of key
brands. The Novartis Over-the-Counter (OTC) business unit generated positive growth with
pain medications including Voltaren, a treatment for joint and muscle pain, which in the
second quarter reached record market share as the second largest in the German OTC
market. The second quarter launch of Pantoloc Control in 11 European countries combined
with the Prevacid24HR achievement of a 25% share of the fast-growing proton pump
inhibitors (PPI) market segment with sales now annualizing in excess of USD 200 million,
will help further establish our gastrointestinal franchise. CIBA Vision, the
fastest-growing lens care business, continues its strong performance with AirOptix and
its expansion in all regions.

At the same time, all divisions are seeking to expand in emerging markets where growth
in the second quarter was 16%, with particularly strong performances in South Korea
(23%) and Russia (41%). In Russia, our Pharmaceuticals business experienced dynamic
performance (42%) in specialty areas and new launches. Sandoz in Russia has been a key
driver of generics growth in the second quarter (40%).

Driving productivity

In order to free up resources to improve margins and assure continued investment in
innovation and growth, we are focused on improving efficiency and reducing costs across
the whole business. Second quarter productivity initiatives added around 2 percentage
points of margin improvement, of which approximately half was reinvested. In Cost of
Goods Sold solid productivity improvements were made particularly in Sandoz and Consumer
Health, but were insufficient overall to offset the impact of price decreases and
inventory reductions. Good progress continues to be made with Sales & Marketing
productivity initiatives, especially in Pharmaceuticals, where productivity gains exceed
reinvestment.

Cash flow

The sustainability of our strategy lies with the generation of cash flow which provides
the resources for reinvestment and creates shareholder return. Free cash flow before
dividends generated in the quarter totaled USD 2.4 billion, an increase of 24% over the
previous year, and for the six months amounted to USD 5.3 billion, rising 54% over the
previous year.

Cash flow continues to be driven by increasing focus on the cash conversion cycle and
operational cash flow improvements. Cash flow from operating activities increased to USD
3.0 billion in the second quarter (25.2% of net sales and an increase of 13% over 2009)
and in the first half increased to USD 6.3 billion (26.3% of net sales and an increase
of 37% over 2009).

Alcon

We continue to make progress with the required regulatory approvals around the world. As
a result, closing of the acquisition of 77% majority ownership of Alcon could be
completed late in the third quarter or the fourth quarter of 2010. During the second
quarter, an expanded commercial paper program was put in place to complete the
preparatory steps for financing the acquisition.

2010 outlook

(Barring unforeseen events)

Based on the strong first half, we are raising our sales guidance for the full year.
Novartis expects to deliver constant currency Group sales growth at mid- to
high-single-digits (excluding Alcon). This expectation includes sales of A(H1N1)
pandemic flu vaccines, which, year over year, is broadly neutral to overall sales
growth.

Group operating margin and core operating margin are expected to increase in 2010
following continued business expansion and sustained productivity improvement. Sales of
(A)H1N1 vaccines added around 1.5 margin points in both 2009 and 2010.

Reported sales and operating profit are affected by the current volatility in exchange
rates. The impact of 2010 rates on sales in the first quarter was positive (+7%), the
second quarter impact was slightly negative (-1%) and if exchange rates remain where
they are for the remainder of the year the impact on the second half is expected to be
negative. Overall for the year a small negative impact is expected. As a result of the
natural hedging effect that partially exists between revenues and costs, the impact on
operating income of current rates, if they prevail for the remainder of the year, is
expected to be broadly neutral.

No account has been taken in these expectations for the acquisition of Alcon. Modeling
assumptions for the inclusion of Alcon will be clarified at the point of completion.

HEALTHCARE BUSINESS REVIEW

Pharmaceuticals

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Net sales 7 670 7 115 8 8 14 961 13 548 10 8
Operating income 2 337 2 213 6 5 4 664 4 275 9 6
As % of net sales 30.5 31.1 31.2 31.6
Core operating income 2 636 2 318 14 14 5 067 4 489 13 10
As % of net sales 34.4 32.6 33.9 33.1

Second quarter

Net sales

Net sales expanded 8% to USD 7.7 billion (+8% cc) driven by 9 percentage points volume
expansion, partly offset by government cost-containment measures in Europe and the
biannual price cut in Japan. Recently launched products provided USD 1.6 billion of net
sales in the 2010 period, representing 21% of net sales compared to 16% in the 2009
quarter. Products launched since 2007 – which include Lucentis, Exforge, Exelon Patch,
Exjade, Reclast/Aclasta, Tekturna/Rasilez, Tasigna, Afinitor, Onbrez Breezhaler, Ilaris
and Fanapt – grew by 43% compared to the same period last year.

All regions continued to benefit from the product portfolio rejuvenation, particularly
Europe (USD 2.7 billion, +8% cc), generating 27% of its net sales from recently launched
products. Volume growth in Europe was 12 percentage points with a negative price effect
of 4 percentage points due to recent government cost-containment measures. The US (USD
2.6 billion, +7% cc), as well as Latin America and Canada (USD 0.7 billion, +15% cc),
maintained solid growth rates. Japan performance (USD 0.9 billion, +8% cc) was driven by
strong momentum from the regulatory approvals of the 9 new medicines launched since
2009. The six top emerging markets (USD 775 million, +11% cc) were led by double-digit
gains in Russia, India and South Korea, more than offsetting the impact of recent
cost-containment measures in Turkey, as well as slower growth in China due to
stock-in-trade adjustments and the implementation of the new regional structure.

All therapeutic areas contributed to the business expansion. Oncology (USD 2.5 billion,
+11% cc), the largest franchise, was led by sustained growth of Gleevec/Glivec (USD 1.1
billion, +8% cc), Femara (USD 338 million, +10% cc), and Sandostatin (USD 312 million,
+11% cc), and important contributions from the recently launched products Exjade (USD
192 million, +11% cc), Tasigna (USD 89 million, +73% cc) and Afinitor (USD 55 million).
Cardiovascular and Metabolism (USD 2.0 billion, +8% cc) maintained strong momentum
supported by Exforge (USD 227 million, +37% cc), Tekturna (USD 103 million, +56% cc) and
Galvus (USD 90 million, +136% cc). Diovan sales (USD 1.6 billion, +1% cc) also held up
well, despite CozaarÒ generic entry in the US and the angiotensin II receptor blocker
(ARB) market slowdown in Japan. Neuroscience and Ophthalmics (USD 924 million, +17% cc)
saw rapid growth from Lucentis (USD 377 million, +29% cc) and Exelon Patch (USD 168
million, +41% cc).

Operating income

Operating income rose 6% (+5% cc) to USD 2.3 billion. The operating income margin of
30.5% of net sales declined by 0.6 percentage points, primarily impacted by litigation
charges of USD 178 million.

Core operating income grew 14% (+14% cc) to USD 2.6 billion. The core operating income
margin of 34.4% of net sales improved 1.8 percentage points compared to the same period
in 2009. Cost of Goods Sold (-0.7 percentage points) was impacted by lower fixed
overhead absorption, in addition to higher Lucentis royalties. R&D improved 0.7
percentage points, mainly driven by phasing of clinical trial activities. Marketing &
Sales expenses fell 1.1 percentage points to 28.5% of net sales and General &
Administration expenses improved by 0.2 percentage points, both benefiting from
continuing productivity efforts. Other Income & Expense improved by 0.5 percentage
points.

First half

Net sales

Net sales expanded 10% to USD 15.0 billion (+8% cc, driven by 9 percentage points volume
expansion). Recently launched products provided USD 3.1 billion of net sales in the 2010
period, representing 20% of net sales compared to 15% in the 2009 period.

Operating income

Operating income rose 9% (+6% cc) to USD 4.7 billion. The operating income margin of
31.2% of net sales was impacted by litigation charges of USD 178 million in the second
quarter, and in the first quarter by a PTZ601 impairment charge of USD 152 million, in
addition to the Famvir settlement with Teva which included an asset write-up of USD 100
million and an exceptional settlement gain of USD 42 million.

Core operating income grew 13% (+10% cc) to USD 5.1 billion. The core operating income
margin of 33.9% of net sales improved by 0.8 percentage points, including lower sales to
other divisions (-0.2 percentage points) as well as higher Cost of Goods Sold (-0.9
percentage points). R&D improved 0.7 percentage points, mainly driven by phasing of
clinical trial activities. Marketing & Sales expenses (+1.4 percentage points) and
General & Administration costs (+0.1 percentage points) were driven by continuing
productivity improvements. Higher net costs from Other Income & Expense (-0.3 percentage
points) were mainly due to the first quarter in the 2009 period benefiting from
provision reversals related to launch product inventories.

Pharmaceuticals product review

Cardiovascular and Metabolism

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Hypertension medicines
Diovan 1 552 1 533 1 1 2 994 2 935 2 0
Exforge 227 168 35 37 431 304 42 39
Tekturna/Rasilez 103 67 54 56 192 119 61 60
Subtotal 1 882 1 768 6 6 3 617 3 358 8 6
Galvus 90 39 131 136 166 65 155 152
Lotrel 71 86 -17 -17 144 169 -15 -15
Total strategic products 2 043 1 893 8 8 3 927 3 592 9 7
Mature products 277 346 -20 -20 572 677 -16 -18
Total 2 320 2 239 4 4 4 499 4 269 5 3

An expanding portfolio of high blood pressure medicines (USD 1.9 billion, +6% cc) has
enabled Novartis to continue to drive sales while increasing its leadership of the
global branded hypertension market segment, achieving a 15.9% share by April 2010
compared to 14.4% during the same period last year (Source: IMS Health). Single-pill
combinations based on valsartan (Diovan)and aliskiren (Tekturna/Rasilez)now provide over
half of these sales, reflecting the continuing shift toward use of combination
therapies.

Diovan(USD 1.6 billion, +1% cc) sales increased in the second quarter 2010 versus last
year. In the US, Diovan reached sales of USD 657 million (+0% cc), maintaining its
leadership of the ARB segment with a 40.03% share by April 2010 (+0.06 percentage points
compared to April year-to-date 2009; source: IMS Health). Diovan is the only medicine in
the ARB class approved to treat the three major cardiovascular indications: high blood
pressure, high-risk heart attack and heart failure. In April, Diovan gained approval of
a new indication from the European Commission for the treatment of children and
adolescents (ages 6 to 18) with high blood pressure.

Exforge (USD 227 million, +37% cc) maintained solid growth in the second quarter fueled
by continued geographic expansion and the launch of Exforge HCT, which adds a diuretic
in a single pill, in the US and Europe. Exforge, a single-pill combination of Diovan
(valsartan)and the calcium channel blocker amlodipine, has delivered consistent and
sustained growth since its launch in 2007.

Tekturna/Rasilez (USD 103 million, +56% cc) maintained a solid growth rate driven by
single-pill combinations Tekturna/Rasilez HCT and Valturna in the US. Tekturna/Rasilez,
the only approved high blood pressure therapy known as a direct renin inhibitor, was
also approved in China in April for use alone or in combination with other blood
pressure medications. Other single-pill combinations in development are a combination of
aliskirenand amlodipine, currently under regulatory review in the US and Europe,and a
triple-combination therapy with aliskiren, amlodipine and a diuretic, expected to be
submitted for US regulatory approval this year.

Galvus/Eucreas (USD 90 million, +136% cc),oral treatments for type 2 diabetes, delivered
very strong growth in many markets, particularly Spain, Greece, Germany, Portugal,
France, South Korea and India. Galvus was launched in Japan in April under the brand
name Equa.

Oncology

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Gleevec/Glivec 1 075 990 9 8 2 107 1 884 12 8
Zometa 378 359 5 6 753 701 7 5
Femara 338 310 9 10 682 596 14 13
Sandostatin 312 281 11 11 622 539 15 12
Exjade 192 173 11 11 371 295 26 23
Tasigna 89 53 68 73 164 88 86 84
Afinitor 55 11 nm nm 96 12 nm nm
Other 41 60 -32 -31 90 119 -24 -27
Total 2 480 2 237 11 11 4 885 4 234 15 13

nm – Not meaningful

Gleevec/Glivec(USD 1.1 billion, +8% cc) has sustained growth through continued expansion
in 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 GIST and has since
received approvals for this indication in more than 55 countries.

Tasigna (USD 89 million, +73% cc) has been growing rapidly through geographic and market
expansion with approvals in more than 80 countries as a second-line therapy for patients
with certain forms of CML resistant or intolerant to prior therapy including
Gleevec/Glivec. In June, following priority review, the US FDA approved Tasigna for the
treatment of adult patients with newly diagnosed CML in the chronic phase. Regulatory
submissions for Tasigna in first-line indication are underway worldwide, with
applications currently filed in the EU, Switzerland and Japan. Trials are also underway
examining the use of Tasigna in CML patients with suboptimal response to Glivec and in
patients with metastatic GIST.

Zometa(USD 378 million, +6% cc) expansion has 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. New data presented at ASCO showed that the
addition of Zometa to chemotherapy significantly improved overall survival by 16% (p =
0.0118) in newly diagnosed multiple myeloma patients. This survival advantage was also
observed in addition to, and independent of, the drug’s effects on skeletal related
events (SREs). The potential use of Zometa for adjuvant breast cancer in premenopausal
women is being reviewed by US and European regulatory authorities with feedback
anticipated by year end. Zoledronic acid, the active ingredient in Zometa, is also
available under the trade names Reclast/Aclasta for use in non-oncology indications.

Femara (USD 338 million, +10% cc) achieved ongoing double-digit growth on market share
gains in the US and other key markets, including Germany, France, Japan, the UK and the
Nordic countries. The US prescribing information for Femara was updated to include
long-term (73-month) follow-up data from the BIG 1-98 study comparing Femara with
tamoxifen in the initial adjuvant setting. The study confirmed a significant benefit for
Femara versus tamoxifen in reducing the risk of distant metastases and the overall risk
of breast cancer recurrence.

Sandostatin(USD 312 million, +11% cc) benefited from increasing use of Sandostatin LAR
in treating the symptoms of neuroendocrine tumors (NET).

Exjade(USD 192 million, +11% cc) has continued to expand with strong double-digit growth
on increased average dosing and improved adherence to therapy in the US and key markets
around the world. Exjade, currently approved in more than 100 countries as the only
once-daily oral therapy for transfusional iron overload, received regulatory approvals
in 2009 in the US, Europe, Switzerland and other countries, extending the dose range to
40 mg/kg.In June 2010, Exjade received regulatory approval in China.

Afinitor (USD 55 million) received priority review status by the US FDA for the
treatment of patients with subependymal giant cell astrocytomas (SEGA) associated with
tuberous sclerosis (TS). An FDA decision is expected by the end of the year with
regulatory submissions underway in TS in the EU. Regulatory filings are expected this
year in pancreatic neuroendocrine tumors (pNET) following data showing Afinitor met the
primary endpoint of progression-free survival in a Phase III study of pNET. RADIANT 2, a
placebo-controlled Phase III study of Afinitor in combination with Sandostatin LAR
versus Sandostatin LAR alone in patients with advanced carcinoid tumors missed the
primary endpoint by a very small statistical margin (progression-free survival Hazard
Ratio = 0.77 in favor of Afinitor, p = 0.026 vs p=0.024 predefined). An imbalance in
baseline between the two treatment arms was observed and will be further investigated.
Full data will be discussed with the Health Authorities in the context of the upcoming
submission. Afinitor, an oral inhibitor of the mTOR pathway, is an approved treatment
for advanced renal cell carcinoma (kidney cancer) following VEGF-targeted therapy.
Afinitor is also 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 Certican/Zortress for use in non-oncology indications.

Neuroscience and Ophthalmics

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Lucentis 377 294 28 29 741 523 42 35
Exelon/Exelon Patch 252 233 8 9 503 436 15 13
Comtan/Stalevo 150 138 9 9 291 261 11 9
Extavia 38 9 nm nm 58 12 nm nm
Other 107 118 -9 -10 232 235 -1 -5
Total strategic products 924 792 17 17 1 825 1 467 24 20
Mature products 149 150 -1 -3 282 281 0 -5
Total 1 073 942 14 14 2 107 1 748 21 16

Lucentis (USD 377 million, +29% cc) has maintained strong growth reflecting its position
as the only approved medicine to significantly improve vision in patients with wet
age-related macular degeneration (AMD). Two clinical studies recently confirmed rapid
and sustained improvement in vision with Lucentis in another debilitating eye condition,
visual impairment due to diabetic macular edema (DME), currently under regulatory review
in the EU. In the US, where Genentech holds the rights to Lucentis, the treatment of
macular edema following retinal vein occlusion (RVO) was approved in June. Novartis
plans to file for approval in this indication in the EU and other markets by the end of
2010.

Exelon/Exelon Patch (USD 252 million, +9% cc) has continued to grow based on increasing
demand for Exelon Patch, with the transdermal form of the medicine generating more than
67% of total Exelon sales in the second quarter compared to 52% 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 38 million) continued to grow from geographic expansion in 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
US in 2009, and since then has been approved in over 20 other countries.

Respiratory

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Xolair 90 79 14 18 170 140 21 20
TOBI 72 69 4 4 137 143 -4 -5
Onbrez 5 0 nm nm 8 0 nm nm
Other 1 2 nm nm 0 1 nm nm
Total strategic products 168 150 12 15 315 284 11 10
Mature products 40 43 -7 -5 89 96 -7 -11
Total 208 193 8 11 404 380 6 5

Xolair(USD 90 million, +18% cc) has continued to grow strongly in major European
countries and Latin America. In the US, Novartis co-promotes Xolair with Genentech and
shares a portion of the US operating income. In the first half of 2010, US sales to
Genentech were lower than in the same period of 2009 due to a change in ordering
processes. Xolair, a biotechnology drug for moderate to severe persistent allergic
asthma in the US and severe persistent allergic asthma in Europe, has approvals in more
than 80 countries. Plans to commence Phase III trials in China to support regulatory
submissions there remain on track for this year.

Onbrez Breezhaler (USD 5 million) has demonstrated strong performance following EU
approval and since first launching in late 2009 in Germany for adult patients with
chronic obstructive pulmonary disease (COPD). Onbrez Breezhaler has since been launched
in Ireland and Denmark in March 2010 with additional launches expected this year in 20
markets, including the UK, Spain, Brazil and Mexico. Regulatory submissions also are
planned this year in Japan and China. In the US, all clinical studies to support
resubmission continue on track with re-filing expected by year end.

Immunology and Infectious Diseases

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Neoral/Sandimmun 217 227 -4 -5 429 448 -4 -7
Reclast/Aclasta 142 115 23 23 265 200 33 31
Myfortic 108 90 20 18 208 163 28 22
Certican 36 27 33 33 70 50 40 35
Ilaris 6 0 nm nm 10 0 nm nm
Other 73 57 28 30 140 103 36 32
Total strategic products 582 516 13 12 1 122 964 16 13
Mature products 217 237 -8 -10 424 457 -7 -11
Total 799 753 6 5 1 546 1 421 9 5

Reclast/Aclasta (USD 142 million, +23% cc), the only once-yearly osteoporosis treatment
available in over 90 countries, maintained a steady pace of growth. Approved in up to
six indications worldwide, Reclast/Aclasta provides fracture protection to a broad
spectrum of patients ranging from those diagnosed with early bone loss to patients with
more severe forms of the disease and has been used in more than one million infusions.
It is also the only bisphosphonate proven to reduce fracture risk and mortality after a
low-trauma hip fracture. Zoledronic acid, the active ingredient in Reclast/Aclasta, is
also available under the trade name Zometa for use in oncology indications.

Certican/Zortress (USD 36 million, +33% cc) is now available in more than 80 countries
to prevent organ rejection in adult kidney transplantation, heart transplantation, or
both. In April, it was approved in the US under the brand name Zortress (everolimus) for
adult kidney transplantation. Everolimus is currently in two Phase III studies: heart
transplantation in the US, and a worldwide study for liver transplantation. Everolimus,
the active ingredient in Certican/Zortress, is also available under the trade name
Afinitor for use in an oncology indication.

Ilaris (ACZ885) (USD 6 million), is the first medicine to treat adults and children aged
four years and older suffering cryopyrin-associated periodic syndrome (CAPS), a group of
rare auto-inflammatory disorders that affect one in one million people. Ilaris
selectively blocks the inflammatory protein interleukin-1 beta. Following US and
European regulatory approvals in 2009, it is now approved in 40 countries to treat CAPS.
Two Phase III trials are underway studying ACZ885 in the treatment of acute flares
associated with gouty arthritis. Trials are also ongoing in other diseases in which IL-1
beta may play an important role, including type 2 diabetes and systemic juvenile
idiopathic arthritis (SJIA).

Vaccines and Diagnostics

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Net sales 564 247 128 135 1 925 494 290 287
Operating income -42 -167 75 72 797 -234 nm nm
As % of net sales -7.4 -67.6 41.4 -47.4
Core operating income 138 -45 nm nm 1 061 -36 nm nm
As % of net sales 24.5 -18.2 55.1 -7.3

nm – Not meaningful

Second quarter

Net sales

Net sales were USD 564 million for the second quarter (+135% cc) compared with USD 247
million in the prior period. Revenue of approximately USD 200 million was recognized in
the period relating to A(H1N1) pandemic flu contracts (mainly Japan and US Health and
Human Services), largely completing the campaign. Excluding the impact of A(H1N1)
pandemic, the business experienced strong growth (+46% cc) driven by the expansion of
the vaccines business in emerging markets and the first sales of Menveo in the US.

The launch of Menveo represents an important step in building a meningitis franchise.
MenB vaccine is on track to be filed in Europe by the end of 2010 and discussions
regarding the phase III trial continue with the FDA. Based on the unique reverse
vaccinology technology, MenB has the potential to address a major unmet need for a
protective vaccine especially in Europe, Australia, South America and Canada.

In April, Novartis signed a contract in Brazil forming a strategic partnership with
FUNED (Fundação Ezequiel Dias) to deliver MenC vaccines to children under the age of
two. In 2009 Novartis announced an agreement to acquire an 85% stake in the Chinese
vaccines company Zhejiang Tianyuan Bio-Pharmaceuticals Co., Ltd. The transaction is on
track for completion later in 2010.

Operating income

Operating loss was USD 42 million for the second quarter of 2010 (+72% cc) compared to a
USD 167 million loss for the second quarter of 2009, improved by the strong sales
performance. The quarter included an impairment charge of USD 71 million related to a
financial asset as well as a legal settlement which resulted in a final additional
charge of USD 45 million.

Core operating income for the period was USD 138 million compared to a core operating
loss of USD 45 million in the prior year.

First half

Net sales

Net sales were USD 1.9 billion for the first half of the year (+287% cc) compared to USD
494 million 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
the impact of A(H1N1) pandemic, the business showed strong growth (+22% cc).

Operating income

Operating income in the period was USD 797 million compared to an operating loss of USD
234 million in the year-ago period, driven substantially by contributions of A(H1N1)
pandemic vaccines.

Core operating income was USD 1.1 billion, driven by a strong sales performance, up from
a core operating loss of USD 36 million for the same period in 2009.

Sandoz

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Net sales 1 973 1 774 11 13 3 974 3 500 14 11
Operating income 289 247 17 16 599 538 11 7
As % of net sales 14.6 13.9 15.1 15.4
Core operating income 364 307 19 20 814 654 24 21
As % of net sales 18.4 17.3 20.5 18.7

Second quarter

Net sales

Sandoz accelerated its growth (USD 2.0 billion, +11%, +13% cc) versus prior year as 20
percentage points of volume expansion from new product launches, the inclusion of EBEWE
Pharma’s specialty generics business (contributing 5 percentage points in the quarter)
and continued strong results from the US, Canada, Russia, Italy, Japan and biosimilars
more than offset price erosion of 7 percentage points.

US retail generics and biosimilars (+43% cc) continued to deliver strong growth due to
successful recent first-to-market launches including tacrolimus, lansoprazole, losartan
and metaxalone. German retail generics and biosimilars (-5% cc) declined compared to the
prior year as a result of negative market growth driven by the impact of statutory
health insurance tenders, but Sandoz expanded its leadership position in the German
generics market. Emerging markets growth accelerated, particularly in Asia-Pacific (+25%
cc) and Central and Eastern Europe (+17% cc). Biosimilars (+66% cc) continued to
achieve strong momentum, with 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 17% to USD 289 million, as the operating income margin improved
0.7 percentage points to 14.6% of net sales. The lower improvement of the operating
margin as compared to the core operating margin increase of 1.1 percentage points
reflected one-time charges related to the termination of a co-development agreement and
purchase price accounting for EBEWE Pharma.

Core operating income rose 19% to USD 364 million, resulting in the core operating
margin increase of 1.1 percentage points to 18.4% of net sales including lower sales to
other divisions

(-0.9 percentage points), other revenues (+0.1 percentage points) and Cost of Goods Sold
increased 0.4 percentage points as price erosion, inventory write-offs and the impact of
increased sales of lower margin products more than offset continued Cost of Goods Sold
productivity improvements. Marketing & Sales costs (17.5% of net sales, +0.8 percentage
points) rose slower than sales due to productivity improvements, while fully funding
investments behind growing businesses. R&D costs (7.5% of net sales) decreased slightly
(+0.4 percentage points) as a percentage of sales as productivity savings funded the
continued investments in the development of differentiated generics, such as biosimilar,
oncological injectable and respiratory products. General & Administration costs (4.3% of
net sales, +0.8 percentage points) decreased due to ongoing cost-containment measures.
Other Income & Expense improved (2.1%, +0.3 percentage points) due to lower legal fees.

On June 1, Sandoz completed the acquisition of Oriel Therapeutics, a privately held US
pharmaceuticals company. The closure gives Sandoz rights to several promising
development projects, as well as to the novel FreePath(TM) drug delivery system and
Solis(TM) multi-dose dry powder inhaler. Regulatory approvals, if achieved, would
broaden access to affordable, high-quality respiratory medicines and further reinforce
Sandoz’s position as a leader in differentiated generics.

First half

Net sales

Sandoz achieved double-digit sales growth in the first six months (USD 4.0 billion,
+14%, +11% cc) versus prior year supported by strong growth in US retail generics and
biosimilars (+31% cc) and in emerging markets such as Central and Eastern Europe (+11%
cc), Asia-Pacific (+21% cc) and Middle East, Turkey and Africa (+10% cc). Sales volumes
expanded 18 percentage points due to new product launches, the inclusion of EBEWE
Pharma’s specialty generics business (contributing 5 percentage points in the half year)
and continued strong results from biosimilars more than compensating price erosion of 7
percentage points.

Operating income

Operating income in the first half grew 11% versus prior year to USD 599 million. The
operating margin declined by -0.3 points to 15.1% of net sales. The reduction of the
operating margin in the period as compared to the growth in core operating margin
reflected the acquisition-related charges for the EBEWE Pharma integration, one-time
charges for the termination of a co-development agreement and provisions for legal
settlements.

Core operating income rose 24% to USD 814 million, as the core operating margin improved
by 1.8 percentage points to 20.5% of net sales, including lower sales to other divisions
(-0.4 percentage points), other revenues (0.1 percentage points), and higher Cost of
Goods Sold (-0.2 percentage points). R&D costs decreased 0.7 percentage points as
productivity savings funded continued investment in the development of differentiated
generics. General & Administration costs decreased (0.8 percentage points) due to
ongoing cost reduction measures. Other Income & Expense were positive at 0.8 percentage
points.

Consumer Health

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Net sales 1 509 1 410 7 7 2 987 2 713 10 7
Operating income 294 271 8 10 558 506 10 7
As % of net sales 19.5 19.2 18.7 18.7
Core operating income 318 293 9 10 606 547 11 8
As % of net sales 21.1 20.8 20.3 20.2

Second quarter

Net sales

All three Consumer Health businesses – OTC, Animal Health and CIBA Vision – contributed
to higher net sales in the second quarter of 2010 versus prior year (USD 1.5 billion,
+7%, +7% cc), as the three businesses continued growing ahead of their respective
markets.

Pain medicines were key growth contributors in OTC. In the US, Excedrin and Triaminic
gained share as a result of successful advertising and promotional campaigns. In Europe,
Voltaren was the key growth driver. In Germany, Voltaren achieved a record 44% share in
the topical analgesic category and currently ranks as the second-largest brand in the
German OTC market.

Novartis OTC is strengthening its portfolio by building a gastrointestinal franchise in
the fast-growing PPI category. Prevacid24HR achieved a 25% year-to-date share of the US
PPI category, which has grown 39% this year. Pantoloc Control, a PPI to which Novartis
acquired European marketing rights in late 2009, was launched in 11 European markets in
the PPI category during the second quarter.

CIBA Vision continued its growth momentum, expanding in all regions, underpinned by new
product launches. In the US, AirOptix achieved a record 26% share of its category.

Novartis Animal Health is one of the fastest-growing companies in the market, mainly led
by strong performance in the US business. Interceptor and Sentinel gained market share
and strengthened their positions within the heartworm and flea categories. In Europe the
new Milbemax chewable formulation is leading growth.

In the US, the Consumer Health Division delivered strong performance (USD 0.5 billion,
+12%) and gained share, while in Europe (USD 0.6 billion, +5% cc) solid growth was
achieved, most notably in France, the UK and Germany. All top six emerging markets grew
and together achieved 26% (+19% cc) net sales growth.

Operating income

Operating income rose 8% (+10% cc) to USD 294 million with operating income margin
improving by 0.3 percentage points in the second quarter of 2010 to 19.5% of net sales
from the 2009 period.

Core operating income grew 9% (+10% cc) to USD 318 million, increasing the operating
income margin 0.3 percentage points in the second quarter of 2010 to 21.1% of net sales.
The core gross margin (68.0% of net sales, +1.0 percentage points) improved as a result
of productivity gains and product pricing. Marketing & Sales expenses (35.0% of net
sales, -0.4 percentage points), were higher than the prior year primarily driven by
promotional support for new product launches as well as sales force expansion across all
of the businesses. R&D (5.6% of net sales, +0.5 percentage points) remained largely
unchanged in US dollars to support product development across all Consumer Health
businesses. General & Administration costs (6.2% of net sales, +0.1 percentage points)
were largely unchanged versus prior year and Other Income & Expense (-0.1% of net sales,
-0.9 percentage points) rose as a result of a one-off provision reversal in 2009.

First half

Net sales

Sales grew 10% (+7% cc) to USD 3.0 billion and all Consumer Health businesses delivered
good growth, outperforming their respective markets.

OTC grew on the back of Prevacid24HR and Excedrin in the US and Voltaren in Europe.
Animal Health growth was mainly led by the strong performance of Interceptor and
Sentinel in the US and Milbemax in Europe. CIBA Vision grew in all regions led by new
product launches.

Operating income

Operating income rose 10% (+7% cc) to USD 558 million, with the operating margin stable
at 18.7% of net sales versus the same period in 2009.

Core operating income grew 11% (+8% cc) to USD 606 million, representing a faster pace
of growth than net sales. The operating income margin rose 0.1 percentage points to
20.3% of net sales versus the same period in 2009. Gross margin improvements from
productivity gains have been mostly reinvested to support the Prevacid24HR launch in the
US and sales force expansion across all businesses.

FINANCIAL REVIEW

Second quarter and first half

Q2 2010 Q2 2009 % change H1 2010 H1 2009 % change
USD m USD m USD cc USD m USD m USD cc
Net sales 11 716 10 546 11 12 23 847 20 255 18 15
Divisional operating income 2 878 2 564 12 12 6 618 5 085 30 26
Corporate income & expense, net 83 -200 nm nm -146 -374 nm nm
Group operating income 2 961 2 364 25 24 6 472 4 711 37 33
as % of net sales 25.3 22.4 27.1 23.3
Income from associated companies 158 124 27 27 261 207 26 23
Financial income 14 91 -85 nm 63 43 47 nm
Interest expense -175 -136 29 29 -308 -222 39 39
Taxes -521 -399 31 30 -1 103 -720 53 50
Net income 2 437 2 044 19 18 5 385 4 019 34 29
EPS (USD) 1.06 0.90 18 17 2.34 1.76 33 28
Core operating income 3 276 2 663 23 23 7 141 5 274 35 32
as % of net sales 28.0 25.3 29.9 26.0
Core net income 2 771 2 394 16 15 6 080 4 696 29 25
Core EPS (USD) 1.20 1.05 14 14 2.65 2.06 29 24

nm – Not meaningful

Second quarter

Net sales

Net sales rose 11% (+12% cc) to USD 11.7 billion with currency movements depressing the
result by 1 percentage point. Rejuvenation of the portfolio continued with recently
launched products generating sales of USD 2.4 billion – 21% of total sales including
A(H1N1) pandemic vaccines. For the Group, volume grew by 12 percentage points, price was
a negative 1 percentage point and acquisitions contributed 1 percentage point.
Pharmaceuticals (USD 7.7 billion, +8% cc) advanced in all regions and maintained solid
volume growth. Vaccines and Diagnostics (USD 0.6 billion, +135% cc) achieved
considerable gains, including USD 0.2 billion from recognition of A(H1N1) pandemic
vaccine sales. Sandoz (USD 2.0 billion, +13% cc) grew on successful new product launches
and the contribution of EBEWE Pharma. All Consumer Health businesses (USD 1.5 billion,
+7% cc) had strong performances.

Corporate income & expense, net

Corporate income & expense, which includes the costs of the Group headquarters and costs
for corporate research, was impacted in the second quarter by a pension curtailment gain
of USD 265 million. Excluding this, expenses were 9% below the previous year.

Group operating income

Operating income rose 25% (+24% cc) to USD 3.0 billion including 1 percentage point from
favorable currency movements. Operating income includes a pension gain of USD 265
million, offset by provisions for litigation and legal settlements of USD 231 million
and impairments of assets of USD 82 million. The operating income margin improved 2.9
percentage points to 25.3% of net sales from 22.4% in the 2009 period. Core operating
income, which excludes exceptional items and amortization of intangible assets in both
periods, rose 23% (+23% cc) to USD 3.3 billion, and the core operating income margin
rose 2.7 percentage points to 28.0% of net sales.

Income from associated companies

The increase in income from associated companies of 27% to USD 158 million in the second
quarter of 2010 was primarily driven by higher net income contribution from the Alcon
investment. Contributions from Alcon for the 2010 quarter amounted to USD 35 million
compared with USD 5 million for the previous-year period, whereas the result from the
Roche investment was USD 117 million compared with USD 112 million in the prior year
quarter. Core results, which exclude exceptional items and the amortization of
intangible assets in both periods, increased from USD 264 million to USD 299 million or
13% during the second quarter of 2010.

Financial income and interest expense

Financial income amounted to USD 14 million in the second quarter down from USD 91
million mainly attributable to lower returns on financial investments and currency
gains. Interest expenses increased from USD 136 million to USD 175 million due to the
most recent US dollar bond issue in March 2010.

Taxes

The tax rate (taxes as a percentage of pre-tax income) rose to 17.6% in the second
quarter from 16.3% in the 2009 period, principally due to a shift in the mix of profits
through the first half.

Net income

Net income rose 19% (+18% cc) to USD 2.4 billion. This was lower than the operating
income growth of 25% due to higher interest expense, lower financial income and higher
tax expense, partly offset by higher contributions from associated companies. Core net
income rose 16% (+15% cc) to USD 2.8 billion.

Earnings per share

Earnings per share (EPS) rose largely in line with net income to USD 1.06 in the second
quarter from USD 0.90 in the 2009 period, while core EPS grew 14% (+14% cc) to USD 1.20
from USD 1.05. The average number of shares outstanding rose 1% to 2,287.7 million from
2,263.3 million in the year-ago period, while a total of 2,287.5 million shares were
oustanding at June 30, 2010.

First half

Net sales

In the first half of the year, Novartis Group net sales rose by 18% (+15% cc) to USD
23.8 billion. Sales benefitted from 3 percentage points in currency movements. Recently
launched products generated sales of USD 5.5 billion, 23% of net sales. Volume grew by
16 percentage points, price was negative 2 percentage points and acquisitions
contributed 1 percentage point. All regions of our Pharmaceuticals organization advanced
(USD 15 billion, +8% cc) and maintained solid volume growth. Recognition of A(H1N1)
pandemic vaccine sales provided USD 1.3 billion for Vaccines and Diagnostics, which
achieved significant growth overall (USD 1.9 billion, +287% cc). Sandoz had a strong
first half and grew (USD 4.0 billion, +11% cc) due to the successful launch of new
products and the acquisition of EBEWE Pharma. All Consumer Health businesses (USD 3.0
billion, +7% cc) outperformed their markets.

Operating income

Operating income rose 37% (+33% cc) to USD 6.5 billion including 4 percentage points of
favorable currency movements. Included in operating income is a one-time pension gain of
USD 265 million offset by litigation charges totaling USD 237 million and impairments
totaling USD 147 million. The first half of 2010 operating income margin improved 3.8
percentage points to 27.1% of net sales, up from 23.3% in the first half of 2009. Core
operating income, which excludes exceptional items and amortization of intangible assets
in both periods, rose 35% (+32% cc) to USD 7.1 billion. The first half of 2010 core
operating income margin rose 3.9 percentage points to 29.9% of net sales.

Income from associated companies

For the first half of 2010 income from associated companies increased from USD 207
million to 261 million or 26%. The increase is attributable to higher contribution from
both major associated companies Alcon and Roche. Core results increased from USD 486
million to USD 587 million or 21% for the first half year, primarily due to USD 62
million of the increase relating to Roche and USD 50 million to Alcon.

Financial income and interest expense

Financial income increased by 47% from USD 43 million to USD 63 million mainly due to a
positive currency result (compared to a loss in the prior year). Interest expenses
increased by 39% to USD 308 million from USD 222 million in the prior-year period as a
result of the issuance of US dollar bonds in February 2009 and March 2010 and a euro
bond in June 2009.

Taxes

The tax rate (taxes as percentage of pre-tax income) rose to 17.0% in the first half of
2010 from 15.2% in the 2009 period. A significant part of this increase was due to sales
of A(H1N1) pandemic flu vaccines in higher-tax jurisdictions.

Net income

Net income rose 34% (+29% cc) to USD 5.4 billion which is slighly lower than operating
income growth of 37% as contribution increases from associated companies and financial
income were more than offset by increased interest and tax expenses. Core net income
rose 29% (+25% cc) to USD 6.1 billion.

Earnings per share

Earnings per share (EPS) rose largely in line with net income to USD 2.34 in the first
half from USD 1.76 in the 2009 period, while core EPS grew 29% (+24% cc) to USD 2.65
from USD 2.06. The average number of shares outstanding rose 1% to 2,282.8 million from
2,264.9 million in the year-ago period, while a total of 2,287.5 million shares were
oustanding at June 30, 2010.

Balance sheet

Total assets amounted to USD 96.9 billion at June 30, 2010, an increase of USD 1.4
billion compared to the end of 2009. Cash and marketable securities rose by USD 5.5
billion as a result of reinvesting proceeds from operations and the US dollar bond
issued in March 2010. Intangible assets rose by USD 1.0 billion from the acquisitions of
Corthera Inc. and Oriel Therapeutics Inc. US. These increases were partly offset by
reductions due to currency changes (USD 4.1 billion) and lower financial assets.

Total liabilities increased by USD 3.1 billion to USD 41.1 billion as higher financial
debts of USD 4.6 billion were partially offset by reductions in other liabilities. The
Group’s equity fell by USD 1.6 billion to USD 55.8 billion at June 30, 2010, principally
due to the dividend payment for 2009 of USD 4.5 billion (a 14% increase from the
dividend payment for 2008 of USD 3.9 billion), net actuarial losses from defined benefit
plans of USD 1.2 billion and translation losses of USD 1.9 billion. These were partially
offset by net income of USD 5.4 billion and USD 0.6 billion from equity-based
compensation and sale of treasury shares, respectively, in the first half of 2010.

The Group’s debt/equity ratio rose to 0.33:1 at June 30, 2010, compared to 0.24:1 at the
end of 2009, reflecting the higher financial debt following the issuance of the USD 5
billion bond in March 2010 and the lower equity. The Group’s financial debt of USD 18.6
billion consisted of USD 5.4 billion in current and USD 13.2 billion in non-current
liabilities. Overall liquidity rose to USD 23.0 billion from USD 17.4 billion at the end
of 2009. Net liquidity at June 30, 2010 increased to USD 4.4 billion from USD 3.5
billion at the end of the previous year.

Credit agencies maintained their ratings of Novartis during the first half of 2010.
Moody’s rated the Group as Aa2 for long-term maturities and P-1 for short-term
maturities, and Standard & Poor’s had ratings of AA- for long-term and A-1+ for
short-term maturities. Fitch had a long-term rating of AA and a short-term rating of
F1+.

Cash flow

Cash flow from operating activities rose 37% to USD 6.3 billion in the first six months,
driven by the strong performance and in particular proceeds from A(H1N1) pandemic
vaccines. Cash used for investing activities fell by USD 1.1 billion to USD 4.5 billion
from the 2009 period. This was due to lower investments in marketable securities which
amounted to USD 3.0 billion compared to USD 4.4 billion in the prior year period and
cash outflows for acquisitions of subsidiaries which increased from USD 31 million to
USD 499 million principally due to USD 305 million for completion of the EBEWE Pharma
acquisition and the initial payments for Corthera and Oriel Therapeutics totaling USD
194 million. The cash flow from financing activities of USD 1.0 billion included a USD
5.2 billion increase in net financial debt due to the 2010 US dollar bond issuance and
USD 0.3 billion arising from treasury share transactions, principally related to
share-based compensation, which were largely offset by the dividend payment of USD 4.5
billion.

Free cash flow before dividends rose 54% or USD 1.8 billion to USD 5.3 billion
principally as a result of improved cash flow from operating activities.

INNOVATION REVIEW

Novartis has one of the industry’s most competitive pipelines with 136 projects in
pharmaceutical clinical development, of which 58 involve new molecular entities.

Among developments in the second quarter of 2010:

*

The FDA approved Zortress (everolimus) for the prevention of organ rejection in kidney
transplant patients and Tasigna (nilotinib) for newly diagnosed chronic myeloid
leukemia. EU approval was received for Diovan in treating pediatric hypertension,
following a positive CHMP opinion in December 2009.

*

The FDA advisory committee unanimously recommended approval of FTY720 (fingolimod) as
treatment in relapsing remitting multiple sclerosis, the most common form of the
disease.

*

Submission for EU approval of a triple-medicine combination therapy for hypertension in
a single pill containing Tekturna/Rasilez, amlodipine and hydrochlorothiazide was
achieved in May, following the US submission in the first quarter. US submission of the
Afinitor dossier for approval in SEGA (subependymal giant cell astrocytoma) associated
with TS (tuberous sclerosis) achieved in April 2010.

*

EPO906 (ovarian cancer) was discontinued after a pivotal trial failed to achieve its
primary end point in the form of improved overall survival over current standard of care
(liposomal doxorubicin).

Q2 2010 selected major approvals: US, Europe and Japan

Product Active ingredient Indication Approval date
Certican Everolimus Kidney transplantation US – April
Diovan Valsartan Pediatric hypertension EU – April
Tasigna Nilotinib Newly diagnosed CML US – June

Selected projects awaiting regulatory decisions

Completed submissions
Product Indication US EU Japan News update
ABF656 Hepatitis C Q4 2009 – Dossier for ABF656 at once-every-two-weeks dosing was withdrawn in EU in April since additional information would be requested that could not be generated within required timeframe

– Dossier for ABF656 at once-every-two-weeks dosing continues under review in the US; the FDA provided preliminary comments to Human Genome Sciences on the potential risk/benefit of once-every-two-weeks dosing
Afinitor Tuberous sclerosis complex-subependymal giant cell astrocytomas Q2 2010 – FDA submission April and priority review; EU submission planned for 2010

– Phase II registration study data oral presentation at ASCO
Exelon Patch Alzheimer’s disease dementia Approved Approved Q1 2010
FTY720 Multiple sclerosis Q4 2009 Q4 2009 – FDA Advisory Committee unanimously recommended approval

– EU: D120 questions have been received on May 20; Responses to these questions are planned to be submitted on August 18

Lucentis Diabetic macular edema Q4 2009 – Phase III RESTORE data presented in May 2010 at the European Association for the Study of Diabetic Eye Complications

– Regulatory feedback expected in Q4 2010
QAB149 Chronic obstructive pulmonary disease Q4 2008 Approved – Clinical trials underway to address FDA Complete Response letter (October 2009); resubmission planned by end 2010
Tasigna Newly diagnosed chronic myeloid leukemia Approved Q4 2009 Q1 2010 – FDA approval received after priority review

– ENESTnd 18 month median follow-up oral presentation at ASCO

– ENESTnd 12 month median follow-up published in New England Journal of Medicine
Tekturna and amlodipline Hypertension Q4 2009 Q4 2009 – EU: Day 120 list of questions received in April 2010; CHMP opinion expected in Jan 2011 and approval in April 2011
Tekturna, amlodipine and Hypertension Q1 2010 Q2 2010 – EU submission achieved in May 2010

Hydro-chlorothiazide
TOBI-TIP Cystic fibrosis Q4 2009 – US submission planned for 2010
Zometa Adjuvant breast cancer Q4 2009 Q4 2009 – Regulatory feedback expected Q4 2010

Selected pharmaceutical pipeline projects

Project/ Compound Potential indication/ Disease area Planned submissions Current Phase News update
ACZ885 Refractory gout acute flares 2010 III – On track for 2010 submission

– Phase III data expected in Q3 2010
Systemic onset juvenile idiopathic arthritis 2011 III
Type 2 diabetes 2012 II
Afinitor Neuroendocrine tumors 2010 III – On track for 2010 submission

– RADIANT 3 study in pancreatic NET met primary endpoint

– Results of RADIANT 3 shared at World Congress of Gastrointestinal Cancer (WCGI) on July 1, 2010

– RADIANT 2, a placebo-controlled Phase III study of Afinitor in combination with Sandostatin LAR
versus Sandostatin LAR alone in patients with advanced carcinoid tumors missed the primary endpoint by
a very small statistical margin (progression-free survival Hazard Ratio = 0.77 in favor of Afinitor, p
= 0.026 versus p=0.024 predefined). An imbalance in baseline between the two treatment arms was
observed and will be further investigated. Full data will be discussed with the Health Authorities in
the context of the upcoming submission.
Tuberous sclerosis complex AML 2011 III
ER+ breast cancer 2012 III
HER2+ breast cancer 2013 III
Gastric cancer 2012 III
HCC (Hepatocellular cancer) 2013 III – Initiated Phase III study in Q2
Lymphoma ≥2014 III
AFQ056 Parkinson’s disease- L-dopa induced dyskinesia 2012 II
Fragile X syndrome 2012 II
AG0178 Major depressive disorder 2012 III – Sublingual Phase III program initiated May 2010
AIN457 Behcet’s uveitis 2010 III – On track for 2010 submission
Non-infectious uveitis 2011 III
Psoriasis 2013 II – Phase III start planned for 2011
Rheumatoid arthritis 2013 II – Phase III start planned for end of 2010
ASA404 2nd line non-small cell lung cancer 2012 III – Interim analysis in H2 2010
BAF312 Multiple sclerosis ≥2014 II – Phase II data expected in Q4 2010
Certican Prevention of organ rejection – liver 2011 III
DEB025 Hepatitis C 2013 II – Phase III start planned in Q4 2010
Exjade Non transfusion dependent Thalassemia 2011 II
HCD122 Hematological tumors ≥2014 I
INC424 Myelofibrosis 2011 III
LBH589 Hodgkin’s lymphoma 2010 II – On track for 2010 submission

– Updated Phase II pivotal study data oral presentation at ASCO and European Hematology Association
(EHA) congresses
Multiple myeloma 2013 III – Phase I data oral in combination with Velcade(TM) (bortezomib) presentation at ASCO
Hematological tumors ≥2014 II
LCQ908 Type 2 diabetes ≥2014 II – Phase II interim results expected in second half of 2010
LCZ696 Heart failure ≥2014 III
LDE225 Gorlin’s syndrome 2011 II
Lucentis Retinal vein occlusion 2010 III – EU submission on track for Q4 2010 (with Genentech Phase III data)
NVA237 Chronic obstructive pulmonary disease 2011 III
PKC412 Aggressive systemic mastocytosis 2011 II
Acute myeloid leukemia 2013 III
PRT128 Acute coronary syndrome 2013 II – First data from INNOVATE-PCI Phase II trial results to be presented at European Society of

Chronic coronary heart disease Cardiology in August 2010
– First Phase III start planned for H2 2010
PTK796 Complicated skin and soft tissue infections 2012 III
QAX028 Chronic obstructive pulmonary disease ≥2014 II – Results from a Phase IIa efficacy study are expected in H2 2010
QMF149 Chronic obstructive pulmonary disease 2013 II
Asthma 2013 II
QTI571 (Glivec) Pulmonary arterial hypertension 2011 III
QVA149 Chronic obstructive pulmonary disease 2012 III – Results from a Phase IIa efficacy study presented in late 2009

– Phase III started in April 2010
Project/ Compound Potential indication/ Disease area Planned submissions Current Phase News update
RLX030 Acute heart failure 2013 III
SBR759 Hyperphosphatemia 2011 III
SMC021 Osteoarthritis 2011 III – Waiting for data in H2 2010
Osteoporosis 2011 III – On track for 2011 submission.

– Two-year interim analysis expected end 2010
SOM230 Cushing’s disease 2010 III – On track for 2010 submission

– Phase III study met endpoint; results to be submitted for presentation at the 14th Congress of
the European Neuroendocrine Association
Acromegaly 2011 III
Refractory / resistant carcinoid syndrome 2011 III
Tasigna Gastrointestinal stromal tumor ≥2014 III
cKIT melanoma 2012 III – Phase III started in April 2010
TKI258 Solid tumors 2013 II

Selected vaccine pipeline projects

Project/ Compound Potential indication/ Disease area Planned submissions Current Phase News update
Menveo Prevention of meningococcal disease (serogroups A, C, Y and W-135) in infants 2011 (EU/US) III
MenB Multi-component vaccine for prevention of meningococcal disease (serogroup B) 2010 (EU) III – Awaiting Phase III results in EU (Q3/Q4) before progressing with Phase III in US

(meningococcal serogroups B)
Optaflu Seasonal influenza (cell culture subunit vaccine) 2011 (US) III
Fluad pediatric Seasonal influenza (subunit vaccine with MF59 adjuvant) 2010 (EU) III – Trial results to be published in Q3

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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 102,000 full-time-equivalent associates and operate
in more than 140 countries around the world. For more information, please visit
http://www.novartis.com http://www.novartis.com/ .

Important dates

October 21, 2010 Third quarter and first nine months 2010 results

November 17, 2010 Novartis Investor Business Update Meeting

January 2011 Fourth quarter and full-year 2010 results

All product names appearing in italics are trademarks owned by or licensed to Novartis
Group Companies.

Please find full media release in English attached and on the following link:

http://hugin.info/134323/R/1431809/378103.pdf

http://hugin.info/134323/R/1431809/378103.pdf

Further language versions are available through the following links:

German version is available through the following link:

http://hugin.info/134323/R/1431807/378101.pdf

http://hugin.info/134323/R/1431807/378101.pdf

French version is available through the following link:

http://hugin.info/134323/R/1431808/378102.pdf

http://hugin.info/134323/R/1431808/378102.pdf

HUG#1431809

Media release (PDF) http://hugin.info/134323/R/1431809/378103.pdf

— End of Message —