Novartis announces initiative to improve access to state-of-the-art anti-malarial treatment Coartem®

• Malaria strikes 300 million to 500 million people every year, the biggest killer of children in Africa - every 30 seconds a child in Africa dies of this disease
• Average cost per Coartem treatment reduced to USD 1.00 thanks to Novartis subsidy
• Novartis on track to deliver a record 50 million treatments by the end of October 2006 compared to four million in total in 2004
• Novartis has annual production capacity to provide up to 100 million Coartem treatments
• Coartem the only pre-qualified fixed-dose combination therapy for malaria, shown to have cure rates of up to 95%, even in areas of multi-drug resistance

Novartis announced today an immediate and significant reduction in the average price of its antimalarial medicine Coartem® for the public market by more than one-third to an average USD 1.00 per treatment in an effort to accelerate further access to this important malaria therapy in low-income regions, particularly Africa.

This devastating disease continues to be responsible for approximately one million deaths each year. Malaria disproportionately affects young children and adolescents in Africa, where a child is estimated to die of malaria every 30 seconds.

"The dramatic increase achieved in our production capacity, thanks to an improved supply situation for the natural ingredient artemisinin, provides us with an opportunity to further accelerate access to Coartem in combination with a price decrease," said Dr. Daniel Vasella, Chairman and CEO of Novartis.

"The compelling need for an inexpensive and highly effective malaria treatment, especially in low-income countries, prompted our decision to provide Coartem below our costs. I am very pleased that the WHO and other organizations such as UNICEF and Médecins Sans Frontières can now become even more effective in rolling back malaria," Dr. Vasella said.

The average price per treatment is now USD 1.00 compared to the prior level of USD 1.57. Novartis has been providing Coartem at no profit since 2001 in collaboration with the World Health Organization (WHO).

This price reduction is expected to have the greatest impact on children who are suffering disproportionately from malaria since they make up the majority of malaria patients. About 75% of all malaria patients taking Coartem are children and adolescents. Countries will now be able to treat twice the number of children under age five with the same amount of funds.

Novartis has undertaken the pharmaceutical industry's most aggressive manufacturing scale-up of its kind to ensure that supplies of Coartem meet demand. Novartis has invested heavily in expanding production capacity at state-of-the-art sites in Suffern, New York, and China.

Commitments have also been made to stimulate and develop a diversified supply base for raw materials and active ingredients from Africa and China. A significant technology transfer from Novartis to its Chinese partners helped enable development and production of Coartem in line with good manufacturing practices.

Deliveries for Coartem have steadily climbed over the last two years - from four million treatments in 2004 to well over 40 million treatments to date in 2006. Based on orders at hand, deliveries are expected to reach a milestone of 50 million treatments by the end of October 2006.

About malaria
About 300 million to 500 million new cases of malaria are estimated by experts to occur each year, resulting in over one million deaths annually, of which 90% occur in children in Africa. Malaria morbidity and mortality rates are rising in developing countries, largely due to the emergence of drug-resistant parasites that have rendered traditional antimalarial drugs, such as chloroquine and sulfadoxine-pyrimethamine (SP), ineffective.

In addition to the devastating toll malaria takes on human life, the disease has a substantial negative impact on the economic development of nations in which the disease is endemic. The drain on African economies alone is estimated to be USD 12 billion each year (WHO, 2000). The threat of malaria can be a serious deterrent to tourism, further hampering economic development and growth.

About Coartem
Coartem is the only pre-qualified, fixed-dose ACT combining artemether, an artemisinin derivative, and lumefantrine. It is a highly effective and well-tolerated antimalarial that achieves cure rates of up to 95%, even in areas of multi-drug resistance. It is indicated for the treatment of acute uncomplicated falciparum malaria, the most dangerous form of malaria.

Artemisinin is a compound derived from the sweet wormwood plant and has been used for centuries in traditional Chinese medicine to treat fever. An artemisinin-based combination therapy is a combination of two or more drugs (one of which is an artemisinin derivative) that have different modes of action and different targets. Studies have shown that using two or more drugs in combination has the potential to delay the development of resistance in areas of low transmission. Artemisinin-based combination therapies in particular have been found to be highly effective in treating malaria and their potential to delay resistance in areas of intense transmission is under investigation.

The supply chain for manufacturing ACTs is particularly complex and time-consuming. Artemether, one of the active ingredients in Coartem, is derived from artemisinin, which is the starting material for all ACTs. Artemisinin is a plant derived raw material and crops of Artemisia annua must be planted one growing season ahead of harvesting and extraction for use in production. The cultivation of Artemisia annua requires a minimum of seven months. The entire process of making Coartem takes approximately 14 months from planting of seeds to final production of the medicine.