Frequently Asked Questions

Top 10 questions from our investors

Last updated: February 06, 2023

What is your overall approach on impact?

• We believe that we can create impact by fulfilling unmet medical need through delivering innovative and quality medicines to as many people as possible.
• We have reached approximately 743 million patients at Novartis across 140 countries (236 million with Innovative Medicines, 54 million with Novartis Global Health and an additional 453 million patients with Sandoz).
• Some of our impact efforts at Novartis include our 2020 sustainability-linked bond (SLB), our Sub-Saharan Africa strategy and our product launches which focus on innovation and creating value. We believe that accountability is linked to impact, which is why we set out to make these efforts intentional, with measurable KPIs and to deliver access to innovative medicines globally.

What is your position on the use of stem cells and fetal tissue?

• Novartis conducts research using human embryonic stem cells (hESCs), adult stem cells, fetal cell lines, and human fetal tissues. Novartis collects and uses somatic stem cells from various sources including tissues from adult human beings and human embryos. We use fetal tissues for limited research and under specific conditions where no alternatives are available. Any acquisition and use of human embryonic stem cell lines or fetal tissue for research purposes undergoes extensive approval processes and procedures.
• Novartis does not currently have any partnerships or outsourced activities in embryonic research and does not produce any products to enable embryonic research nor commercially offer technologies that enable the performance of scientific research on stem cells.

What is your position on the Inflation Reduction Act (US)?

• After more than a decade, the Inflation Reduction Act (IRA) has provided a resolution for the US drug price debate.
• On the individual provisions, there are positives and negatives.
• We believe that isolating Medicare patients from high out-of-pocket cost is a positive. It will increase compliance and, as a result, will increase the drug benefit. It will also serve to reduce public concern over the cost of pharmaceuticals. It should potentially also serve to improve industry outlook over the longer term.
  • Inflation rebates are less impactful as our (and presumably peer) plans already included inflation-level price increases.
  • The negotiation provisions are problematic. The incentive structure is not good for patients, especially with small molecules. This could hurt patients with rare diseases, which have previously been ‘lead indications’ for broader-applied drugs. It is critical that Centers for Medicare & Medicaid Services provides clear guidance on the negotiation criteria and prescription drug plan coverage criteria post negotiations.
• At Novartis, we have modeled the impact on our commercial and patient priorities.

What are some of your R&D efforts on Access from 2022?

• In mid-2022, Novartis endorsed the Kigali Declaration on neglected tropical diseases, pledging USD 250 million to advance R&D of new treatments against NTDs and malaria over 5 years (2021-25).
• We committed funding to advance R&D of the neglected tropical disease program, focusing on novel drug candidates for four diseases:
  • Discover novel, curative anti-parasitic therapies for Chagas disease.
  • Develop LXE408 for the treatment of visceral leishmaniasis; we are currently entering Ph2 clinical development.
  • We made progress on a potential first-in-class compound to treat dengue fever (in Ph1). Although this is the most common vectorborne viral disease in the world, there is currently no specific treatment for dengue.
  • Cryptosporidium infection is the most prevalent form of parasitic diarrhea, a major cause of mortality among young children in developing countries. We have discovered a promising drug candidate, EDI048, currently in Ph1.

How is your approach different on increasing diversity in clinical trials?

• Most clinical trial diversity programs focus on recruitment of diverse patients as trial subjects. We recognize that one of the barriers to diverse patient recruitment is a lack of diverse clinical trial investigators. Our effort is designed to build trust with underserved communities by creating more diversity in the entire health research ecosystem.
• Moreover, we know that the hard-fought battle to realize health equity cannot and should not be the job of any one individual, organization, or agency. The participation and inclusion of companies beyond pharma/ biotech is also vital. Technology and social interventions present a great opportunity to bridge knowledge and trust gaps.
• Our effort is about increasing representation. The training of more diverse clinical trial investigators is a must to reverse what has become a trust deficit. With the Centers of Excellence, we will also be able to better understand other social and environmental determinants of health through the use of next generation technologies, which we can then use to address related health inequities.

What are some of your efforts to ensure suppliers meet your climate change expectations?

• Our suppliers play a key role in helping Novartis achieve its carbon neutrality and net-zero ambitions. We have developed the Environmental Sustainability (ES) Criteria, a legally binding document to formally codify our environmental expectations from suppliers. Our target is to integrate the ES Criteria in all our supplier contracts by 2025. We are on track to having our ES Criteria signed by our priority top 500 suppliers.
• We are updating the Novartis Third Party Code to ensure we have a unified and consistent approach while engaging with all our suppliers to drive our Environmental priorities.

Can you share more detail on your environmental achievements in 2022?

• On carbon neutrality, we reduced our Scope 1 and 2 emissions by 23% year-on-year, which represents an overall reduction of 49% vs. our 2016 baseline. We enhanced our Scope 3 methodology on extent and method of calculation, resulting in an increase in overall Scope 3 emissions vs. our 2016 baseline.
• On waste, we reduced the amount of waste sent for disposal by 9% vs. 2021, which corresponds to a 59% reduction vs. our 2016 baseline. We have already surpassed our 2025 waste reduction target.
• On water, we reduced our water consumption by 2% in 2022 vs. 2021, which corresponds to a total reduction of 42% vs. our 2016 baseline. More than 85% of our own manufacturing sites already meet our 2025 water quality target.

What is the difference between your net zero and carbon neutrality goals?

• We have undertaken bold commitments to reduce carbon emissions in our own operations and across the value chain. Our approach to be carbon neutral in our own operations is built on two major pillars: (a) reduction of our energy consumption by adopting new and advanced technologies and efficiency projects (b) a clean supply solution from renewable energy sources.
• Our ambition is to be carbon neutral in our own operations by 2025, across the value chain by 2030, and net zero by 2040 in accordance with the Science Based Target Initiative (SBTi) Net Zero Standard published in October 2021. In May 2022, we committed to the SBTi to develop science-based targets (near-term and long-term targets) in accordance with the SBTi Net Zero Standard, which is aligned with the Paris Agreement (1.5C degree pathway). We now have until April 2024 to get our targets validated by the SBTi.
• To achieve net zero by 2040, we plan to reduce our scope 1, 2 and 3 emissions by more than 90%, and neutralize any residual and GHG emissions released to the atmosphere thereafter.

Can you tell us more about your transition to hybrid working?

• Our new guidelines continue to allow for flexibility where it makes sense, in line with our commitments to diversity, equity and inclusion and to maintain a healthy work-life balance.
• Our updated guidance was announced in 2022. It will be implemented in 2023, pending local consultations and country-specific requirements, including local health and safety regulations. Informed by external research and internal insights, it provides greater clarity and accountability for our workforce and empowers our leaders to play a central role in how teams come together and interact.
• Office-based employees are asked to prioritize 12 days a month on site, field-based teams to continue working predominantly at customer locations, and lab and manufacturing staff, who require the use of campus facilities, to make use of the workspaces designed to deliver breakthrough innovation and world-class manufacturing.

Are there any updates on ethics and compliance topics?

• On the Average Wholesale Price (AWP) litigation, Novartis settled a putative class action brought by private payers which resolved the last AWP lawsuit. This matter is now concluded.
• In 2021, Novartis received a civil investigative demand from the DOJ seeking information from 2016 to the present, regarding the marketing and pricing of Entresto®. During Q4 2022, the DOJ advised that it has no additional requests, and the matter is considered closed.
• On the South Korea investigation into Novartis alleged business practices pending since 2016, the Supreme Court dismissed the prosecutor’s appeal in January 2023 and the matter is now concluded.

What is the new cost basis of my Novartis and Alcon shares following the spin-off of Alcon from Novartis?

Information about allocation of tax basis for U.S. holders may be found in the Form 8937: Basis of Securities (PDF 0.1 MB). With regard to non-U.S. holders, please note that the allocation of tax basis for Novartis and Alcon shares following the spin-off depend on the applicable local tax provisions and each shareholder’s individual circumstances. Accordingly, all shareholders and ADR holders are asked to consult their own tax advisor regarding the tax basis allocation calculations.

What are the income tax implications to Canadian shareholders due to the Alcon spin-off?

The following documents include the Finance Canada and Canada Revenue Agency comfort letter, Canada income tax guidelines and tax election letters related to the Alcon Spin-off for Canadian resident shareholders:

Canada Income Tax Alcon Spin-off FAQ - English (PDF 0.1 MB)

Canada Income Tax Alcon Spin-off FAQ- French (PDF 0.1 MB)

Department of Finance Canada Comfort Letter (PDF 0.1 MB)

Download the Canada and Quebec Tax Election Example Letters (ZIP 0.1 MB)

 

Where are Novartis shares traded?

Novartis shares are listed and traded on the SIX Swiss Exchange (Valor No. 001200526, ISIN CH0012005267, symbol: NOVN) as well as on the NYSE in the form of American Depositary Receipts (ADR) (Valor No. 567514, ISIN US66987V1098, symbol: NVS).

What are the ticker symbols for Novartis?

Shares	SIX (Reuters / Bloomberg)	NOVN.S / NOVN SW
ADRs	NYSE (Reuters / Bloomberg)	NVS / NVS US

What is an ADR/ADS?

ADR stands for American Depositary Receipt. ADS stands for American Depositary Share. An ADR is a receipt for a number of shares of a foreign-based corporation held by a US depositary bank, entitling the ADR holder to all dividends and capital gains.

What is the number of outstanding shares in Novartis?

Key Novartis share data

Calculated on the weighted average number of shares outstanding

	2022	2021	2020
Issued shares	2 403 721 252	2 434 420 920	2 467 060 920
Treasury shares1	284 112 195	199 480 972	210 238 872
Outstanding shares at December 31	2 119 609 057	2 234 939 948	2 256 822 048
Weighted average number of shares outstanding	2 181 180 341	2 242 601 173	2 277 041 940

1. Approximately 99 million treasury shares (2021: 102 million; 2020: 103 million) are held in Novartis entities that restrict their availability for use.

What is the number of outstanding ADRs in Novartis?

Key data on ADRs issued in the US

	2022	2021	2020
Year-end ADR price (USD)	90.72	87.47	94.43
Number of ADRs outstanding1	225 435 680	269 891 321	288 755 853

1. The depositary, JPMorgan Chase Bank, N.A., holds one Novartis AG share for every ADR issued.

When is your dividend going to be paid?

The dividend payment date has been set for March 13, 2023.

What is the dividend history for Novartis shares?

Shareholders approved the 25th consecutive dividend increase to CHF 3.10 (+3.3%) per share for 2021 at the Annual General Meeting on March 04, 2022.

Learn more about dividend information

What is the amount and timing of the next dividend payment?

The Novartis Board of Directors will propose a dividend of CHF 3.20 per share to the shareholders for approval at the Annual General Meeting to be held on March 07, 2023.

If this proposal is approved, the dividend will be paid as from March 13, 2023. The last trading day with entitlement to receive the dividend is March 08, 2023. As from March 09, 2023, the shares will be traded ex-dividend.

Is the dividend on the Novartis ordinary share and the Novartis ADR the same?

Yes, however, since ADR holders will receive their dividend in US dollars, the amount received will be impacted by currency exchange rates, as well as by a handling fee (historically, $0.01 per share) associated with the ADR dividend. An estimate of the amount of the US dollar dividend for the ADR will be calculated on the day of the dividend announcement based on that day’s exchange rates. The actual exchange rate will be determined once all funds are received and exchanged by J.P. Morgan, the depositary bank.

Since 2019, Novartis’s dividend to ADR holders will be paid in two stages. The first payment will be equal to 65% of the payout, payable one week after Swiss payment date. Those holders reclaiming withholding tax will receive a second payment once the reclaim process is completed.

Will the rate recently announced for the ADRs change between now and the ADR payment date?

Yes, the preliminary announcement only provides an estimated rate based on a current FX rate. The actual rate will be determined when the Swiss Francs are converted to US dollars on the Swiss payment date once all the funds are received by J.P. Morgan, the Depositary.

When will the remainder of the funds be converted and paid to the ADR holders?

The remainder of the funds due to ADR holders will be converted only after a tax reclaim has been completed and once any such reclaimed funds have been received by J.P. Morgan from the Swiss Tax Authorities. Once the funds are received and converted into US dollars a payment will be made shortly thereafter to any ADR holders entitled thereto. From previous years, we can expect tax reclaim funds to be distributed to ADR holders six to seven weeks after the Swiss payment date.

Will the entire dividend amount be converted into US dollars on the Swiss payment date of March 13, 2023?

On the Swiss payment date only 65% of the dividend is received. This amount will be converted into US dollars and paid on the ADR payment date of March 20, 2023.

Why can’t J.P. Morgan receive all of the funds on the Swiss payment date?

The Swiss Tax Authorities require that a tax reclaim be completed prior to each payment for any amounts due above and beyond the non-treaty amount. Investors must certify and elect their entitlement and provide necessary disclosure documentation as required by the treaty between the US and Switzerland based upon their tax status.

Why does it take so long to get the reclaim funds back from the Swiss Tax Authorities?

Holders of ADRs entitled to receive the dividend are not able to elect until after the ADR record date which is just one (1) day prior to the Swiss payment date. Eligible holders of ADRs are given 10 days to complete and submit their election. Once any reclaims are submitted to the Swiss Tax Authorities it takes approximately 15 days for such authorities to process the reclaim.

Will another announcement be made once the tax reclaim funds are received?

No, the funds will be converted and paid to the holders.

How does the tax reclaim process work?

There is a process for banks and brokers within Depositary Trust Company to elect their clients’ correct tax status electronically and to provide documentation on behalf of their clients. J.P. Morgan elects on behalf of registered holders based upon their tax status. Please contact J.P. Morgan / Goal Group Recoveries, Inc., New York at +1 212 248 9130 for further questions.