Corporate Responsibility (CR) is a core part of our business strategy and underscores our mission to discover new ways to improve and extend people’s lives. It is embedded in the way we manage our daily business, and focuses on a two-pronged commitment to expand access to healthcare and do business responsibly.
In 2017, we conducted a new, comprehensive CR materiality assessment. This is expected to be part of a regular four-year cycle we have established to help us better understand the issues that matter most to our key internal and external stakeholders. We asked participants to rank issues by impact on our business and by our performance (i.e., by how well we manage the issue). Four issue clusters were clearly identified as most important: Access to Healthcare, Patient Health & Safety, Ethical Business Practices, and Innovation. We plan to use these results to guide our strategy, track issues of concern, inform and prioritize our programs and establish meaningful metrics against which to measure our CR performance.
Expanding access to healthcare
To further embed access in the heart of our business, we established a set of Access Principles that went into effect in 2018. At their core is a commitment to integrate patient access strategies into all of our new medicine launches. These strategies are to be based on three key principles: systematically assessing our R&D portfolio against the unmet needs of underserved populations, further improving the affordability of our medicines, and systematically assessing our efforts to strengthen local healthcare systems. Starting this year, the CEO and Executive Committee of Novartis members have an access objective as part of their individual objectives.
Rolling out Novartis Access: agreements signed with six countries to date
Novartis Access, our portfolio of 15 on- and off-patent medicines against key chronic diseases, has continued to make progress since its launch in late 2015, though not as swiftly as anticipated. A first in the industry, the portfolio is offered as a basket to governments, non-governmental organizations (NGOs) and other institutional customers at a price of USD 1 per treatment per month.
Since launch, we delivered in total more than 800,000 treatments, each providing a one month supply of medicine, to Kenya, Ethiopia, Lebanon and Cameroon. We currently have signed memoranda of understanding with Kenya, Ethiopia, Rwanda, Uganda, Pakistan and Cameroon. Overall, we are in discussions with the governments of ten countries across Africa and Asia.
We are working with Boston University to evaluate the impact of Novartis Access in Kenya, and this methodology could help other companies evaluate their own access programs.
Novartis Malaria Initiative leads two of the most advanced malaria development programs worldwide
The Novartis Malaria Initiative is one of the healthcare industry's largest access-to-medicine programs. It focuses on improving access to treatment, helping communities in malaria-endemic countries deliver better healthcare and researching and developing next generation antimalarial treatments.
Since 2001, working with a range of organizations, Novartis has delivered more than 850 million treatments without profit to more than 60 malaria-endemic countries.
Novartis currently leads two of the most advanced malaria development programs worldwide. KAF156 is the first compound from a novel class of antimalarials called imidazolopiperazines to enter Phase IIb studies. KAF156 has the potential to clear malaria infection, including resistant strains, as well as to block the transmission of the malaria parasite. We are developing KAF156 with scientific and financial support from Medicines for Malaria Venture (in collaboration with the Bill & Melinda Gates Foundation).
The second compound, KAE609, also in Phase II clinical development, continues to be evaluated. In addition, our scientists are working on other projects, including a back-up compound to one of the two compounds currently in clinical development.
If successfully developed, these compounds would be the first antimalarials in many years not belonging to the artemisinin class and could provide a new option to treat the disease and counter emerging artemisinin resistance.
Launching SMS for Life 2.0
In December 2016, we launched an innovative technology-based healthcare program called SMS for Life 2.0 in Kaduna State, Nigeria. It has since been deployed in more than 250 healthcare facilities in Nigeria, and we started the roll out in Zambia in 2017, with the goal to reach more than 500 healthcare facilities in the northern provinces. Further expansion in other sub-Saharan and Asian countries is under discussion.
Building on the award-winning SMS for Life program, the new and enhanced program uses smartphones and tablet computers to address challenges at peripheral health facility level. It empowers local healthcare workers to track stock levels of selected medicines such as antimalarials, vaccines, and HIV treatments, on a regular basis. The system is reducing stock-outs by bringing visibility to stocks of essential medicines and supplies, thereby increasing access to medicines.
The program also enables the monitoring of basic disease surveillance parameters such as malaria, measles, cholera or yellow fever, and the analysis of disease-specific demographics and impact of interventions. At the same time, the peripheral healthcare workers can use the electronic devices to access specially commissioned eLearning training modules and educational videos, aiming to improve the quality of health services.
Novartis Foundation addresses heart health issues in low-income communities
In 2017, the Novartis Foundation and its partners, including CDC Foundation, the American Heart Association, NCD Alliance, Intel, city governments and local partners, announced the launch of Better Hearts Better Cities. It aims to improve cardiovascular health in low-income urban populations, addressing hypertension and its risk factors. Better Hearts Better Cities convenes partners – from food suppliers to health authorities, employers and city planners – to find solutions to improve cardiovascular health at scale in cities. The approach is being tested in Ulaanbaatar, Mongolia; Dakar, Senegal; and São Paulo, Brazil.
In South Africa, with the University of Basel and other partners, the Foundation is running Healthy Schools for Healthy Communities. The project aims to address poor health in disadvantaged schools.
The Foundation is also conducting other programs in Ghana and Vietnam, to bring hypertension detection and management closer to local communities – linking hypertension screening and education opportunities in the community with blood pressure check points in local shops, pharmacies and other businesses.
Earlier this year, the Novartis Foundation and partners launched a new Global Partnership for Zero Leprosy. The Foundation also continues to develop novel strategies to interrupt the transmission of leprosy through leprosy post-exposure prophylaxis (LPEP) – by providing preventative treatment for close contacts of newly diagnosed patients to decrease the risk of transmission. LPEP is now included in the Operational Manual in the revised WHO Global Leprosy Strategy for 2016-2020 and is operational in Brazil, Cambodia, India, Indonesia, Nepal, Myanmar, Tanzania, and Sri Lanka.
Other Foundation programs include the Leprosy Alert and Response Network System (LEARNS) – the Philippines’ first mobile phone-based leprosy detection system – and the development of a molecular leprosy diagnostic test.
The Novartis Foundation is also using digital technology to power person-centered, integrated and scalable initiatives. With the Ghana Ministry of Health and others, the Foundation is setting up seven teleconsultation centers across the country. National coverage of telemedicine services is expected by 2019.
Sandoz continues its partnership with World Child Cancer to help improve survival rates for children with cancer
In 2018, Sandoz continued to partner with World Child Cancer, supporting activities in the Philippines, Myanmar, Mexico and Ghana to improve access to medical capacity. The partnership aims to improve the standard of care for children suffering from cancer, contributing to better survival rates in these countries. World Child Cancer is a leading global charity that addresses local healthcare challenges in cancer care and supports opportunities to improve care for children.
To mark the first anniversary of the Sandoz HACk (Healthcare Access Challenge), we issued a white paper providing a progress update on the three winning ideas selected in 2017 that use mobile technologies to improve access to healthcare in Ghana, the Maldives and the Philippines. The winners received seed funding and mentoring support to help bring their ideas to life, and in just one year, we are starting to see the impact of their ideas on the lives of patients at community level. Launched in 2016, the HACk competition aims at generating novel solutions to key healthcare access challenges in local communities. A second edition of the Sandoz HACk is planned for 2018.
Sandoz continues to support Americares, a health-focused relief and development organization to increase access to medicines. Last year, Sandoz donated USD 7.7 million worth of products to Americares to treat infections; cardiovascular, eye and skin conditions; and musculoskeletal pain. In 2018, we have already donated more than USD 3 million worth of products to the organization for emergency aid primarily in Latin America.
Eye care programs combat cataract blindness and transform lives worldwide
Reducing preventable blindness, half of which is caused by cataracts, is one of the most cost-effective ways to alleviate poverty and strengthen communities. With their sight restored through cataract surgery, patients regain their independence and opportunities to work and go to school. Alcon’s Corporate Responsibility efforts combat preventable blindness and enable more than 45 charitable partner organizations to deliver innovative, sustainable programs that increase patient access to care, drive eye care provider training and improve eye health awareness in more than 40 countries worldwide. Alcon is the lead eye care partner for Mercy Ships, a non-profit hospital ship providing care for underserved people in Africa. In 2017, Mercy Ships trained five Ophthalmic Surgeons and two Ophthalmic Nurses, and provided 1,529 eye surgeries during their programs in Benin and Cameroon.
In 2018, we launched Alcon Cares Project 100, which aims to reduce cataract blindness by providing equipment to perform phaco surgeries. Alcon Cares, a foundation that oversees equipment and product donations to those in need, plans to give 100 reprocessed Infiniti units to eligible clinics in Asia, Central and South America, and Africa over the next three years, making it one of the largest eye care equipment donations of its kind. The goal is to perform 200,000 phaco surgeries and train at least 400 doctors by the end of December 2020.
Researching treatments for infectious and tropical diseases
Within NIBR, the Novartis Institute for Tropical Diseases (NITD) is dedicated to discovering novel treatments for neglected diseases that disproportionately affect population health in developing countries. NITD is working to find new medicines to combat malaria, human African trypanosomiasis (HAT), leishmaniasis, Chagas disease, and cryptosporidiosis.
One of the significant recent achievements of our NITD scientists was the discovery and early validation of a drug candidate (KDU731) for treating cryptosporidiosis, a diarrheal disease which is a major cause of child mortality in lower-income countries. Currently there are no vaccines or broadly effective treatments.
In collaboration with the University of Georgia and Washington State University in the US, NITD researchers used transgenic parasites and novel disease models – as well as knowledge from our malaria research programs – in the drug discovery process.
NITD scientists have also identified a candidate for the treatment of HAT, known as “sleeping sickness”. This often-fatal parasitic disease occurs in remote, rural areas of Sub-Saharan Africa, where health system limitations make the condition difficult to diagnose and treat. In preclinical testing, this compound shows the promise for rapid parasite killing, which may support HAT elimination. It could also have potential utility for Chagas Disease.
In addition, we undertake adaptive development, modifying existing medicines to better meet the needs of underserved and vulnerable patient groups like children and the elderly, and those living in high-heat and tropical climates. For example, we are working to expand the clinical use of Lamprene (clofazimine), an agent to treat leprosy, for the treatment of patients that suffer from multidrug-resistant tuberculosis.
Fighting antimicrobial resistance
Novartis joined the AMR Industry Alliance, which brings together a group of pharmaceutical, generics, diagnostics, and biotech companies to help collectively deliver on the specific commitments made in the Industry Declaration on AMR and the AMR Roadmap. The AMR Roadmap includes commitments to establish and implement a common framework for managing discharges of antibiotics from production facilities by 2018, to develop a practical mechanism to demonstrate that our supply chain meets the standards in the framework, and to establish science-driven, risk-based targets for antibiotic discharges by 2020.
Novartis joins more than 20 pharmaceutical companies to launch Access Accelerated
In 2017, Novartis joined more than 20 pharmaceutical companies to launch Access Accelerated, Access Accelerated is a first-of-its-kind, multi-stakeholder collaboration focused on improving care for noncommunicable diseases (NCDs) in lower-income countries.
In 2018, Access Accelerated published its year-one report, showing that 27 programs were launched or extended in 2017 to fight the growing burden of NCDs.
A commitment to independent, robust metrics and evaluation has been central to Access Accelerated from its inception. To this end, the group engaged Boston University to develop a common approach to allow Access Accelerated to measure results and aggregate impact across member initiatives, as well as to learn from cross-program experiences. This first-of-its-kind measurement framework serves as a common language for categorizing, understanding and comparing access programs.
Access Accelerated also supported Boston University in their development of the Access Observatory. Companies registered 62 individual programs meeting the Access Accelerated criteria (addressing barriers to appropriate NCD care and treatment in low- and middle-income countries) into the Access Observatory.
Doing business responsibly
We recognize that to realize our vision to be a trusted leader in changing the practice of medicine, we need to earn and maintain the trust of patients, associates, healthcare partners, shareholders and the society we serve. This requires that we operate with high integrity, transparency and environmental sustainability.
We care for our associates, strive to positively contribute to the communities where we live and work, and protect the environment. We are also promoting ethics and strengthening governance by taking steps to align our standards with society’s increasingly high expectations for ethical behavior.
Supporting professional development and diversity and inclusion
We continue to focus on learning and development to build capabilities and energize employees. In 2017 we launched a fresh approach to developing leaders that moves away from purely classroom-based training toward immersive programs lasting 9-12 months, called leadership journeys. These feature a combination of webinars, simulations, social learning, and personalized coaching support.
We also continued to focus on diversity and inclusion (D&I). We embrace D&I in nationality, race, age, ethnicity, gender, sexual orientation and religion. We have dedicated groups supporting women in leadership, associates with alternative thinking and working styles, talent from key growth markets, and our LGBTI (Lesbian, Gay, Bisexual Transgender and Intersex) community. In June 2018, we signed up to the United Nations’ LGBTI Standards of Conduct for Business to protect the rights of LGBTI individuals. Further, in celebration of Pride Month and the contributions of the LGBTI community, Novartis and Sandoz headquarters flew the rainbow flag in June.
Conducting a human rights impact assessment
Ethical business practices go beyond compliant behavior – it also means respecting and supporting the protection of human rights in everything we do; and ensuring that this extends to our third party suppliers.
In 2017, we issued an updated version of our Human Rights Guideline, which came into force in 2003. Also in 2017 and continuing this year, to strengthen our approach to monitoring human rights issues in line with the UN Guiding Principles on Business and Human Rights, we conducted a global human rights impact assessment (HRIA) to identify and prioritize key risks of negative impacts on human rights, and to define key opportunities for addressing these. Based on the results of the corporate HRIA, we developed a market-level HRIA questionnaire to support Novartis local organizations to assess key risks and opportunities. In November 2017, we piloted our first local human rights impact assessment in Egypt, and we completed a second pilot in Turkey during the first half of 2018. During the second half of 2018, we plan additional pilots in China and Malaysia before making a recommendation on how an ongoing human rights country level assessment process should work in the future.
In addition, we have hired a Senior Manager of Human Rights Management who will be dedicated to this topic.
We also published our Modern Slavery Act statement on our website in 2017 and 2018.
Developing an integrated approach to third-party management
We launched a new Third Party Risk Management (TPRM) program in late 2016 to develop an integrated approach to third-party management through one core process, underpinned by one technology solution, delivering quality and efficiency improvements. With this new model, we expect to move toward a comprehensive supplier risk management framework that includes all key risk areas. We believe this new state-of-the-art model will bring consistency and rigor to how we qualify and manage third-party risks, while being simpler, scalable and more transparent.
We plan to pilot the program starting in Mexico in 2018. We expect it will be operational globally in 2019 following a phased regional rollout.
Measuring our financial, environmental and social impact
Over the past three years, we have developed, tested and applied a methodology for valuing the financial, environmental and social (FES) impact our business activities have on society. The results reflect our value beyond financial performance, taking into account benefits and costs to society.
Economic and environmental impact valuation is more developed than social impact valuation. For our social impact valuation, we cover key elements of our own operations, the social impact of our products and healthcare system strengthening initiatives. This includes employee development, occupational safety, living wage, and the local impact of access programs such as our Novartis Access portfolio against chronic diseases.
Overall, according to our analysis, the company’s activities in 2017 generated a contribution of USD 62 billion to the global economy, and created an estimated 360 000 jobs, beyond those held by our own employees. Our activities generated negative environmental impact, valued at USD 2.2 billion.
A social impact valuation is being performed with the help of WifOR, an independent economic research institute, on selected Novartis products. In 2017, an analysis of 27 products in South Africa found that the products created value that amounted to an equivalent of USD 1.9 billion.
In 2017, wages paid by Novartis created more than USD 1 billion of social value, while identified cases below the living wage resulted in USD 1.4 million of negative social value.
We are committed to expanding and adapting this methodology as more evidence and data become available. In particular, we hope to soon be able to measure the social impact of more parts of our product portfolio, as well as the social impact of living wages in our supply chain.
Promoting ethical business conduct
We are taking a series of steps in 2018 to further strengthen our culture of integrity. We realigned our existing divisional policies to create a new, harmonized group-wide Professional Practices Policy. The new policy outlines how all associates should conduct business and interact with customers, including how they promote medicines to healthcare professionals. It marks a fundamental shift in the way ethics and compliance are handled within Novartis, moving from a rules-based to a principles-based approach. The new policy was effective on March 1, 2018 (except at Alcon, where the effective date will be determined at a later stage).
We have also launched our newly harmonized Integrity & Compliance Risk Assessment and Monitoring (RAM) process. This process integrates current risk assessments, self-assessments, controls activities, and monitoring into a single, continuous, cyclical process. The process is fully supported by an online tool.
We are further strengthening our Third Party Risk Management holistically across the organization, including how we engage third parties, how we leverage IT systems to enable better visibility into the practices of the third parties we have engaged, and how we better monitor compliance of our third parties.
We are taking additional steps to change the way we interact with healthcare professionals. We believe that it is essential for physicians to have the information they need to make informed healthcare decisions, and we support legitimate peer-to-peer medical education, including speaker programs. We have built on our elimination of promotional gifts and have placed restrictions on the engagement of healthcare professionals as promotional speakers.
From January 2018, we sponsor physicians to attend international congresses only when they play an active role on behalf of Novartis. Examples include speaking at or chairing a Novartis-sponsored session or symposium, presenting data from Novartis-sponsored trials, or capturing scientific insights that can be further disseminated to the physician’s local community. We have also introduced annual caps for promotional speaker engagements by healthcare professionals beginning as of January 2018. We are fully committed to transparency in these interactions and to ensuring that all payments and transfers of value are reported in a manner that is consistent with local laws and regulations (e.g., the US Sunshine Act and the European Federation of Pharmaceutical Industries and Associations Disclosure Code).
Further, to provide more transparency in the way we do business, we have published US Transparency and Patient Access Reports (for 2016 and 2017), which address important questions about our business practices in the United States.
External recognition for our CR performance
Novartis is frequently recognized in corporate responsibility and industry rankings, and has been among the top three pharmaceutical companies in Fortune’s “World’s Most Admired Companies” ranking for 14 years.
In 2017, we were ranked #4 in Fortune’s Change the World List, which recognizes companies that have a positive social impact through activities that are part of their core business strategy. We were also ranked fourth in the 2017 Dow Jones Sustainability Index (DJSI) World, and re-entered the DJSI Europe Index for the first time in four years. We were again recognized as one of the world’s most sustainable companies by Corporate Knights, raising 4 places to #64, and we were one of 73 companies worldwide to make CDP’s Water “A” List in 2017. Novartis was included in the FTSE4Good index for 2017. In addition, we have again participated in the biennial Access to Medicine Index, which ranks the performance of pharmaceutical companies to improve worldwide access to healthcare. In 2016, Novartis rose to #3. New results will come out in November 2018.
These materials contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that can generally be identified by words such as “potential,” “expected,” “will,” “planned,” “pipeline,” “outlook,” or similar expressions, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products; or regarding the proposed 100% spinoff of the Alcon Division, including express or implied discussions regarding the potential financial or other impact on Novartis, and the potential strategic benefits, synergies or opportunities expected as a result of the proposed spinoff; or regarding the potential impact on Novartis of the completed acquisition of AveXis Inc., including express or implied discussions regarding potential future sales or earnings of Novartis, and any potential strategic benefits, synergies or opportunities expected from the acquisition; or regarding the potential financial or other impact of the other significant acquisitions and reorganizations of recent years; or regarding the potential impact of the share buyback; or regarding potential future sales or earnings of the Novartis Group or any of its divisions or potential shareholder returns; or by discussions of strategy, plans, expectations or intentions. 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Nor can there be any guarantee that Novartis will be able to realize any of the potential strategic benefits, synergies or opportunities as a result of the proposed 100% spinoff of the Alcon Division, or that the proposed spinoff will in fact maximize shareholder value. Neither can there be any guarantee that Novartis will be able to realize any of the potential strategic benefits, synergies or opportunities as a result of the significant acquisitions and reorganizations of recent years. Nor can there be any guarantee that shareholders will achieve any particular level of shareholder returns. Neither can there be any guarantee that the Group, or any of its divisions, will be commercially successful in the future, or achieve any particular credit rating or financial results. In particular, our expectations could be affected by, among other things: global trends toward health care cost containment, including government, payor and general public pricing and reimbursement pressures and requirements for increased pricing transparency; regulatory actions or delays or government regulation generally, including potential regulatory actions or delays with respect to the development of the products described in these materials; the potential that the proposed 100% spinoff of the Alcon Division may not be approved by our shareholders, or that it may not be completed, or completed as currently proposed, or at any particular time; the potential that the strategic benefits, synergies or opportunities expected from the proposed 100% spinoff of the Alcon Division may not be realized or may take longer to realize than expected, or that the proposed spinoff may not in fact maximize shareholder value; the potential that the strategic benefits, synergies or opportunities expected from the significant acquisitions and reorganizations of recent years may not be realized or may take longer to realize than expected; the inherent uncertainties involved in predicting shareholder returns; the uncertainties inherent in the research and development of new healthcare products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products which commenced in prior years and will continue this year; safety, quality or manufacturing issues; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes and government investigations generally; uncertainties involved in the development or adoption of potentially transformational technologies and business models; general political and economic conditions, including uncertainties regarding the effects of ongoing instability in various parts of the world; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; and uncertainties regarding potential significant breaches of data security or data privacy, or disruptions of our information technology systems; and other risks and factors referred to in Novartis AG’s current Form 20-F on file with the US Securities and Exchange Commission. 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