Q4 2019 Earnings Call

Good morning, and good afternoon, and welcome to that and if artist Q4, and full year she's hasn't than 19 results release conference call and life or do webcast. Please note that during the presentation. All participants will be in listen only mode on the conference is being recorded.

Operator: Good afternoon, and welcome to the Novartis Q4 and Fall Year 2019 results release conference call and live audio webcast. Please note that during the presentation, all participants will be in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions by pressing stars and 1 at any time during the conference. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. Should anyone need assistance during the conference call, they may signal the operator by pressing stars and zero. With that said, I would now like to turn the conference over to Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir.

So the presentation, there will be an opportunities ask questions by pressing star and one anytime during the conference a recording of the conference call, including the Q and they session will be available on our website shortly after the call and.

Should anyone need assistance during the conference calls they may signal the operator by pressing star zero with that I would now like on the corpus over to Mr.. Some Michelle global head of Investor Relations. Please go ahead so.

Operator: Hello and welcome everybody. Thank you for participating in our full year and quarter for 2019 Investor Corps. Before I start, I'll read you the Safe Harbor Statement. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such statements.

Hello, and welcome everybody. Thank you for participating I know full year and quarter for 29, Chief Investor Cool.

Before I start to review the Safe Harbor statement information presented today contains forward looking statements that involve known and unknown risks uncertainties and other factors. These may cause actual results to be materially different from any future results performance or achievements expressed or implied.

Slide by such statements. Please refer to the company's form 20-F on file with the U.S. Securities and Exchange Commission for a description of some of these factors.

Samir Shah: Please refer to the Company's Form 20-F on file with the U.S. Securities and Exchange Commission for a description of some of these facts. If you then turn to slide three in our investor presentation, you'll see a list of participants. So in the room, we have Vas Narasimhan, the Chief Executive Officer, Harry Kirsch, the CFO, Marie-France Tuzon, who's the President of Novartis Pharmaceuticals, Suzanne Sheffer, President of Novartis Oncology, John Tsai, Head of Global Drug Development and the CMO, Richard Sainer, who's the CEO of Sandoz, and Shannon Klinger, the Group General Counsel. I'm going to pass this on to Vas in just a minute or two, but just for your information, when we go to the Q&A session at the end of the formal presentation, we're going to limit each question or questioner to just two questions at maximum. With that, I'll hand it over to Vas.

Then turn to slide three in our Investor presentation, you'll see the list of participants so in the room, we have us dollarsseven, the Chief Executive Officer, Harry Kirsch. The CFO most wants to use all he's the president of Novartis pharmaceuticals, she's on [laughter] precedence of Novartis. Okay.

Allergy, John Psi head of global drug development.

Hello, Richard So you know who's the CEO sandals and Charlotte in clean Guy The group General Counsel.

I'm going to hand across your for US just in a minute or too, but just for your information when they go to the cure in a session at the end of the formal presentation, we're going to limit each question or question just to chew questions at maximum.

With that I'll have to cross device.

Samir Shah: Great. Thank you, Samir, and thank you all for joining today's Fuller Results conference call. So if we move to slide five, as you saw in 2019, we really delivered an outstanding performance across the company. And I think the big reason for that is we have had a clear strategy, and we're executing against that strategy.

Great. Thank you Samir and thank you all for joining todays a full year results conference call. So if we move to slide five as you saw in 2019, we really delivered a outstanding performance across the company and I think the big reason for that as we've had a clear strategy and we're executing against that strategy.

Vas Narasimhan: Clearly, we want to be a focused medicines company powered by advanced therapy platforms and data science. We're focusing the company, and we're delivering against each of our five priorities, which I'll take in turn over the course of this presentation. So going to slide six, when you look at the last two years, we've executed over $70 billion of transactions, both to focus the company and build up our presence in strategic areas, including building a presence in cell and gene therapies and radioligand therapy, now within glycerin, a presence in RNA therapeutics, altogether a broad-based medicines portfolio, which we believe is the largest medicines company, purely focused on the discovery and broad access We also continue to execute our M&A strategy to build our deeper therapeutic expertise and therapeutic depth in areas like ophthalmology and cardiovascular disease.

Clearly, we want to be a focus medicines company powered by bad therapy platforms that data science, we're focusing the company, we're delivering against each of our five priorities, which I will take in turn over the course of this presentation.

We'll go into slide six when you look at the last two years, we've executed now over $70 billion of transactions both to focus the company and build up our president and strategic areas, including building a presence in cell and gene therapies and radio like in therapy. Now was includes surrender presence in our M&A therapeutics altogether abroad.

Based medicines portfolio, which we believe is the largest medicines company purely focused on the discovery and broad access to medicines in the World. We also continue to execute our M&A strategy to build our deeper therapeutic expertise in therapeutic depth and area like ophthalmology in.

Other disease. So we feel good about this dynamic and look forward to continuing the strategy of bolt on M&A for the years to come depending on the quality of the assets we identified.

Vas Narasimhan: So we feel good about this dynamic and look forward to continuing a strategy of bolt-on M&A for the years to come, depending on the quality of the assets we identify. Moving to slide seven, when you look at innovation, one of our key pillars, I think we demonstrated this year that we're on the right track and really have developed the depth of a pipeline that can enable us to grow in the long term. When you think about the scale of the portfolio that we demonstrated at our R&D day, we have scale and depth across all of our key therapeutic areas, from phase one to phase three. When you look at the replacement power of our pipeline, when we look at the data from Evaluate Pharma, we've seen a profile where we are leading the industry in replacement power between 2019 and 2024. And we continue to focus on building a deeper pipeline and advanced therapies, 16 programs now in clinical development, as well as focusing on first in class and first in indication, with 90% now of the portfolio having that profile. They're moving to slide eight.

Moving to slide seven when you look at innovation one of our key pillars I think we demonstrated this year that we're on the right track and really have developed the depth of pipeline that can enable us to grow in the long term. When you think about the scale of the portfolio that we demonstrated in our R&D day, we have scale in depth across all of our key therapeutic areas.

From phase one to phase three when you look at the replacement power of our pipeline when we look at the data from evaluate pharma.

Hey profile, where we are lead the industry and replacement power between 2019 in 2024, and we continue to focus on building a deeper pipeline and advanced therapy is 16 programs now in clinical development as well as the focus on first in class in first first in indication with 90% now the port.

Folio with that profile.

Now moving to slide eight.

2019 was truly a breakthrough year for that innovation with five enemy approvals, which we believe is a record for a company in the industry at least in recent years. Six. If you include one of our tropical medicine approvals 30 major submissions around the world and 30 clinical data readout.

Vas Narasimhan: 2019 was truly a breakthrough year for that innovation, with five NME approvals, which we believe is a record for a company in the industry, at least in recent years, six, if you include one of our tropical medicine approvals, 30 major submissions around the world, and 30 clinical data readouts. But 2019 was the year we showed that we have the depth and breadth of a portfolio that can grow for the long term. I am so very pleased with that.

2019, with your we showed that we have the depth and breadth of a portfolio that can grow for the long term. So very pleased with that and we'll go through in a little more detail later on in the call. How we're performing on some of these launches.

Vas Narasimhan: And we'll go through in a little more detail later in the call how we're performing on some of these launches. Now moving to slide nine, when you look at catalysts for 2020, another full year of catalysts, major approvals, including the expected approval of Opatumumab, which we filed in December and used a priority review voucher. We also, of course, have the planned filing shortly for Entresto and Hef-Pef, the planned approval of hopefully QVM and QMF in asthma, Capmatinib in lung cancer, Cosentix non-radiographic axial spa, where we also used a priority review voucher, and Inquisirin, where we've now filed in both the U.S. and the EU, both with expected action dates over the course of Highlights include the LU PSMA, the radioligand therapy asset, and prostate cancer, as well as a number of others, which you can see here on the slide.

Now moving to slide nine when you look at catalysts for 2020, another full year of catalyst major approvals, including the expected approval.

Of Opa tumor Mab, which we filed in December and use the priority review voucher. We also of course have the planned filings shortly of and trust, though and half path.

The file the planned.

Approval of hopefully UQM and QM AFE in asthma capmatinib in lung cancer Cosentyx Nonrated graphic axles par. We also used a priority review voucher and in closer in where we've now filed in both the U.S. and do you both with expected action dates and over the course of 2020.

Also a number of major readouts across the portfolio a highly highlights include the loopy SDMA.

The radio Laggan therapy asset and prostate cancer as well as a number of others, which you can see or on the slide and then as we tried to highlight to you in the R&D day, a number of phase three starts our mid stage pipeline now is rapidly advancing and we'll look forward to giving you updates on how that portfolio evolves over the course of the year.

Vas Narasimhan: And then, as we tried to highlight to you in the R&D day, a number of phased restarts. Our mid-stage pipeline is now rapidly advancing, and we'll look forward to giving you updates on how that portfolio evolves over the course of the year.

So moving to slide 10.

We also have a big focus on on China, as I think you're seeing across the sector. We would like to highlight a few points. When you look at our profile in China, We had 13 enemy approvals over the past five years with 22 NR delisting since 2017, showing were really pivoting to a much more innovative portfolio.

Vas Narasimhan: We also have a big focus on China, as I think you're seeing across the sector. We would like to highlight a few points when you look at our profile in China. We've had 13 NME approvals over the past five years, with 22 NRDL listings since 2017, showing we're really pivoting to a much more innovative portfolio across our China business. When you look forward, we expect now to have 50 NDA approvals between 2020 and 2024. That's a doubling of the rate we've had in recent years, and our goal is to deliver greater than 90% of our 2024 and beyond Chinese submissions simultaneously with global submissions. We expect to have a presence in China; our total sales in China are in the range of $2.2 billion, and our aspiration is to double that business over the coming five years. So a big focus on China, and I look forward to keeping you up to date on that progress as the year progresses.

Across our China business. When you look forward, we expect now to have 50 Anda approvals between 2020 and 2024, that's a doubling of the rate we've had over over recent years and our goal is to deliver greater than 90% of our 2024 and beyond China submission simultaneously with global.

Submissions, we expect to have a profile in China, our total sales in China and the range of 2.2 billion and our aspiration is to double that business over the coming five years, So big focus on China and look forward to keeping you up to date on that profile as years as the year progresses.

So moving to slide 11, moving to operational excellence, we delivered a strong performance in 2019 as you saw from the results release, Harry I'll go through these numbers are in a bit more detail, but some of the highlights I think strong sales growth with a 9% sales growth in constant currencies were delivering on the margin expansion with.

1.8% margin expansion in I am and I'll talk a little bit more about that on the next slide I think we're delivering as well as strong shareholder return profile. When you look at the one year TSR 22.3. Both also when you look at the two year three year TSR as well, we're delivering as well nice returns for our shareholders and we have.

Vas Narasimhan: So moving to slide 11, moving to operational excellence. We delivered a strong performance in 2019, as you saw from the results released. Harry will go through these numbers in a bit more detail.

Course appreciate your confidence in Novartis.

Now moving to slide 12 to go little bit deeper on the operational performance. When you look at our growth drivers strong performance across the growth drivers Cosentyx and entresto growing well very France will go into that in a bit more detail Zogenix, Matt I'll cover in a moment and then as well across the oncology portfolio Buddha Sarah colleagues scaly.

Vas Narasimhan: But some of the highlights, I think, are strong sales growth with 9% sales growth in constant currencies. We're delivering on the margin expansion with 1.8% margin expansion in IM. And I'll talk a little bit more about that on the next slide.

Really now picking up momentum Suzanne I will tell you a bit more about that so when you look across that they're locked inside of this slide you see a broad set of assets that are continuing to grow well in market and you were a company was 15 blockbusters in our inline portfolio and that gives us that diversity and strength to keep growing.

Vas Narasimhan: I think we're delivering as well a strong shareholder return profile when you look at the one-year TSR, 22.3, but also when you look at the two-year and three-year TSRs as well. We're delivering nice returns for our shareholders. And we, of course, appreciate your confidence in Novartis. Now, moving to slide 12, to go a little bit deeper on the operational performance. When you look at our growth drivers, strong performance across the growth drivers, Cosensex and Intresto are growing well. Marie France will go into that in a bit more detail.

In the long term when you look at growth driver as a percent of recent launches. We're now up to 35% exiting 2019, and we expect that number to continue to grow over the coming years.

Moving to slide 13, when you look at the profile of the company for the next three years 15 ongoing or upcoming major launches. This will be a huge focus for us in 2020, driving the 2019 launches which are already in progress and now really focusing on preparing for the 2020 in 2021 launches.

And you'll hear more about that from my colleagues later on in the call So moving to slide 14.

Vas Narasimhan: Zolgensma, I'll cover that in a moment. And then, as well, across the oncology portfolio, Lutathera, Kiscali. Kiscali is really now picking up momentum, Susanna will tell you a bit more about that.

I wanted to say word on little Gen Smart performance.

In 2019, we had a strong launch full year sales was that that 361 million. So very good performance. When you look at the patients treated commercially roughly at a rate of about 100 patients per quarter 100 for Q3 and 200 now at year end, we would expect in the us to be largely.

Vas Narasimhan: So when you look across the left-hand side of this slide, you see a broad set of assets that are continuing to grow well in the market. And we're a company with 15 blockbusters in our inline portfolio, and that gives us that diversity and strength to keep growing in the long term.

In that at that rate of 100 patients a quarter until we have approval in Europe to have the next inflection point and that eventually the intrathecal approval as well, which I'll speak to in a moment commercial lives were up to 97% coverage Medicaid lives right over 50% coverage newborn screening continues to tick up and Wifi.

Vas Narasimhan: When you look at growth drivers as a percent of recent launches, we're now up to 35 percent in exiting 2019, and we expect that number to continue to grow over the coming years. So moving to slide 13, when you look at the profile of the company for the next three years, 15 ongoing or upcoming major launches, this will be a huge focus for us in 2020, driving the 2019 launches, which are already in progress, and now really focusing on preparing for the 2020 and 2021 launches. And you'll hear more about that from my colleagues later on in the call. So moving to slide 14, I wanted to say a word on Zolgensma's performance in 2019.

The new heavily to be heavily focused on driving newborn screening and importantly, we have 99% of patients approved now for reimbursement if they're on label for Xeljanz Matt.

Now some of the next steps for the product the Intrathecal formulation clinical hold we're working on a submission to FDA for a data package to hopefully resolve the clinical hold then continue the regulatory discussions and we continue to hope to file the intrathecal formulation. This year CMP positive opinion, we anticipate.

In Q1 of this year with respect to Japan, we anticipate an approval in the first half of this year and I would say conversations both into Europe , and Japan are going very well and we also anticipate decisions and other markets around the world, including Switzerland, Canada, Australia, Brazil, and as well as number of countries in the middle East easily adopt.

Vas Narasimhan: We had a strong launch, and full-year sales were at $361 million, so very good performance. When you look at the patients treated commercially, we're roughly at a rate of about 100 patients per quarter, 100 for Q3N, and 200 now at year end. We would expect in the U.S. to be largely at that rate of 100 patients a quarter until we have approval in Europe for the next inflection point and then eventually the intrathecal approval as well, which I'll speak to in a moment. Commercial lives are up to now 97% coverage. Medicaid lives were at over 50% coverage.

Funnel areas of potential future growth for for the medicine. So there is delivering on the promise of bringing a transformational gene therapy to children. We look forward to continuing to progress expanding its application in more patient populations in more geographies.

In the year to come so moving to slide 15.

On the margins we've guided at the last time, we spoke about.

About this Q4 of last year that we expect to have reached the mid thirtys in the near term and you can see us already getting close to that was 33.5 exiting 2019 and the mid to high Thirtys in the medium term one important thing to note about our margin guidance is we would expect to achieve these margins independent of when a potential.

Joel and yellow, we occurs and that's really driven by a combination of strong sales momentum of our growth drivers productivity programs, which I'll talk about in a moment as was excellent resource allocation from our older brands to newer launches and with that we're able to offset generic erosion as well as any launch investments we need.

Vas Narasimhan: Newborn screening continues to tick up, and we've continued to be heavily focused on driving newborn screening. And importantly, we have 99% of patients approved now for reimbursement if they're on label for Zolgensma. Now some of the next steps for the product, the intrathecal formulation clinical hold, we're working on a submission to FDA for a data package to hopefully resolve the clinical hold, then continue the regulatory discussions, and we continue to hope to file the intrathecal formulation this year. A CHMP positive opinion we anticipate in Q1 of this year. With respect to Japan, we anticipate approval in the first half of this year, and I would say that conversations both in Europe and Japan are going very well.

For upcoming launches, including the newly acquired in cluster in asset.

So moving to slide 16.

I just wanted to say a word about the transformation, we're advancing in MTO and NBF with respect to manufacturing, we're well on our way of our goal of consolidated footprint. That's much more focus on high end technologies. We also are advancing our efforts in procurement in manufacturing I really reducing the excess inventories that were.

Holding and also deploying data and digital much more aggressively across the manufacturing network in NBS. We are on track now with respect to our movement of roles to our our global service centers, we've been able to take a number of actions to consolidate our footprint as well consolidate or overall real estate operation.

Vas Narasimhan: And then we also anticipate decisions in other markets around the world, including Switzerland, Canada, Australia, Brazil, and as well as a number of countries in the Middle East. These will be additional areas of potential future growth for the medicine. So Zolgensma is delivering on the promise of bringing transformational gene therapy to children. We look forward to continuing to progress, expanding its application to more patient populations and more geographies in the year to come. So moving to slide 15. On the margins, we've guided, the last time we spoke, you know, about this Q4 of last year, that we expect to have reached the mid-30s in the near term, and you can see us already getting close to that with 33.5 exiting 2019, and the mid- to high-30s in the medium term. One important thing to note about our margin guidance is that we would expect to achieve these margins independent of when a potential Jelenia LOE occurs.

And we have a new chief procurement officer has now been enroll for a number of months already optimizing our top hundred supplier. So all of this taken together is enabling us to be on track to deliver our goal of $2 billion of savings by the end of 2020, and we expect these efforts to deliver an additional $1.5 billion of savings in the medium to.

Turning to contribute to that margin expansion I showed you on the earlier slot that.

Moving to slide 17.

Sandoz also had a great 2019, they delivered accretive growth you saw a 2% global sales, 7% ex us, 16% and Biopharmaceuticals importantly, excellent leverage on the PNR with 10% core operating income growth. This is in large part due to the focusing on our key strategy that Richard and his team have put.

In place focusing on a core generics business trying to be a grade generics company, both an oral solid and injectables and bio similars focusing in on key geographies, where we think we can build strong long term positions. We have the number one position in the EU in Japan. We closed the are in the process of closing Gaspin acquisition.

And there are confident we can continue to build our business in Japan and in the U.S. were stabilizing the business. We expect a closure of the transaction with or have been though in Q1. This year, which will allow us tend to focus on our hospital and bio Similars businesses, we're on track as well to have a autonomous.

Vas Narasimhan: And that's really driven by a combination of strong sales momentum for our growth drivers, productivity programs, which I'll talk about in a moment, as well as excellent resource allocation from our older brands to newer launches. And with that, we're able to offset generic erosions, as well as any launch investments we need for upcoming launches, including the newly acquired Inquisitor and Asset. So moving to slide 16.

Sandoz within Novartis for the start of 20 to 21 focus very much in the manufacturing organization and we continue to advance our broad portfolio of Biosimilar. So very pleased with the progress we're making in Sanders go to the next slug.

Now I just wanted to touch on our data and digital transformation culture and DSG across all the key pillars of our digital transformation. We're now beginning to really see this take hold at the company I think it's fundamentally transforming how we operate we're scaling 12 digital what we called lighthouse projects.

Vas Narasimhan: I just wanted to say a word about the transformation we're advancing in NTO and NBS. With respect to manufacturing, we're well on our way to our goal of a consolidated footprint that's much more focused on high-end technologies. We also are advancing our efforts in procurement and manufacturing, really reducing the excess inventories that we're holding and also deploying data and digital much more aggressively across the manufacturing network. In NBS, we are on track now with respect to our movement of roles to our global service centers. We've been able to take a number of actions to consolidate our footprint as well as reorganize our overall real estate operations.

Willingness to transform ourselves, whether it's in our development and trial operations manufacturing.

In our Salesforce. The idea is that we have AI and data science powering our decision, making wherever relevant at the company, we're making novartis digital we have over 15 100 associates now in digital and data science at the company. We also are getting broad interest in learning programs on digital at Novartis.

We're working to become a key partner in the startup tech ecosystem, we are buying homes, which we have launched a number of cities around the world, which allows startups to work closely with Novartis and lastly, we're working on bold moves we've made a bold collaboration with Microsoft on an AI innovation lab in R&D, we're partnering with Amazon Web services to transform.

Our technical operations as well as a procurement operation and working in China with Tencent in areas like heart failure I expected in the coming years, you will see the tangible impact of these efforts on both our top and bottom line now if you move to the next slide.

Vas Narasimhan: We have a new chief procurement officer who's now been with us for a number of months, already optimizing our top 100 suppliers. So all of this, taken together, is enabling us to be on track to deliver our goal of $2 billion of savings by the end of 2020. We expect these efforts to deliver an additional $1.5 billion of savings in the medium term to contribute to that margin expansion I showed you on the earlier slide. Now they're moving to slide 17. Sandoz also had a great 2019.

Also on culture change, we continue to believe culture will be the key driver of our long term performance truly creating uninspired curious an unbiased organization, there's a broad range of initiatives, which you see or on the slide I won't go through all of them, but I think it just to give you a sense that we take this very seriously at executive committee level.

We are working diligently to drive this through the organization, whether it's getting our people more connected with the purpose, whether it's enabling learning and growth across the company and whether it's developing leaders who are more software and able to lead an empowered on boss way, we're quite committed to this and we believe in the long run for our law.

Vas Narasimhan: They delivered accretive growth. You saw 2% global sales, 7% XUS, and 16% in biopharmaceuticals. Importantly, excellent leverage on the P&L with 10% core operating income growth. This is in large part due to the focus on our key strategy that Richard and his team have put in place, focusing on a core generics business, trying to be a great generics company, both in oral solids and injectables and biosimilars, and focusing in on key geographies where we think we can build strong long-term positions. We have the number one position in the EU.

Foreign investors that will truly pay off on the next slide if you now turn to our efforts to build trust with society. Many of you attended our SG Investor Day last last fall, we continue to product progress against our aspirations and ethical standards, we rolled out a new program to really tackle third party risk management.

At scale and pricing and access we've outlined a new approach in sub Saharan Africa, where our entire sub Saharan Africa business is now under a single entity, whose goal is to maximize access without.

Without having to focus on profits and really just say how can we build healthcare systems and access in Africa.

Global Health, we are pioneering work in sickle cell disease in Ghana and across sub Saharan Africa to really Taco for the first time, a chronic genetic disease at scale in the region and on corporate citizenship. We have now reached 44% women in management and our goal continues to be to get to 50% and we're on track.

Vas Narasimhan: In Japan, we closed the, are in the process of closing the Aspen acquisition, and are confident we can continue to build our business in Japan. And in the US, we're stabilizing the business. We expect a closure of the transaction with Orabindo in Q1 of this year, which will allow us then to focus on our hospital and biosimilars businesses. We're on track as well to have an autonomous Sandoz within Novartis for the start of 2021, focused very much on the manufacturing organization. And we continue to advance our broad portfolio of biosimilars. So, I'm very pleased with the progress we're making with Sandoz. Can we go to the next slide?

To do so.

So moving to slide 21, I wanted to highlight that with our year see approach. We are not just sending ambitious targets for the long run, but we're also embedding this into our operations. We have a set of FC targets for 2020. We will these are embedded in my scorecards for 2020 as was the executive team, we will transparently report on them.

So really ramp report on our progress in each of these areas against our longer term goals. They are attracted a trust and reputation committee that I'd share linked to content this compensation and transparently to close.

And if you go to the next slide one thing I want to highlight as you can find a tremendous amount of detailed the Novartis in Society report. We also have published a dynamic index, which goes through all of the key SG metrics links them to where you can find the information you need for a novartis. This is both to enable the rating agencies as well as your.

Vas Narasimhan: Now I just wanted to touch on our data and digital transformation culture and ESG. Across all of the key pillars of our digital transformation, we're now beginning to really see this take hold at the company. I think it's fundamentally transforming how we operate. We're scaling 12 digital, what we call lighthouse projects, which are enabling us to transform ourselves, whether it's in our development of trial operations, manufacturing, or our sales force. The idea is that we have AI and data science powering our decision-making wherever relevant at the company. We're making Novartis digital. We have over 1,500 associates now in digital and data science at the company. We also are getting broad interest in learning programs on digital at Novartis.

Our own urology groups to be able to find the information they need about the company. If you can't find it. Please let us know when you look at some of the things were committed to they include reducing the launch time lag for innovative medicines to less than three months for low and middle income countries versus what we see in US Europe , we've committed to get to carbon neutrality in our own operation.

Since by 2025, as well as tackler third party scope three carbon emissions delivering on the UN equal pay free equal work in gender equity goals.

As I said addressing major areas in global health, So a very a concerted effort. One we deeply believe in I'm personally committed to and we hope to show progress over over the course as the year.

Moving to the next slide.

Vas Narasimhan: Working to become a key partner in the startup tech ecosystem, we have Viomes, which we

Just want to close before handing it to marry front that we believe the in total when you look at the portfolio of Novartis, we're well positioned for sustained long term growth. We have a strong set of end market growth drivers, we have a great a great set of 15 ongoing or upcoming major launches a broad set of novel.

Vas Narasimhan: And lastly, we're working on bold moves. We have made a bold collaboration with Microsoft on an AI innovation lab for R&D.

Vas Narasimhan: We're partnering with Amazon Web Services to transform our technical operations as well as our procurement operations and working in China with Tencent on areas like heart failure. I expect that in the coming years, you will see the tangible impact of these efforts on both our top and bottom lines. Now, let's move to the next slide.

Assets that we highlighted in our R&D day, as well as a range of new indications for products like Cosentyx Bayview pick ray amongst others.

We believe this will sustain our growth over the medium to long term and we'll look forward to delivering these important medicines for the world over the coming years.

So with that I will hand, it over to marry fronts.

So good afternoon to all of you.

Let's start with slide 25.

So 2019 was a very strong year for pharmaceuticals, with 12% growth our key drove growth drivers Cosentyx and Entresto grew 20% in 71% respectively. We also laid the foundation for next phase of growth.

Vas Narasimhan: Also on culture change, we continue to believe culture will be the key driver of our long-term performance, truly creating an inspired, curious, and unbossed organization. There's a broad range of initiatives, which you see on the slide; I won't go through all of them. But I think it just to give you a sense that at the executive committee level, we are working diligently to drive this through the organization, whether it's getting our people more connected with the purpose, whether it's enabling learning and growth across the company, and whether it's developing leaders who are more self-aware and able to lead in an empowered, unbossed way. We're quite committed to this.

We're off to a great start with the view in the US we're accelerating needs and design Dre and we've added includes ran to the portfolio next slide.

Cosentyx had a fantastic year with strong growth through multiple competitor entries.

The underlying growth is very strong and the demand is strong.

Actually in the U.S., we even accelerated versus prior year end, we're outperforming the market both in dermatology and rheumatology.

With a strong first line access we secured and continued news flow for example, our maximize and prevent trials, we really expect to maintain this momentum in 2020 and are confident for the future. In fact, we're increasing our guidance to be on 5 billion.

Vas Narasimhan: And we believe in the long run, for our long-term investors, it will truly pay off. On the next slide, if you now turn to our efforts to build trust with society. Many of you attended our ESG Investor Day last fall, and we continue to progress against our aspirations. And ethical standards, we rolled out a new program to really tackle third-party risk management at scale. And in pricing and access, we've outlined a new approach in Sub-Saharan Africa, where our entire Sub-Saharan Africa business is now under a single entity, whose goal is to maximize access without without having to focus on profits and really just say how can we build healthcare systems and access in Africa. In global health, we are pioneering work in sickle cell disease in Ghana and across Sub-Saharan Africa to really tackle, for the first time, a chronic genetic disease at scale in the region.

Next slide.

Interest also saw impressive growth in 2019.

And all time high and I'm very pleased with the strong execution in the market.

We feel that we have all of the components to sustain this momentum we've got a strong evidence base for in hospital and Machine Association, but also ambulatory treatment, we see increasing guideline support for Entresto as a first choice treatment and of course in 2020, we have very nice expansion opportunities in new markets, particularly.

In China and Japan.

Slide 27.

All right 28, sorry excuse me.

India have you were very pleased with the U.S. launch, particularly the excellent customer feedback we've seen very strong uptake from retina specialists.

And with the permanent permanent J code there is strong confidence for reimbursement.

Vas Narasimhan: And on corporate citizenship, we have now reached 44% women in management, and our goal continues to be to get to 50%, and we're on track to do so. So moving to slide 21, I wanted to highlight that, you know, with our ESG approach, we are not just setting ambitious targets for the long run, but we're also embedding this into our operations. We have a set of ESG targets for 2020. We will, these are embedded in my scorecards for 2020, as well as the executive team. We will transparently report on them to really report on our progress in each of these areas against our longer-term goals. They're tracked on a trust and reputation committee that I chair, linked to this compensation, and transparently disclosed.

The feedback has been outstanding what we hear the most is that physicians are incredibly impressed with new views drying properties and with the efficacy. We're also looking forward to an easy approval later this quarter and.

Q2 approval in Japan, and we expect to be a view to become a major player across the globe.

Slide 29.

Well for two lab, we are very very excited about this opportunity and we're getting focus to bring this product as quickly as possible to patients we filed both in the U.S. and the EU.

And I just want to spend a moment on this because there is there's a real shift happening in the marketplace about how physicians treat MMS.

And this leads us to believes that we have a truly unique product profile was after two lab, let's physicians tell us is that the increasingly believes that it is best to use the lowest efficacious therapy upfront.

Vas Narasimhan: And if you go to the next slide, one thing I want to highlight is you can find a tremendous amount of detail in the Novartis and society report. We also have published a dynamic index, which goes through all of the key ESG metrics and links them to where you can find the information you need on Novartis. This is both to enable ESG rating agencies, as well as your own ESG groups, to be able to find the information they need about the company. And if you can't find it, please let us know.

And if you think about asset to the lab, we offer unsurpassed efficacy of B cell depletion. If you look at the chart on the last which we presented at R&D day, you'll see that the confirmed disability worsening data is very impressive.

If you combine that with a very favorable safety profile and easy mode of administration will have an auto injector at launch we will really proposing a winning firstline value proposition. So our objective. This year is to really focus on making sure that we can provide broad access to as many neurologists as possible and of course to as many.

Vas Narasimhan: So a very concerted effort, one we deeply believe in, I'm personally committed to, and we hope to show progress over the course of the year. Just want to close, before handing it to Mary France, that we believe that, in total, when you look at the portfolio of Novartis, we're well positioned for sustained long-term growth. We have a strong set of in-market growth drivers. We have a great set of 15 ongoing or upcoming major launches, a broad set of novel assets that we highlighted in our R&D day, as well as a range of new indications for products like Cosantics, Bayview, and PickRay, amongst others. We believe this will sustain our growth over the medium to long term, and we'll look forward to delivering these important medicines for the world over the coming years. So with that, I will hand it over to Mary France.

Patients as possible.

Slide 13.

We're also very excited about our opportunity with includes trend because the profile, including this administration twice a year really lends itself to significantly impacting cardiovascular mortality.

Sorry, Brian patient population, we become began the integration, which we will complete by March and we've also filed in both the U.S. and in the EU, we were ongoing with our bridging studies in Japan and China. So the key focus for this year is to.

Provide broad and affordable access and start engaging with payers and multiple different countries.

So I will now if we move to a last slide.

We have a very clear strategy for 2020, we're going to continue the momentum with Cosentyx and Entresto.

With a strong focus on preparing our launches so scaling deal view licensing opportunities that includes around and the biggest shift that you'll see is that we firmly have our eyes on the future. We have a number of fantastic assets and they're only a few years away. We're investing earlier in our launches and we're making sure that were prepared well well ahead of time.

Marie-France Tuzon: So, good afternoon to all of you. Let's start with slide 25. So, 2019 was a very strong year for pharmaceuticals with 12% growth. Our key growth drivers, Cosentix and Entrusto, grew 28% and 71%, respectively. We also laid the foundation for our next phase of growth. We're off to a great start with BioGeu in the U.S., we're accelerating Mazent and Zydra, and we've added Inquisiron to the portfolio. Next slide.

I'm really confident in the teams that we have across the globe and I just want to thank them for their outstanding work in 2019.

I'd like to pass onto Susanna. Thank you, Mike Ross and good morning. Good afternoon, everybody. So let's move to slide 33 also for oncology, we had a very good year.

Each phase of 14.8 billion and deliver growth of 10%. So I'm really proud of what the oncology team has achieved the gross was mainly driven by the strong uptake of our recently launched products, including new term, Sarah Kim Ryan Kiss, Kylie and pick right, but we also saw continued very strong.

Marie-France Tuzon: Cosentis had a fantastic year with strong growth through multiple competitor entries. The underlying growth is very strong, and demand is strong. Actually, in the U.S., we even accelerated versus the prior year, and we're outperforming the market both in dermatology and rheumatology. With the strong first-line access we've secured and continued news flow, for example, our Maximize and Prevent trials, we really expect to maintain this momentum in 2020 and are confident for the future. In fact, we're increasing our guidance to beyond $5 billion. Next slide.

Momentum from our growth drivers Chuck Covey, Promacta, Revolade and making is tough in July we aggressively shifted investments to our gross drivers to our launches and prelaunch really best early and also approved an investment case for China.

In the gross really could more than compensated for generic impact we saw in 2019, mainly from Afinitor and Sandostatin earlier in Europe and exchange shape now in the U.S.. So moving to slide 34, one of the key growth areas for us was our breast cancer portfolio.

We have launched Picoway into 129 team. This is a first in class pick Threec a inhibitor indicated for 40% of H.I. positive hertwo negative metastatic breast cancer patients is a pixthree CA mutation in these patients usually have a very poor prognosis of very high medical.

Marie-France Tuzon: Intresto also saw impressive growth in 2019 at an all-time high, and I'm very pleased with the strong execution in the market. We feel that we have all of the components to sustain this momentum. We've got a strong evidence base for in-hospital initiation, but also ambulatory treatment. We see increasing guideline support for Entresto as a first-choice treatment. And of course, in 2020, we have very nice expansion opportunities in new markets, particularly in China and Japan. Slide 27. We're 28. Sorry, excuse me.

We need the product at a very strong start delivering 118 million assays in 2019, and very pleased that testing rate was up to 25% at year end, starting at 5% probably in the beginning the year. The has launched a product like higher Gen test.

And now also have approval for the foundation medicines, a tissue test and expect the plasma test a foundation medicines to be approved by Q2 2020 .

Marie-France Tuzon: In view of you, we're very pleased with the US launch, particularly the excellent customer feedback. We've seen very strong uptake from retina specialists, and with the permanent J code, there's strong confidence for reimbursement. The feedback has been outstanding. What we hear most is that physicians are incredibly impressed with BLVU's drying properties and with its efficacy.

In addition, we have launched a very product development program in five new indications called the epic program with the potential to serve additional 100000 patients is pick crane.

Also because clearly had a very great year, reaching 418 million of sales.

Just to remind you King's college, the only CDK for six they consistently demonstrated superior over so either into pivotal phase three trials, we saw a clear early signs of accelerated growth both in the U.S. and very very strong continue growth ex us so very pleased with the performance.

Marie-France Tuzon: We're also looking forward to an EC approval later this quarter and a Q2 approval in Japan, and we expect BLVU to become a major player across the globe. Slide 29.

Marie-France Tuzon: Ofatumumab, we are very, very excited about this opportunity, and we're focusing on bringing this product as quickly as possible to patients. We filed for it both in the US and the EU.

We're also rapidly in rolling in our Natalie trial. This is a trial in high end intermediate Aculab breast cancer, not only has a different design than the other ongoing trials and RG one setting. These three years treatment and could potentially get registration as early as 2020 tool based on a positive.

Marie-France Tuzon: And I just want to spend a moment on this because there is a real shift happening in the marketplace about how physicians treat MS, and this leads us to believe that we have a truly unique product profile with Afitumumab. What physicians tell us is that they increasingly believe that it is best to use the most efficacious therapy up front. And if you think about Alpha Tumamab, we offer unsurpassed efficacy of B-cell depletion. If you look at the chart on the left, which we presented at our R&D day, you'll see that the confirmed disability worsening data is very impressive. If you combine that with a very favorable safety profile and easy mode of administration, we'll have an auto-injector at launch. We are really proposing a winning first-line value proposition. So our objective this year is to really focus on making sure that we can provide broad access to as many neurologists as possible and, of course, to as many patients as possible. Slide 30.

Preplanned interim analysis.

Moving to slide certifies. The second launched we had in 2019 was ADAC feel the only approved product for the reduction of frequency of Vaso occlusive crisis or view sees in sickle cell disease in the U.S. there are more than 54000 patients suffering from sickle cell.

Sees and having more than one do you see per year and therefore, there is a huge medical need we have made the commercial product available two days after approval and we are now actively engaging this payers working through reimbursement. We saw already initial orders from community centers. He has applied a permanent.

Recall that we expect in July 2020.

And usually it takes about 18 months to achieve reimbursement across the country, but we're very pleased that already six states published their guidelines for attack.

Marie-France Tuzon: We're also very excited about our opportunity with Inclisiran because the profile, including this administration twice a year, really lends itself to significantly impacting cardiovascular mortality in a very broad patient population. We've begun the integration, which we will complete by March, and we've also filed in both the U.S. and in the EU. We're ongoing with our bridging studies in Japan and China. So the key focus for this year is to provide broad and affordable access and start engaging with payers in multiple different countries. So all in all, if we move to the last slide.

So moving to the next slide giving an outlook on 2020 , we will continue to maximize our growth drivers. We expect continued growth from Tiscali, we plan to tap into the potential of earlier lines. This looters, Sarah and we expect continued growth in Revolade Promacta from ITC and also from.

Plan as a in the U.S. and Japan, we're committed to deliver on how launches will further expand picture in the U.S. and prepare for the launch in Europe .

And we hope to continue strong and daquila expanding to larger accounts in the U.S. and try first the capacity increase for Kim Ryan to meet the strong demand in petrea tick Ala NTL Pcls last but not lease of the prepare for our next Big Bets Cup. Martin is just a potential to Peter first to market C met.

Marie-France Tuzon: We have a very clear strategy for 2020. We're going to continue the momentum with Cosentix and Entresto, with a strong focus on preparing our launches, so scaling DOV, and launching off of Tumamab and Inquisiran.

Inhibitor expecting the data readout of our PDL, one spot at least them up in combination this mechanist and tough Wheeler preparing our commercial.

Marie-France Tuzon: And the biggest shift that you'll see is that we firmly have our eyes on the future. We have a number of fantastic assets, and they're only a few years away. We're investing earlier in our launches, and we're making sure that we're prepared well ahead of time. I'm really confident in the teams that we have across the globe. And I just wanna thank them for their outstanding work in 2019. I'd like to pass it on.

The same for the retail auto TCM piece in May.

This year and also focus medical education on.

Kinome up to establish the importance of inhibition of tumor promoting inflammation service that I will hand over to how the yes. Thank you Susan.

Good morning, good afternoon, everybody.

Marie-France Tuzon: on to Susanna. Thank you, Maurice, and good morning, good afternoon, everybody. So let's move to slide 33. Also, for oncology, we had a very good year. We reached sales of $14.8 billion and delivered growth of 10%. I'm really proud of what the oncology team has achieved. The growth was mainly driven by the strong uptake of our recently launched products, including Lutathera, Chimraya, Kiskali, and Picre. But we also saw continued very strong momentum from our growth drivers, Chakawe, Promagta, Revolade, and Mechanist, Tafelar.

My comments refer to the results of our continuing operations.

And growth rates are in constant currencies, unless I would note otherwise.

So moving to next slide.

As Mark said 2019 has been exceptional year overall for the results of the company and to financial results.

Slide 38, we compare our actual results with our latest guidance as you know the revised.

Hi, its upward throughout the year and delivered.

Vectored full year sales growth was 9% core operating income growth 17.

Slide 39.

Shows a summary of our quarter four and full year performance.

Suzanne Sheffer: We aggressively shifted investments to our growth drivers, to our launches and pre-launches to really invest early, and we also approved an investment case for China. And the growth could really more than compensate for the generic impact we saw in 2019, mainly from Affinitor and Sanderstedt in LER in Europe and Exchange Shade New in the U.S. So moving to slide 34, one of the key growth areas for us was our breast cancer portfolio. We launched Picre in June 2019. This is a first-in-class PIK3CA inhibitor indicated for 40% of HR positive, HER2 negative metastatic breast cancer patients with a PIK3CA mutation. And these patients usually have a very poor prognosis, so they have a very high medical need.

Basically quarter for for the same pattern as each quarter of 29 gene and full year.

Focusing on full year sales increased high single digit driving accretive double digit core operating income and core EPS growth of 17% each.

This resulted in also in the strong free cash flow of 12.9 billion up 15% in US dollars was prior year.

The net income decline you see here.

Is entirely due to the 5.7 billion Otcs joint venture onetime net gain that we recorded in 20 ATM when we divested our stake to GSK.

Now you will recall one of our key financial priorities is to increase free cash flow and we have delivered another strong resulted in 29 team on slide 14.

Suzanne Sheffer: The product had a very strong start, delivering 118 million sales in 2019, and we were very pleased that the testing rate was up to 25% at year-end, probably starting at 5% probably at the beginning of the year. We have launched a product with a QIOGEN test and now also have approval for the Foundation Medicine's tissue test and expect the plasma test of Foundation Medicine to be approved by Q2 2020. In addition, we have launched a very broad development program in five new indications, called the EPIC program, with the potential to serve an additional 100,000 patients with PICre. Also, Kiskali had a very great year, reaching 418 million in sales.

The free cash flow of 29 team is compared was 20 ATM.

And.

Our free cash flow increase was mainly driven by operating income adjusted for noncash items as you can see where a couple of large onetime items on which we of course also reported and they offsetting each other some divestment gains but it also 20, a team where we still had the overseas.

See joint venture and another milestone from the prior portfolio deals.

Of course, we will continue to place a strong focus on cash flow management onto going forward.

Next slide as you can see on slide 41, we're proposing to 20 threerd consecutive dividend increase to tool French 95 per share is an increase of 3.5%.

Suzanne Sheffer: Just to remind you, Kiskali is the only CDK46 that consistently demonstrated superior overall survival in two pivotal phase 3 trials. We saw clear early signs of accelerated growth, both in the U.S. and very, very strong continued growth outside the U.S., so we are very pleased with the performance. We are also rapidly enrolling in our NATALI trial, which is a trial in high and intermediate adjuvant breast cancer.

The dividend yield remains above 3%.

So of course also fully in line with our dividend policy of increasing our dividend every year and Swiss francs.

On slide 42.

Suzanne Sheffer: NATALI has a different design than the other ongoing trials in the adjuvant setting, with three years of treatment, and could potentially get registration as early as 2022, based on a positive pre-planned interim analysis. So moving to slide 35, the second launch we had in 2019 was Adaquio, the only approved product for the reduction of the frequency of vaso-occlusive crises or VOCs in sickle cell disease. In the U.S., there are more than 54,000 patients suffering from sickle cell disease and having more than one VOC per year, and therefore, there is a huge medical need.

This strong core margin improvement in quarter, four and full year, given the excellent sales execution and productivity for gross core margin, who in each quarter and the full year for both divisions.

For the full year, continuing operations margin improved by 1.9% points and then innovative medicines sales grew 11% driving 18% core operating income growth and enabling the margin to improved to 33.5% up plus 1.8% <expletive> group.

For a year.

At the same time, we have been increasing investments to support our many launches and pre launches with this result, we are clearly on track to deliver our medium term core margin guidance of mid to high Thirtys for innovative medicines.

Suzanne Sheffer: We made the commercial product available two days after approval, and we are now actively engaging with payers working through reimbursement. We saw initial orders from community centers already. We have applied a permanent J-Code that we expect in July 2020, and usually it takes about 18 months to achieve reimbursement across the country, but we are very pleased that already six states have published their guidelines for Adaquio.

Sandoz has a solid year returning to growth with sales growing 2% core operating income who.

Much stronger than sales driven by the sales growth, but also continued gross margin improvements.

Entity ongoing business transformation.

Sandoz core margin for 29 team was 21.5% up 1.5% points was probably a year.

Suzanne Sheffer: So moving to the next slide, giving an outlook on 2020, we will continue to maximize our growth drivers. We expect continued growth from Kiskali. We plan to tap into the potential of an early alliance with Lutathera, and we expect continued growth in Revelate, Promagta from ITV, and also first line SAA in the US and Japan. We are committed to delivering on our launches. We will further expand PICRE in the US and prepare for the launch in Europe. And we hope to continue strong on our DACWIO, expanding to larger accounts in the US and trying first a capacity increase for Kymriah to meet the strong demand for patriotic ALL and DLPCL. Last but not least, we will prepare for our next big bets. CapMartinit with the potential to be the first to market a CMAT inhibitor. We are expecting the data readout of our PDR1 spartalizumab in combination with Mekinist and Tafenlar. Preparing our commercial organization for the readout of Lutetium PSMA later this year, and also focusing medical education on Kanakinumab to establish the importance of inhibition of tumor-promoting inflammation.

Now moving to the 2020 full year guidance on slide 43.

In short we anticipate the strong business momentum of 29 team to continue and 2020.

For the focus medicines company, we expect sales growth.

In the range of mid to high single digits by Division innovative medicines sales and expects to grow mid to high single digits and sandal sales are expected to grow low single digit.

Once again, we expect accretive growth and margin improvement and 2020 .

Operating income is expected to grow ahead of sales and the high single to low double digit range.

Our guidance includes forecast assumption as you can see at the bottom of the slide that node millennia or Santos Dutton they are generics.

Would enter and 2020 anywhere.

Further the guidance excludes the sandals, you as oral solids, and turn portfolio, which were under process of divesting in both years.

When in 2029 team.

We expect to close the sale to our we'll be doing quarter one.

Harry Kirsch: So with that, I will hand it over to Harry.

Let me add a word on quarterly core income core operating income dynamics in 2020, we do expect that quarter, one will be at the upper end of the full year guidance. This is to mainly two to two drivers first the generics.

Harry Kirsch: Thank you, Susanna. Good morning, good afternoon, everybody.

Harry Kirsch: My comments refer to the results of our continuing operations, and growth rates are in constant currencies unless I would note otherwise. So moving to the next slide. As Vas said, 2019 has been an exceptional year, overall, for the results of the company and the financial results. On slide 38, we compare our actual results with our latest guidance. As you know, we revised...

We were early yards discussing the impacts are expected to be lower in quarter, one as we model and ramp up throughout the year. So the overall generic burn will be but higher than 29 gene, but ramping up as.

We modeled.

Harry Kirsch: guidance upward throughout the year and delivered as expected. Full year sales growth was 9% and co-operating income growth 17%. Slide 39 shows the summary of our quarter four and full year performance. Basically, quarter 4 followed the same pattern as each quarter of 2019 and the full year.

Second in quarter, one we are not yet lapping the zogenix by launch you may recall last year, we got a media approval and also not the mid year sizable acquisition of last year.

On slide 44.

Jeff I would like to at some perspective on other key elements of our expected bottom line performance beyond core operating income.

Harry Kirsch: Focusing on the full year, sales increased by high single digits, driving accretive double digit co-operating income and core EPS growth of 17% each. This resulted in also a strong pre-cash flow of $12.9 billion, up 15% in US dollars versus the prior year. The net income decline you see here is entirely due to the 5.7 billion OTC joint venture one-time net gain that we recorded in 2018 when we divested our stake in GSK. Now you will recall that one of our key financial priorities is to increase free cash flow, and we have delivered another strong result in 2019. The free cash flow of 2019 is compared with 2018, and our free cash flow increase was mainly driven by operating income adjusted for non-cash items.

We expect core net financial expenses to increase by around 0.2 billion, reflecting the financing costs of our acquisition of the medicines company.

Core taxes are expected to be broadly in line with 29 team, which is in the range of 16%.

And with that I hand, it back tomorrow.

Thank you Harry So just to close if we move to slide 46.

Just to reiterate again strong performance really an exceptional performance 2019, a big thank you to the entire Novartis organization for a truly outstanding year delivering on our long term strategy and our operational performance.

In closing with slide 47 I.

Again, just to highlight the portfolio and the medicines, we create or the strength of this company. We believe we have the right profile to drill deliver growth for the long term and we look forward to consistently demonstrating that in 2020.

Harry Kirsch: As you can see, we had a couple of large one-time items on which we, of course, also reported, and they are offsetting each other, some divestment gains, but then also in 2018, when we still had the OTC joint venture and another milestone from the prior portfolio deals. Of course, we will continue to place a strong focus on cash flow management also going forward. Next slide.

With that we can open the lines for questions and answers. Thank you.

As a reminder, ladies and gentlemen should you wish to ask a question. Please press star one on your telephone keypad. The first question comes from the line of these color from Cowen. Please go ahead. Your line is now open.

Thank you have a couple of questions first Dunhill Gents Movado, you mentioned that conversations are going well in the EU and Japan, but I don't think you stated the tone around the U.S. discussions I think back to John size comments at the R&D meeting last month, which also did not offer optimism.

Harry Kirsch: As you can see on slide 41, we are proposing the 23rd consecutive dividend increase to 2.95 francs per share. This is an increase of 3.5%, and the dividend yield remains above 3%. It's, of course, also fully in line with our dividend policy of increasing our dividend every year in Swiss francs. You see our strong core margin improvement in Q4 and the full year. Given the excellent sales execution and productivity focus, core margin grew in each quarter and the full year for both divisions. Full year continuing operations margin improved by 1.9 percent points, and in innovative medicines sales grew 11 percent, driving 18 percent core operating income growth and enabling the margin to improve to 33.5 percent, up just 1.8 percent point growth per year. At the same time, we have been increasing investments to support our many launches and pre-launches. With this result, we are clearly on track to deliver our medium-term core margin guidance of mid to high 30s for innovative medicine. Sandoz had a solid year, returning for growth.

It seems that things are tough with FDIC on the I. I T study and I'm just wondering if you would say that that's not the case.

And then secondly on Zohydro Novartis is rationale for the acquisition was that its marketing force would boost sales, but growth has been slow and it didnt get mentioned in the prepared remarks other than Harry mentioning that you acquired the assets.

When should we expect this inflection inside your thank you.

Thank you see as I'll take those and then I'll hand, it to marine transfer for side. So I would not agree with your characterization I think we have had good discussions with the FDA were clear on the information we need to provide both from a preclinical standpoint as well as the clinical data, which is most important element of the story and.

Terms of.

The how the patients are doing from the strong study we plan to provide that data package to the FDA and the coming weeks.

Then assuming we adequately of answer their questions I would expect or at least hope that we would get off of clinical hold we would then move forward with a pre build a proposal for the filing of the strong data for an 80 approval. We continue to guide to a filing load of Avi access one on one item.

Harry Kirsch: Sales Growing 2%, Co-Operating Income, much stronger than sales, driven by sales growth but also continued cross-margin improvements and the ongoing business transformation. The Sandoz core margin for 2019 was 21.5%, up 1.5% points versus prior year. Now moving to the 2020 full-year guidance on slide 43. In short, we anticipate the strong business momentum of 2019 to continue in 2020. For the Focused Medicines Company, we expect sales growth in the range of mid to high single digits. By the Vision, Innovative Medicine says it expects to grow in the mid to high single digits. Some will say it's expected to grow low single-digit. Once again, we expect accretive growth and marginal improvement in 2020. Core operating income is expected to grow ahead of sales in the high single to low double-digit range.

In 2020.

Now with respect to Zeiter refunds.

So we've always said that we had to rebuild this brand. So we went through a complete restructuring, which we've now completed the product has great potential and as we know the marketplaces huge 34 million patients in the U.S. and only 1.69 of those are currently on a per.

Correction product for their dry eye disease. We also know that the unique product has a unique product profile is the only one to treat the signs and symptoms. So we are through this restructuring we return to DTC in Q4, we're going to continue to invest in Q1 and returned to growth certainly by the.

Second half of the year with greater share of voice in DTC strength.

Great. Thank you Mary fronts next question operator, thank Steve.

Thank you. Your next question comes from the line of Graham Parry from Bank of America. Please go ahead. Your line is now open.

Harry Kirsch: Our guidance includes the forecast assumption, as you can see at the bottom of this slide, that no Giardinia or Santos-Platon L.A. are generic would enter the U.S. in 2020. Further, the guidance excludes the Sandoz U.S. oral solids and DERM portfolio, which we are in the process of divesting, in both years 2020 and 2019. We expect to close the sale to Aurobindo in Q Let me add a word on quarterly co-op income and co-operating income dynamics in 2020. We do expect that quarter one will be at the upper end of the full year guidance. This is mainly due to two drivers.

Hi, Thanks for taking my questions Firstly on July when you're in the litigation.

Overnight that you see the on the newly issued 179 patent which had some additional language on infection prevention I was just wondering should we view this as any signal that you have any concern that you might not listen when the IP. Our appeal on the lack of confidence in your for a five patent litigation and how does and seemingly ever greening the patent.

Fit with Novartis, Social trust agenda to Miss and reputation oriskany seem to be trying to extend the patent life.

On the fairly here secondly on Xeljanz, Matt and is this timing you, giving so the interest equal filing of the 2020 is obviously somewhat vague I was just wondering if you could try to tighten that into first half second half and I was wondering just on your comment earlier about I think you said 100 patients per quarter.

Harry Kirsch: First, the generics we were also discussing, the impacts are expected to be lower in quarter one as we model a ramp-up throughout the year. So the overall generic burn will be a bit higher than 2019, but it will ramp up as we model it. And second, in quarter one, we are not yet lapping the Zolgensma launch. You may recall last year we got a MADY approval and also not the mid-year Xitra acquisition of last year. On slide 44, just where I would like to add some perspective on other key elements of our expected bottom line performance beyond core operating income. We expect core net financial expenses to increase by around 0.2 billion, reflecting the financing cost of our acquisition of the medicines company. Core taxes are expected to be broadly aligned with 2019, which is in the range of 16%.

2020 why no inflection that we announced intrathecal aegis fully penetrated into instant patients and there's no more prevalent patients on the T. left thank you.

Yes, I think things, perhaps the other two separate.

Things going on right now with respect to do any or we have the four or five patent which was held up in the IP artist currently under an IPO our appeal in the Federal Circuit also that four or five patent is being appealed as well in district court and both of those trials are either ongoing or soon to start.

Right and we expect.

Decisions in both trials over the course of 2020 and we'll of course keep you up to date and we continue to believe this is the strength of that patent in the strength of the patent continue to work to defend that fully separate from that yesterday, we received the U.S. patent related to the treatment of Rms.

By determining Versalis zoster status and the Vaccinating inappropriate cases, we actually had filed this patent close to eight to nine years ago. It's just that the patent was issued only yesterday.

Harry Kirsch: And with that, I hand it back to Voss.

Vas Narasimhan: Thank you, Harry. So just to close, if we move to slide 46, just to reiterate again, a strong performance, really an exceptional performance in 2019. A big thank you to the entire Novartis organization for a truly outstanding year delivering on our long-term strategy and our operational performance. And closing with slide 47, you know, again, just to highlight the portfolio and the medicines we create are the strength of this company. We believe we have the right profile to deliver growth for the long term, and we look forward to consistently demonstrating that in 2020. So, with that, we can open the lines for questions and answers. Thank you.

And we immediately then you know it profile infringement lost roots in the U.S. District Court against all generic companies that are still currently involved in the dosing regimen patent litigation, so not necessarily all companies with those companies that have not settled with us on the dosing regimen patent litigation.

Again to your comment on Evergreen and we don't view this as ever greeting. We view this as legitimately defending patents that we filed long ago base on insights on how the mechanism of drill any operates in this case with respect disaster virus in the previous case with respect to dose as the dose differed from transplant medications IPO for the use of the drug is a true.

Fine setting so that the situation we continue to pursue these various lines and.

We'll we'll see ultimately how the year unfolds and keep all of you up to up to date as these various various lines of discussion continue now with respect to Zogenix made it difficult for me to tighten. This any further I think until we submit the previously meeting request I think it'd be premature.

Operator: As a reminder, ladies and gentlemen, should you wish to ask a question, please press star and one on your telephone keypad. Your first question comes from the line of Steve Scala from Cohen. Please go ahead; your line is now open.

Steve Scala: Oh, thank you. I have a couple questions.

Our to do so.

Vas Narasimhan: First, on Zolgensma Voss, you mentioned that conversations are going well in the EU and Japan, but I don't think you stated the tone around the U.S. discussions. I think back to John Tsai's comments at the R&D meeting last month, which also did not offer optimism. It seems that things are tough with FDA on the IT study, and I'm just wondering if you would say that that's not the case. And then, secondly, on Zydra, Novartis's rationale for the acquisition was that its marketing force would boost sales, but growth has been slow. And it didn't get mentioned in the prepared remarks, other than Harry mentioning that you acquired the asset. When should we expect this inflection in Zydra?

If everything were to go exactly as we want to be could file as early as mid of this year. If the FDA asked us to provide additional information from the high dose of the strong study, we would probably be towards more of the end of this year. So it really depends on us getting that feedback from from the FDA and as soon as we have that feedback.

Well of course.

Provided back to you now with respect to the dynamics, we see in the U.S. you saw a strong Q3 as strong Q4 right now what we see as continued share gains I in the under six month segment, but we also of course have the six to 18 month six to 24 months old starting to age out of the segment.

So I think right now we're guiding to kind of an offset of our gains in under six month offsetting the aging out of the six to 24 months. The next inflection points will first come actually from the European approval.

Turned out that for the SMB market the ex us market is larger than the U.S. market. So on European approval as I said, we expect CHP opinion in first quarter Japanese approval, which we also expect in the first half and then a range of other country approvals other sizeable market opportunities in the middle East as wasn't.

Marie-France Tuzon: Thank you.

Vas Narasimhan: Thank you, Steve. So I'll take Zoltan's, but I'll hand it to Mary France for a side drive. So I would not agree with your characterization.

Vas Narasimhan: I think we have had good discussions with the FDA. We're clear on the information we need to provide, both from a preclinical standpoint, as well as the clinical data, which is the most important element of the story in terms of how the patients are doing from the strong study. We plan to provide that data package to the FDA in the coming weeks. Then, assuming we adequately have answered their questions, I would expect, or at least hope, that we would get off of clinical hold. We would then move forward with a pre-BLA proposal for the filing of the strong data for an IT approval, and we continue to guide to a filing of AVXS 101 IT in 2020. Now, with respect to Zydra, Marie-France?

Latin America. Those filings are also and then we would expect all of those to be inflection points for the Ivy under two years as all Jones and then separate from that the I too would be a further inflection point once approved.

Thank you Graham.

Next question operator.

Thank you. Your next question comes a lot of Andrew Baum from Citi. Please go ahead. Your line is now open.

Thank you couple of questions. Please you've indicated that you are going to file and trust.

Preserved ejection fraction heart failure sometime in Q1 in respect to repair like could you just give us some details and what population you filing as the modestly which uses a women is at both secondly.

How much weight you would you put on the 179 patents surely a carve outs and skinny label would seem to circumvent given the widespread prevalence of Arsallah vaccination in the U.S. market and then finally on them. We can see MPS I may its the therapy trial Fileable. In addition to your phase three trial.

Marie-France Tuzon: We've always said that we had to rebuild this brand, so we went through a complete restructuring, which we've now completed.

Marie-France Tuzon: The product has great potential. As we know, the marketplace is huge, 34 million patients in the US, and only 1.6 million of those are currently on a prescription product for their dry eye disease. We also know that the unique product has a unique product profile. It's the only one to treat the signs and symptoms. So we are, through this restructuring, returning to DTC and Q4. We're going to continue to invest in Q1 and return to growth, certainly by the second half of the year, with a greater share of voice in DTC strength.

Broadening the initial approvals for this product in a in refractory prostate cancer. Thank you.

Okay. So first on a the indication for I'm interested in preserved ejection fraction heart failure, John Yeah, just that thanks for your question Andrew just in terms of quick reminder, for folks on Paragon study. The results came out in the third quarter of the year, we saw very narrow mess with a P value 0.0.

Marie-France Tuzon: Great. Thank you, Mary France. Next question, operator. Thanks, Steve.

Five nine in terms of patients with preserved ejection fraction. We've had good discussions with the U.S. Appia Andy approach that we would take as a broad indication gift, giving that benefits that we've seen across the population and that will have continued dialogue with the regulatory agency on the approach moving forward.

Operator: Thank you. Your next question comes from the line of Graham Parry from Bank of America. Please go ahead; your line is now open.

Graham Parry: Okay, thanks for taking my question. So firstly, on Jelenia and the litigation, we see overnight that you sued on the newly issued 179 patent, which had some additional language on infection prevention. I was just wondering, should we view this as any signal that you have any concern that you might not win the IPR appeal or any lack of confidence in your 405 patent litigation? And how does seemingly evergreening the patents fit with Novartis' social trust agenda? Do you think there's some reputational risk here that you seem to be trying to extend the patent life unfairly here? Secondly, on Zolgensma, the timing you're giving for the intrathecal filing in 2020 is obviously somewhat vague. I was just wondering if you could try to tighten that into first half and second half. And I was wondering just on your comment earlier about I think you said 100 patients per quarter through 2020. Why no inflection there without intrathecal? You just fully penetrated into incident patients, and there's no more prevalent patients under two left. Thank you.

And so then on the 1009.

We are overall, our view that we have we're confident in the strength of both the dosing regimen patent and the and disaster patent we think given there's lots are patent relates to the safety of the product we feel like it is a strong patent and we'll continue to vigorously defend.

Our our IP rights it, particularly against those companies that have not yet settle the overall with respect to July Onea settlement discussions of course are ongoing and we'll see where we land over the course of this year.

Luke SDMA, John I didn't ask I Didnt hear the specific question could you repeat that Andrew.

Sure. So you have your phase three trial in patients.

Unwilling or unable or fails chemotherapy. The large phase three the name escapes me later this year, but you also have the therapy phase two trial plus chemo and further my question was whether you could get approval for both syndications. Therefore broadening the initial label at the time assessed launch.

Yes, Thanks, Andrew are for the our vision trial, we're actually looking at their later lines and we would not get both indications on because the second trial. It actually come later, so our intent is through the vision trial.

Yes, so we think it we'd expect to see first vision get that third fourth line and then move into earlier lines of therapy as the other readout happened I don't think we'd have data available to really enable us to get an even broader population.

Vas Narasimhan: Thanks, Graham. So, you know, there are two separate things going on right now with respect to Jelenia. We have the 405 patent, which was held up in the IPR and is currently under an IPR appeal in the federal circuit. Also, that 405 patent is being appealed as well in district court. And both of those trials are either ongoing or soon to start. And we expect decisions in both trials over the course of 2020. And we'll, of course, keep you all up to date.

Largely that's our current expectation.

Very good. Thank you enter next question operator.

Thank you. My next question comes and then Tim Anderson from Wolfe Research. Please go ahead. Your line is now open.

Thank you I just wanted to go back to delineate again after Q3.

Management was felt to be on the road.

As being quite bullish.

You would extend Halloween and not have generic entry for years to come.

Yeah. There is a sense now than perhaps you backed away from that maybe related to oral arguments recently, so I'm wondering just to simplify it yes.

Vas Narasimhan: And we continue to believe that the strength of that patent and the strength of that patent will continue to work to defend that fully. Separately from that, yesterday, we received a U.S. patent related to the treatment of RMS by determining varicella exhaustor status and vaccinating inappropriate cases. We actually filed this patent close to eight to nine years ago. It's just that the patent was issued only yesterday. And we immediately then, you know, filed infringement lawsuits in the U.S. District Court against all generic companies that are still currently involved in the dosing regimen patent litigation. So not necessarily all companies, but those companies that have not settled with us in the dosing regimen patent litigation. Again, to your comment on evergreening, we don't view this as evergreening. We view this as legitimately defending patents that we filed long ago based on insights into how the mechanism of Gilenya operates. In this case, with respect to the zoster virus.

Giving guidance to the analyst community, what would be a safe assumption for when we shouldn't necessarily.

And second question is sandoz.

You've previously talked about that I think as being a three year journey to turn it around to reevaluate what to do the division.

Maybe where you're ended at or slightly less and I'm wondering if you can update us on long term plans for that division is performing.

We see that but at the same time it is a drag on gross especially as the innovative pharma side of the business picks up and has momentum. Thank you.

Thanks, Tim.

Joe any unfortunately, I can't I can't answer your question, because I think it's difficult for us to know precisely what we are confident non is we have a strong set of patents here that were vigorously defending we're giving guidance or that you can all assume that no generic entrants in 2020, and I think we'll know a lot more over the course.

So this year as we see the results of the IP, our appeal our own effort to strengthen the four or five patent with the IP Our office the district Court.

Vas Narasimhan: In the previous case, with respect to dose, as the dose differed from transplant medications for the use of the drug in the transplant setting. So that's the situation. We continue to pursue these various lines, and we'll see ultimately how the year unfolds and keep all of you up to date as these various lines of discussion continue. Now, with respect to Zolgensma IT, it will be difficult for me to tighten this any further, I think, until we submit the pre-VLA meeting request. But it would be premature to do so.

Litigation, that's ongoing are 179 patent which has now been.

Granted and we have filed infringement lawsuits on it.

And then of course, the wildcard with all of that is would someone attempt to launch at risk and various scenarios as well. So I think it's difficult I think to give a a a precise.

Answer, but I think what's really important is that along with the 2020 guidance. We also are committed to delivering the margin.

Expansion that we talk about independent of when that happened.

So that should give you all of you confidence we believe in the overall growth profile momentum and financial profile of the company now with respect to Sandoz, Yeah, I'm very pleased with where we are in this in this journey to date I think over on the right track I think.

Vas Narasimhan: You know, if everything were to go exactly as we wanted, we could file as early as the middle of this year. But if the FDA asked us to provide additional information from the high dose of the strong study, we would probably be closer to the end of this year. So it really depends on us getting that feedback from the FDA. And as soon as we have that feedback, we'll, of course, you know, provide it back to you.

We're committed to the business and continuing to drive the margins up to the mid twenties, which would put us in the range of our peer set over the coming years, continuing to strengthen the pipeline and pro portfolio separating it into the companies that it has the ability to convert compete very successfully Richard you want to just give some comments on where we are underway.

And as a strategy. Thank you, yes, I mean, clearly a strong year in 2019, we want to continue that momentum growing in 2020 and vessel improve the margin journey as well also part of that is moving supply chain more within the Sandoz framework that gives us greater controllable costs and resource allocation.

Vas Narasimhan: Now, with respect to the dynamics we see in the U.S., you saw a strong Q3, a strong Q4. Right now, what we see is continued share gains in the under 6-month segment, but we also, of course, have the 6- to 24-months-old starting to age out of the segment.

And continuing to build our strength in Europe with a number one position taking market share building, a very strong and dynamic biologics portfolio. The U.S. now rebased much more focused in terms of growing on a much stronger.

Vas Narasimhan: So I think right now we're guiding to kind of an offset of our gains in under 6 months, offsetting the aging out of the 6- to 24-months. The next inflection points will first come from European approval. It turns out that for the SMA market, the ex-U.S. market is larger than the U.S. market. So on European approval, as I said, we expect a CHMP opinion in the first quarter. Japanese approval, which we also expect in the first half, and then a range of other country approvals. There are sizable market opportunities in the Middle East, as well as in Latin America.

Tool and specialty platform and then emerging markets closing the Aspen acquisition on integrating that into the into this quarter and then continue to build strong economic growth. So I think there's a lot of things that we're focused on that really support that agenda.

Yes, we'll keep you updated us enters the continues on the journey and of course, if any of our perspectives changeable off course, let you know.

Thank you Tim next question.

Your next question comes the line all Seamus Fernandez from Guggenheim. Please go ahead. Your line is now open.

Oh, thanks to the question. So two questions number one can you.

Can you guys inside status on the trajectory for be view.

In the market looks like we're off to a good start.

Vas Narasimhan: Those filings are also in, and we would expect all of those to be inflection points for the IV under 2 years for Zolgensma. And then separate from that, the IT would be a further inflection point once approved. Thank you, Graham. Next question, operator.

What we're hearing from some physicians, though is that there are two questions being raised about the reimbursement dynamics in the market.

And whether or not PRN utilization.

Is it something where they're struggling to get reimbursed if a patient is not getting the kind of benefits that they hoped early on I know it's early on in the launch so just trying to get a better sense of if that maybe due to the J code.

And lack of lack of that in the early days or just education that novartis needs to do have the physician base where reimbursement.

Vas Narasimhan: Thank you. Your next question comes from the line of Andrew Baum from City. Please go ahead; your line is now open.

And the second question is can you just help us understand the increase around agreement with the UK I think there's a lot of confusion around this so.

Andrew Baum: Thank you. A couple of questions, please. You've indicated that you are going to file in Tresta for preserved ejection fraction heart failure sometime in Q1, irrespective of Parallax. Could you just give us some details on what population you're filing for?

Just love to know the.

Input with regard to distribution.

And really how this agreement is structured and the kind of revenue potential that you might see just from from that type of.

An indication if this is something that novartis is seeking to expand into this type of structure novartis would expand into other markets internationally or even in the U.S. Thanks.

John Tsai: Is it modestly reduced? Is it women? Is it both?

Vas Narasimhan: Secondly, how much weight do you really put on the 179 patents? Surely a carve out and a skinny label would seem to circumvent given the widespread prevalence of the varicella vaccination in the US market. And then, finally, on Lutetium PSMA, is the therapy trial fileable in addition to your phase three trial, broadening the initial approvals for this product in refractory prostate cancer? Thank you.

Thank you Sam So first on a bayview overall performance and profitably.

Okay, So and I'll just say that overall were extremely pleased with our launches deal you in the U.S. It was actually very strong uptake, we've got 84% of retina specialists that have been view in their fridge and actually we got the J code in record time, So we there's a lot cheaper.

In the marketplace around and the reimbursement and the benefits investigation experience. We're also supporting physicians and providers and payers with there was a number as different initiatives. So that that this will flow quite easily you have to remember we've had been.

Vas Narasimhan: Okay, so first on the indications for Entresto and preserved ejection fraction heart failure, John.

John Tsai: Yeah, just thanks for the question, Andrew. Just in terms of a quick reminder for folks on the Paragon study, the results came out in the third quarter of the year where we saw a very narrow miss with a p-value of 0.059 in terms of patients with preserved ejection fraction. We've had good discussions with the US FDA, and the approach that we would take is a broad indication given the benefits that we've seen across the population, and we'll have continued dialogue with the regulatory agency on the approach moving forward.

Permanent J code since the first of January , but so far and their benefits investigation and the we Verifications has gone extremely well what we're really excited about though is is the feedback. So again outstanding feedback from from physicians regarding the efficacy and regarding the drying properties a via views.

Very encouraged we feel strongly that there is confidence in the marketplace around not only the clinical experience so far but also the experience around reimbursement.

Im expecting closer in the are you kagermann profiles so.

Vas Narasimhan: And so then on the 179 patent, overall, our view is that we're confident in the strength of both the dosing regimen patent and the disaster patent. We think, given the disaster patent relates to the safety of the product, we feel like it is a strong patent, and we'll continue to vigorously defend our IP rights, particularly against those companies that have not yet settled overall with respect to Jelenia. Settlement discussions, of course, are ongoing, and we'll see where we land over the course of this year.

The NHS partnership is made up of three memorandums of understanding. The first one is really around a population health agreement in secondary prevention to enable broad access in the UK.

The second agreement is around a partnership spray primary prevention trial and that is something that we would be working not only with the UK, but hopefully other with other countries, obviously with the intention and having a trial beyond just the you can hear the intent would be much more in to look at those patients who would be at high risk.

I was having an event, but have not yet had an event.

The third.

Memorandum of understanding is around the collaboration in manufacturing and this is really around the optimization to scale capacity. So these are three agreements our intent evergreen and their input preliminary phases and we're obviously in conversations.

Vas Narasimhan: Yeah, I didn't ask, I didn't hear the specific question. Could you repeat that, Andrew? Sure.

Andrew Baum: Sure, so you have your phase 3 trial in patients unwilling or unable or failed chemotherapy, the large phase 3, the name escapes me, later this year, but you also have the phase 2 trial versus chemo. So my question was whether you could get approval for both indications, therefore broadening the initial label at the time of first launch.

With with the UK government around all three what is really interesting is is is this novel approach and I think thats, what where we're very excited about because it is an opportunity for us to work with healthcare systems in a very different way, we know LDL cholesterol is a huge issue.

Vas Narasimhan: Yeah, thanks, Andrew. For the vision trial, we're actually looking at the later lines, and we would not get both indications because the second trial would actually come later. So our intent is to go through the vision trial.

Because there's a lack of adherence and we feel that was in Queensland twice, a year injected and a physician office can really have the potential to increase it any adherents and make a dent in CV disease and CV mortality overtime.

Vas Narasimhan: Yeah, so we, I think we'd expect to see First Vision get that third, fourth line and then move into earlier lines of therapy as the other readouts happen. But I don't think we'd have data available to really enable us to get an even broader population at launch. At least that's what our current expectation is.

We wish him as just on the model inside of your question. If you just think about the secondary prevention market in the or number of patients actually in the UK, There's about 1.8 million patients in the in the UK, who would be eligible from a secondary prevention standpoint. The initial part of this memorandum of understanding which we still have to I think full.

We get the final agreements around.

Would it enabled the treatment of multiple hundreds of thousands of patients.

Andrew Baum: Very good. Thank you, Andrew. Next question, operator.

And then as data becomes more available from launch I should say and a data becomes more available, especially the outcome study in 2020 for a potential to further further expand that so there would be a clear commercial potential right from the start with a inclisiran being broadly used in.

Operator: Thank you. Your next question comes on the line from Jim Anderson from Wolfe Research. Please go ahead; your line is now open.

Timothy Anderson: Thank you. I just want to go back to Jelena again.

Vas Narasimhan: After Q3, management was felt to be on the road as being quite bullish that you would extend LOE and not have generic entry for years to come. And there's a sense now that perhaps you've backed away from that, maybe related to oral arguments recently. So I'm wondering, you know, just to simplify it, you know, giving guidance to the analyst community, what would be a safe assumption for when we should expect LOE? And second question is Sandoz. You've previously talked about that, I think, as being a three-year journey to turn it around and reevaluate what to do with the division. Maybe we're a year into that or slightly less, and I'm wondering if you can update us on long-term plans for that division that's performing. We see that, but at the same time, it is a drag on growth, especially as Thank you.

In the UK can't guide obviously, the specific numbers, but we think it's a very highly attractive with respect to that large and Mary frontrunner tumor very actively discussing now with payers in the U.S. as well as other parties around the world to see can we use similar population based agreements to drive significant value.

The uptake even ahead of the outcome study.

Good so thank you Seamus next question operator.

Your next question comes a lot of my Weston from Credit Suisse. Please go ahead. Your line is now open.

Thank you very much the first question vast in your introductory comments you flights one of the half billion of incremental efficiency gains.

You'd already raised margin guidance to mid to high Thirtys with the medicines company deal. So how should we interpret today's message is hitting our target is even higher thirties. All this new savings program helps achieved the previous goal.

Vas Narasimhan: Thanks, Tim. Jelena, unfortunately, I can't answer your question because I think it's difficult for us to know precisely. What we are confident about is that we have a strong set of patents here that we're vigorously defending. We're giving guidance so that you can all assume that there will be no generic entry in 2020. And I think we'll know a lot more over the course of this year as we see the results of the IPR appeal, our own effort to strengthen the 405 patent with the IPR office, the district court litigation that's ongoing, and our 179 patent, which has now been granted, and we have filed infringement lawsuits on it. And then, of course, the wild card with all of that is, would someone attempt to launch at risk in various scenarios So I think it's difficult, I think, to give a precise answer.

Are we looking for a large proportion to be reinvested in launches and innovation.

And then two other quick ones, if I can Mitsubishi Tanabe. The Jelani arbitration can you just update us on timing, please and when we should expect an outcome.

And one for Susanna Looter Thera. It previously had been slacked as a a blockbuster opportunity, but sales now seem to a very much plateaued, what's going to drive the inflection and on when should we see it. Thank you.

Thank you Matthew on the on the 1.5 billion, we really see this as a part of the ongoing journey to achieve the mid to high Thirtys margin I heard you want to add any other details.

Vas Narasimhan: But I think what's really important is that, along with the 2020 guidance, we also are committed to delivering the margin expansion that we talked about, independent of when this happens. So that should give you all confidence that we believe in the overall growth profile, momentum, and financial profile of the company. Now, with respect to Sandoz, I'm very pleased with where we are on this journey to date. I think we're on the right track. I think we're committed to the business and continuing to drive the margins up to the mid-20s, which would put us in the range of our peer set over the coming years, continuing to strengthen the pipeline and portfolio, and separating it within the company so that it has the ability to compete very successfully. Richard, do you want to just give some comments on where we are on the Sandoz strategy? Thank you, Vaz.

Matthew Thank you for the question. So basically we updated where we stand on the prior 2 billion productivity program that we announced two two years ago, which we are completing and of 20 to 20 and that was of course also supporting our short and mid term margin guidance.

This is also a further supporting our margin expansion to the mid to high Thirtys. So it's part of the over program.

Of course, the growth drivers from a sales from the launches in market growth drivers as well as resource allocation and this ongoing continued efforts, mainly and technical operations supply chain, but also NBS and procurement.

Thank you very and then on Mitsubishi Tanabe, we don't have any updates from where we lost run. This will continue we're continuing that dialogue and we'll of course provide you an update if and when we have one and then with respect to alluded Theres Susanna yeah. So I look at their actually it is a endlessly one of the key.

Vas Narasimhan: Yeah, I mean, clearly, a strong year in 2019. We want to continue that momentum growing in 2020 and improve the margin journey as well. Also, part of that is moving the supply chain more within the Sandoz framework, which gives us greater control of our costs and resource allocation and continuing to build our strength. Clearly, in Europe, we're the number one position for taking market share, building a very strong and dynamic biologics portfolio. The U.S. is now rebased, much more focused in terms of growing on a much stronger injectable and specialty platform, and then emerging markets, closing So I think there are a lot of things that we're focused on that really support that agenda.

Gross drivers for the oncology business.

And overall, we're very pleased with the performance. He has however observed a slight deceleration in the growth in the U.S. A you know just remember that still more than 80% of sales are coming from the U.S. and that's largely to do the reason that the major net centers that he focused on in the first drop.

End of our commercial efforts have nava through the existing prevalence pool of cap met a patients. So now we focus on really tapping into earlier lines. We have expanded our U.S. huge for us now really targeting community centers and tier two centers.

And should should be very.

Very optimistic actually he also should see no more sales coming from Europe as we got reimbursement in several key markets like France, Italy, and Spain. So overall I mean, we remain very confident on notice there. We still believe this has blockbuster potential and as I said still remain very.

Vas Narasimhan: Okay, so we'll keep you updated as Sandoz continues on his journey, and, of course, if any of our perspectives change, we'll, of course, let you know. Thank you, Tim. Next question?

Vas Narasimhan: Your next question comes from the line of Seamus Fernandez from Guggenheim. Please go ahead; your line is now open.

Optimistic about this product.

Seamus Fernandez: Oh, thanks for the questions. So, I have two questions. Number one, can you guys just update us on the trajectory for B of U in the market? You know, it looks like we're off to a good start. What we are hearing from some physicians, though, is that there are some questions being raised about the reimbursement dynamics in the market and whether or not PRN utilization is something where they're struggling to get reimbursed if a patient is not getting the kind of benefits that they hoped for early on. I know it's early in the launch.

Great. Thank you Sarah Thank you Matthew next question operator.

Your next question comes the line also read the tea.

Hi General. Please go ahead. Your line is now open.

Good afternoon, everyone for suffers from some additional two quick questions first ofatumumab.

Could you remind us what told the resource or that you will use to push.

The us long.

In terms of sales force and we use some may isn't already within yourself or sentimental do you need to be the new ones.

Of the launch of my second question.

Marie-France Tuzon: Just trying to get a better sense of if that may be due to the J code and lack of that in the early days or just education that Novartis needs to do with the physician base for reimbursement. The second question is, can you just help us understand the Inclusiran agreement with the UK? I think there's a lot of confusion around this, so I would love to know the inputs with regard to distribution and really how this agreement is structured and the kind of revenue potential that you might see just from that type of indication. And if this is something that Novartis is seeking to expand into this type of structure, it would expand into other markets internationally or even in the US. Thanks.

More big picture regarding a risk pure rough terrain following suffer from results.

What is your strategy in the U.S. sometime in the respiratory notably in the US would you change your.

You are on this.

There are a particular area. Thank you.

It's very front I know bitumen.

So an opportunity obviously, we are resourcing to win and we've got a strong focus on the U.S. also given the fact that we have submitted a p. RV and we are looking to.

Work with two separate sales forces. So one dedicated to offer to allowed and then of course, we have a sales force with a nascent angelena.

Marie-France Tuzon: Thank you, Seamus. So first on the overall Bayview performance.

Marie-France Tuzon: Okay, so I'll just say that overall, we're extremely pleased with our launch of B.O.V.I.U. in the U.S. There's actually been a very strong uptake. We've got 84% of retina specialists that have B.O.V.I.U. in their fridge, and actually, we got the J-code in record time.

So we will be we will be resourcing to win in this marketplace as I said to you before and in the presentation. We firmly believe that we have a very unique value proposition was off until now with unsurpassed efficacy and it would be cell depletion. We've got an excellent safety profile and also the either administered.

Marie-France Tuzon: So there's a lot of confidence in the marketplace around the reimbursement and the benefits investigation experience. We're also supporting physicians and providers and payers with a number of different initiatives so that this will flow quite easily. You have to remember, we've had the permanent J-code since the 1st of January, but so far, their benefits investigation and the re-verifications have gone extremely well. What we're really excited about, though, is the feedback. So we get outstanding feedback from physicians regarding the efficacy and the drying properties of B.O.V.I.U., so we're very encouraged. We feel strongly that there is confidence in the marketplace around not only the clinical experience so far but also the experience around reimbursement.

Question, well can really make this product a first line choice for.

Not only centers of excellence, but just in general neurologists.

Great. Thank you very fast on a on on the respiratory strategy. What I'd say is of course I've ever been was a big step back, but we still have a significant global presence with Xolair xolair as a major medicine for for the company is obviously, a leading medicine for the treatment of they topic asthma.

A number of lifecycle management opportunities with Xolair, both in Japan. The U.S., Andy you Xolair remains in pillar acts U.S., we will of course have the ER the inhaled range, which now we'll get expanded with the Q Yemen QM AFE approval and then longer term, we have a a pipeline within.

R&D within development and research that could address a broad range of a more specialty respiratory areas, including idiopathic pulmonary fibrosis ph sarcoidosis, we have a program.

Marie-France Tuzon: And with respect to Inquisitor and the UK agreement, Mary Foss?

Marie-France Tuzon: So the NHS partnership is made up of three memorandums of understanding. The first one is really around a population health agreement on secondary prevention to enable broad access in the UK. The second agreement is around a partnership for a primary prevention trial. And that is something that we would be working not only with the U.K. but hopefully with other countries, obviously with the intention of having a trial beyond just the U.K. Here, the intent would be much more to look at those patients who would be at high risk of having an event but have not yet had one. The third memorandum of understanding is around collaboration in manufacturing, and this is really around the optimization to scale capacity.

Medicine called GBW, which is an oral medicine for CR P.D.. So full range of assets in respiratory so I'd say right now we're waiting to see how that pipeline matures and in the meantime, we focus on Xolair and our inhaled range.

Thank you borrow next question.

Thank you next question comes a lot of Peter Welford from Jefferies. Please go ahead. Your line is now open.

Oh, Thanks for taking my questions just two brief ones. Please firstly, just I guess Harry on the corporate cost base.

But obviously a lot of the cost cutting coming through which will be completed this year, we still seeing around at mid single digit increasing costs last year they cost.

Can you sort of provide some guidance perhaps after that.

Mike to develop in the future.

We're not we should see a change is not trends.

Secondly than just the Richard how would you give us any boards visibility on the reasons beyond the discontinuation of generic Advair I was just a decision based on regulator discussions or is this related to some other parts of the product content mistakes.

Marie-France Tuzon: So these are three agreements or intensive agreements. They're in the preliminary phases, and we're obviously in conversations with the UK government on all three. What is really interesting is this novel approach, and I think that's what we're very excited about, because it is an opportunity for us to work with healthcare systems in a very different way. We know LDL cholesterol is a huge issue because of the lack of adherence, and we feel that with Inquisiran, twice a year injected at a physician's office can really have the potential to increase adherence and make a dent in CV disease and CV mortality over time.

That concludes hiring at the mid stage the release, but do we have the exact numbers sandals old U.S. knowledge business. These will be now.

Sales and profits to take out 29 team. Thank you.

Great. So thank you Peter corporate costs are going to corporate cost I mean ill [laughter].

First of all these.

First of all let me start with all of our guides of course include always or to the corporate.

Sector, even though the small part, though and you at up of course innovative medicines and some doors.

So they are quite a few moving parts in that we expect actually for next year. That's the corporate cost part comes style.

And you know and arranger 50 to 80 million, that's a bit more volatile because it's often you know.

Vas Narasimhan: Maybe, Seamus, just on the modeling side of your question, if you just think about the secondary prevention market or number of patients, actually, in the U.K., there are about 1.8 million patients in the U.K. who would be eligible from a secondary prevention standpoint. The initial part of this memorandum of understanding, which we still have to, I think, fully get the final agreements around, would enable the treatment of multiple hundreds of thousands of patients. And then as data becomes more available, from launch, I should say, and as data becomes more available, especially the outcome study in 2024, there is potential to further expand that. So there would be clear commercial potential right from the start with Inquisitrin being broadly used in the U.K. We can't guide, obviously, to specific numbers, but we think it's highly attractive with respect to that launch. And Mary Frantz and her team are very actively discussing now with payers in the U.S. as well as other parties around the world to see whether we can use similar population-based agreements to drive significant volume uptake even ahead of the outcome study. Good So, thank you, Seamus. Next question, operator.

He is on pension charges and other things share based compensation, although if that would therefore bit mobile it's hard to them, maybe other pockets business, but we do we do see an overall reduction into corporate cost line core core corporate cost as we go into 20 to 20.

Let me should just asked it.

Yes to it so.

We have footnoted that it's a 1.1 billion in twin 1.2 billion 20, 81.1 or 2019 on sales I can just give you exact numbers.

But we went anywhere wants to dealers concluded we will issue them full set of pro forma financial.

So the net sales of this part of the business was 1.174 billion Mtwenty 18, and it's 1.072 billion and 29, Jim in terms of core operating income. It was 294 million in 18 and is now 200.

With 72, and 29 team now that sounds probably.

Low decline is of course helped that we stopped depreciation and amortization of course for core to stop of depreciation is important and basically the depreciation that didnt get booked was 9 million in 2018, and 26 million and 29 team.

Operator: Your next question comes from the line of Matt Weston from Credit Suisse. Please go ahead; your line is now open.

Matthew Weston: Thank you very much. The first question, Vas, in your introductory comments, you flagged one and a half billion of incremental efficiency gains. You'd already raised margin guidance to mid to high thirties with the medicines company deal. So how should we interpret today's message? Is it now a target of even higher thirties? Or does this new savings program help achieve the previous goal? Or are we looking for a large proportion to be reinvested in launches and innovation? And then two other quick ones, if I can. Mitsubishi Tanabe, the Gilenya arbitration. Can you just update us on the timing, please, and when we should expect an outcome? And one for Susanna, Lutathera.

So if you add that back then you have their decline a 14% on the bottom line, but of course, when compared to numbers and when we give pro forma 270 to 94 for two years, incorporating an income will be the ones that nor the public numbers.

Great. Thank you here and then generic anchor Richard.

Thank you. So as you know we received the CRL for proposed that that Gx and 28 team on our latest Q3 guidance that we would not be able to lose this will hates to 2020 .

Following a recent review of our data readout will no longer see a pathway to launch in the next 18 months and as a result, we've decided to discontinue further development.

Yes, and I think theater really much really data driven not does not necessarily from regulatory.

Feedback standpoint.

Okay next question operator.

Your next question comes the line of Stephens medicines onto though please go ahead your line is [laughter].

Yes, hi, thank you.

Vas Narasimhan: It previously was flagged as a blockbuster opportunity, but sales now seem to have very much plateaued. What's going to drive the inflection, and when should we expect it?

Mass you showed us on slide 23 that inline products some pipeline would sustain long term growth for the company.

What do you project for your bolt ons, which were on an annual basis for 10 billion do you still need thats, probably sometime girls and the other one is what about share buybacks in that context. Thank you.

Harry Kirsch: Thank you, Matthew. On the $1.5 billion, we really see this as a part of the ongoing journey to achieve the mid to high 30s margin.

Harry Kirsch: Details. Yeah, Matthew, thank you for the question. So basically, we updated where we stand on the prior $2 billion productivity program that we announced two years ago, which we are completing at the end of 2020. And that was, of course, also supporting our short and mid-term margin guidance. This is also further supporting our margin expansion to the mid to high 30s. So it's part of the overall program. You know, of course, the growth drivers from sales, from the launches, in-market growth drivers, as well as resource allocation and this ongoing continued efforts, mainly in technical operations, supply chain, but also NBS, and procurement.

Yes, you know how are you want to just go through our capital allocation priorities and I can follow more detailed on M&A.

Sure.

Stefan I mean, our capital allocation priorities have not changed so most of you know them should repeat them. So the first big.

Investments and attractive organic growth opportunities the second being accrual in dividends now and we are assuming MGM approval. We will pay all 7 billion early March all for shareholders in totality and then third the would be the M&A both.

It on acquisitions, where we see usually in the range of roughly 5% that's not a formula we go buy it whatever the opportunities are but I think it's mainly to indicate we are not after large M&A last but not least wouldn't be share buybacks and geo we completed last year five trillion show.

Vas Narasimhan: Thank you, Harry. And then, on Mitsubishi Tanabe, we don't have any updates from where we last were on this. We'll continue, we're continuing the dialogue, and we'll, of course, provide you with an update if and when we have one. And then, Susanna, with respect to Ludothera, do you have any update on that?

Our buyback that we started in the middle of 20, a team now given also we bought the medicines company for 9.7 billion, we will finance. It of course, you know share buyback at the moment, we do not see the additional ones. So we haven't announced it therefore.

Richard Saynor: Yeah, so on Lutathera, actually, it is and will be one of the key growth drivers for the oncology business. And overall, we're very pleased with the performance. We have, however, observed a slight deceleration in growth in the US.

Whenever we would do additional share buyback people do analysis, we have to standing commitment that we always buyback employee participation programs. So we never dilute our shareholders with employee programs. There's of course, an ongoing Barbara good comps that we do without announcing it but a specific share buyback program.

Suzanne Sheffer: You know, just remember that still more than 80% of sales are coming from the US. And that's largely due to the fact that the major net centers that we focused on in the first round of our commercial efforts have now worked through the existing pool of gap net patients. So now we focus on really tapping into earlier lines. We have expanded our US field force, now really targeting community centers and tier two centers, and should be very, we are very optimistic, actually. We also should see more sales coming from Europe now as we get reimbursement in several key markets like France, Italy, and Spain. So overall, we remain very confident in Lutathera. We still believe this has blockbuster potential, and as I said, I still remain very optimistic about this product. Great, thank you.

At the moment is not announced I do expect it share buybacks will be always part of our capital location, but it's also the fourth priority.

Thanks, Harry and I think I've with respect to bolt on M&A I mean, when I look at this chart, but I see is the power of Novartis internal R&D and we appropriately supplement it with M&A, but were never in a position where we need to do or have to do M&A. We do it based on attractive assets that fit with our M&A strategy and then if we can have very strong acting.

Thomas beyond the acquisition that of course, we do them. So we feel very good about our overall profile in the strength of our internal R&D engine.

Next question operator, thank you so.

Thank you. Another question comes a lot of response from Deutsche Bank. Please go ahead. Your line is now open.

Hi, Thanks, very much for taking my questions.

Firstly on Cosentyx surveys Joel peak sales guidance, but if we look at the Q on Q volume growth in the U.S. It is slowed a bit and it sounds like youre talking about maintained rather than improved commercial access for 2020 I know historically, we've seen a soft Q1 was an acceleration as youve benefits.

Suzanne Sheffer: Great. Thank you, Suzette. Thank you, Matthew. Next question, operator?

Operator: Your next question comes from the line of Florent. Please go ahead; your line is now open. Good afternoon, everyone. Francis here from Societe Generale.

Francis: Two quick questions. First, on Ofatimumab, could you remind us what the resources that you will use to push the U.S. launch in terms of Salesforce? Will you use Amazon or Jelenia Salesforce as well, or do you need to build new ones ahead of the launch?

From a improved volumes I wonder if we.

Should I expect the again this year or are we in more of an equilibrium with an acceleration more dependent on on your approvals plus the first question second I just wondered if how are you could talk about the swing factors to the upper and lower end of guidance consensus is already at the pretty much of the top end of the garden.

Vas Narasimhan: My second question is more about the big picture regarding respiratory following CVPPROM results. What is your strategy in the U.S., in respiratory, notably in the U.S.? Would you change your view on this therapeutic area? Thank you.

So on that if there's anything maybe that were not considering or is your range would you see that as a conservative kind of start for the yeah.

Vas Narasimhan: Is there any front? I don't know if we're doing that.

Marie-France Tuzon: So on Afritumumab, obviously, we are resourcing to win, and we've got a strong focus on the U.S., also given the fact that we have submitted a PRV. We are looking to work with two separate sales forces, so one dedicated to Afritumumab, and then, of course, we have a sales force with Mason Angelenia. So we will be sourcing to win in this marketplace. As I said to you before and in the presentation, we firmly believe that we have a very unique value proposition with Afritumumab with unsurpassed efficacy in B cell depletion. We've got an excellent safety profile, and also the ease of administration can really make this product a first-line choice for not only centers of excellence but also general neurologists.

Final question is just a clarification is there a few products, where you are sales of significantly exceeded the high Q.

Volume growth in the quarter, including intrastate Promacta in July and Yeah. Just wondered if you could talk to give some insight on trends in pricing mix and stocking changes impacting those products. Thanks.

Thank you Richard So first on Cosentyx dynamic smartphones.

And so now let me try and take part of your your question. So let me maybe address the Q4 Q1 transition. So yes, we do expect the typical Q1 seasonality and well probably see that across the industry. We actually aim to be front broadly in line with Q4 potentially with the small deviation.

And we wouldn't see a very very large aviation.

Vas Narasimhan: Great. Thank you, Marie-France.

Vas Narasimhan: On the respiratory strategy, what I'd say is, of course, FEVIPRBIN was a big setback, but we still have a significant global presence with Xolair. Xolair is a major medicine for the company and, obviously, a leading medicine for the treatment of atopic asthma. We've had a number of lifecycle management opportunities with Xolair, both in Japan and the U.S., and in the EU. Xolair remains a pillar.

And with your access question, we remain very focused on first and second line accent.

And you and obviously the incremental R&D is as usual tend to make sure that happens we feel very confident about where we are in access and there've been some changes, but we are in a solid first and second line position in the U.S.

I just like to remind that we've we've continued and we sustained growth actual multiple competitor entries and we see cosentyx relatively untouched by new competitors coming in the marketplace. If I just getting on an example, so any U.S. were outperforming both in dermatology and rheumatology that if I.

Vas Narasimhan: XUS, we will, of course, have the inhaled range, which now will get expanded with the QVM and QMF approval. And in the longer term, we have a pipeline within R&D, within development, and research that could address a broad range of more specialty respiratory areas, including idiopathic pulmonary fibrosis, PAH, and sarcoidosis. We have a program, a medicine called QBW, which is an oral medicine for COPD. So we have a full range of assets in respiratory. So I'd say right now that we're waiting to see how that pipeline matures, and in the meantime, we focus on Xolair and our inhaled range. Thank you so much. Next question.

Like the dermatology market, we grew 27% this year versus the marketplace and 12 and if we look at quarter for 27, what's the marketplace growing at 14.

We're very confident in cosentyx product profile, but I I think what's more important news that physicians are really confident with concentrix products profile. If we look at PS, though we provide complete treatment.

Centex is great on skin, but it is a complete treatment two thirds of patients will have additional NASA stations are now scout and Palmer plantar and we do propose a very strong value proposition. What's also important to is that payers, one and I all 17 on their formulary and so were in enough.

Operator: Thank you. Your next question comes from the line of Peter Welford from Jeffreys. Please go ahead; your line is now open.

Peter Welford: Thanks for taking my questions. Just two brief ones, please.

Very good position to keep that keep our market position. We're also leaders and in the wind space. So that's why we've upped our guidance based on the momentum and also on the additional news flow that we expect in the future.

Harry Kirsch: Firstly, just, I guess, for Harry on the corporate cost base. Despite, obviously, a lot of the cost cutting coming through, which will be completed this year, we're still seeing around a mid-single-digit increase in corporate SG&A costs year-on-year. Can you sort of provide some guidance, perhaps, as to how that might develop in the future and whether or not we should see a change in that trend? Secondly, then, just for Richard, I wonder if you could give us any more visibility on the reasons behind the discontinuation of Generic and FAIR? Was this a decision based on regulatory discussions, or was this related to some other part of the product characteristics? And perhaps, because you asked Harry, I didn't see it in the release, but do we have the exact numbers for the Sandoz or US Solids business, please? We've been asked for both sales and profits to take out of 2019. Thank you.

Thank you very mountain I always.

I think people should remind themselves cosentyx has almost 45% of itself now coming from rheumatology fast growth and they're of course, we faced minimal competition and continue to have an outstanding profile that we expand with additional indications Murray fonts and her team are doing an outstanding job, we feel very good where we are on cosentyx saw.

Guidance a harry.

Yeah, I think Richard you asked about what are the potential swing factors I mean things and all would we discussed here in north of three key elements on the topline.

I think our key growth drivers in market are well established and that is not so much of a swing factor in my mind of course, the launches we have some key launches and there's always a range you know how fast will be a few take up it's a it's a great start.

Richard Saynor: Great. So thank you, Peter. Corporate costs, Harry.

Other key launches that are driving encore in pharma, so, but the range of outcome on the largest.

Harry Kirsch: You're the corporate cost, I mean, you know First of all, let me start with all of our guidances, which always include the corporate sector, even though it is a small part, you know, when you add up, of course, innovative medicines and Sandoz. So there are quite a few moving parts in that.

The second piece of caused them to productivity part.

There we are very confident you know we are slightly ahead of our 2 billion program.

To be.

And last this year the next programs there, but that's completely under our control and that's going stream you well to third element to stem the potential generic entries and.

Harry Kirsch: We expect actually for next year that the corporate cost part comes down and is in the range of 50 to 80 million, but it's a bit more volatile because it often includes some pension charges and other things, share-based compensation, all of that would therefore be a bit more volatile than maybe other parts of the business. But we do see an overall reduction in the corporate cost line, and core corporate costs as we go into 2020. Maybe I should just add to it.

No we have now in the U.S. basically X JJ to new competition entering in November on affinity for the three lower strengths not at the highest strength.

Then trouble pools and other element of course will be how quickly are there, but lots on generic suppliers resubmitting some of them up back in the market and you know we would expect that xyrem on an ex force decline in 2020.

Now if there's some other smaller products and often pharma.

Of course this could be that these coupled with later you know then we talk about the higher end.

Harry Kirsch: So we have footnoted that 1.2 billion in 2018 and 1.1 billion in 2019 on sales. I can just give you the exact numbers; then you have it. We will anyway, once the deal is concluded, we will issue a set of pro forma financials. So, the net sales of this part of the business were $1.174 billion in 2018, and it's $1.072 billion in 2019. In terms of co-operating income, it was $294 million in 2018, and it's now $272 million in 2019. Now, that sounds probably like a very low decline. It's, of course, helped that we stopped depreciation and amortization. Of course, for core, the stop of depreciation is important, and basically, the depreciation that didn't get booked was $9 million in 2018 and $26 million in 2019. So, if you add that back, then you have a decline of 14% on the bottom line. But, of course, when you compare the numbers, and when we give Proforma the $272 and $294 for the two years of co-operating income, we'll be the ones that know the public numbers.

And also have hour of all launches Overperform, we talk at the high end of two sides. So through usual, let's say a set of swing factors, but overall very confident in the topline growth, but more on this uncertainty what generics outside of Japan, India, and South Florida would you out of our guidance on the other.

Smaller products when are they coming in.

Thank you Harry and then I think on the last question on Directv a mismatch probably we can't comment on on on why the data Miss that's been on chart in terms of interest, though dynamics and then in terms of kids Golly, and and Taf Mek dynamics, maybe first many fronts want to comment on Entresto Momo.

Tim and are in the U.S. and then to that I can comment on the Alco portfolio.

You know as you saw before the momentum for interest out is extremely strong and this is really based on demand.

As as I said before the end the our axes are at an all time high in the U.S., we've seen a fantastic quarter for and we expect that momentum to continue.

300, 2020, we're very encouraged by the fact that we have very strong data both thing in supporting ambulatory initiations Battle in hospital initiation, we had strong endorsement from the guideline so from a T C H, a and E.S.C. and also we've got opportunity.

Grown its future in China, and Japan. So I think we're poised to <unk> to do really well with entrusted US here. Thank you very present volume dynamics that thing also on the oncology portfolio in the U.S. very very strong accelerated growth on a kiss Kelly and I think littered you pointed out promacta actually there we see continued strong growth.

Harry Kirsch: Thank you, Harry. And then another generic advert, Richard. Thank you.

Richard Saynor: So, as you know, we received a CRL for a proposed ADVAIR-GX in 2018, and our latest Q3 guidance indicated that we would not be able to launch before H2 2020. However, following a recent review of our data readouts, we no longer see a pathway to launch in the next 18 months, and as a result, we've decided to discontinue further development.

In I T P and also very strong uptake in first line essay. We also had very favorable guidelines published is at S., putting promacta favorable versus Revlimid. So continued growth there and very pleased with the momentum.

Richard Saynor: Yes, and I think Peter is really, really data driven, not necessarily from regulatory feedback. Okay, next question.

So overall, Richard I'd say, it's not stocking or other factors is real demand growth that we're seeing on our key brands. So next question operator.

Operator: Your next question comes to the line of Stephan Schneider from Vontabau. Please go ahead; your line is now open.

Thank you and his question comes a lot of Canpotex from Goldman Sachs. Please go ahead. Your line is now open.

Good afternoon, and thank you for taking my questions.

Stephen Scala: Yes, hi, thank you. Matthew showed us on slide 23 that the inline

First one is but last year novartis started by tied into operating profit for the innovative medicines business to grow mid to high single digits.

Vas Narasimhan: Online Products and Pipeline would sustain long-term growth for the company. What do you project for your bolt-ons, which were on an annual basis for $10 billion? Do you still need them to drive long-term growth? And the other question is, what about share buybacks in that context? Thank you.

And you ended the year delivering service.

Can you help us think about what might be to frac protect like prevent you from doing similar levels of growth or similar kind of momentum as they look at 2020.

Harry Kirsch: Yeah, you know, Harry, you want to just go through our capital allocation priorities, and I can comment in more detail on M&A.

His question number one.

Harry Kirsch: Sure. Stephan, I mean, our capital allocation priorities have not changed. So, most of you know them; I should repeat them. The first is investments in attractive organic growth opportunities. The second being the growing dividend. And we, assuming AGM approval, will pay out 7 billion in early March to all of our shareholders in totality. And then thirdly would be the M&A bolt-on acquisitions, where we usually see a range of, you know, roughly 5%. That's not a formula.

Number two relative to increase to Ron and you spoke about the NHS kind of memorandum of understanding between hundreds of thousands of patients to begin with it.

The how you're selling medicine in the UK prior to increase Iran would have been Humira ask about 400 million pounds in Africa spend.

As one thinks about potential market pricing for increased paradigm.

The kind of population numbers, we are talking about how likely is it does in concert on has not the biggest selling medicine in the UK.

Harry Kirsch: We will buy it, whatever the opportunities are. But I think it's mainly to indicate we are not after large M&A. Last but not least, would be share buybacks. And, you know, we completed a 5 billion share buyback last year that we started in the middle of 2018. Given also that we bought the medicines company for 9.7 billion, we will finance it, of course, you know, share buyback at the moment. We do not see an additional one. So we haven't announced it. Therefore, whenever we would do an additional share buyback, we would announce it. We have a standing commitment that we always buy back employee participation programs. So we never dilute our shareholders' value with employee programs. And that's, of course, an ongoing buyback that we do without announcing it. But a specific share buyback program at the moment is not announced. I do expect share buybacks will always be part of our capital allocation, but it's also the fourth priority.

Thank you.

My first comment care as your questions or strangely like entrapment I feel like so I was a do my best answer them.

On a on the overall momentum as Harry said, you know of course, we had a tremendous momentum on our growth brands on our launches I think the key different between 2020 and 2019, we do as the Exjade an affinity for generics coming in we also have the opposite mature portfolio with generic exposure and there's just a range of different outcomes.

For those Grand and on the upside of course, if our launch brands or deliver or over deliver our aspirations they would more than than up offset them. So that's why we gave the range that we've given at the start of this year to be prudent and then we'll of course update as we as the year are progressing we have a better read on some.

Are these key launches.

At our currently ongoing now on on with respect to in cluster and it certainly our aspiration that we would want to make it one of the largest medicines or if not the largest medicine in the history of the or the NHS, but we have many steps to get there we have to get the medicine approved we have to arrive at the final agreement.

Vas Narasimhan: Thanks, Kerry. And with respect to bolt-on M&A, I mean, when I look at this chart, what I see is the power of Novartis internal R&D, and we appropriately supplement it with M&A, but we're never in a position where we need to do or have to do M&A. We do it based on attractive assets that fit with our M&A strategy, and then if we can have very strong economics beyond the acquisition, then, of course, we do them. So we feel very good about our overall profile and the strength of our internal R&D. Next question, operator. Thank you, Stephanie.

With a with the UK and nice and then ultimately we need to drive significant uptake within the NHS system, which will require Mary France and her team to do a lot of work to ensure that patients are diagnosed and ultimately get the medicine. The good news and what we're excited about is the commitment of the NHS to work together with us today.

Drive that uptake, which is what we feel like on the first part of this agreement is truly unprecedented for a their head to the NHS than myself to sit together and discuss the.

Operator: Thank you. Our next question comes from the line of Richard Parkes from Deutsche Bank. Please go ahead; your line is now open.

Introduction of a medicine into the NHS system and the goal of driving large scale utilization together, including the NHS directly working on driving that utilization themselves. I think just shows the potential of this medicine to impact what is the leading cause of death and disability for health care system. So there's a show.

Richard Parkes: Hi, thanks very much for taking my questions. Firstly, on Cosentix, you obviously raised your peak sales guidance, but if we look at the Q1 Q volume growth in the US, it's slowed a bit, and it sounds like you're talking about maintained rather than improved commercial access for 2020. I know historically we've seen a soft Q1 with an acceleration as you've benefited from improved volumes. I wonder if we should expect that again this year or are we in more of an equilibrium with an acceleration more dependent on new approvals?

Huge desire I I've been genuinely impressed by the.

Partnership that we've seen with the UK NHS and rather than UK government agencies on this and what the hopeful now is that we can hope replicated in other geographies and hopefully at the other systems in the U.S. as well.

Okay and now we have we still have a seven to eight questions left and so I would ask now that we do our best to limit yourself to one question and one question should have no more than two sub parts to it. So next question.

Marie-France Tuzon: That's the first question. Second, I just wondered if Harry could talk about the swing factors between the upper and lower end of guidance. Consent is already pretty much at the top end of the guidance, so I wondered if there's anything maybe that we're not considering or is your range, would you see that as a conservative kind of start for the year? There are a few products where US sales have significantly exceeded the IQVIA volume growth in the quarter, including Entresto, Promacta, and Gilenya. I just wondered if you could talk, give some insight on trends in pricing mix and stocking changes impacting those products. Thanks.

Your next question comes a lot of Los Angeles Mediasite. Please go ahead. Your line is now open.

Hi, Thanks for taking my question. It is one question with to support and 40 assets going to or have been though do you see any further risks to the execution timeline and have there been any changes to what you are actually going to be able to dispose of them. Thank you.

Richard secular we're confident we'll close this quarter or with moving interaction we would expect to we're working closely with our window in the FTC to close that often this shouldn't be any surprises.

Thank you Richard next question, but I think you learn expression.

Thank you and next question comes a lot of Richard rest of JP. Morgan. Please go ahead. Your line is not within.

Hi, Thanks for taking my question say, just one about the tax rate. So just I think we had an idea that the tax rate might Tim I go up to aim between a range of 16% to 17% because of some of the tax reform in Switzerland, and maybe the U.S. So just thoughts on what's going on and that team to bring it in line.

Harry Kirsch: Thank you, Richard. So first on Cosentix Dynamics, Maria Franz.

Vas Narasimhan: So let me try and take parts of your question. So let me maybe address the Q4, Q1 transition. So yes, we do expect the typical Q1 seasonality, and we'll probably see that across the industry. We actually aim to be broadly in line with Q4, potentially with a small deviation, but we wouldn't see a very, very large deviation, and obviously the incremental RDs as usual to make sure that happens. We feel very confident about where we are in access. There have been some changes, but we are in a solid first and second line position in the U.S.

That 2020 sort of 16% and how we should think about it going forward. Thanks very much.

Sure.

Right. Thank you Richard so so far it's always the core tax rates and detection rates move around where the pissed off.

Different split off of profits into different geography is what different detached so.

Again I was I was pleased that fourth when it when do we have outlook that the tax rate of core tax or 16% is a realistic right basically in the range of last year and an ongoing that could be an increase.

Marie-France Tuzon: I'd just like to remind you that we've continued and sustained growth through multiple competitor entries, and we see Cosentix relatively untouched by new competitors coming into the marketplace. If I just give you an example, so in the U.S., we're outperforming both in dermatology and rheumatology, but if I take the dermatology market, we grew 27 percent this year versus the marketplace at 12. And if we look at quarter four, it's 27 percent, versus the marketplace growing at 14.

In the range of this 16 to 17 jumped into half percent, but if you update really here a year by year and you know there's lot going on on the in the overall tax.

Phil field of taxes on the other hands, we feel that we have very attractive tax rate and that we will continue to have very attractive attractive tax right of course, the Swiss tax reform being embedded an approved last year super helpful for that.

Vas Narasimhan: We're very confident in the Cosentix product profile, but I think what's more important is that physicians are really confident in the Cosentix product profile. If we look at PSO, we provide complete treatment. Cosentix is great on the skin, but it is a complete treatment. Two-thirds of patients will have additional manifestations on the nail, scalp, and palmar plantar, and we do propose a very strong value proposition. What's also important is that payers want an IL-17 on their formulary, and so we're in a very good position to keep our market position. We're also leaders in the room space, so that's why we've upped our guidance based on the momentum and also on the additional news flow that we expect in the future.

But it's very hard to give exact long term outlooks on it but I'm confident we continue to have a.

Very attractive texture, and arrange of 16% to 17% of long term.

Great. Thank you Richard Thank you very next question operator.

Your next question comes a lot of at Kibali, though for brand on <unk>. Please go ahead. Your line is not listen.

Yes. Good afternoon. So one question as well we understand clearly what is beyond your assumption that a linear they won't be any generation 2020 may be a word on one you also take the assumption that the they won't be a nice understood can generate can do U.S. instead, it seems that device quite hopeful to get.

Positively how till the CRL hands. So they got last year end two being the most kids by the end of the first half. So could you get maybe some sensitivity if that happens does that change anything to your guidance. Thanks very much.

Vas Narasimhan: Thank you, Mary France. And I always think people should remind themselves Cosentyx has almost 45% of its sales now coming from rheumatology, fast growth. And there, of course, we face minimal competition and continue to have an outstanding profile that we expand with additional indications. And Mary France and her team are doing an outstanding job. So we feel very good with where we are on Cosentyx.

Yeah. Thank you Eric on Santa sudden weaken as you know there the there's been an ongoing effort to launch a generic on on Sandostatin L.A.R. given its unique formulation since I believe 2006 or 2007. It is a very complex formulation and accomplished manufacturing.

Process are we to our understanding of not seen any activity in the channels to indicate a and front and so if and when that changes will of course, let you know and update our guidance a appropriately I don't know here if you want to comment on the letter.

Vas Narasimhan: Yeah, I think, Richard, you asked about what are the potential swing factors. I mean, in the end, all what we discussed here, you know, the three key elements on the top line, I think our key growth drivers in the market are well established, and that is not so much of a swing factor, in my mind. Of course, the launches, you know, we have some key launches, and there's always a range: how fast will BOFU take up? It's a great start.

You know the U.S. sales of slot floor I'd. If you assume it's your this would not be sold material of course.

Both there would be like drill N saslaw than we would have to update but with saslaw alone assuming a mid mid year U.S. entry would not change or guidance is big enough ranch.

I would also say its important to note given the production challenges with a dance that an L.A. Our I think this we expect us to more looked like a biosimilar type or <unk> erosion as we've seen in Europe , where you've been able to hold very well our sand is that an L.A. our chain a share even in the face of entrants in enjoy.

Vas Narasimhan: And other key launches that are driving Onco and Pharma. So it's a bit the range of outcomes for the launches. The second piece is, of course, then the productivity part. There, we are very confident. You know, we are slightly ahead of our two billion program to be finalized this year. The next program is there, but that's completely under our control. And that's going extremely well.

Our money in a few other countries.

Okay next question operator Burke.

Thank you and ask questions from the line up then we shall have mental health. Please go ahead. Your line is now open.

Harry Kirsch: The third element is then the potential generic entries, and now we have in the US basically an XJJ renewal competition entering in November on Affinitur the three lower strengths, not yet the higher strength, and then Traverpost. Another element, of course, will be how quickly the Valsartan generic suppliers are resubmitting. Some of them are back in the market, and you know we would expect that Diavan and XFORGE to decline in 2020. Now if there are some other smaller products and from the pharma. Of course, it could be that these come a bit later, you know; then we talk about the higher end. And also, if our launches overperform, we talk about the higher end of the guidance. So it's the usual, let's say, set of swing factors, but overall, very confident in the top line growth, a bit more on this uncertainty, what generics outside of Jelenia and Zaslav, which are out of all guidance on the other smaller products, when are they coming in?

Hi that sorry, my questions just being onsite thinking.

Thank you nourish appreciate your interest next question. Operator next question comes a lot of Microsoft from Morgan Stanley . Please go ahead. Your line is now I 10.

Yes, Thanks for squeezing me in Dallas.

Cosentyx two parts on the first part.

Phenomenon Radiographic act spot on the use of a PR. They clearly you have confidence the opportunity here for the product as poly embraced against house, but.

Is this a reflection of some patients sites into that mix all subgroup data from the present study or just sort of portfolio, probably you have from an entrenched formally position because in market seems it has incredibly strong data in this setting.

On the face.

Superior so just trying to understand the pass and physicians want both at Cnf and I'll sum seen approach and then the related question in terms of.

The Io something iOS seven Cnf headset trial. This expense this year versus Cosentyx from you see piece.

Vas Narasimhan: Thank you, Harry. And then on the last question on the IQVIA mismatch, I think we probably can't comment on why the data mismatch, but in terms of Entresto dynamics and then in terms of Kisgali and TAF-MEC dynamics, maybe first, Mary France, would you like to comment on Entresto momentum in the U.S.? And then, Susana, you can comment on the Onco portfolio.

To sum up if you see superiority or do you feel that have any impact given of Seattle 20 for L. Simpson.

As you said no physicians and payers won an example of post but if it's a head to head honestly parallel some scene I for 17, a 17 assets had study would have any impacts on this ross's syndications consensus because expand into new and compensating indications.

Marie-France Tuzon: So, you know, as you saw before, the momentum for Entresto is extremely strong, and it's really based on demand. As I said before, NBRXs are at an all-time high in the U.S. We've seen a fantastic quarter four, and we expect that momentum to continue through 2020. We're very encouraged by the fact that we have very strong data, both supporting ambulatory initiations and in-hospital initiations. We have strong endorsement from the guidelines, so from ACC, AHA, and ESC. And also, we've got opportunities to grow in the future in China and Japan, so I think we're poised to do really well with Entresto.

Yeah. Thanks for the question you don't Cosentyx Nonrated graphic axles by the reason we're excited is again the mechanism here vial 70 neighbors TNF.

Thank you all it allows you to really target emphasizes or the nccs insertion points and we believe in the long run leads to slower progression.

These like physicians. The reason you've had such a strong uptake in P.S.N.S. with I, all 17, and particularly Cosentyx is because of that mechanism in the data we've been able to show across a range of different indications. So we think versus a TNF option I patients will prefer I'll 17, a also there's an impressive safety profile nonrated graphic your.

Moving into earlier lines of really in earlier lines of therapy. So safety also matters. So we think we'll have the right profile, beating given cosentyx overall strength in rheumatology, we want to expand the full indication range quickly we have nonrated graphic than we have as we loaded in the R&D day, a broad range of eight additional indications we're pursuing primary.

Suzanne Sheffer: Thank you very much and volume dynamics. I think also of the oncology portfolio in the US, very, very strong accelerated growth.

Suzanne Sheffer: on KISCALI, and as Richard pointed out, PROMACTA, actually, we see continued strong growth in ITP and also very strong uptake in first line SAA. We also had very favorable guidelines published at ASH putting PROMACTA favorably versus Revlimid, so continued growth there, and very pleased with the momentum.

Early in rheumatology to really build out the base. So that's very much the goal on I'll 17, a AFE look we believe Cosentyx now has six seven years of real World data has a broad port label has proven itself for physicians and so we're not particularly concerned about other I'll send.

The team inhibitors now coming in five six years after with a single trial I think as Mary fronts noted, we have been able to head off every single one of the entrance that have come into say and light leading all of you say that the end of Cosentyx is near and we've been able to keep growing I think that speaks to the power of the medicine and that's what we'll keep.

Vas Narasimhan: So overall, Richard, I'd say it's not stocking or other effects. This is real demand growth that we're seeing on our key brands.

Operator: So, next question, operator?

Operator: Thank you. Thank you, everyone. Thank you. Thank you.

Driving.

And then the last one last question operator.

Operator: Thank you. Your next question comes from the line of Kea Parekh from Goldman Sachs. Please go ahead; your line is now open.

Your last question comes a lot of Simon. Thank you gentlemen, Ben. Please go ahead. Your line is now open.

Thank you everyone for hanging around for my question Fabs and you began the I presentation with a with a very persuasive.

Operator: Good afternoon, and thank you for taking my questions. The first one is, last year Novartis started by guiding its operating profit for the innovative medicines business to grow at mid to high single digits. And you ended the year delivering 17 percent. Can you help us think about what might be the factors that might prevent you from achieving similar levels of growth or a similar kind of momentum as we look at 2020? That's question number one.

Presentation on your commitment to diversify SG philosophy and targets the questions, how and when will you be able to persuade sustain electronics.

Left the Red flag that they can have on Novartis, which we know some talking from clients is preventing some investors from holding your stock. Thanks, so much.

Operator: Question number two, relative to Inclisiran, and you spoke about the NHS kind of memorandum of understanding being hundreds of thousands of patients to begin with. The highest selling medicine in the UK prior to Inclisiran would have been Humira at about 400 million pounds in NHS spend. As one thinks about potential market pricing for Inclisiran, and with the kind of population numbers we are talking about, how likely is it that Inquisaron is not the biggest selling medicine in the UK?

Yes, I appreciate the questions I mean, we're very committed to demonstrating to m. Sci sustain analytics and the relevant other affirms the depth and breadth of our commitment to these topics you will see in the appendix of our Novartis inside the report the most comprehensive review of our position in all of these areas that we've ever done.

We're doing an online system as well to provide these agencies with their all the relevant facts were working very hard to resolve the remaining a light hot topics. We have from the past with respect to some of our legacy issues and I'm optimistic we'll be able to get to a better place with the reports coming.

Operator: Thank you.

Operator: My first comment, Kerry, is that your questions feel strangely like entrapment, I feel like. So I will do my best to answer them. On the overall momentum, as Harry said, you know, of course, we have tremendous momentum on our growth brands and on our launches. I think the key difference between 2020 and 2019 is that we do have the X-Jade and Affinitore generics coming in. We also have the Opsa mature portfolio with generic exposure, and there's just a range of different outcomes for those brands.

Out later this year, it's certainly a top focus for me and our management team. So hopefully we'll be able to do that and those investors then would be able to invest in our we believe great company.

Thank you all very much and appreciate your stake sticking around a little longer and we'll look forward to providing another update in a few months I wish you a great 2020, great start to the next decade and thank you for your interest in Novartis.

That does conclude our conference call today. Thank you for participating me when I disconnect.

Operator: And on the upside, of course, if our launch brands deliver or over-deliver on our aspirations, it would more than offset them. So that's why we gave the range that we gave at the start of this year to be prudent, and then we'll, of course, update as the year progresses and we have a better read on some of these key launches that are currently ongoing. Now, with respect to Inclustrin, it's certainly our aspiration that we would want to make it one of the biggest medicines, or if not the largest medicine in the history of the NHS. But we have many steps to get there. We have to get the medicine approved.

Mm.

Operator: We have to arrive at a final agreement with the UK and NICE. And then, ultimately, we need to drive significant uptake within the NHS system, which will require Mary France and her team to do a lot of work to ensure that patients are diagnosed and ultimately get the medicine. The good news, and what we're excited about, is the commitment of the NHS to work together with us to drive that uptake, which we feel like the first part of this agreement is truly unprecedented. For the head of the NHS and myself to sit together and discuss the introduction of a medicine into the NHS system and the goal of driving large-scale utilization together, including the NHS directly working on driving that utilization themselves, I think just shows the potential of this medicine to impact what is the leading cause of death and disability for healthcare systems.

Operator: So, there's a huge desire. I've been genuinely impressed by the partnership that we've seen with the UK NHS and relevant Okay, and now we have, we still have seven to eight questions left. And so I would ask now that we do our best to limit ourselves to one question, and that one question should have no more than two sub parts. So, next question.

Operator: Your next question comes from the line of Laura Sutcliffe from UBS. Please go ahead, your line is now open. Hello, thanks for taking my question. It is one question with two sub parts. For the assets going to Aurobindo, do you see any further risks to the execution timeline? And have there been any changes to what you are actually going to be able to dispose of there?

Operator: Thank you.

Operator: Richard? Thank you, Laura. We are confident we'll close this quarter. We're moving in the direction we would expect to. We're working closely with Aramindo and the FTC to close that out, and there shouldn't be any surprises.

Operator: Thank you, Richard. Next question. Thank you, Laura. Next question.

Operator: Thank you. Your next question comes from the line of Richard Rosser from J.P. Morgan. Please go ahead; your line is now open.

Operator: Hi, thanks for taking my question. So just one about the tax rate. I think we had an idea that the tax rate might go up in between a range of 16 to 17 percent because of some of the tax reform in Switzerland and maybe the U.S. So just thoughts on what's going on there to bring it in line for 2020, sort of 16 percent, and how we should think about it going forward. Thanks very much. (inaudible)

Operator: Right. Thank you, Richard.

Operator: So it's, of course, always the core tax rates, and the tax rates move around with a bit of, you know, different splits of profits into different geographies were differently taxed. So, again, I was pleased that for 2020, we have an outlook that the core tax rate of 16% is realistic, right, basically in the range of last year. And then ongoing, there could be an increase in the range of this 16 to 17, 17.5%. But we really update this here year by year.

Operator: And, you know, there's a lot going on in the overall tax field of taxes. On the other hand, we feel that we have a very attractive tax rate and that we will continue to have a very attractive tax rate. Of course, tax reform being embedded and approved last year is super helpful for that, but it's very hard to give exact long-term outlooks on it. But I'm confident we'll continue to have a very attractive tax rate in the range of 16 to 17.5% in the long term.

Operator: Great. Thank you, Richard. Thank you, Harry. Next question, operator.

Operator: Thank you. Our next question comes from the line of Eric LeBerrygore from Brian Garnier. Please go ahead; your line is now open.

Operator: Yes, good afternoon. So, one question as well. We understand clearly what is beyond your assumption that in Gilenya, there won't be any generic in 2020. Maybe a word on why you also take the assumption that there won't be any Sandostatin generic in the US. It seems that Teva is quite hopeful to get a positive outcome from the CRL answer they got last year and to be in the market by the end of the first half. So could you give maybe some sensitivity of if that happens, does that change anything to your guidance? Thanks very much.

Operator: Thank you, Eric. On Sandostatin, as you know, there's been an ongoing effort to launch a generic for Sandostatin LAR, given its unique formulation, since, I believe, 2006 or 2007. It is a very complex formulation and a complex manufacturing process. We, to our understanding, have not seen any activity in the channels to indicate an entrant. And so if and when that changes, we'll, of course, let you know and, you know, update our guidance accordingly. I don't know, Harry, if you want to comment on the level of impact.

Operator: You know the U.S. sales of SASLAR, right? If you assume a mid-year entry, this would not be so material. Of course, on both, there would be, you know, Jelenia and SASLAR; then we would have to update. But with SASLAR alone, assuming a mid-year U.S. entry would not change our guidance. It's a big enough range.

Operator: And I would also say, given the production challenges with Sandestat and LAR, I think this will more look like a biosimilar type erosion, as we've seen in Europe, where we've been able to hold very well our Sandestat and LAR share, even in the face of entry into Germany and a few other countries. Okay, next question, Operator.

Operator: Thank you. Our next question is from the line of Narish Chauhan from Intro Health. Please go ahead; your line is now open.

Operator: Hi there. Sorry, my question's just been answered. Thank you.

Operator: Thank you, Naresh. We appreciate your interest. Next question, operator?

Operator: Your next question comes from the line of Mark Purcell from Morgan Stanley. Please go ahead; your line is now open.

Mark Purcell: Yeah, thanks for squeezing me in, Vas. Cosensics, two parts. On the first part, for non-radiographic AXSPR and the use of a PRV, clearly, you have confidence in the opportunity here for the product as partly a race against touts, but is this a reflection of patient cycling dynamics or subgroup data from the PREVENT study or just the portfolio play you have from an entrenched formulary position? Because in the market, Symbosia has incredibly strong data in this setting, which on So just trying to understand, do players and physicians want both the TNF and IL-17 approaches? And then the related question, in terms of the IL-17A and IL-17F head-to-head trial that's expected this year versus Cosensics from UCB's Bepkenazimab, if you see superiority, do you feel that has any impact? Given obviously IL-23 and IL-17, as you said, physicians and players want an example of both, but if it's a head-to-head and a superior IL-17A, IL-17F head-to-head study, would that have any impact on the psoriasis indication for Cosensics as you span into newer compensating indications?

Vas Narasimhan: Yeah, thanks for the question. You know, on Cosentyx non-radiographic axils, the reason we're excited is that, again, the mechanism here of IL-17A versus TNF molecules allows you to really target emphysitis or the emphyses, the insertion points. And we believe this, in the long run, leads to slower progression of the disease. For physicians, the reason you've had such a strong uptake in PSA and AS with IL-17A, particularly Cosentyx, is because of that mechanism and the data we've been able to show across a range of different indications. So we think versus a TNF option, patients will prefer IL-17A. Also, there's an impressive safety profile.

Vas Narasimhan: Non-radiographically, you're moving into earlier lines of, really an earlier line of therapy, so safety also matters. So we think we'll have the right profile. We think given Cosentyx's overall strength in rheumatology, we want to expand the full indication range quickly. We have non-radiographic indications, then we have, as we loaded in on R&D day, a broad range of eight additional indications we're pursuing primarily in rheumatology to really build out the base. So that's very much the goal. On IL-17AF, look, we believe Cosentyx now has six, seven years of real-world data, has a broad label, and has proven itself for physicians. And so we're not particularly concerned about other IL-17 inhibitors now coming in five, six years later with a single trial. I think, as Mary France noted, we have been able to head off every single one of the entrants that have come in to say, and lead all of you to say that the end of Cosentyx is near, and we've been able to keep growing. I think that speaks to the power of the medicine, and that's what we'll keep driving. And then, one last question, operator.

Vas Narasimhan: Your last question comes from the line of Simon Baker from Redburn. Please go ahead; your line is now open. Thank you, everyone, for hanging around for my question.

Operator: In the presentation, with a very persuasive style.

Operator: Thank you for that impressive presentation on your commitment to Novartis' ESG philosophy and targets. The question is, how and when will you be able to persuade Sustainalytics to lift the red flag that they currently have on Novartis, which we know from talking to clients is preventing some investors from holding your stock. Thanks so much.

Operator: I appreciate the questions. We are very committed to demonstrating to MSCI, Sustainalytics, and the relevant other firms the depth and breadth of our commitment to these topics. You'll see in the appendix of our Novartis and Society report the most comprehensive review of our position in all of these areas that we've ever done. We're developing an online system as well to provide these agencies with all of the relevant facts. We're working very hard to resolve the remaining topics we have from the past with respect to some of our legacy issues, and I'm optimistic we'll be able to get to a better place with the reports coming out later this year. It's certainly a top priority for me and our management team.

Operator: So hopefully, we'll be able to do that, and those investors will then be able to invest in our, we believe, great company. Thank you all very much, and we appreciate you sticking around a little longer, and we'll look forward to providing you another update in a few months. I wish you all a great 2020, a great start to the next decade, and thank you for your interest in Novartis.

Operator: This does conclude our conference call today. Thank you for participating. We will now disconnect. ??? ??? ??? ?? ?? ?? ?? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? [inaudible] , , , , , , , , , , , , ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ???