Loretto Callaghan

Novartis Ireland MD & Country President

Planning for Sustainable Healthcare

Novartis is a leader in Healthcare and a major investor in Ireland, employing over 1,500 people across 4 sites

• 1,134 manufacturing and development jobs in Ringaskiddy and Alcon

• Commercial offices based in Dublin in Beech Hill Office Campus and Elm Park Office Campus

Source: Novartis data on file 2014

Novartis is committed to bringing research to Ireland

• Novartis Commitment to clinical trials in Ireland­ 25 clinical trials

­ Involving over 1,100 Irish patients

• In Neurology, Dermatology, Ophthalmology, Cardiology, Oncology . . .

• . . in partnership with 20 Irish hospitals

Source: Novartis data on file & Infographic 2014

4

Powerful trends are changing the healthcare landscape

1billion

Populationwill increase by

>500million

Additional 50+ year olds

2 0 1 5 - 2 0 2 5

70% of all illnesses

Chronicdiseases

Source: Projections from UN; WHO

5

Powerful trends will change the Irish healthcare landscape

356k(8%)

Irish Populationwill increase by

>390k(27%)

Additional 50+ year olds

2 0 1 6 - 2 0 2 6

70% of all illnesses

Chronicdiseases

Source: CSO data M2F2 Assumptions

6

Healthcare spending to double1

Healthcare spending will double as a result

1 Projected Global Healthcare Spend, expressed in nominal termsSource: Economist intelligence Unit, World Bank, Global Insights, BMI, OECD, McKinsey Strategy & Trend Analytic Center

2x2 0 1 5 - 2 0 2 5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201580

100

120f(x) = 0.141666799389686 x + 100

f(x) = 0.216745397962012 x + 100

f(x) = − 0.0740573745687829 x + 100

Prices of Prescribed Medicines Relative to Health Sector Prices & the Economy -- Consumer Price Index (Base Jan 2005=100)

CPILinear (CPI)Health

Price of Medicines over the last 10 years have declined versus overall CPI and Healthcare.

Societal Impact of Innovation in medicines extends beyond Patent Life

| Presentation Title | Presenter Name | Date | Subject | Business Use Only8

years

benefit to societycompany revenuebenefit to society

Company Investment

annualnet benefit

launch patent expiry

Examples (WHO List of Essential Medicines)• artemether+lumefantrine (malaria)• deferoxamine (haemoglobinopathies)• levodopa+carbidopa (parkinson)• terbinafine (fungal diseases)• triclabendazol (antischistosomals & antitrematode)

+

20

Company ImpactSocietal Benefit

Moving to a model focused on OUTCOMES

9

Treating signs & symptomsHypertension, bloodsugar levels

Focus on overall clinical outcomesLess heart failure exacerbations, fewer hospital admittances

Today

Product plus offering The product + measures to enhance outcomes: diagnostics, telehealth technology, apps

Product offeringThe product itself

Selling medicines & devices Customers with fixed budget for pharmaceutical and device spending

Partnering for better health Partnering with customers to achieve good clinical outcomes against sustainable healthcare spending

Tomorrow

`

FIRST-IN-CLASS TREATMENT

XOLAIR®

for patients with severeallergic asthma

Hospitals only pay for patients who respond

Ireland Example:Xolair Responder Programme

Novartis Driving Value: Research aim is for “treatment free” remission

12148223-28 NVS External stakeholder presentation v26Jan2015.pptx

Outcomes orientation allows creation of greater value in healthcare systems

Population-specific

Starting point is to focuson improving patient outcomes

Better quality of care is often less expensive over the long-term

Better quality care at equal or lower cost leads to higher value in the system

Improve outcomes Reduce overall costs Increase financial sustainability

Cost of delivering the outcomes

Health outcomesSustainable Health Care =

13148223-28 NVS External stakeholder presentation v26Jan2015.pptx

Government /payor

Other suppliers IT Device

Pharmaceutical industry

Improved Outcomes

Physicians GPs Specialists

Patients Patients Caregivers

Providers Hospitals CHCs

Partnership & Collaboration Key

An outcome based system will benefit all participants

14148223-28 NVS External stakeholder presentation v26Jan2015.pptx

Call for action

Outcomes are the path to sustainable healthcare

We can all help in different ways

Novartis is eager to help and change our role