Frequently Asked Questions

Top 10 questions from our investors

Last updated: October 31, 2022

What is the impact of Sandoz separation on your programs (Access, Anti-Microbial Resistance)

• We believe that the planned separation of Sandoz will deliver benefits – with a clear investment thesis for Novartis focusing on being an Innovative Medicines Business and Sandoz standalone potentially to become the #1 European Gx company and global leader in biosimilars.
• We expect improvements in driving access for patients for both companies:
  • The Novartis Access Principles will continue to focus on innovative therapies and impact. We will continue to progress on our commitment that 100% of launches will have an access strategy, and Sustainability Linked-Bond patient access targets across LMICs will remain unchanged.
  • Sandoz will continue to focus their access strategy on affordable healthcare and support its leading position in supplying high-quality Gx antibiotics to help tackle AMR.
  • Overall, we don’t expect our ESG focus areas and commitments to change. Material ESG factors (patient health & safety, access, innovation, ethical business practices) will remain unchanged for both the New Novartis and Sandoz.

Can you talk about the new organizational structure: What impact are you seeing on employee motivation/ culture/engagement scores/innovation?

• We are implementing a new, more agile and simpler operating model that will reshape the way we operate and enable us to accelerate our growth and productivity, and improve the quality of our pipeline.
• We recognize that these changes have created considerable uncertainty for many of our employees, as reflected in the decrease in the employee engagement scores in H2 2022, an anticipated outcome following the announcement.
• As we navigate the changes to implement this new structure as soon as possible, we want to ensure that we are taking the most appropriate steps in a compassionate way for our people.
• The new organizational model will not only enable us to reduce our costs but create a simpler, agile organization, capable of effectively delivering on our plans to drive growth and returns, particularly by unlocking the benefits of innovation in driving overall performance.

How are you addressing the cost of living crisis to fairly balance the needs of your stakeholders while mitigating business risks associated with economic challenges?

• We acknowledge the current economic challenges (e.g. inflation), and we try to balance the needs of different stakeholders.
• We aim to be as fair as possible across our stakeholders:
  • Employees: In markets experiencing extreme hyperinflation, we have already made a number of interventions with the support of each of the local work councils. We also recognize that inflation continues to be increasing in many other markets and we are regularly monitoring these developments. As we approach our year-end compensation cycle, we will consider several factors in line with our principle of fairness (including market rates, affordability, long-term sustainability for the company, criticality of talent, our EPIC¹ and Living Wage commitments) when determining any appropriate compensation adjustments.
  • Suppliers: Constantly monitoring our supply markets to ensure supply and price stability, then leverage contractual provisions and supplier collaboration to mitigate effects.
  • Customers: We are monitoring price increases closely (e.g. In the US, we will continue to cap our price increases based on our commitments. In Europe, we acknowledge that healthcare containment measures are increasing).
  • Mitigating business risks: We expect increased inflationary pressures to be mitigated by productivity measures including the recently announced new organizational model.

Scope 3 challenge: How are you managing/mitigating the risks of the tail-end/smaller suppliers?

• We follow a risk-based approach. We have too many suppliers and our efforts are focused on consolidating our supplier base. In the interim, we are focusing on the larger strategic suppliers who are responsible for more than 95% of our carbon footprint.
• Key supplier contracts will include sustainability criteria.
• We continue to leverage our industry partnerships to support suppliers e.g. Novartis is a founding member of ENERGIZE program that aims to support suppliers in adoption of renewable electricity.

What are the potential financial implications of your net zero goals?

• We are committed to our net zero target and are currently defining our near-term and net zero targets in line with the science-based targets (SBT) net zero standard.
• Our investments for ESG commitments, short-mid and long-term, are always part of our integrated financial and business plans and included in our financial guidance and objectives.

Can you talk about your efforts on clinical trial diversity? How do you currently monitor racial diversity in clinical trials?

• Diverse, inclusive trials are critical to ensuring that we understand how those patients who are most likely to be treated for a disease or condition will respond to a medicine.
• Most clinical trial diversity programs focus on the recruitment of diverse patients as trial subjects. However, we have learnt that: a) these efforts need to focus on building trust with the underserved communities; b) the lack of diverse clinical trial investigators constitutes a barrier to diverse patient recruitment. More specifically, our efforts include:
  1. Working with historically black medical schools over an initial period of 10 years to help build their clinical trial capabilities and establish, or further strengthen, their positioning as clinical trial centers of excellence ($30m commitment).
  2. Supporting up to 1,200 Black and African American students to become the next generation of leaders in health, science, technology and business through scholarships, mentorship, fellowship programs ($20m commitment).
  3. Shifting the focus of the Novartis US foundation to becoming fully dedicated to engaging with community organizations and funding other programs that address health inequities, with a focus on diversity in clinical trials.
  4. Setting clinical trial diversity targets by evaluating D&I principles for 100% of Ph3 studies with US participation starting in H2 2021.
  5. Monitoring clinical trial diversity: Disease prevalence is loaded into our enrolment projection system to allow transparency throughout the trial, enabling real-time monitoring. We also developed a Clinical Innovation Technology Platform (CLIP) that helps identify base population for selected indications (based on epidemiology, real-world data) and support demographic analysis to establish trial representation goals.

Can you tell us what you have achieved so far and what you would highlight from the Beacon of Hope initiative?

• In Q2 2022, we provided an update on the Beacon of Hope initiative (clinical trial diversity efforts) since its launch one year ago:
  • Morehouse School of Medicine’s Clinical Trial Center of Excellence is now operational.
  • Three additional medical colleges/universities joined to create Clinical Trial Centers of Excellence to conduct studies by investigators and trial managers of color among participants from underrepresented populations.
  • Two other pharma companies joined the initiative, including conducting clinical trials through Historically Black Medical School clinical trial centers.
  • Rolled out specific programs to empower African American students, including mentorships, scholarships, grants.

More details on Beacon of Hope

Can you explain the importance of the company’s access to medicine/healthcare initiatives in the overall business strategy of the company?

• Improving access to medicines is where the healthcare industry can drive the largest impact on society. It is one of the greatest unmet health needs worldwide, with nearly 2 billion people lacking access to medicines according to the World Health Organization. Access also featured in the Novartis materiality assessment in 2021, with internal and external stakeholders ranking it alongside innovation, ethical business practices, and patient health & safety as the key priorities for Novartis.
• Access is a global issue, and central to the Novartis strategy globally. We are firmly committed to ensuring our innovative medicines reach everyone who needs them, regardless of where they live or their economic status. In 2017, we established the Access Principles to guide how we integrate access strategies in how we research, develop and deliver all our new medicines, globally. And in 2020, we issued a sustainability-linked bond that is explicitly tied to how we’re increasing access to our therapies. Most recently, Novartis reinforced its access commitment to investors during the 2022 Meet the Management event.
• Novartis will continue to integrate access to medicines in our overall business operations, with our goal to incorporate global access strategies in 100% of our launches.

Can you provide color on the governance on the ESG strategy, including decision-making process and oversight?

• ESG has become embedded across all levels of our organization, supported by a clear governance structure at the leadership level.
• The Board of Directors, particularly through the Governance, Sustainability and Nomination Committee, is responsible for the oversight of the Group’s ESG strategy, and to provide guidance on how ESG is incorporated into Novartis long-term strategy and risk management.
• The Trust and Reputation Committee, a sub-committee of the Executive Committee of Novartis, is responsible for the overall ESG steer and decision-making, and is supported by the Sustainability & ESG Office, ESG Council and the ESG Topic Leads, in particular for the delivery and implementation of the various ESG initiatives.

Biodiversity – we would like to understand how you are progressing on identifying transition risks associated with biodiversity and the impact of climate change, and how you are assessing this in your supply chain.

• Biodiversity loss has been recognized as a risk and accordingly has been included in our enterprise risk management program.
• Our current approach to reducing our impact on biodiversity is applied through addressing our targets on carbon reduction, water quality and elimination of plastic.
• Additional strategic levers will be evaluated in the future.

 

1. Equal Pay International Coalition

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

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

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

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

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

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

Department of Finance Canada Comfort Letter (PDF 0.1 MB)

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

 

Where are Novartis shares traded?

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

What are the ticker symbols for Novartis?

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

What is an ADR/ADS?

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

What is the number of outstanding shares in Novartis?

Key Novartis share data

Calculated on the weighted average number of shares outstanding

	2021	2020	2019
Issued shares	2 434 420 920	2 467 060 920	2 527 374 820
Treasury shares1	199 480 972	210 238 872	262 366 332
Outstanding shares at December 31	2 234 939 948	2 256 822 048	2 265 008 488
Weighted average number of shares outstanding	2 242 601 173	2 277 041 940	2 290 792 782

1. Approximately 102 million treasury shares (2020: 103 million; 2019: 118 million) are held in Novartis entities that restrict their availability for use.

What is the number of outstanding ADRs in Novartis?

Key data on ADRs issued in the US

	2021	2020	2019
Year-end ADR price (USD)	87.47	94.43	94.69
Number of ADRs outstanding1	269 891 321	288 755 853	315 073 094

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

When is your dividend going to be paid?

The dividend payment date has been set for March 10, 2022.

What is the dividend history for Novartis shares?

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

Learn more about dividend information

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

The Annual General Meeting of shareholders held on March 4, 2022 approved a gross dividend (before taxes and duties) of CHF 3.10 per dividend-bearing share of CHF 0.50 nominal value.

The last trading day with entitlement to receive the dividend is March 7, 2022.

As from March 8, 2022 the shares will be traded ex-dividend. This dividend will be paid as of March 10, 2022 (the Swiss payment date).

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

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

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

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

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

Will the entire dividend amount be converted into US dollars on the Swiss payment date of March 10, 2022?

On the Swiss payment date only 65% of the dividend is received. This amount will be converted into US dollars and paid on the ADR payment date of March 17, 2022.

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

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

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

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

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

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

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

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

How does the tax reclaim process work?

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