Novartis reports higher sales and earnings in first quarter of 2008

Novartis AGOn track for solid growth in 2008, Novartis reported higher net sales and double-digit earnings growth in the first quarter of 2008 from the Group's continuing operations now entirely focused on healthcare and reaffirmed its outlook for record sales and earnings for the full year.

Net sales rose 9% to USD 9.9 billion, which were unchanged in local currencies (lc), thanks to the contributions from Sandoz, Consumer Health and Vaccines and Diagnostics. In Pharmaceuticals, net sales fell 3% lc to USD 6.3 billion as strong growth of key brands in all regions outside the US helped offset a 19% US decline from the negative impact of generic competition and the loss of Zelnorm that continued from 2007.

Operating income climbed at a slightly slower pace than net sales, rising 7% to USD 2.5 billion after taking into account significant investments in all Divisions in new product launches, late-stage development projects, and expansion in emerging markets. Currency movements had a net positive impact of approximately USD 185 million. The operating margin reached 25.1% of net sales after 25.6% in the year-ago period.

On the back of the solid operating performance, net income rose 10% to USD 2.3 billion, benefitting from business growth, productivity programs, higher levels of income from associated companies and net financial income. Basic earnings per share (EPS) advanced 15% to USD 1.02 from USD 0.89 in the 2007 first quarter, helped by a reduced level of outstanding shares.

Commenting on the results, Dr. Daniel Vasella, Chairman and CEO of Novartis said: "Our solid first quarter results show that Novartis is on track. I am especially pleased with the dynamic growth of Vaccines and Diagnostics and the new products in Pharmaceuticals. Our pipeline is also progressing well with promising results in innovative treatments in several areas, including cancer (e.g. RAD001) and multiple sclerosis (e.g. FTY720). Project Forward is beginning to deliver the desired improvements in efficiency, allowing for continuous high level investments in R&D. Our recently announced plans to acquire majority ownership of Alcon will create a new growth platform with the world leader in eye care, further strengthening our healthcare portfolio in a fast-changing healthcare environment. I am confident Novartis will once again achieve record sales and earnings in 2008 from continuing operations now fully focused on healthcare."

About Novartis
Novartis AG provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and consumer health products. Novartis is the only company with leading positions in these areas. In 2007, the Group's continuing operations (excluding divestments in 2007) achieved net sales of USD 38.1 billion and net income of USD 6.5 billion. Approximately USD 6.4 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 98,000 full-time associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

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