NOVARTIS AG Content
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Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Edition no.17
Q1 impact and sustainability update
Dear investors and analysts,
In our Q1 earnings release, we announced the proposal of Dr. Giovanni Caforio as the new Chair of the Novartis Board of Directors, succeeding Dr. Joerg Reinhardt, upon completion of his 12-year term at the 2025 Annual General Meeting (AGM).
Many of you likely know Dr. Caforio from his time at BMS; we look forward to engaging with you later this year on his potential role at Novartis in the lead-up to the AGM in 2025.
In addition, in our Q1 update, we share key highlights from our 2024 AGM; outline our efforts to design and use AI responsibly; discuss advancements in our Novartis Greener Clinical Trials program; and provide an update on our CDP rating. We also share the top questions received from shareholders in Q1 and our responses.
We also welcomed our new Global Head of Investor Relations, Sloan Simpson, in Q1. As always, we look forward to continuing our engagement with investors on impact and sustainability topics.
For any questions and comments, please reach out to:
Sloan Simpson | Maria Cuevas | |
Global Head of | Investor Relations | |
Investor Relations | Executive Director & ESG Head | |
sloan.simpson@novartis.com | maria.cuevas@novartis.com | |
+1 862 345 4440 | +41 795 865 285 |
Content
Click below to navigate through the document
Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Q1 impact and sustainability update | 2
Novartis proposal for the new Chair of the Board of Directors
Novartis proposes Dr. Giovanni Caforio as Chair of the Board of Directors at the AGM in 2025
The 12-year term of Dr. Joerg Reinhardt as Chair of the Board of Directors ends as scheduled in 2025, when he will retire and not be available for re-election at the Annual General Meeting. Dr. Reinhardt joined Sandoz in 1982 and has held managerial positions with increasing responsibility in Sandoz and, thereafter, Novartis, including Head of the Vaccines and Diagnostics Division and Chief Operating Officer. In 2013, he was appointed Chair of the Board of Directors. During his leadership, Novartis transformed from a diversified healthcare enterprise to a focused medicines company.
The Board of Directors is proposing the nomination of Dr. Giovanni Caforio as Chair of the Board of Directors. Shareholders will vote on Dr. Caforio's nomination to the Board at the next AGM 2025.
Since joining Bristol Myers Squibb in 2000, Dr. Caforio has served in various senior roles at the company. From May 2015 to November 2023, Dr. Caforio was CEO, and from May 2017 to March 2024, he served as Executive Chairman. Under his leadership, BMS successfully transformed into a global medicines company with strong capabilities across R&D and commercialization.
Dr. Caforio was born and educated in Italy and holds Italian and US citizenship. He is a physician by training and received his M.D. from the University of Rome. Dr. Caforio is fluent in Italian, French, Spanish, Portuguese and English.
Content
Click below to navigate through the document
Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Q1 impact and sustainability update | 3
Update on AGM 2024
Our 2024 Annual General Meeting (AGM) was held on March 5, 2024. All resolutions were passed with more than 84% support.
We highlight selected topics from the 2024 AGM below.
Re-election of Members of the Board
Shareholders re-elected Joerg Reinhardt as Chair of the Board of Directors and all other current members of the Board with over 85% support.
Shareholders also re-elected all current members of the Compensation Committee.
The Board of Directors re-designated Simon Moroney as Chair of the Compensation Committee.
Dividend
Shareholders approved the 27th consecutive dividend increase to CHF 3.30 (+3.1%) per share for 2023, representing a 3.7% yield1 and approximately 58% payout of free cash flow.
Advisory vote on non-financial report
Shareholders endorsed the non-financial report in an advisory vote, which received 98.4% support.
Overall, we are grateful for the level of support from our shareholders and the positive feedback we have received on our third integrated report. We remain committed to improving our reporting for enhanced transparency.
Further details of this report are available here.
Background
With the introduction of new provisions on transparency on non-financial matters in the Swiss Code of Obligations in 2023, Novartis was obliged to prepare a report on non-financial matters and submit it to shareholders. The intention of the new provisions is to increase transparency in non-financial matters by providing shareholders with more consistent, comparable, and reliable data. To comply with these new provisions, Novartis has further enhanced the disclosures in its well-established Novartis in Society Integrated Report
and submitted it to shareholders for a vote at the 2024 annual general meeting.
As this was the first year of the new provisions, different interpretations emerged on whether the vote should be binding or advisory. Novartis carefully considered this matter and concluded that the vote on the report on non-financial matters is of consultative nature. Among other reasons, the determining aspect for this conclusion is that the report comprises the company's sustainability strategy, which is part of the overall corporate strategy. As such, it is part of the duties of the Board of Directors and cannot be delegated to the shareholders' meeting.
Novartis will continue to monitor the future discussions concerning the advisory or binding nature of the vote on non-financial matters under the new provisions of Swiss law and on that basis determine the approach for shareholder votes in 2025 and beyond.
1. Based on the SIX closing share price on March 4, 2024.
Content
Click below to navigate through the document
Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Q1 impact and sustainability update | 4
Compensation
In two separate binding votes, shareholders approved the total maximum aggregate amount
of compensation for the Board of Directors for the period from the 2024 AGM to the 2025 AGM with 92.2% support, and the total maximum aggregate amount of compensation for the Executive Committee for the 2025 financial year with 90.0% support.
The 2023 total realized compensation for the CEO was 149% of target, driven by strong 2023 performance.
The CEO Long Term Incentive (LTI) target for cycle 2024-26 will increase by 13%, which brings
the target pay slightly above the 25th percentile of global pharma peers. This is performance-driven compensation, with stringent associated long-term targets.
Proxy advisor ISS recognized that Novartis "provided a compelling rationale for this adjustment, which is entirely performance-based." The voting outcome at the 2024 AGM on compensation report was 84.4% (an increase compared to 2023: 80.6%).
For more details, please see our 2023 Compensation Report here.
Content
Click below to navigate through the document
Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Q1 impact and sustainability update | 5
Responsible AI innovation
AI serves as a powerful tool for Novartis. We outline how we leverage AI for value creation across our business and to advance our global health goals, while taking a thoughtful approach to risk mitigation.
Value-creating applications of AI
A benefit of integrating AI across operations is the potential to improve productivity and efficiency and unlock resources and capabilities. Within healthcare and pharmaceuticals, AI can advance the discovery, production and delivery of life-saving medicines.
We have set the following objectives for our use of AI:
Innovate across R&D to develop novel therapies and drugs
Optimize business processes, operations and commercial activities
Engage with patients, healthcare professionals and partners
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Welcome
Q1 impact and sustainability update | 6
We are implementing AI use cases across Novartis, continually exploring opportunities of AI application to create value.
A selection of current use cases are included below1:
Initiative | Activity | Potential outcome/impact |
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Leveraging our data across R&D
Through data42, our digital research and development platform, Novartis applies AI to harness its extensive collection of patient data and data from over 2,000 clinical studies to uncover correlations between drugs and diseases.
Streamlined data cleaning and curation enable focused insights for our data scientists, supporting improvements in disease identification. By accelerating medical research and drug discovery, we mitigate rising R&D costs and improve treatment accessibility.
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Enabling drug discovery
Through our strategic research collaboration with Isomorphic Labs, we have developed an
AI model predicting protein folding to reshape drug design. It models multiprotein and multiligand complexes in
3D at atomic resolution.
AI-driven approaches may uncover complex biological mechanisms, improving the speed of drug discovery.
Top 10 questions from shareholders
Automating clinical trial report writing
With our strategic investment in Yseop, an AI technology developer, we automate clinical trial report writing.
Automating key aspects of medical reporting and data analysis speeds up study submissions, reducing timelines between drug development and patient delivery for quicker access to treatments.
Optimizing | We deployed Copilot for | AI empowerment can augment |
processes | Microsoft Office 365 to a select | our associates' capabilities |
using AI | group of associates, using the | and optimize certain document- |
power of large language models | heavy processes and activities, | |
to improve productivity. | changing the way we work and | |
potentially reducing costs. |
1. In compliance with all applicable data privacy laws.
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Welcome
Q1 impact and sustainability update | 7
Leveraging AI to advance our global health goals and upskilling our associates
We aim to leverage the potential of AI to support our mission to advance global health. We are implementing AI use cases that support our ambitions to reduce health equity, and we are upskilling our workforce to ensure Novartis employees are equipped with the skills to use AI to drive innovation.
Initiative | Activity | Potential outcome/impact |
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Narrowing Health Inequities with the Novartis Foundation
AI4HealthyCities is a global Novartis Foundation partnership with city governments, research organizations, Microsoft AI for Health and WIPRO, which focuses on reducing health inequities
in city populations with the goal to co-design new population health roadmaps, based on the newly generated data insights. The initiative uses AI to integrate city data sets and uncover cardiovascular risk factors.
US-focused studies show that only about 20% of health outcomes are shaped by the healthcare access, with the remaining 80% being shaped by socio-economic and environmental factors, alongside genetics and modifiable aspects such as lifestyle habits.
By leveraging insights generated from data in health and related sectors, we aim to narrow health inequities and empower policymakers with tools to support decisions. With five cities across three continents already participating, the initiative anticipates sharing initial results later in 2024.
Top 10 questions from shareholders
Upskilling
our associates on AI
Novartis runs an enterprise- wide AI upskilling campaign, covering a broad spectrum of topics. A significant component of this program is supporting the adoption of Microsoft Copilot. We also established a 'Data Science Academy' that offers education sessions and accreditation for data scientists and executives.
Upskilling employees in AI is crucial for driving innovation. It empowers employees to leverage AI tools effectively and securely, enhancing productivity and decision-making.
Content
Click below to navigate through the document
Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Q1 impact and sustainability update | 8
Our approach to mitigating AI risks
Underpinning our risk mitigation strategy for AI is our commitment to the ethical and responsible use of AI systems, which is available on our website.
We engaged a team of ethicists and data privacy, legal and AI specialists, both from within Novartis and externally, to develop the initial framework. The commitment then underwent a review with the Independent Bioethics Advisory Committee and was approved by the Novartis ESG Committee, which is chaired by our CEO and ensures awareness and accountability at the highest levels
of the company.
This commitment stands on eight core ethical principles, that are aligned to our Code of Ethics
and international standards, ensuring a human-centric approach in AI development and applications.
Empower Humanity | Accountability | Mitigate Bias | Respect Privacy |
Transparent | Safe and | Environmental | Review, Learn |
and Explainable | Secure | Sustainability | and Adapt |
Three of these principles are particularly relevant to our risk mitigation efforts:
Accountability
Establishes robust AI governance, including leadership and oversight, risk and impact assessments, policies and procedures, transparency, training and awareness, monitoring and verification, response and enforcement. It means humans are accountable for AI; our AI use cases are thoroughly assessed to mitigate risks before deployment; and Operation Technology controls and processes are applied to continuously monitor AI systems.
Transparency and explainability
Enables auditability of AI decisions while communicating purpose, capabilities and limitations. Novartis can effectively track and understand AI's decisions, mitigating risks and facilitating communication with stakeholders.
Safe and secure
Performing risk impact assessments in the design and implementation of AI systems, considering the context and ensuring we safeguard our patients' and partners' information. In the event of adverse events, we follow reporting procedures to flag risks to the Novartis Safety Department or Quality Assurance within 24 hours of discovery, and transparently disclose any risks to regulatory authorities. This ensures we have a robust framework for preemptively assessing risks and impacts with comprehensive strategies in place to promptly address any potential impacts.
Our AI Risk and Compliance Management framework is being rolled out across the organization in 2024, and our Ethics, Risk and Compliance organization now includes a specialized branch focused on Data Privacy, Digital, and AI Ethics, reporting directly to our Chief Ethics, Risk and Compliance Officer.
Content
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Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Q1 impact and sustainability update | 9
Novartis Greener
Clinical Trials Program
Environmental sustainability is a meaningful component to the Novartis strategy and operating model, and we remain committed to driving a sustainable approach to clinical trials, with a strong focus on efficiency as the key tool
in the early stages of development.
We continue to build on our progress with the Novartis Greener Clinical Trials initiative.
Activity | Potential outcome/impact |
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
The Novartis Greener Clinical Trials program (launched in 2020 and expanded to company-wide effort in 2022) integrates sustainable practices into clinical trials, from design to execution.
The initiative has advanced our sustainability goals in these areas:
- Reduced the volume of patient medication and clinical sample kits and their shipments to hospitals and labs via the use of improved data and analytics capabilities.
- Introduced reusable shipper boxes covering almost all cool-chain medication shipments to hospitals.
- Limited the frontloading of medication at clinical sites prior to patient recruitment.
- Introduced guidance for sustainable clinical trial design and execution across our organization and internal processes.
The program has reduced the carbon footprint of our manufactured drug products and patient medication kits for clinical trials, clinical trial medication shipments, single-use shipper boxes waste and trial monitoring on-site visits by between 40% and 70% over a 3-yearperiod.
Novartis is sharing its experience with private and public partners within the Sustainable Healthcare Coalition (SHC) to advance progress in reducing the environmental impact of clinical trials.
Novartis was awarded the 2023 Terra Carta Seal for this initiative. Part of the Sustainable Markets Initiative (SMI), the Terra Carta Seal recognizes global companies that are actively supporting a climate- and nature-positive future by aligning their core operations
and strategies with sustainable practices.
Content
Click below to navigate through the document
Welcome
Novartis proposal for the new Chair of the Board of Directors
Update on AGM 2024
Responsible AI innovation
Novartis Greener Clinical Trials Program
CDP 2023:
Double A List status
Top 10 questions from shareholders
Q1 impact and sustainability update | 10
CDP 2023: Double A List status
CDP recognized Novartis as a leader in corporate transparency and action on climate change and water security in its 2023 CDP disclosures, awarding Novartis an "A" rating in both CDP Climate Change and CDP Water Security.
The double "A" rating reflects our commitment to transparency and our leading performance on climate change and water security.
Of more than 21,000 companies scored, under 2% were included in the 2023 "A" list for disclosing actionable, high quality environmental data.
Novartis is among a small group of companies that achieved double "A" rating status and the only company among our Global Healthcare Peers.
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Novartis AG published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 15:07:29 UTC.
