US SECURITIES & EXCHANGE COMMISSION FORM 20-F 2012
`
`0001
`
`MYLAN - EXHIBIT 1048
`Mylan et al. v. AstraZeneca
`IPR2015-01340
`
`

`
`As filed with the Securities and Exchange Commission on January 23, 2013
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington D.C. 20549
`FORM 20-F
`REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
`OR
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal
`year ended December 31, 2012
`
`អ
`
`፤
`
`OR
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`OR
`SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`Commission file number 1-15024
`NOVARTIS AG
`(Exact name of Registrant as specified in its charter)
`NOVARTIS Inc.
`(Translation of Registrant’s name into English)
`Switzerland
`(Jurisdiction of incorporation or organization)
`Lichtstrasse 35
`4056 Basel, Switzerland
`(Address of principal executive offices)
`Felix R. Ehrat
`Group General Counsel
`Novartis AG
`CH-4056 Basel
`Switzerland
`011-41-61-696-9511
`felix.ehrat@novartis.com
`(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
`Securities registered pursuant to Section 12(b) of the Act:
`Title of class
`Name of each exchange on which registered
`American Depositary Shares
`New York Stock Exchange, Inc.
`each representing 1 share,
`nominal value CHF 0.50 per share,
`and shares
`Securities registered or to be registered pursuant to Section 12(g) of the Act:
`None
`Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
`None
`Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by
`the annual report:
`
`អ
`
`អ
`
`2,420,620,174 shares
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`Yes ፤ No អ
`If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
`15(d) of the Securities Exchange Act of 1934.
`
`Yes អ No ፤
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
`Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
`been subject to such filing requirements for the past 90 days.
`
`Yes ፤ No អ
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
`‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act (Check one):
`Large accelerated filer ፤
`Accelerated filer អ
`Non-accelerated filer អ
`Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
`អ U.S. GAAP ፤ International Financial Reporting Standards as issued by the International Accounting Standards Board អ Other
`If ‘‘Other’’ has been checked in response to the previous question indicate by check mark which financial statement item the registrant has
`elected to follow.
`
`Item 18 អ
`Item 17 អ
`If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
`Yes អ No ፤
`
`0002
`
`

`
`TABLE OF CONTENTS
`
`INTRODUCTION AND USE OF CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`FORWARD LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 1.
`Identity of Directors, Senior Management and Advisers . . . . . . . . . . . . . . . .
`Item 2.
`Offer Statistics and Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 3.
`Key Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`3.A Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`3.B
`Capitalization and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`3.C Reasons for the offer and use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . .
`3.D Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 4.
`Information on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`4.A History and Development of Novartis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`4.B
`Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Alcon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Sandoz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Vaccines and Diagnostics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Consumer Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`4.C Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`4.D Property, Plants and Equipment
`. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 4A. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 5.
`Operating and Financial Review and Prospects . . . . . . . . . . . . . . . . . . . . . .
`5.A Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`5.B
`Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`5.C Research & Development, Patents and Licenses . . . . . . . . . . . . . . . . . . . . .
`5.D Trend Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`5.E Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`5.F
`Aggregate Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 6.
`Directors, Senior Management and Employees . . . . . . . . . . . . . . . . . . . . . .
`6.A Directors and Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`6.B
`Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`6.C
`Board Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`6.D Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`6.E
`Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 7.
`Major Shareholders and Related Party Transactions . . . . . . . . . . . . . . . . . . .
`7.A Major Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`7.B Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`7.C
`Interests of Experts and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 8.
`Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`8.A Consolidated Statements and Other Financial Information . . . . . . . . . . . . . .
`8.B
`Significant Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 9.
`The Offer and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`9.A Listing Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`9.B
`Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`9.C Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`9.D Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`1
`1
`3
`3
`3
`3
`3
`6
`6
`6
`21
`21
`25
`27
`64
`75
`82
`90
`95
`95
`104
`104
`104
`187
`197
`198
`198
`198
`199
`199
`208
`239
`262
`262
`263
`263
`265
`265
`265
`265
`266
`266
`266
`268
`268
`268
`
`0003
`
`

`
`9.E Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`9.F
`Expenses of the Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 10.
`Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.A Share Capital
`. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.B Memorandum and Articles of Association . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.C Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.D Exchange Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.E Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.F Dividends and Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.G Statement by Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.H Documents on Display . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`10.I
`Subsidiary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 11.
`Quantitative and Qualitative Disclosures about Non-Product-Related Market
`Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Description of Securities other than Equity Securities . . . . . . . . . . . . . . . . .
`Item 12.
`12.A Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`12.B Warrants and Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`12.C Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`12.D American Depositary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 13.
`Defaults, Dividend Arrearages and Delinquencies . . . . . . . . . . . . . . . . . . . .
`Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
`Item 15.
`Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 16A. Audit Committee Financial Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 16B. Code of Ethics
`. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 16C. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 16D. Exemptions from the Listing Standards for Audit Committees . . . . . . . . . . . .
`Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers . . . . . .
`Item 16F. Change in Registrant’s Certifying Accountant . . . . . . . . . . . . . . . . . . . . . . .
`Item 16G. Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 17.
`Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 18.
`Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Item 19.
`Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`268
`268
`268
`268
`268
`272
`273
`273
`278
`278
`278
`279
`
`279
`279
`279
`279
`279
`280
`282
`282
`282
`282
`282
`283
`283
`283
`283
`284
`284
`285
`285
`285
`286
`
`0004
`
`

`
`INTRODUCTION
`Novartis AG and its consolidated affiliates (Novartis or the Group) publish consolidated financial
`statements expressed in US dollars. Our consolidated financial statements found in Item 18 of this annual
`report on Form 20-F (Form 20-F) are prepared in accordance with International Financial Reporting
`Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
`
`USE OF CERTAIN TERMS
`In this Form 20-F, references to ‘‘US dollars’’ or ‘‘$’’ are to the lawful currency of the United States of
`America, and references to ‘‘CHF’’ are to Swiss francs; references to the ‘‘United States’’ or to ‘‘US’’ are
`to the United States of America, references to the European Union (EU) are to the European Union and
`its 27 member states and references to ‘‘Americas’’ are to North, Central (including the Caribbean) and
`South America, unless the context otherwise requires; references to ‘‘associates’’ are to employees of our
`affiliates; references to the ‘‘FDA’’ are to the US Food and Drug Administration, references to ‘‘EMA’’ are
`to the European Medicines Agency, an agency of the EU, and references to the CHMP are to the EMA’s
`Committee for Medicinal Products for Human Use; references to ‘‘ADS’’ or ‘‘ADSs’’ are to Novartis
`American Depositary Shares, and references to ‘‘ADR’’ or ‘‘ADRs’’ are to Novartis American Depositary
`Receipts; references to the NYSE are to the New York Stock Exchange, and references to the SIX are to
`the SIX Swiss Exchange. All product names appearing in italics are trademarks owned by or licensed to
`Group companies. Product names identified by a ‘‘↧’’ or a ‘‘↩’’ are trademarks that are not owned by or
`licensed to Group companies. You will find the words ‘‘we,’’ ‘‘our,’’ ‘‘us’’ and similar words or phrases in
`this Form 20-F. We use those words to comply with the requirement of the US Securities and Exchange
`Commission to use ‘‘plain English’’ in public documents like this Form 20-F. For the sake of clarification,
`each Group company is legally separate from all other Group companies and manages its business
`independently through its respective board of directors or other top local management body. No Group
`company operates the business of another Group company. Each executive identified in this Form 20-F
`reports directly to other executives of the Group company which employs the executive, or to that Group
`company’s board of directors.
`
`FORWARD LOOKING STATEMENTS
`This Form 20-F contains certain ‘‘forward looking statements’’ within the meaning of Section 27A of
`the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
`amended, which can be identified by terminology such as ‘‘planned,’’ ‘‘expected,’’ ‘‘will,’’ ‘‘potential,’’
`‘‘pipeline,’’ ‘‘outlook,’’ or similar expressions, or by express or implied discussions regarding potential new
`products, potential new indications for existing products, or regarding potential future revenues from any
`such products; potential outcomes of our efforts to improve the quality standards at any or all of our
`manufacturing sites; or regarding potential future sales or earnings of the Group or any of its divisions in
`the near- and long-term; or by discussions of strategy, plans, expectations or intentions. You should not
`place undue reliance on these statements. Such forward-looking statements reflect the current views of the
`Group regarding future events, and 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. There can be no guarantee that any new products will be
`approved for sale in any market, or that any new indications will be approved for any existing products in
`any market, or that any approvals which are obtained will be obtained at any particular time, or that any
`such products will achieve any particular revenue levels. Nor can there be any guarantee that the Group
`will be successful in its efforts to improve the quality standards at any or all of our manufacturing sites, or
`that we will succeed in restoring or maintaining production at any particular sites. Neither can there be
`any guarantee that the Group, or any of its divisions, will achieve any particular financial results, either in
`
`1
`
`0005
`
`

`
`the near-term or in the long-term. In particular, management’s expectations could be affected by, among
`other things, unexpected regulatory actions or delays or government regulation generally; unexpected
`clinical trial results, including additional analyses of existing clinical data or unexpected new clinical data;
`the Group’s ability to obtain or maintain patent or other proprietary intellectual property protection,
`including the ultimate extent of the impact on the Group of the loss of patent protection on key products
`which commenced last year and will continue this year; unexpected product manufacturing and quality
`issues, including the potential outcomes of our efforts at the Sandoz and Alcon sites that are subject to
`Warning Letters, and with respect to our efforts to restart production of products formerly produced at
`the Consumer Health manufacturing facility at Lincoln, Nebraska; government, industry, and general
`public pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among
`others, actual or potential product liability litigation, litigation and investigations regarding sales and
`marketing practices, shareholder litigation, government investigations and intellectual property disputes;
`competition in general; uncertainties regarding the effects of the ongoing global financial and economic
`crisis, including the financial troubles in certain Eurozone countries; uncertainties regarding future global
`exchange rates; uncertainties regarding future demand for our products; uncertainties necessarily involved
`in long-term financial projections; uncertainties involved in the development of new healthcare products;
`the impact that the foregoing factors could have on the values attributed to the Group’s assets and
`liabilities as recorded in the Group’s consolidated balance sheet. Some of these factors are discussed in
`more detail herein, including under ‘‘Item 3. Key Information—3.D. Risk factors,’’ ‘‘Item 4. Information
`on the Company,’’ and ‘‘Item 5. Operating and Financial Review and Prospects.’’ Should one or more of
`these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results
`may vary materially from those described in this Form 20-F as anticipated, believed, estimated or
`expected. We provide the information in this 20-F as of the date of its filing. We do not intend, and do not
`assume any obligation, to update any information or forward looking statements set out in this Form 20-F
`as a result of new information, future events or otherwise.
`
`2
`
`0006
`
`

`
`Identity of Directors, Senior Management and Advisers
`Item 1.
`Not applicable.
`
`PART I
`
`Item 2. Offer Statistics and Expected Timetable
`Not applicable.
`
`Item 3. Key Information
`
`3.A Selected Financial Data
`The selected financial information set out below has been extracted from our consolidated financial
`statements prepared in accordance with IFRS as issued by the IASB. Our consolidated financial
`statements for the years ended December 31, 2012, 2011 and 2010 are included in ‘‘Item 18. Financial
`Statements’’ in this Form 20-F.
`The results of our Medical Nutrition and Gerber Business Units are shown as discontinued
`operations for all periods presented, following their divestment in 2007.
`All financial data should be read in conjunction with ‘‘Item 5. Operating and Financial Review and
`Prospects’’. All financial data presented in this Form 20-F are qualified in their entirety by reference to the
`consolidated financial statements and their notes.
`
`3
`
`0007
`
`

`
`INCOME STATEMENT DATA
`Net sales from continuing operations . . . . . . . . . . . . . .
`Operating income from continuing operations . . . . . . . .
`Income from associated companies . . . . . . . . . . . . . . . .
`Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Other financial (expense)/income . . . . . . . . . . . . . . . . .
`Income before taxes from continuing operations . . . . . .
`Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Net income from continuing operations . . . . . . . . . . . . .
`Net income from discontinued operations . . . . . . . . . . .
`Group net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Attributable to:
`Shareholders of Novartis AG . . . . . . . . . . . . . . . . . .
`Non-controlling interests . . . . . . . . . . . . . . . . . . . . .
`Operating income from discontinued operations . . . . . . .
`
`Basic earnings per share ($):
`—Continuing operations . . . . . . . . . . . . . . . . . . . . . . .
`—Discontinued operations . . . . . . . . . . . . . . . . . . . . . .
`—Total
`. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`Diluted earnings per share ($):
`—Continuing operations . . . . . . . . . . . . . . . . . . . . . . .
`—Discontinued operations . . . . . . . . . . . . . . . . . . . . . .
`—Total
`. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Cash dividends(1)
`. . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Cash dividends per share in CHF(2)
`. . . . . . . . . . . . . . .
`
`Year Ended December 31,
`2008
`2011
`2010
`2009
`2012
`($ millions, except per share information)
`
`56,673
`11,511
`552
`(724)
`(96)
`11,243
`(1,625)
`9,618
`
`58,566
`10,998
`528
`(751)
`(2)
`10,773
`(1,528)
`9,245
`
`50,624
`11,526
`804
`(692)
`64
`11,702
`(1,733)
`9,969
`
`44,267
`9,982
`293
`(551)
`198
`9,922
`(1,468)
`8,454
`
`9,618
`
`9,245
`
`9,969
`
`8,454
`
`9,505
`113
`
`9,113
`132
`
`9,794
`175
`
`8,400
`54
`
`3.93
`
`3.93
`
`3.83
`
`3.83
`
`4.28
`
`4.28
`
`3.70
`
`3.70
`
`3.89
`
`3.78
`
`4.26
`
`3.69
`
`3.89
`6,030
`2.30
`
`3.78
`5,368
`2.25
`
`4.26
`4,486
`2.20
`
`3.69
`3,941
`2.10
`
`41,459
`8,964
`441
`(290)
`384
`9,499
`(1,336)
`8,163
`70
`8,233
`
`8,195
`38
`70
`
`3.59
`0.03
`3.62
`
`3.56
`0.03
`3.59
`3,345
`2.00
`
`(1)
`
`(2)
`
`Cash dividends represent cash payments in the applicable year that generally relates to earnings of the previous year.
`
`Cash dividends per share represent dividends proposed that relate to earnings of the current year. Dividends for 2012 will be
`proposed to the Annual General Meeting on February 22, 2013 for approval.
`
`4
`
`0008
`
`

`
`BALANCE SHEET DATA
`Cash, cash equivalents and marketable securities &
`derivative financial instruments . . . . . . . . . . . . . .
`Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Other current assets . . . . . . . . . . . . . . . . . . . . . . . .
`Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . .
`Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Trade accounts payable . . . . . . . . . . . . . . . . . . . . . .
`Other current liabilities . . . . . . . . . . . . . . . . . . . . .
`Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . .
`Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Issued share capital and reserves attributable to
`shareholders of Novartis AG . . . . . . . . . . . . . . . .
`Non-controlling interests . . . . . . . . . . . . . . . . . . . . .
`Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Total liabilities and equity . . . . . . . . . . . . . . . . . . .
`Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Outstanding share capital . . . . . . . . . . . . . . . . . . . .
`Total outstanding shares (millions) . . . . . . . . . . . . . .
`
`Year Ended December 31,
`2011
`2010
`2009
`($ millions)
`
`5,075
`5,930
`13,079
`93,412
`117,496
`4,989
`18,159
`28,408
`51,556
`
`65,844
`96
`65,940
`117,496
`65,940
`895
`2,407
`
`8,134
`6,093
`12,458
`96,633
`123,318
`4,788
`19,870
`28,891
`53,549
`
`63,196
`6,573
`69,769
`123,318
`69,769
`832
`2,289
`
`17,449
`5,830
`10,412
`61,814
`95,505
`4,012
`15,458
`18,573
`38,043
`
`57,387
`75
`57,462
`95,505
`57,462
`825
`2,274
`
`2008
`
`6,117
`5,792
`8,972
`57,418
`78,299
`3,395
`13,109
`11,358
`27,862
`
`50,288
`149
`50,437
`78,299
`50,437
`820
`2,265
`
`2012
`
`8,119
`6,744
`13,141
`96,212
`124,216
`5,593
`18,458
`30,946
`54,997
`
`69,093
`126
`69,219
`124,216
`69,219
`909
`2,421
`
`Cash Dividends per Share
`Cash dividends are translated into US dollars at the Reuters/Bloomberg Market System Rate on the
`payment date. Because we pay dividends in Swiss francs, exchange rate fluctuations will affect the US
`dollar amounts received by holders of ADSs.
`
`Year Earned
`2008 . . . . . . . . . .
`2009 . . . . . . . . . .
`2010 . . . . . . . . . .
`2011 . . . . . . . . . .
`2012(1)
`. . . . . . . .
`
`Month and
`Year Paid
`February 2009
`March 2010
`March 2011
`March 2012
`March 2013
`
`Total Dividend
`per share
`(CHF)
`2.00
`2.10
`2.20
`2.25
`2.30
`
`Total Dividend
`per share
`($)
`1.72
`1.95
`2.37
`2.48
`2.51(2)
`
`(1)
`
`(2)
`
`Dividend to be proposed at the Annual General Meeting on February 22, 2013 and to be distributed March 1, 2013
`
`Translated into US dollars at the 2012 Reuters/Bloomberg Market System December 31, 2012 rate of $1.09 to the Swiss franc.
`This translation is an example only, and should not be construed as a representation that the Swiss franc amount represents, or
`has been or could be converted into US dollars at that or any other rate.
`
`5
`
`0009
`
`

`
`Exchange Rates
`The following table shows, for the years and dates indicated, certain information concerning the rate
`of exchange of US dollar per Swiss franc based on exchange rate information found on Reuters/
`Bloomberg Market System. The exchange rate in effect on January 17, 2013, as found on Reuters Market
`System, was CHF 1.00 = $1.07.
`
`Year ended December 31,
`($ per CHF)
`2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`Month
`August 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`September 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`October 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`November 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`January 2013 (through January 17, 2013) . . . . . . . . . . . . . .
`
`Period End
`0.94
`0.97
`1.06
`1.06
`1.09
`
`Average(1)
`0.93
`0.92
`0.96
`1.13
`1.07
`
`Low High
`0.82
`1.02
`0.84
`1.00
`0.86
`1.07
`1.06
`1.25
`1.02
`1.12
`
`1.02
`1.04
`1.06
`1.05
`1.07
`1.07
`
`1.05
`1.08
`1.08
`1.08
`1.10
`1.10
`
`(1)
`
`Represents the average of the exchange rates on the last day of each full month during the year.
`
`3.B Capitalization and Indebtedness
`Not applicable.
`
`3.C Reasons for the offer and use of proceeds
`Not applicable.
`
`3.D Risk Factors
`Our businesses face significant risks and uncertainties. You should carefully consider all of the
`information set forth in this annual report on Form 20-F and in other documents we file with or furnish to
`the SEC, including the following risk factors, before deciding to invest in any Novartis securities. Our
`business as well as our financial condition or results of operations could be materially adversely affected
`by any of these risks, as well as other risks and uncertainties not currently known to us or not currently
`deemed to be material.
`
`Risks Facing Our Business
`Our patented pharmaceuticals businesses, and other key products, face, and will continue to face, important patent
`expirations and aggressive generic competition.
`The products of our Pharmaceuticals and Alcon Divisions, as well as key products from our other
`divisions, are generally protected by patent rights, which are intended to provide us with exclusive rights to
`market the patented products. However, those patent rights are of varying strengths and durations. Loss
`of market exclusivity for one or more important products—including the loss of exclusivity on Diovan, our
`best-selling product, which began in the EU in 2011, and occurred in the US in 2012 and will continue in
`Japan in 2013—have had, and can be expected to continue to have a material adverse effect on our results
`of operations.
`
`6
`
`0010
`
`

`
`The introduction of generic competition for a patented medicine typically results in a significant and
`rapid reduction in net sales and net income for the patented product because generic manufacturers
`typically offer their unpatented versions at sharply lower prices. Such competition can result from the
`regular expiration of the term of the patent. Such competition can also result from the entry of generic
`versions of another medicine in the same therapeutic class as one of our drugs, or in another competing
`therapeutic class, or from the compulsory licensing of our drugs by governments, or from a general
`weakening of intellectual property laws in certain countries around the world. In addition, generic
`manufacturers frequently take an aggressive approach to challenging patents, conducting so-called
`‘‘launches at risk’’ of products that are still under legal challenge for patent infringement, before final
`resolution of legal proceedings.
`We also rely in all aspects of our businesses on unpatented proprietary technology, know-how, trade
`secrets and other confidential information, which we seek to protect through various measures including
`confidentiality agreements with licensees, employees, third-party collaborators, and consultants who may
`have access to such information. If these agreements are breached, our contractual remedies may not be
`adequate to cover any losses.
`Some of our best-selling products have begun or are about to face significant competition due to the
`end of market exclusivity resulting from the expiry of patent protection.
`(cid:127) The patent on valsartan, the active ingredient of Diovan/Co-Diovan/Diovan HCT (high blood
`pressure), expired in the major countries of the EU in November 2011, and generic competitors
`have launched there. In addition, patent protection expired in the US in September 2012, and
`generic versions of Diovan HCT have launched in the US. Generic versions of Diovan monotherapy
`have not yet launched in the US but could potentially launch at any time. In addition, patent
`protection for Diovan is scheduled to expire in Japan in 2013, and 2016 for Co-Diovan (including
`patent term extensions). The active ingredient valsartan is also used in the single-pill combination
`therapies Exforge and Exforge HCT (high blood pressure). While market exclusivities for Exforge/
`Exforge HCT will remain in the EU and Japan due to regulatory exclusivities, there is a risk that
`generic manufacturers may circumvent regulatory exclusivity and gain approval of a combination
`valsartan-amlodipine product in Europe. In the US, under a license agreement with a generics
`manufacturer, the product is expected to face generic competition beginning in October 2014.
`(cid:127) The patent on Femara (cancer) expired in 2011 in the US and in major European markets, and
`generic competitors have launched in those markets.
`(cid:127) The patent on zoledronic acid, the active ingredient in Zometa (cancer), as well as in Reclast/
`Aclasta (osteoporosis), expired in 2012 in a limited number of smaller markets, and will expire in
`2013 in the US and in other major markets. However, certain forms or uses of these products are
`covered by additional patents with later expiration dates in certain markets.
`(cid:127) The patent on the active ingredient in Gleevec/Glivec (cancer) will expire in 2015 in the US, in 2016
`in the major EU countries and 2014 in Japan, in each case including extensions. However, the
`product is protected by additional patents claiming innovative features of Gleevec/Glivec.
`For more information on the patent status of our Pharmaceuticals Division’s products see ‘‘Item 4.
`Information on the Company—Item 4.B Business Overview—Pharmaceuticals—Intellectual Property’’
`and ‘‘Item 18. Financial Statements—note 20’’.
`In 2013, the impact of generic competition on our net sales is expected to be as much as $3.5 billion.
`Because we typically have substantially reduced marketing and research and development expenses
`related to a product in its final year of exclusivity, it is expected that the loss of patent protection will have
`an impact on our operating income which can be expected to correspond to a significant portion of the
`product’s lost sales. The magnitude of such an impact could depend