Excluding Roche investment impacts2						Reported
		Q1 2022 USD m		Q1 2021 USD m		% change USD		% change cc 1		Q1 2021 USD m		% change USD		% change cc 1
Net sales to third parties		12 531		12 411		1		5		12 411		1		5
Divisional operating income		3 026		2 554		18		26		2 554		18		26
Corporate income and expense, net		-174		-139		-25		-30		-139		-25		-30
Operating income		2 852		2 415		18		26		2 415		18		26
As % of net sales		22.8		19.5						19.5
(Loss)/income from associated companies		-2		0		nm		nm		256		nm		nm
Interest expense		-201		-202		0		-2		-202		0		-2
Other financial income and expense		20		-19		nm		nm		-19		nm		nm
Income taxes		-450		-391		-15		-23		-391		-15		-23
Net income		2 219		1 803		23		32		2 059		8		15
Basic earnings per share (USD)		1.00		0.80		25		34		0.91		10		17
Net cash flows from operating activities		1 649		1 608		3				2 130		-23
Free cash flow 1		920		1 075		-14				1 597		-42
Core 1
Core operating income		4 083		3 957		3		9		3 957		3		9
As % of net sales		32.6		31.9						31.9
Core net income		3 251		3 100		5		11		3 413		-5		0
Core basic earnings per share (USD)		1.46		1.38		6		12		1.52		-4		2
1  Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 35. Unless otherwise noted, all growth rates in this release refer to same period in prior year.
2  A reconciliation of 2021 IFRS results and non-IFRS measures core results and free cash flow to exclude the impacts of the 2021 divestment of our Roche investment can be found on page 40 of the Condensed Interim Financial Report. The free cash flow impact represents the dividend received in Q1 2021 from Roche in relation to the distribution of its 2020 net income
nm = not meaningful

Novartis is a focused medicines company, continuing to build depth in five core therapeutic areas (Cardio-Renal, Immunology, Neuroscience, Oncology and Hematology), strength in technology platforms (Gene Therapy, Cell Therapy, Radioligand Therapy, Targeted Protein Degradation and xRNA), and a balanced geographic footprint. Our confidence to grow in the near-term is driven by potential multi-billion-dollar sales from: Cosentyx, Entresto, Kesimpta, Zolgensma, Kisqali and Leqvio. To fuel further growth through 2030 and beyond, we have 20+ new assets with significant sales potential that could be approved by 2026. The strategic review of Sandoz is progressing; we expect to provide an update, at the latest, by the end of 2022. We remain disciplined and shareholder focused in our capital allocation as we balance investing in our business, through organic investments and value-creating bolt-ons, with returning capital to shareholders via our growing annual dividend and share buybacks. Novartis continued to make significant strides in building trust with society and consistently integrating access strategies into how we research, develop and deliver our medicines; reaching over 55 million patients through various access approaches in 2021. We are committed to net zero emissions across our value chain by 2040. Our culture journey towards an inspired, curious and unbossed organization continues, in order to drive performance and competitiveness in the long-term.

In April, we announced a new organizational structure to accelerate growth, strengthen the pipeline and increase productivity. The Pharmaceuticals and Oncology business units are being integrated into an Innovative Medicines business with separate US and International commercial organizations to increase focus, strengthen competitiveness and drive synergies. A new Strategy & Growth function combining corporate strategy, R&D portfolio strategy and business development is being created to further strengthen the pipeline with high-value medicines across internal and external opportunities. A new Operations unit combining Novartis Technical Operations and Customer & Technology Solutions units aims to generate economies of scale, drive productivity and create a strong technology and operational foundation. With the changes, Novartis expects to deliver SG&A savings of at least USD 1 billion, to be fully embedded by 2024.

Net sales were USD 12.5 billion (+1%, +5% cc) in the first quarter driven by volume growth of 11 percentage points, price erosion of 3 percentage points and the negative impact from generic competition of 3 percentage points.

Corporate income and expense, which includes the cost of Group management and central services, amounted to an expense of USD 174 million in the first quarter compared to an expense of USD 139 million in the prior year, mainly driven by lower contributions from the Novartis Venture Fund.

Operating income was USD 2.9 billion (+18%, +26% cc), mainly due to higher sales, increased productivity and lower impairments, partly offset by higher R&D and M&S investments.

Core operating income was USD 4.1 billion (+3%, +9% cc). Core operating income margin was 32.6% of net sales, increasing by 0.7 percentage points (+1.1 percentage points cc).

Income from associated companies decreased from USD 256 million in prior year to a loss of USD 2 million in the first quarter and core income from associated companies decreased from USD 313 million in prior year to a loss of USD 2 million. These decreases were due to the divestment of our investment in Roche that closed in the fourth quarter of 2021.

Interest expense amounted to USD 201 million broadly in line with the prior year.

Other financial income and expense amounted to an income of USD 20 million compared to a loss of USD 19 million in the prior year mainly due to higher interest income and currency gains.

The tax rate in the first quarter was 16.9% compared to 16.0% in the prior year. For comparability, excluding Roche Income from associated companies (divested in Q4 2021) , the prior year tax rate would have been 17.8% compared to 16.9% in first quarter 2022. The decrease from the prior year was mainly the result of a change in profit mix.

The core tax rate (core taxes as a percentage of core income before tax) was 16.9% compared to 16.0% in the prior year. For comparability, excluding Roche Income from associated companies (divested in Q4 2021),  the prior year core tax rate would have been 17.3% compared to 16.9% in first quarter 2022. The decrease from the prior year was mainly the result of a change in profit mix.

Net income was USD 2.2 billion (+8%, +15% cc), mainly driven by higher operating income, partly offset by the loss of Roche income. Excluding the impact of Roche income, net income grew +32% (cc). EPS was USD 1.00 (+10%, +17% cc), growing faster than net income, benefiting from lower weighted average number of shares outstanding. Excluding the impact of Roche income, EPS grew +34% (cc).

Core net income was USD 3.3 billion (-5%, 0% cc), as growth in core operating income was offset by the loss of Roche core income. Excluding the impact of Roche core income, core net income grew +11% (cc). Core EPS was USD 1.46 (-4%, +2% cc), benefiting from lower weighted average number of shares outstanding. Excluding the impact of Roche core income, core EPS grew +12% (cc).

Free cash flow amounted to USD 0.9 billion (-42% USD), compared to USD 1.6 billion in the prior year quarter, mainly due to the loss of Roche annual dividend (prior year USD 0.5 billion) and unfavorable working capital, partly offset by favorable hedging results. Excluding the impact of Roche annual dividend, free cash flow declined -14% (USD).

		Q1 2022 USD m		Q1 2021 USD m		% change USD		% change cc
Net sales		10 176		10 104		1		4
Operating income		2 607		2 242		16		24
As % of net sales		25.6		22.2
Core operating income		3 652		3 666		0		5
As % of net sales		35.9		36.3

Net sales were USD 10.2 billion (+1%, +4% cc) with volume contributing 9 percentage points to growth. Sales growth was mainly driven by Entresto, Kesimpta, Cosentyx, Xolair, Zolgensma and Kisqali. Generic competition had a negative impact of 3 percentage points mainly due to Afinitor, Gleevec and Exjade. Pricing had a negative impact of 2 percentage points. Sales in the US were USD 3.7 billion (+3%) and in the rest of the world were USD 6.5 billion (0%, +5% cc).

In the US sales were mainly driven by Entresto and Kesimpta, partly offset by the impact of generic competition mainly on Afinitor. In Europe (USD 3.5 billion, -4%, +5% cc) sales growth was driven by Entresto and Jakavi. China sales were USD 0.8 billion (+18%, +15% cc) driven by Cosentyx and Entresto. Emerging Growth Markets grew +4% (+9% cc).

Pharmaceuticals BU sales were USD 6.7 billion (+5%, +9% cc) with continued strong growth from Entresto (USD 1.1 billion, +39%, +42% cc), Kesimpta (USD 195 million), Cosentyx (USD 1.2 billion, +10%, +12% cc), Xolair (USD 368 million, +10%, +17% cc) and Zolgensma (USD 363 million, +14%, +18% cc), partly offset by increased competition for Gilenya and generic impact mainly for Exforge, DuoTrav/Travatan and Azopt. The USD 49 million from contract manufacturing revenue recognized in Established Medicines contributed approximately 1 percentage point to Pharmaceuticals BU sales growth.

Oncology BU sales were USD 3.5 billion (-7%, -3% cc). Strong performance of Kisqali (USD 239 million, +23%, +28% cc), Jakavi (USD 389 million, +7%, +14% cc), Promacta/Revolade (USD 491 million, +6%, +9% cc) and Tafinlar+Mekinist (USD 403 million, +3%, +7% cc), was more than offset by generic competition mainly for Afinitor/Votubia (USD 138 million, -46%, -43% cc), Gleevec/Glivec (USD 198 million, -27%, -25% cc), Exjade/Jadenu (USD 110 million, -28%, -24% cc) and Sandostatin (USD 320 million, -11%, -9% cc).

Operating income was USD 2.6 billion (+16%, +24% cc), driven by sales growth, productivity measures, lower impairments and restructuring cost, partly offset by higher R&D and M&S investments. Operating income margin was 25.6% of net sales, increasing +3.4 percentage points (+4.1 percentage points in cc).

Core adjustments were USD 1.0 billion, mainly due to amortization, compared to USD 1.4 billion in prior year. Core adjustments decreased compared to prior year mainly due to lower impairments and restructuring costs.

Core operating income was USD 3.7 billion (0%, +5% cc) mainly driven by higher sales and productivity, partly offset by higher R&D and M&S investments. Core operating income margin was 35.9% of net sales, decreasing 0.4 percentage points, (+0.2 percentage points cc due to currency impacts). Core gross margin as a percentage of sales increased by 0.1 percentage point (cc). Core R&D expenses as a percentage of net sales increased by 0.9 percentage points (cc). Core SG&A expenses as a percentage of net sales decreased by 0.7 percentage points (cc). Core Other Income and Expense as a percentage of net sales increased the margin by 0.3 percentage points (cc).

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Hematology
Promacta/Revolade		491		463		6		9
Tasigna		461		515		-10		-7
Jakavi		389		363		7		14
Gleevec/Glivec		198		272		-27		-25
Kymriah		127		151		-16		-13
Exjade/Jadenu		110		153		-28		-24
Adakveo		44		37		19		20
Scemblix		25				nm		nm
Other		75		103		-27		-25
Total Hematology		1 920		2 057		-7		-3
Solid Tumor
Tafinlar + Mekinist 1		403		393		3		7
Sandostatin		320		358		-11		-9
Kisqali		239		195		23		28
Afinitor/Votubia		138		254		-46		-43
Votrient		129		143		-10		-7
Lutathera		125		122		2		4
Piqray		73		78		-6		-6
Tabrecta		31		17		82		75
Other		146		165		-12		-7
Total Solid Tumor		1 604		1 725		-7		-4
Total Novartis Oncology business unit		3 524		3 782		-7		-3
1  Majority of sales for Mekinist and Tafinlar are combination, but both can be used as monotherapy
nm = not meaningful

Promacta/Revolade (USD 491 million, +6%, +9% cc) showed growth across most regions, driven by increased use in chronic immune thrombocytopenia (ITP) and as first-line treatment for severe aplastic anemia (SAA).

Tasigna (USD 461 million, -10%, -7% cc) sales declined in Emerging Growth Markets due to tender related volatility.

Jakavi (USD 389 million, +7%, +14% cc) growth was driven by strong demand in the myelofibrosis and polycythemia vera indications. Regulatory filings based on the REACH2 and REACH3 trials in steroid-resistant/dependent graft-versus-host disease (GvHD) are under review. In March 2022, CHMP has adopted a positive opinion recommending approval of Jakavi for the treatment of patients aged 12 years and older with acute graft versus host disease or chronic graft versus host disease who have inadequate response to corticosteroids or other systemic therapies.

Gleevec/Glivec (USD 198 million, -27%, -25% cc) declined due to increased generic competition.

Kymriah (USD 127 million, -16%, -13% cc) sales declined in the US and Europe due to lower demand in both regions. Coverage continued to expand, with more than 370 qualified treatment centers in 30 countries having coverage for at least one indication.

Exjade/Jadenu (USD 110 million, -28%, -24% cc) declined due to pressure from generic competition.

Adakveo (USD 44 million, +19%, +20% cc) continued to progress well worldwide with establishing access in new markets and reaching over 7,000 patients to date.

Scemblix (USD 25 million) launched in Q4 2021. Strong uptake demonstrating the high unmet need in CML.

Tafinlar + Mekinist (USD 403 million, +3%, +7% cc) sales grew in the US, Emerging Growth Markets and Japan. Growth was driven by demand in BRAF+ adjuvant melanoma and NSCLC indications, while maintaining demand in the highly competitive metastatic melanoma market. Tafinlar + Mekinist is approved in over 80 countries and remains the worldwide targeted therapy leader in BRAF+ melanoma.

Sandostatin (USD 320 million, -11%, -9% cc) declined across most markets due to ongoing competitive pressure, including generics impact.

Kisqali (USD 239 million, +23%, +28% cc) grew across all geographies due to demand based on the longest overall survival benefit reported in HR+/HER2- advanced breast cancer. It is the only CDK4/6 inhibitor with proven OS benefit across all three Phase III trials of the MONALEESA program with different endocrine therapy partners regardless of menopausal status or line of therapy. Kisqali is approved in 97 countries. Novartis is in US ANDA litigation with generic manufacturers.

Afinitor/Votubia (USD 138 million, -46%, -43% cc) declined across all geographies, mainly in the US, driven by generic competition.

Votrient (USD 129 million, -10%, -7% cc) declined due to increased competition.

Lutathera (USD 125 million, +2%, +4% cc) sales grew in all regions with almost 500 centers now actively treating patients globally.

Piqray (USD 73 million, -6%, -6% cc) sales declined mainly driven by lower new patient starts in the US. Piqray is the first and only therapy specifically developed for the approximately 40% of HR+/HER2- advanced breast cancer patients who have a PIK3CA mutation, which is associated with poor prognosis. Piqray is approved in more than 70 countries.

Tabrecta (USD 31 million, +82%, +75% cc) US launch continues to progress well. Tabrecta is the first and only therapy approved by the US FDA to specifically target metastatic NSCLC with a mutation that leads to MET exon 14 skipping (METex14), as detected by an FDA-approved test using tissue and blood. Tabrecta is approved in 12 countries.

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Immunology, Hepatology and Dermatology
Cosentyx		1 159		1 053		10		12
Ilaris		285		256		11		18
Other		1				nm		nm
Total Immunology, Hepatology and Dermatology		1 445		1 309		10		13
Xolair sales for all indications are reported in the Respiratory and Allergy franchise
nm = not meaningful

Cosentyx (USD 1.2 billion, +10%, +12% cc) driven by demand-led volume growth in the US and Europe, with accelerating growth in other international markets. Cosentyx has now treated over 700,000 children and adults worldwide since launch, and is now approved in 5 indications across rheumatology and dermatology.

Ilaris (USD 285 million, +11%, +18% cc) strong sales were driven by continued growth across all regions. Contributors to continuing growth include adult-onset Still’s disease, together with the other adult rheumatology indications in the US and Europe, as well as strong performance for the Periodic Fevers Syndrome indications in Japan.

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Neuroscience
Gilenya		605		707		-14		-11
Zolgensma		363		319		14		18
Kesimpta		195		50		nm		nm
Mayzent		79		55		44		47
Aimovig		54		47		15		22
Other		9		12		-25		-36
Total Neuroscience		1 305		1 190		10		13
nm = not meaningful

Gilenya (USD 605 million, -14%, -11% cc) sales declined due to increased competition. Novartis is in litigation in the US on our dosing regimen and method of treatment patents, and in Europe regarding our forthcoming dosing regimen patent, with manufacturers of generic and other tablet forms.

Zolgensma (USD 363 million, +14%, +18% cc) growth was driven by expanding access in Europe and Emerging Growth Markets. Zolgensma is now approved in 43 countries.

Kesimpta (USD 195 million) strong sales growth was driven mainly by the US launch due to strong access and increased demand based on a favorable risk-benefit profile. Kesimpta is a targeted B-cell therapy that can deliver powerful and sustained high efficacy, with a favorable safety and tolerability profile and the flexibility of an at home self-administration for a broad population of RMS patients. Kesimpta is now approved in 69 countries.

Mayzent (USD 79 million, +44%, +47% cc) continued to grow in MS patients showing signs of progression despite being on other treatments. Mayzent is the first and only oral disease modifying therapy (DMT) studied and proven to delay disease progression in a broad SPMS patient population. Mayzent is now approved in 71 countries.

Aimovig¹ (USD 54 million, ex-US, ex-Japan +15%, +22% cc). Effective January 1, 2022, Novartis and Amgen reached an agreement to settle all remaining claims in the litigation. Aimovig is approved in 76 countries and reimbursed in 30 markets, and has been prescribed to over 669,000 patients worldwide in the post-trial setting.

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Cardiovascular, Renal and Metabolism
Entresto		1 093		789		39		42
Leqvio		14		1		nm		nm
Total Cardiovascular, Renal and Metabolism		1 107		790		40		43
nm = not meaningful

Entresto (USD 1.1 billion, +39%, +42% cc) sustained strong growth with increased patient share across most markets, driven by demand in HF patients. In the US, Entresto is indicated for heart failure patients with left ventricular ejection fraction (LVEF) below normal. In China, Entresto is included in the National Reimbursement Drug List for both HFrEF and Hypertension. In the US, Novartis is in ANDA litigation with generic manufacturers.

Leqvio (USD 14 million) launch in the US and in other markets is ongoing, with focus on patient on-boarding, removing access hurdles and driving urgency to treat. Leqvio is the first and only small interfering RNA (siRNA) therapy to lower low-density lipoprotein cholesterol approved in the US and was successfully launched in January 2022. Leqvio is now approved in more than 55 countries, with most awaiting reimbursement. Novartis has obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals.

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Ophthalmology
Lucentis		520		545		-5		0
Xiidra		107		108		-1		-2
Beovu		48		39		23		29
Other		312		399		-22		-18
Total Ophthalmology		987		1 091		-10		-5

Lucentis (USD 520 million, -5%, 0% cc) sales were in line (cc) with prior year.

Xiidra (USD 107 million, -1%, -2% cc) grew in the US benefiting from increased brand awareness but was more than offset by decline in Emerging Growth Markets. Novartis is in ANDA litigation with generic manufacturers.

Beovu (USD 48 million, +23%, +29% cc) sales grew mainly in Europe, Emerging Growth Markets and Japan following continued geographic expansion. This quarter, Beovu received EU approval for diabetic macular edema (DME).

Other ophthalmology products declined mainly due to generic impacts in the US, primarily for Travatan and Azopt, and in Japan for Olopatadine.

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Respiratory and Allergy
Xolair		368		335		10		17
Ultibro Group		132		149		-11		-6
Enerzair Group		14		4		nm		nm
Other		6		5		20		9
Total Respiratory and Allergy		520		493		5		13
Xolair sales for all indications are reported in the Respiratory and Allergy franchise
nm = not meaningful

Xolair (USD 368 million, +10%, +17% cc) continued growth, driven by increasing demand in severe allergic asthma and chronic spontaneous urticaria indications, with nominal contribution from the nasal polyps indication. Novartis co-promotes Xolair with Genentech in the US and shares a portion of revenue as operating income, but does not record any US sales.

Ultibro Group (USD 132 million, -11%, -6% cc) sales declined mainly in Europe due to competition. Ultibro Group consists of Ultibro Breezhaler, Seebri Breezhaler and Onbrez Breezhaler.

Enerzair Group (USD 14 million) consists of Enerzair Breezhaler and Atectura Breezhaler, to date they have been launched in 28 markets including Germany, Japan, UK, France, Australia and Canada.

		Q1 2022		Q1 2021		% change		% change
		USD m		USD m		USD		cc
Established Medicines
Galvus Group		216		262		-18		-10
Exforge Group		200		254		-21		-19
Diovan Group		191		214		-11		-8
Zortress/Certican		90		107		-16		-10
Voltaren/Cataflam		85		86		-1		5
Neoral/Sandimmun(e)		82		94		-13		-8
Contract manufacturing		49				nm		nm
Other		375		432		-13		-10
Total Established Medicines		1 288		1 449		-11		-6
nm = not meaningful

Galvus Group (USD 216 million, -18%, -10% cc) declined mainly due to the co-promotion agreement in Japan.

Exforge Group (USD 200 million, -21%, -19% cc) declined mainly due to generic competition and the impact of Volume-Based Procurement in China.

Diovan Group (USD 191 million, -11%, -8% cc) declined mainly due to generic competition and the impact of Volume-Based Procurement in China.

Zortress/Certican (USD 90 million, -16%, -10% cc) declined mainly in the US.

Voltaren/Cataflam (USD 85 million, -1%, +5% cc) grew in Emerging Growth Markets.

Neoral/Sandimmun(e) (USD 82 million, -13%, -8% cc) declined across most markets.

 

1 Novartis returns its Aimovig US rights to Amgen which is now exclusively commercializing Aimovig in the US. Novartis’ ex-US rights remain unaffected and Novartis will continue to commercialize Aimovig in the rest of the world, with the exception of Japan. Amgen will no longer pay royalties to Novartis on sales of Aimovig in the US, and the parties’ cost sharing for commercialization of Aimovig in the US ceases. The parties will continue to share development expenses worldwide in accordance with the relevant agreements. Other terms of the settlement are confidential.

		Q1 2022 USD m		Q1 2021 USD m		% change USD		% change cc
Net sales		2 355		2 307		2		8
Operating income		419		312		34		42
As % of net sales		17.8		13.5
Core operating income		538		445		21		26
As % of net sales		22.8		19.3

Sandoz net sales were USD 2.4 billion (+2%, +8% cc), with volume contributing 16 percentage points to growth. Pricing had a negative impact of 8 percentage points. Ex US sales grew by +10% in cc. Underlying topline growth benefited from a lower prior year comparison, which was most notable for the cough and cold season, as business dynamics continued to normalize from COVID impacts.

Sales in Europe were USD 1.3 billion (0%, +9% cc), in the US USD 436 million (-2%), in Asia / Africa / Australasia USD 409 million (+4%, +8% cc) and in Canada and Latin America USD 253 million (+21%, +21% cc) driven by volume increases and tender wins.

Retail sales were USD 1.8 billion (+5%, +11% cc), growing across all regions. Total Anti-Infectives sales were USD 269 million (+2%, +6% cc).

Global sales of Biopharmaceuticals (biosimilars, biopharmaceutical contract manufacturing and Glatopa) grew to USD 515 million (+1%, +7% cc).

Operating income was USD 419 million (+34%, +42% cc), mainly driven by higher sales and improved gross margin. Operating income margin was 17.8% of net sales, increasing by 4.3 percentage points (4.3 percentage points cc) compared to prior year, benefiting from a lower prior year comparison as business dynamics continued to normalize from COVID impacts.

Core adjustments were USD 119 million, including USD 58 million of amortization. Prior year core adjustments were USD 133 million. The change in core adjustments compared to prior year was driven by lower impairments and legal settlements partly offset by higher impacts from manufacturing footprint changes and financial impacts / assets write-offs provisions in Ukraine.

Core operating income was USD 538 million (+21%, +26% cc), benefiting from a lower prior year comparison as business dynamics continued to normalize from COVID impacts. Core operating margin was 22.8% of net sales, increasing by 3.5 percentage points (+3.3 percentage points cc). Core gross margin as a percentage of sales increased by 1.9 percentage points (cc), due to product and geographic mix. Core R&D expenses as a percentage of net sales decreased by 0.5 percentage points (cc). Core SG&A expenses decreased by 0.3 percentage points (cc). Core Other Income and Expense increased the margin by 0.6 percentage points (cc) driven by higher divestment income.

Net cash flows from operating activities amounted to USD 1.6 billion, compared to USD 2.1 billion in the prior year quarter. This decrease was mainly due to lower dividends from associated companies, as the prior year quarter included the dividends received (USD 0.5 billion) from our investment in Roche, which was divested in the fourth quarter of 2021. Unfavorable changes in working capital were mostly offset by higher net income adjusted for non-cash items and other adjustments, including divestment gains and favorable hedging results.

Net cash inflows from investing activities from continuing operations amounted to USD 9.4 billion, compared to USD 0.8 billion in the prior year quarter.

The current year quarter cash inflows were driven by USD 10.9 billion net proceeds from the sale of marketable securities, commodities and time deposits; and USD 0.2 billion from the sale of intangible assets, financial assets and property, plant and equipment. These cash inflows were partly offset by USD 0.8 billion cash outflows for acquisitions and divestments of businesses, net (primarily the acquisition of Gyroscope Therapeutics Holdings plc); and USD 0.9 billion for purchases of intangible assets, property, plant and equipment and of financial assets.

In the prior year quarter, net cash inflows from investing activities from continuing operations of USD 0.8 billion were mainly driven by USD 1.5 billion net proceeds from the sale of marketable securities, commodities and time deposits, partly offset by USD 0.6 billion for purchases of intangible assets (including the upfront payment to in-license tislelizumab from an affiliate of BeiGene, Ltd).

Net cash outflows used in financing activities from continuing operations amounted to USD 9.5 billion, compared to USD 8.5 billion in the prior year quarter.

The current year quarter cash outflows were driven by USD 7.5 billion for the dividend payment; USD 2.4 billion for net treasury share transactions and USD 0.1 billion payments for lease liabilities. These cash outflows were partly offset by cash inflows of USD 0.5 billion from the net increase in current financial debts.

In the prior year quarter, net cash outflows used in financing activities from continuing operations of USD 8.5 billion were mainly driven by USD 7.4 billion for the dividend payment; USD 1.9 billion for net treasury share transactions and USD 1.5 billion for the repayment of a bond denominated in euro (notional amount of EUR 1.25 billion) at maturity. These cash outflows were partly offset by cash inflows of USD 2.3 billion from the net increase in current financial debts.

Free cash flow amounted to USD 0.9 billion (-42% USD), compared to USD 1.6 billion in the prior year quarter, mainly due to the loss of Roche annual dividend (prior year USD 0.5 billion) and unfavorable working capital, partly offset by favorable hedging results. Excluding the impact of Roche annual dividend, free cash flow declined -14% (USD).

Total non-current assets of USD 88.0 billion at March 31, 2022 increased by USD 1.9 billion compared to December 31, 2021.

Intangible assets other than goodwill increased by USD 0.7 billion as net additions (primarily the acquisition of Gyroscope Therapeutics Holdings plc) were partially offset by amortization and unfavorable currency translation adjustments.

Other non-current assets increased by USD 1.7 billion mainly due to an increase in the prepaid benefit costs of USD 1.7 billion resulting from the changes in discount rates used to calculate the actuarial defined benefit obligations, partly offset by actuarial losses from valuation impact on plan assets.

These increases were partly offset by a decrease in property, plant and equipment of USD 0.2 billion as net additions were more than offset by depreciation and unfavorable currency translation adjustments and a decrease in financial assets of USD 0.3 billion, driven by value adjustments.

Goodwill, investments in associated companies, deferred tax assets and right of use assets were broadly in line with December 31, 2021.

Total current assets of USD 37.2 billion at March 31, 2022 decreased by USD 8.5 billion compared to December 31, 2021.

Marketable securities, commodities, time deposits and derivative financial instruments decreased by USD 11.0 billion mainly due to the dividend payment and the purchases of treasury shares.

This decrease was only partly offset by increases in cash and cash equivalents of USD 1.4 billion, trade receivables of USD 0.4 billion and inventories and other current assets of USD 0.3 billion respectively.

Income tax receivables were broadly in line with December 31, 2021.

Total non-current liabilities of USD 33.7 billion were broadly in line with December 31, 2021.

Deferred tax liabilities increased by USD 0.3 billion, largely due to the impact of acquisitions. This increase was offset by a decrease in provisions and other non-current liabilities of USD 0.2 billion mainly driven by a decrease in defined benefit plans, due to changes in discount rates used to calculate the actuarial defined benefit obligations, partly offset by actuarial losses from valuation impact on plan assets.

Financial debts and lease liabilities were broadly in line with December 31, 2021.

Total current liabilities of USD 29.8 billion decreased by USD 0.4 billion compared to December 31, 2021.

Provisions and other current liabilities decreased by USD 0.5 billion largely due to a decrease of USD 0.6 billion in other deferred short term employee benefits. Trade payables decreased by USD 0.5 billion.

Current financial debts and derivative financial instruments increased by USD 0.4 billion and current income tax liabilities increased by USD 0.2 billion.

Current lease liabilities were broadly in line with December 31, 2021.

The Group`s equity decreased by USD 6.1 billion to USD 61.7 billion at March 31, 2022 compared to December 31, 2021.

This decrease was mainly due to the cash-dividend payment of USD 7.5 billion, purchase of treasury shares of USD 2.8 billion, unfavorable currency translation differences of USD 0.3 billion and net unfavorable fair value adjustments on financial instruments of USD 0.2 billion. This was partially offset by the net income of USD 2.2 billion, net actuarial gains of USD 1.9 billion, equity-based compensation of USD 0.2 billion, decrease of the treasury share repurchase obligation of USD 0.2 billion and the exercise of options and employee transactions of USD 0.1 billion.

The Group’s liquidity amounted to USD 18.8 billion at March 31, 2022, compared to USD 28.3 billion at December 31, 2021. Total non-current and current financial debts, including derivatives, amounted to USD 29.5 billion at March 31, 2022, compared to USD 29.2 billion at December 31, 2021.

The debt/equity ratio increased to 0.48:1 at March 31, 2022, compared to 0.43:1 at December 31, 2021. As of March 31, 2022 the net debt was USD 10.7 billion, compared to USD 0.9 billion at December 31, 2021.

Benefiting from our continued focus on innovation, Novartis has one of the industry’s most innovative and inventive pipelines with more than 160 projects in clinical development.

Product		Active ingredient/ Descriptor		Indication		Region
Pluvicto		177Lu-PSMA-617		Metastatic castration-resistant prostate cancer, post-taxane		US - Mar
Vijoice		alpelisib		PIK3CA-related overgrowth spectrum		US - Apr
Scemblix		asciminib		3L Chronic myeloid leukemia		JP - Mar
Beovu		VEGF inhibitor		Diabetic macular edema		EU - Mar

				Completed submissions
Product		Indication		US		EU		Japan		News update
Cosentyx		JPsA & ERA		Approved		Q2 2021
Cosentyx		Cosentyx 300mg auto-injector and pre-filled syringe		Q4 2020		Approved		Q3 2021
Jakavi		Acute graft-versus-host disease (GvHD)				Q1 2021		Q1 2021		– US filing by Incyte – EU/EEA CHMP Positive opinion
		Chronic GvHD				Q1 2021		Q1 2021		– US filing by Incyte – EU/EEA CHMP Positive opinion
ABL001 (asciminib)		3L Chronic myeloid leukemia		Approved		Q2 2021		Approved		– JP approval
Beovu		Diabetic macular edema		Q3 2021		Approved		Q3 2021		– EU approval
Pluvicto		Metastatic castration-resistant prostate cancer, post-taxane		Approved		Q4 2021				– US approval
VDT482 (tislelizumab)		2L Esophageal cancer (ESCC)		Q3 2021		Q1 2022				– MAA submitted in EU
		NSCLC				Q1 2022				– MAA submitted in EU
Kymriah		Relapsed/refractory follicular lymphoma		Q3 2021		Q3 2021		Q4 2021		– FDA priority review – EU/EEA CHMP Positive opinion
SKO136 (ensovibep)		Corona virus infection		Q1 2022						– FDA emergency use application

Compound/ product		Potential indication/ Disease area		First planned submissions		Current Phase		News update
ABL001 (asciminib)		1L Chronic myeloid leukemia		2025		3
ACZ885 (canakinumab)		Adjuvant NSCLC		2023		3
Aimovig		Migraine, pediatrics		≥2026		3
AVXS-101 (OAV101)		Spinal muscular atrophy (IT formulation)		2025		3		– Pivotal confirmatory study initiated
Beovu		Diabetic retinopathy		2025		3
Piqray		Triple negative breast cancer		2023		3
		Human epidermal growth factor receptor 2-positive (HER2+) advanced breast cancer		2025		3
		Ovarian cancer		2023		3
CFZ533 (iscalimab)		Liver transplantation		≥2026		2
		Sjögren's syndrome		≥2026		2
Coartem		Malaria, uncomplicated (<5 kg patients)		2024		3		– Submission planned in Switzerland

Compound/ product		Potential indication/ Disease area		First planned submissions		Current Phase		News update
Cosentyx		Ankylosing spondylitis head‑to‑head study versus Sandoz biosimilar Hyrimoz (adalimumab)				3		– Study for publication only
		Hidradenitis suppurativa		2022		3
		Giant cell arteritis		2024		3
		Lichen planus		2025		2
		Lupus nephritis		≥2026		3
		Psoriatic arthritis (IV formulation)		2022		3
		Ankylosing spondylitis (IV formulation)		2023		3
CPK850		Retinitis pigmentosa		≥2026		2
CSJ117		Asthma		≥2026		2
JDQ443		Non-small cell lung cancer, 2/3L		2024		3		– Ph3 to be initiated in H2 2022
		Non-small cell lung cancer (combos)		≥2026		2
KAE609 (cipargamin)		Malaria, uncomplicated		≥2026		2
		Malaria, severe		≥2026		2
KAF156 (ganaplacide)		Malaria, uncomplicated		≥2026		2
Kisqali + endocrine therapy		Hormone receptor-positive (HR+)/human epidermal growth factor receptor 2-negative (HER2-) early breast cancer (adjuvant)		2023		3
Leqvio		Secondary prevention of cardiovascular events in patients with elevated levels of LDL-C		≥2026		3
LJN452 (tropifexor + licogliflozin)		Nonalcoholic steatohepatitis		≥2026		2
LMI070 (branaplam)		Huntington’s disease		≥2026		2		– FDA Orphan Drug designation – FDA Fast Track designation
LNA043		Osteoarthritis		≥2026		2		– FDA Fast Track designation
LNP023 (iptacopan)		Paroxysmal nocturnal hemoglobinuria		2023		3		– FDA, EU Orphan Drug designation – FDA Breakthrough Therapy designation – Enrollment completed
		IgA nephropathy		2023		3		– EU Orphan Drug designation
		C3 glomerulopathy		2023		3		– EU Orphan Drug designation – EU PRIME designation – FDA Rare Pediatric designation – China Breakthrough Therapy designation granted
		Membranous nephropathy		≥2026		2
		Atypical haemolytic uraemic syndrome		2025		3
LOU064 (remibrutinib)		Chronic spontaneous urticaria		2024		3
		Multiple sclerosis		2025		3
		Sjögren's syndrome		≥2026		2
Lutathera		Gastroenteropancreatic neuroendocrine tumors, 1st line in G2/3 tumors		2023		3
Pluvicto		Metastatic castration-resistant prostate cancer pre-taxane		2023		3
		Metastatic hormone sensitive prostate cancer		2024		3
177Lu-NeoB		Multiple solid tumors		≥2026		1
LXE408		Visceral leishmaniasis		≥2026		2
MBG453 (sabatolimab)		Myelodysplastic syndrome		2022/2023		3		– FDA Fast Track designation – EU Orphan Drug designation
		Unfit acute myeloid leukemia		2024		2
MIJ821		Depression		≥2026		2
NIS793		1L Pancreatic cancer		2025		3		– FDA Orphan Drug designation
PPY988		Geographic atrophy		≥2026		2		– Gyroscope acquisition

Compound/ product		Potential indication/ Disease area		First planned submissions		Current Phase		News update
QBW251 (icenticaftor)		Chronic obstructive pulmonary disease		2025		2		– Readout imminent
QGE031 (ligelizumab)		Chronic spontaneous urticaria				3		– No submission planned
		Chronic inducible urticaria				3		– No submission planned
		Food allergy		2025		3
SAF312 (libvatrep)		Chronic ocular surface pain		≥2026		2
TQJ230 (pelacarsen)		Secondary prevention of cardiovascular events in patients with elevated levels of lipoprotein(a)		2025		3		– Enrollment ongoing – FDA Fast Track designation – China Breakthrough Therapy designation
UNR844		Presbyopia		2024		2
VAY736 (ianalumab)		Auto-immune hepatitis		≥2026		2
		Sjögren’s syndrome		≥2026		2		– FDA Fast Track designation
		Lupus Nephritis		≥2026		3		– Ph3 to be initiated in 2022
		Systemic lupus erythematosus		≥2026		2
VDT482 (tislelizumab)		1L Nasopharyngeal carcinoma		2022		3		– FDA Orphan designation granted
		1L Gastric cancer		2023		3		– Study met primary OS endpoint in PD-L1 high
		1L ESCC		2023		3
		Localized ESCC		2023		3
		1L Hepatocellular carcinoma		2023		3
		1L Small cell lung cancer		2024		3
		1L Urothelial cell carcinoma		≥2026		3		– New date due to revised plan
		Adj/Neo adj. NSCLC		≥2026		3
VPM087 (gevokizumab)		Colorectal cancer, 1st line		≥2026		1
Xolair		Food allergy		2023		3
YTB323		2L Diffuse large B-cell lymphoma		2025		3		– Ph3 to be initiated in 2022 – Operational delay in start of study

Project/ Compound		Potential indication/ Disease area		News update
GP2411 (denosumab)		Osteoporosis (same as originator)		– In Ph3
SOK583 (aflibercept)		Ophthalmology (same as originator)		– In Ph3
Insulin glargine, lispro, aspart		Diabetes		– Collaboration with Gan & Lee
Natalizumab		Multiple sclerosis and Crohn’s disease		– Collaboration Polpharma Biologics
Trastuzumab		HER2-positive cancer tumors		– Collaboration EirGenix – In registration
Bevacizumab		Solid tumors		– Collaboration Bio-Thera Solutions

First quarter (unaudited)

(USD millions unless indicated otherwise)		Note		Q1 2022		Q1 2021
Net sales to third parties		9		12 531		12 411
Other revenues		9		283		283
Cost of goods sold				-3 856		-4 039
Gross profit				8 958		8 655
Selling, general and administration				-3 512		-3 529
Research and development				-2 320		-2 351
Other income				226		339
Other expense				-500		-699
Operating income				2 852		2 415
(Loss)/income from associated companies		3		-2		256
Interest expense				-201		-202
Other financial income and expense				20		-19
Income before taxes				2 669		2 450
Income taxes				-450		-391
Net income				2 219		2 059
Attributable to:
Shareholders of Novartis AG				2 222		2 059
Non-controlling interests				-3		0
Weighted average number of shares outstanding – Basic (million)				2 225		2 252
Basic earnings per share (USD) 1				1.00		0.91
Weighted average number of shares outstanding – Diluted (million)				2 237		2 265
Diluted earnings per share (USD) 1				0.99		0.91
1  Earnings per share (EPS) is calculated on the amount of net income attributable to shareholders of Novartis AG.

First quarter (unaudited)

(USD millions)		Q1 2022		Q1 2021
Net income		2 219		2 059
Other comprehensive income
Items that are or may be recycled into the consolidated income statement
Novartis share of other comprehensive income recognized by associated companies, net of taxes				-71
Net investment hedge, net of taxes		25		105
Currency translation effects, net of taxes		-270		-2 156
Total of items that are or may be recycled		-245		-2 122
Items that will never be recycled into the consolidated income statement
Actuarial gains from defined benefit plans, net of taxes		1 867		1 098
Fair value adjustments on equity securities, net of taxes		-180		149
Total of items that will never be recycled		1 687		1 247
Total comprehensive income		3 661		1 184
Attributable to:
Shareholders of Novartis AG		3 664		1 186
Non-controlling interests		-3		-2

(USD millions)		Note		Mar 31, 2022 (unaudited)		Dec 31, 2021 (audited)
Assets
Non-current assets
Property, plant and equipment		9		11 347		11 545
Right-of-use assets				1 514		1 561
Goodwill		9		29 636		29 595
Intangible assets other than goodwill		9		34 853		34 182
Investments in associated companies		3		195		205
Deferred tax assets				3 865		3 743
Financial assets				2 711		3 036
Other non-current assets				3 861		2 210
Total non-current assets				87 982		86 077
Current assets
Inventories				6 997		6 666
Trade receivables				8 409		8 005
Income tax receivables				269		278
Marketable securities, commodities, time deposits and derivative financial instruments				4 962		15 922
Cash and cash equivalents				13 852		12 407
Other current assets				2 747		2 440
Total current assets				37 236		45 718
Total assets				125 218		131 795
Equity and liabilities
Equity
Share capital				901		901
Treasury shares				-60		-48
Reserves				60 699		66 802
Equity attributable to Novartis AG shareholders				61 540		67 655
Non-controlling interests				164		167
Total equity				61 704		67 822
Liabilities
Non-current liabilities
Financial debts				22 796		22 902
Lease liabilities				1 577		1 621
Deferred tax liabilities				3 384		3 070
Provisions and other non-current liabilities				5 950		6 172
Total non-current liabilities				33 707		33 765
Current liabilities
Trade payables				5 083		5 553
Financial debts and derivative financial instruments				6 696		6 295
Lease liabilities				272		275
Current income tax liabilities				2 578		2 415
Provisions and other current liabilities				15 178		15 670
Total current liabilities				29 807		30 208
Total liabilities				63 514		63 973
Total equity and liabilities				125 218		131 795

First quarter (unaudited)

								Reserves
(USD millions)		Note		Share capital		Treasury shares		Retained earnings		Total value adjustments		Issued share capital and reserves attributable to Novartis shareholders		Non- controlling interests		Total equity
Total equity at January 1, 2022				901		-48		70 989		-4 187		67 655		167		67 822
Net income								2 222				2 222		-3		2 219
Other comprehensive income										1 442		1 442				1 442
Total comprehensive income								2 222		1 442		3 664		-3		3 661
Dividends								-7 506				-7 506				-7 506
Purchase of treasury shares						-17		-2 790				-2 807				-2 807
Exercise of options and employee transactions						1		92				93				93
Equity-based compensation						4		229				233				233
Shares delivered to Alcon employees as a result of the Alcon spin-off						0		5				5				5
Taxes on treasury share transactions								10				10				10
Decrease of treasury share repurchase obligation under a share buyback trading plan		4.1						170				170				170
Fair value adjustments on financial assets sold								7		-7
Other movements		4.2						23				23				23
Total of other equity movements						-12		-9 760		-7		-9 779				-9 779
Total equity at March 31, 2022				901		-60		63 451		-2 752		61 540		164		61 704

								Reserves
(USD millions)		Note		Share capital		Treasury shares		Retained earnings		Total value adjustments		Issued share capital and reserves attributable to Novartis shareholders		Non- controlling interests		Total equity
Total equity at January 1, 2021				913		-53		57 157		-1 419		56 598		68		56 666
Net income								2 059				2 059		0		2 059
Other comprehensive income								-71		-802		-873		-2		-875
Total comprehensive income								1 988		-802		1 186		-2		1 184
Dividends								-7 368				-7 368				-7 368
Purchase of treasury shares						-12		-1 881				-1 893				-1 893
Exercise of options and employee transactions						0		42				42				42
Equity-based compensation						5		153				158				158
Shares delivered to Alcon employees as a result of the Alcon spin-off						0		17				17				17
Taxes on treasury share transactions								1				1				1
Decrease of treasury share repurchase obligation under a share buyback trading plan		4.1						1 769				1 769				1 769
Fair value adjustments on financial assets sold								154		-154
Fair value adjustments related to divestments								3		-3
Other movements		4.2						13				13				13
Total of other equity movements						-7		-7 097		-157		-7 261				-7 261
Total equity at March 31, 2021				913		-60		52 048		-2 378		50 523		66		50 589

First quarter (unaudited)

(USD millions)		Note		Q1 2022		Q1 2021
Net income				2 219		2 059
Adjustments to reconcile net income to net cash flows from operating activities
Reversal of non-cash items and other adjustments		6.1		2 353		2 366
Dividends received from associated companies and others						522
Interest received				17		4
Interest paid				-110		-112
Other financial payments				-30		-283
Income taxes paid				-633		-735
Net cash flows from operating activities before working capital and provision changes				3 816		3 821
Payments out of provisions and other net cash movements in non-current liabilities				-156		-217
Change in net current assets and other operating cash flow items				-2 011		-1 474
Net cash flows from operating activities				1 649		2 130
Purchases of property, plant and equipment				-257		-246
Proceeds from sale of property, plant and equipment				33		66
Purchases of intangible assets				-602		-612
Proceeds from sale of intangible assets				66		83
Purchases of financial assets				-35		-36
Proceeds from sale of financial assets				66		224
Purchases of other non-current assets						-12
Divestments and acquisitions of interests in associated companies, net				-18		-2
Acquisitions and divestments of businesses, net		6.2		-821		-209
Purchases of marketable securities, commodities and time deposits				-4 221		-50
Proceeds from sale of marketable securities, commodities and time deposits				15 154		1 579
Net cash flows from investing activities from continuing operations				9 365		785
Net cash flows used in investing activities from discontinued operations						-5
Net cash flows from investing activities				9 365		780
Dividends paid to shareholders of Novartis AG				-7 506		-7 368
Acquisitions of treasury shares				-2 542		-1 922
Proceeds from exercised options and other treasury share transactions, net				94		30
Increase in non-current financial debts				3
Repayments of non-current financial debts						-1 466
Change in current financial debts				478		2 301
Payments of lease liabilities				-77		-80
Other financing cash flows, net				22		-24
Net cash flows used in financing activities from continuing operations				-9 528		-8 529
Net cash flows used in financing activities from discontinued operations						-11
Net cash flows used in financing activities				-9 528		-8 540
Net change in cash and cash equivalents before effect of exchange rate changes				1 486		-5 630
Effect of exchange rate changes on cash and cash equivalents				-41		-227
Net change in cash and cash equivalents				1 445		-5 857
Cash and cash equivalents at January 1				12 407		9 658
Cash and cash equivalents at March 31				13 852		3 801