5.A Operating results This operating and financial review should be read together with our consolidated financial statements in this Annual Report, which have been prepared in accordance with International Financial Reporting Standards (IFRS®) Accounting Standards as issued by the International Accounting Standards Board (see “Item 18. Financial Statements”). “Item 5. Operating and Financial Review and Prospects” with the sections on our compounds in development and selected development projects (see “Item 4. Information on the Company—Item 4.B Business overview”) constitute the Operating and Financial Review (Lagebericht), as defined by the Swiss Code of Obligations. After Novartis AG shareholders approved the Sandoz spin-off on September 15, 2023, we reported our consolidated financial statements as “continuing” operations (retained innovative medicines business and corporate activities) and “discontinued” operations (Sandoz division and related corporate activities until the distribution date of October 3, 2023) in compliance with IFRS Accounting Standards. For more information, see “Item 18. Financial Statements—Note 1. Accounting policies.” The disclosures and commentary in “Item 5. Operating and Financial Review and Prospects” focus on continuing operations, as there were no financial results from discontinued operations in 2025 and 2024. The discussion of our operating and financial review and prospects for the years ended December 31, 2024, and December 31, 2023, can be found in “Item 5. Operating and Financial Review and Prospects—5.A. Operating results — Results of operations” of our Annual Report on Form 20-F filed on January 31, 2025. Significant transactions are discussed in “Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business,” and “Item 18. Financial Statements—Note 27. Commitments and contingent liabilities.” Overview Novartis is an innovative medicines company engaged in the research, development, manufacturing, distribution, marketing, and sale of a broad range of pharmaceutical products. Our purpose is to reimagine medicine to improve and extend people’s lives. We focus on four core therapeutic areas with strong growth potential and high unmet patient needs—cardiovascular, renal and metabolic; immunology; neuroscience; and oncology. Our operations are organized into five organizational units: Biomedical Research, Development, Operations, and two commercial units US and International. Global functions support these organizational units in the execution of their work. For more information about our organizational structure, see “Item 4. Information on the Company—Item 4.B Overview.” Our business environment Advances in both medical science and digital technologies are opening opportunities for new treatments and more efficient drug discovery. At the same time, pressure on pricing is increasing due to regulatory changes, government funding constraints and tariffs on international trade. Meanwhile, as demand for high quality treatment is rising, there are many people around the world who struggle to access adequate healthcare and the medicines they need. The major trends shaping our business environment include: • Scientific and technological innovation: Rapid progress in medical science means we now understand more about human health than ever before, and these advances are supported by developments in data and digital technologies, including AI. This is opening potential opportunities for new breakthrough treatments, shorter times for their development, reduced costs, more personalized forms of healthcare and greater drug safety. It highlights the importance of continued investment in research and development, particularly in next-generation technologies such as radioligand therapy, xRNA, and cell and gene therapies. • Policy, economic and geopolitical pressures: Geopolitical tensions are contributing to trade protectionism, economic sanctions, political instability, and new national security regulations. These measures may disrupt complex global supply chains in the pharmaceutical industry. At the same time, evolving legislation is changing how governments pay for medicines. In the US, the 2022 Inflation Reduction Act imposed price controls on select drugs in the country’s Medicare program and in 2025 the US administration made several further proposals related to drug pricing and tariffs. Meanwhile, the EU is revising legislation with a view to improving access and affordability for patients. • Health challenges: Demand for quality healthcare is continuing to rise, particularly in areas such as oncology, cardiovascular and immunology. US and EU markets are expanding, as is China, given current government support for better healthcare access. Patients, meanwhile, are better informed and have increasing influence on treatment decisions. Nevertheless, access to healthcare remains a serious challenge, complicated by recent cuts to international aid budgets. The WHO estimates that almost two billion people worldwide do not have regular access to essential medicines due to costs, poor healthcare infrastructure and a shortage 42 of healthcare workers. Collaboration and partnerships across the healthcare system are needed to address these complex challenges. At the same time, many healthcare systems are under pressure as a result of long-term factors, such as aging populations, funding constraints, climate change and evolving lifestyles. These factors have led to an increase in illnesses, such as cancer, diabetes and heart disease, as well as respiratory illness and vector-borne diseases such as malaria. Our strategy As part of our core strategy, we focus on four therapeutic areas: cardiovascular, renal and metabolic; immunology; neuroscience; and oncology. Each has strong growth potential and high unmet patient needs. This focus allows us to build depth in our chosen areas, and to use our scientific expertise to discover and develop new treatments, intervene earlier in the progress of a disease and improve the quality of life for patients. Our exploratory research focuses on these four areas, but we recognize that a wider approach is needed to develop an effective R&D pipeline and remain a leader in scientific discovery. We also work closely with external researchers, biotechnology companies and academics to increase our chances of discovering new medicines and treatments. To support these focus areas, we invest in technology platforms to help us deliver future treatments. We focus on two established platforms — chemistry and biotherapeutics — in addition to three advanced platforms: radioligand therapy, xRNA, and cell and gene therapy. We focus on four priority markets: US, China, Germany, and Japan. Together, these markets account for most of the expected growth in global healthcare spending through 2030. Though these are our priority markets, we also maintain a presence in other markets worldwide. We have set three strategic priorities: • Deliver high-value medicines to accelerate growth: We aim to increase growth, driven by continued strong momentum in our existing portfolio of medicines and key upcoming launches. Over the longer term, we expect growth will come through delivering high-value medicines that sustain and replace our existing growth drivers. • Embed operational excellence to deliver returns: In an increasingly competitive environment, we are simplifying processes and reducing costs to become more efficient and effective in our decision-making and to free up resources for investment in new medicines. Our goal is to continue making attractive returns to shareholders while creating value for patients, healthcare systems and society. • Strengthen our foundations: We continue to invest in the foundations of our long-term success. We have made progress in strengthening our culture to attract and retain talent, while developing artificial intelligence capabilities across our value chain and continuing to build trust with stakeholders and society. 43 Results of operations Key figures1 (USD millions unless indicated otherwise) Year ended Dec 31, 2025 Year ended Dec 31, 2024 Change in USD % Change in constant currencies %1 Net sales from continuing operations 54 532 50 317 8 8 Other revenues 2 142 1 405 52 51 Cost of goods sold -13 699 -12 827 -7 -5 Gross profit from continuing operations 42 975 38 895 10 10 Selling, general and administration -13 248 -12 566 -5 -4 Research and development -11 200 -10 022 -12 -9 Other income 1 460 1 175 24 17 Other expense -2 343 -2 938 20 24 Operating income from continuing operations 17 644 14 544 21 25 Return on net sales (%) 32.4 28.9 Loss from associated companies -12 -38 68 70 Interest expense -1 144 -1 006 -14 -14 Other financial income and expense -136 140 nm nm Income before taxes from continuing operations 16 352 13 640 20 22 Income taxes -2 385 -1 701 -40 -43 Net income from continuing operations 13 967 11 939 17 19 Net income 13 967 11 939 17 19 Basic earnings per share from continuing operations (USD) 7.21 5.92 22 24 Basic earnings per share (USD) 7.21 5.92 22 24 Net cash flows from operating activities 19 144 17 619 9 Non-IFRS measures 1 Free cash flow 1 17 596 16 253 8 1 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." nm = not meaningful Company overview Net sales from continuing operations were USD 54.5 billion, up 8% in USD reported terms and 8% measured in constant currencies (cc)1 to remove the impact of exchange rate movements. Net sales growth was driven by volume growth of 15 percentage points. Generic competition had a negative impact of 6 percentage points, pricing had a negative impact of 1 percentage point while currency had no impact. Sales in the US were USD 23.3 billion (+10%) and in the rest of the world USD 31.2 billion (+7%, +6% cc). Sales growth was mainly driven by continued strong performance from Kisqali (USD 4.8 billion, +58%, +57% cc), Kesimpta (USD 4.4 billion, +37%, +36% cc), Pluvicto (USD 2.0 billion, +43%, +42% cc), Scemblix (USD 1.3 billion, +87%, +85% cc) and Cosentyx (USD 6.7 billion, +9%, +8% cc), partly offset by generic competition, mainly for Promacta, Tasigna and Lucentis. In the US (USD 23.3 billion, +10%), sales growth was mainly driven by Kisqali, Kesimpta, Pluvicto, Scemblix and Cosentyx, partly offset by generic competition, mainly for Entresto, Promacta and Tasigna. In Europe (USD 16.7 billion, +8%, +4% cc), sales growth was mainly driven by Kesimpta, Entresto, Kisqali and Pluvicto, partly offset by generic competition, mainly for Lucentis and Tasigna. Sales in emerging growth markets2 were USD 14.0 billion (+8%, +10% cc), including USD 4.2 billion of sales from China (+8%, +8% cc). Operating income from continuing operations was USD 17.6 billion (+21%, +25% cc), mainly driven by higher net sales and lower impairments, partly offset by higher investments behind priority brands and launches. Operating income margin from continuing operations was 32.4% of net sales, increasing 3.5 percentage points (4.4 percentage points cc). Net income was USD 14.0 billion (+17%, +19% cc), mainly driven by higher operating income. Basic earnings per share was USD 7.21 (+22%, +24% cc), benefiting from the lower weighted average number of shares outstanding Net cash flows from operating activities amounted to USD 19.1 billion (+9%) mainly driven by higher net income, adjusted for non-cash items and other adjustments, partly offset by unfavorable changes in working capital, higher payments out of provisions and higher income taxes paid. Free cash flow1 amounted to USD 17.6 billion (+8%) driven by higher net cash flows from operating activities. 44 We also present our core results1, which exclude the impact of amortization of intangible assets, impairments, business acquisitions, divestments, and other significant items, including restructuring and related items, to help investors understand our underlying performance. Core operating income from continuing operations was USD 21.9 billion (+12%, +14% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches. Core operating income margin from continuing operations was 40.1% of net sales, increasing 1.4 percentage points (2.1 percentage points cc). Core net income was USD 17.4 billion (+11%, +12% cc), mainly due to higher core operating income. Core basic earnings per share was USD 8.98 (+15%, +17% cc), benefiting from the lower weighted average number of shares outstanding. As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in 2025 and 2024 related to discontinued operations. 1 For an explanation of non-IFRS measures and reconciliation tables, see “Non-IFRS measures as defined by Novartis.” 2 Novartis definition of emerging growth markets comprises all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. Net sales from continuing operations The following table provides an overview of net sales from continuing operations by core therapeutic area and established brands: (USD millions) Year ended Dec 31, 2025 Year ended Dec 31, 20241 Change in USD % Change in constant currencies %2 Cardiovascular, renal and metabolic 8 959 8 576 4 3 Immunology 10 293 9 293 11 10 Neuroscience 5 993 4 750 26 25 Oncology 16 830 14 297 18 17 Established brands 12 457 13 401 -7 - 7 Total net sales from continuing operations 54 532 50 317 8 8 1 Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. 2 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." 45 The following table provides the top 20 product net sales from continuing operations1 in 2025, as well as the change compared with 2024: US Rest of world Total Brands Brand classification by therapeutic area or established brands Key indications USD m % change USD/cc2 USD m % change USD % change cc2 USD m % change USD % change cc2 Entresto Cardiovascular, renal and metabolic Chronic heart failure, hypertension 3 285 -19 4 463 18 16 7 748 -1 -2 Cosentyx Immunology Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) 3 839 9 2 829 8 7 6 668 9 8 Kisqali Oncology HR+/HER2- metastatic breast cancer and early breast cancer 2 975 77 1 808 33 33 4 783 58 57 Kesimpta Neuroscience Relapsing forms of multiple sclerosis (MS) 2 943 35 1 483 42 39 4 426 37 36 Tafinlar + Mekinist Oncology BRAF V600+ metastatic and adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication, pediatric low grade glioma (pLGG) 867 2 1 348 11 9 2 215 8 6 Jakavi Oncology Myelofibrosis (MF), polycythemia vera (PV), graft-versus-host disease (GvHD) 2 110 9 7 2 110 9 7 Pluvicto Oncology PSMA-positive mCRPC patients post-ARPI, pre- and post-Taxane 1 596 38 398 69 65 1 994 43 42 Ilaris Immunology Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout) 1 041 30 842 18 16 1 883 25 24 Xolair 3 Immunology Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps, food allergy (FA) 1 723 5 4 1 723 5 4 Promacta/Revolade Oncology Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) 636 -46 1 000 -3 -4 1 636 -26 -27 Scemblix Oncology Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in chronic phase (CP); Ph+ CML in CP with the T315I mutation 824 89 461 82 78 1 285 87 85 Zolgensma Group Neuroscience Spinal muscular atrophy (SMA) 413 -5 819 5 3 1 232 1 0 Sandostatin Group Established brands Carcinoid tumors, acromegaly 729 -9 484 2 2 1 213 -5 -5 Leqvio Cardiovascular, renal and metabolic Atherosclerotic cardiovascular disease (ASCVD) 575 49 623 69 65 1 198 59 57 Tasigna Oncology Chronic myeloid leukemia (CML) 486 -43 618 -25 -25 1 104 -34 -34 Lutathera Oncology GEP-NETs gastroenteropancreatic neuroendocrine tumors 588 15 228 8 5 816 13 12 Exforge Group Established brands Hypertension 5 -38 722 4 4 727 3 4 Lucentis Established brands Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) 643 -38 -40 643 -38 -40 Diovan Group Established brands Hypertension 35 25 569 1 1 604 2 2 Fabhalta 4 Oncology Paroxysmal Nocturnal Hemoglobinuria (PNH), IgA Nephropathy (IgAN), Adult C3 Glomerulopathy (C3G) 317 217 188 nm nm 505 291 287 Top 20 brands total 21 154 11 23 359 12 11 44 513 12 11 Rest of portfolio 2 177 1 7 842 -6 -6 10 019 -5 -4 Net sales from continuing operations 23 331 10 31 201 7 6 54 532 8 8 1 Net sales from continuing operations by location of customer 2 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." 3 Net sales from continuing operations reflect Xolair sales for all indications. 4 Net sales from continuing operations reflect Fabhalta sales for all indications. nm = not meaningful 46 For the table providing the net sales from continuing operations by core therapeutic area and established brands for 2025 and 2024, see “Item 18. Financial statements—Note 4. Revenues and geographic information.” For information about the approved indications for certain products described, see “Item 4. Information on the Company—Item 4.B Business overview— Products.” Cardiovascular, renal and metabolic Net sales in the cardiovascular, renal and metabolic therapeutic area were USD 9.0 billion (+4%, +3% cc), with sales growth mainly driven by Leqvio. Entresto (USD 7.7 billion, -1%, -2% cc) sales declined due to generic entry in the US in the third quarter of 2025. Entresto continued to grow ex-US, where the product is approved for heart failure globally as well as for hypertension in China and Japan. Novartis is in litigation with a generic manufacturer to protect its Entresto IP rights. Leqvio (USD 1.2 billion, +59%, +57% cc) sales grew across all regions, achieving blockbuster status. Focus remains on increasing account and patient adoption and continuing medical education. Novartis obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals. Vanrafia (USD 13 million) received accelerated approval in the US and conditional approval in China in the second and fourth quarter of 2025, respectively, as the first and only selective endothelin A (ETA) receptor antagonist for proteinuria reduction in primary IgA nephropathy (IgAN). Immunology Net sales in the immunology therapeutic area reached USD 10.3 billion (+11%, +10% cc), with sales growth mainly driven by Cosentyx and Ilaris. Cosentyx (USD 6.7 billion, +9%, +8% cc) sales grew across all regions, driven by continued demand from recent launches (including the hidradenitis suppurativa indication and the IV formulation in the US) and volume growth in core indications (psoriasis, psoriatic arthritis, ankylosing spondylitis and non-radiographic axial spondyloarthritis). Ilaris (USD 1.9 billion, +25%, +24% cc) sales grew across all regions, led by the US, Europe and Japan, with continued momentum in the Periodic Fever Syndromes and Still’s disease indications. Xolair (USD 1.7 billion, +5%, +4% cc) sales grew driven by the chronic spontaneous urticaria (CSU) indication, mainly in emerging growth markets. A biosimilar was introduced in some European markets in the third quarter of 2025. 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. Rhapsido (USD 19 million) received FDA approval in Q3 2025 as the only oral, targeted BTK inhibitor for CSU and has shown strong uptake with appropriate use of a free drug program to help support patient access. Rhapsido was also approved in China in the fourth quarter of 2025. Neuroscience Net sales in the neuroscience therapeutic area were USD 6.0 billion (+26%, +25% cc), with sales growth mainly driven by Kesimpta. Kesimpta (USD 4.4 billion, +37%, +36% cc) sales grew across all regions, driven by increased demand and strong access, as a high efficacy B-cell therapy with at-home self-administration for a broad population of RMS patients. Zolgensma Group (USD 1.2 billion, +1%, 0% cc) sales were stable, as the IV formulation has reached a high penetration rate in the incident SMA population. Itvisma, the intrathecal formulation, was approved in both the US and UAE in the fourth quarter of 2025. Aimovig (USD 0.3 billion, +7%, +3% cc) sales grew driven by increased demand for migraine prevention. Novartis commercializes Aimovig ex-US and ex-Japan, while Amgen retains all rights in the US and Japan. Oncology Net sales in the oncology therapeutic area were USD 16.8 billion (+18%, +17% cc), with sales growth mainly driven by Kisqali, Pluvicto, Scemblix and Fabhalta. Kisqali (USD 4.8 billion, +58%, +57% cc) sales grew strongly across all regions, including +77% growth in the US, reflecting continued share gains in metastatic breast cancer (mBC), as well as leading NBRx share in early breast cancer (eBC). Kisqali performance reflects its consistent overall survival benefit across all Phase 3 mBC trials, its NCCN Category 1 Preferred status, and its highest ESMO clinical benefit ratings in mBC and eBC. Tafinlar + Mekinist (USD 2.2 billion, +8%, +6% cc) sales grew across all regions, driven by demand in BRAF+ adjuvant melanoma, NSCLC and tumor agnostic indications. Jakavi (USD 2.1 billion, +9%, +7% cc) sales grew across regions and indications. Incyte retains all rights to ruxolitinib (Jakafi®) in the US. Pluvicto (USD 2.0 billion, +43%, +42% cc) showed strong demand growth in the US following the pre-taxane metastatic castration-resistant prostate cancer (mCRPC) approval in the first quarter of 2025. Access ex-US continued to expand, with the pre-taxane setting approved in Japan and China in the fourth quarter of 2025 and the post-taxane mCRPC setting now approved in 32 countries. Promacta/Revolade (USD 1.6 billion, -26%, -27% cc) sales declined due to generic entry in the US in Q2 2025 and ex-US in the third quarter of 2025. Scemblix (USD 1.3 billion, +87%, +85% cc) sales grew across all regions, demonstrating the continued high unmet need for treatment options with high efficacy and tolerability for adult CML patients. Launch momentum in the early line setting continues, with 61 markets having secured early-line approvals, including approval in the EU in the fourth quarter of 2025. Tasigna (USD 1.1 billion, -34%, -34% cc) sales declined due to generic competition globally. Lutathera (USD 0.8 billion, +13%, +12% cc) sales grew mainly in the US, Europe and Japan due to increased demand and earlier-line adoption (within indication) in the US and Japan. Novartis is in patent litigation with manufacturers having FDA applications referencing Lutathera. Fabhalta (USD 0.5 billion, +291%, +287% cc) sales grew due to continued launch execution and market share gains in PNH as well as renal indications IgAN and C3G. The C3G indication received FDA approval in the first quarter of 2025. 47 Piqray/Vijoice (USD 0.4 billion, -15%, -15% cc) sales declined, driven by increased competition for Piqray across all markets. Established Brands The established brands had net sales of USD 12.5 billion (-7%, -7% cc). Sandostatin Group (USD 1.2 billion, -5%, -5% cc) sales declined primarily due to erosion from generic competition. Exforge Group (USD 0.7 billion, +3%, +4% cc) sales grew mainly in China. Lucentis (USD 0.6 billion, -38%, -40% cc) sales declined mainly due to increased competition. Novartis only commercializes Lucentis in markets ex-US. Diovan Group (USD 0.6 billion, +2%, +2% cc) sales grew mainly in China. Galvus Group (USD 0.5 billion, -19%, -17% cc) sales declined mainly due to continued competition. Kymriah (USD 0.4 billion, -14%, -15% cc) sales declined across most markets due to continued competition. Operating income from continuing operations (USD millions unless indicated otherwise) Year ended Dec 31, 2025 Year ended Dec 31, 2024 Change in USD % Change in constant currencies %1 Gross profit from continuing operations 42 975 38 895 10 10 Selling, general and administration -13 248 -12 566 -5 -4 Research and development -11 200 -10 022 -12 -9 Of which research and exploratory development -4 290 -4 027 -7 -4 Of which confirmatory development -6 910 -5 995 -15 -12 Other income 1 460 1 175 24 17 Other expense -2 343 -2 938 20 24 Operating income from continuing operations 17 644 14 544 21 25 Return on net sales (%) 32.4 28.9 1 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." Gross profit from continuing operations was USD 43.0 billion (+10%, +10% cc), mainly driven by higher net sales. Selling, general and administration expenses were USD 13.2 billion (-5%, -4% cc), mainly driven by higher investments behind priority brands and launches. Research and development expenses were USD 11.2 billion (-12%, -9% cc), driven by increases in confirmatory development (-15%, -12% cc) and research and exploratory development (-7%, -4% cc), mainly due to higher investments in recently acquired assets. Other income was USD 1.5 billion (+24%, +17% cc), mainly driven by higher government grant income. Other expense was USD 2.3 billion (+20%, +24% cc), as higher legal related costs were more than offset by a goodwill impairment in the prior year. Operating income from continuing operations was USD 17.6 billion (+21%, +25% cc), mainly driven by higher net sales and lower impairments, partly offset by higher investments behind priority brands and launches. Operating income margin from continuing operations was 32.4% of net sales, increasing 3.5 percentage points (4.4 percentage points cc). Non-IFRS measure Core operating income from continuing operations 1 (USD millions unless indicated otherwise) Year ended Dec 31, 2025 Year ended Dec 31, 2024 Change in USD % Change in constant currencies % Core gross profit from continuing operations 45 515 41 872 9 9 Core selling, general and administration -13 238 -12 564 -5 -4 Core research and development2 -10 295 -9 302 -11 -8 Of which core research and exploratory development -3 798 -3 370 -13 -10 Of which core confirmatory development -6 497 -5 932 -10 -7 Core other income 667 273 144 121 Core other expense -760 -785 3 8 Core operating income from continuing operations 21 889 19 494 12 14 Core return on net sales (%) 40.1 38.7 1 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." 2 Core research and development expense exclude impairments, amortization and certain other items. 48 The adjustments made to operating income to arrive at core operating income amounted to USD 4.2 billion (compared with USD 5.0 billion in the prior year). For more information, see “—Non-IFRS measures as defined by Novartis—2025 and 2024 reconciliation from IFRS Accounting Standards results to non-IFRS core results.” Core gross profit from continuing operations was USD 45.5 billion (+9%. +9% cc), mainly driven by higher net sales. Core selling, general and administration expenses were USD 13.2 billion (-5%, -4% cc), mainly driven by higher investments behind priority brands and launches. Core research and development expenses were USD 10.3 billion (-11%, -8% cc), driven by increases in core confirmatory development (-10%, -7% cc) and core research and exploratory development (-13%, -10% cc), mainly due to higher investments in recently acquired assets. Core other income was USD 0.7 billion (+144%, +121% cc) mainly driven by higher government grant income. Core other expense was USD 0.8 billion (+3%, +8% cc). Core operating income from continuing operations was USD 21.9 billion (+12%, +14% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches. Core operating income margin from continuing operations was 40.1% of net sales, increasing 1.4 percentage points (2.1 percentage points cc). Non-operating income and expense The term “non-operating income and expense” includes all income and expense items outside operating income from continuing operations. The following table provides an overview of non-operating income and expense from continuing operations: (USD millions unless indicated otherwise) Year ended Dec 31, 2025 Year ended Dec 31, 2024 Change in USD % Change in constant currencies %1 Operating income from continuing operations 17 644 14 544 21 25 Loss from associated companies -12 -38 68 70 Interest expense -1 144 -1 006 -14 -14 Other financial income and expense -136 140 nm nm Income before taxes from continuing operations 16 352 13 640 20 22 Income taxes -2 385 -1 701 -40 -43 Net income from continuing operations 13 967 11 939 17 19 Net income 13 967 11 939 17 19 Basic earnings per share from continuing operations (USD) 7.21 5.92 22 24 Basic earnings per share (USD) 7.21 5.92 22 24 1 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." nm = not meaningful 49 Interest expense and other financial income and expense Interest expense amounted to USD 1.1 billion compared with USD 1.0 billion in the prior year. Other financial income and expense amounted to an expense of USD 136 million compared with an income of USD 140 million in the prior year, mainly due to lower interest and other financial income, partially offset by lower monetary losses from hyperinflation accounting. Income taxes The tax rate was 14.6% compared with 12.5% in the prior year. The current-year tax rate was favorably impacted by changes in uncertain tax positions and the remeasurement of deferred tax balances following tax law changes, primarily in Switzerland and the US, partially offset by the impact of intercompany transactions, prior-year items and other items. The prior-year tax rate was favorably impacted by the effect of changes in uncertain tax positions. Excluding these impacts, the current-year tax rate would have been 15.0% compared with 15.0% in the prior year. Net income Net income was USD 14.0 billion (+17%, +19% cc), mainly driven by higher operating income. Earnings per share Basic earnings per share was USD 7.21 (+22%, +24% cc), benefiting from the lower weighted average number of shares outstanding. Non-IFRS measure Core non-operating income and expense1 The following table provides an overview of the non-IFRS measure core non-operating income and expense from continuing operations: (USD millions unless indicated otherwise) Year ended Dec 31, 2025 Year ended Dec 31, 2024 Change in USD % Change in constant currencies % Core operating income from continuing operations 21 889 19 494 12 14 Core loss from associated companies -12 -12 0 1 Core interest expense -1 144 -1 006 -14 -14 Core other financial income and expense 44 295 -85 -86 Core income before taxes from continuing operations 20 777 18 771 11 12 Core income taxes -3 366 -3 016 -12 -13 Core net income from continuing operations 17 411 15 755 11 12 Core net income 17 411 15 755 11 12 Core basic EPS from continuing operations (USD) 8.98 7.81 15 17 Core basic EPS (USD) 8.98 7.81 15 17 1 For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." Core interest expense and other financial income and expense Core interest expense amounted to USD 1.1 billion compared with USD 1.0 billion in the prior year. Core other financial income and expense amounted to an income of USD 44 million compared with an income of USD 295 million in the prior year, mainly due to lower interest income. Core income taxes The core tax rate (core taxes as a percentage of core income before tax) was 16.2% compared with 16.1% in the prior year. Core net income Core net income was USD 17.4 billion (+11%, +12% cc), mainly due to higher core operating income. Core earnings per share Core basic earnings per share was USD 8.98 (+15%, +17% cc), benefiting from the lower weighted average number of shares outstanding. 50 Factors affecting comparability of year-on-year results of operations Significant transactions The comparability of the year-on-year results of our operations for the total Company can be significantly affected by acquisitions and divestments. As part of our long-term strategy to focus Novartis as a leading innovative medicines company, we announced and/or completed several acquisitions and divestments during 2025 and 2024. A detailed description of significant transactions in 2025 and 2024 can be found in “Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business.” Internal control over financial reporting The Company’s management has assessed the effectiveness of internal control over financial reporting. The Company’s independent registered public accounting firm also issued an opinion on the effectiveness of internal control over financial reporting. Both the Company’s management and its independent registered public accounting firm concluded that the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025. For more information, see “Item 15. Controls and Procedures.” Approach to risk management See “Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Corporate governance—Information and control systems—Risk management” and “Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures.” 51 Non-IFRS measures as defined by Novartis Novartis uses certain non-IFRS Accounting Standards metrics when measuring performance, especially when measuring current-year results against prior periods, including core results, constant currencies and free cash flow. These are referred to by Novartis as non-IFRS measures. Despite the use of these measures by management in setting goals and measuring the Company’s performance, these are non-IFRS measures that have no standardized meaning prescribed by IFRS Accounting Standards. As a result, such measures have limits in their usefulness to investors. Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS Accounting Standards measures) may not be comparable to the calculation of similar measures of other companies. These non-IFRS measures are presented solely to permit investors to more fully understand how the Company’s management assesses underlying performance. These non-IFRS measures are not, and should not be viewed as, a substitute for IFRS Accounting Standards measures, and should be viewed in conjunction with the consolidated financial statements prepared in accordance with IFRS Accounting Standards. As an internal measure of Company performance, these non-IFRS measures have limitations, and the Company’s performance management process is not solely restricted to these metrics. Core results The Company’s core results – including core operating income, core net income and core earnings per share – exclude fully the amortization and net impairment charges of intangible assets, excluding software, net gains and losses on fund investments and equity securities valued at fair value through profit and loss, impact of IAS Standards 29 “Financial reporting in Hyperinflationary Economies” to other financial income and expense, and certain acquisition- and divestment-related items. The following items that exceed a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses, divestment gains and losses, restructuring charges/releases and related items, legal-related items, impairments of property, plant and equipment, software, and financial assets, and income and expense items that management deems exceptional and that are or are expected to accumulate within the year to be over a USD 25 million threshold. Novartis believes that investor understanding of the Company’s performance is enhanced by disclosing core measures of performance, since core measures exclude items that can vary significantly from year to year, they enable better comparison of business performance across years. For this same reason, Novartis uses these core measures in addition to IFRS Accounting Standards measures and other measures as important factors in assessing the Company’s performance. The following are examples of how these core measures are used: • In addition to monthly reports containing financial information prepared under IFRS Accounting Standards, senior management receives a monthly analysis incorporating these non-IFRS core measures. • Annual budgets are prepared for both IFRS Accounting Standard measures and non-IFRS core measures. As an internal measure of Company performance, the core results measures have limitations, and the Company’s performance management process is not solely restricted to these metrics. A limitation of the core results measures is that they provide a view of the Company’s operations without including all events during a period, such as the effects of an acquisition, divestment, or amortization/impairments of intangible assets, impairments to property, plant and equipment and restructurings and related items. Constant currencies Changes in the relative values of non-US currencies to the US dollar can affect the Company’s financial results and financial position. To provide additional information that may be useful to investors, including changes in volume, price and generic competition impacts on net sales, we present information about changes in net sales and selected key figures, including operating income and net income, on a basis that excludes the effects of foreign currency fluctuations. Constant currency calculations have the goal of eliminating two exchange rate effects so that an estimate can be made of underlying changes in the consolidated income statement excluding the impact of fluctuations in exchanges rates: • The impact of translating the income statements of consolidated entities from their non-USD functional currencies to USD • The impact of exchange rate movements on the major transactions of consolidated entities performed in currencies other than their functional currency. We calculate constant currency change measures to present percentage changes by translating the current year’s foreign currency sales and other income statement items into USD using the prior-year average exchange rates (excluding adjustments required under IAS Standards 29 “Financial Reporting in Hyperinflationary Economies” for subsidiaries operating in hyperinflationary economies), and then comparing these translated amounts to prior-year results in USD to derive a constant currency percentage change. We use constant currency percentage change measures in evaluating the Company’s performance, since they may assist us in evaluating our ongoing performance from year to year. These percentage change measures are considered alongside the corresponding USD percentage change measures that are not adjusted for changes in currency exchange rates. 52 Free cash flow Novartis defines free cash flow as net cash flows from operating activities less purchases of property, plant and equipment. Management believes that this definition provides a performance measure that focuses on core operating activities, and also excludes items that can vary significantly from year to year, thereby enabling better comparison of business performance across years. Free cash flow is a non-IFRS measure, which means it should not be interpreted as a measure determined under IFRS Accounting Standards. Free cash flow is not intended to be a substitute measure for net cash flows from operating activities as determined under IFRS Accounting Standards. Free cash flow is presented as additional information because management believes it is a useful supplemental indicator of the Company’s ability to operate without reliance on additional borrowing or use of existing cash. Free cash flow is a measure of the net cash generated that is available for investment in strategic opportunities, returning to shareholders and for debt repayment. Additional information Growth rate calculation For ease of understanding, Novartis uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared with the prior year is shown as a positive growth. Net debt Novartis calculates net debt as current financial debts and derivative financial instruments plus non-current financial debts less cash and cash equivalents and marketable securities, time deposits and derivative financial instruments. Net debt is presented as additional information because it sets forth how management monitors net debt or liquidity and management believes it is a useful supplemental indicator of the Company’s ability to pay dividends, to meet financial commitments, and to invest in new strategic opportunities, including strengthening its balance sheet. For the table that shows the Company’s net debt, see “— Item 5.B Liquidity and capital resources — Company liquidity, financial debts and net debt.” 53 Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results The following tables provide an overview of the reconciliation from IFRS Accounting Standards results to non-IFRS measure core results: 2025 and 2024 reconciliation from IFRS Accounting Standards results to non-IFRS measure core results (USD millions unless indicated otherwise) 2025 2024 IFRS Accounting Standards operating income from continuing operations 17 644 14 544 Amortization of intangible assets 3 197 3 174 Impairments Intangible assets 549 1 401 Property, plant and equipment related to the company-wide rationalization of manufacturing sites 2 18 Other property, plant and equipment 1 9 Total impairment charges 552 1 428 Acquisition or divestment of businesses and related items - Income -380 -458 - Expense 451 483 Total acquisition or divestment of businesses and related items, net 71 25 Other items Divestment gains -50 -45 Financial assets - fair value adjustments -48 45 Restructuring and related items - Income -66 -123 - Expense 544 487 Legal-related items - Income -280 - Expense 441 89 Additional income -236 -183 Additional expense 120 53 Total other items 425 323 Total adjustments 4 245 4 950 Core operating income from continuing operations 21 889 19 494 as % of net sales 40.1% 38.7% Loss from associated companies -12 -38 Core adjustments to loss from associated companies, net of tax 26 Interest expense -1 144 -1 006 Other financial income and expense -136 140 Core adjustments to other financial income and expense 180 155 Income taxes, adjusted for core adjustment items (core income taxes) -3 366 -3 016 Core net income from continuing operations 17 411 15 755 Core net income 17 411 15 755 Core net income attributable to shareholders of Novartis AG 17 411 15 757 Core net income attributable to non-controlling interests 1 0 -2 Core basic EPS from continuing operations (USD) 2 8.98 7.81 Core basic EPS (USD) 2 8.98 7.81 1 In 2025, the IFRS Accounting Standards results for net income attributable to non-controlling interests was USD -17 million. Core net income attributable to non-controlling interests was adjusted for USD 17 million related to impairment charges related to an intangible asset. 2 Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. 54 2025 and 2024 reconciliation from IFRS Accounting Standards results to non-IFRS measure core results 2025 (USD millions unless indicated otherwise) IFRS Accounting Standards results Amortization of intangible assets1 Impairments2 Acquisition or divestment of businesses and related items3 Other items4 Core results Gross profit from continuing operations 42 975 2 805 59 -324 45 515 Operating income from continuing operations 17 644 3 197 552 71 425 21 889 Income before taxes from continuing operations 16 352 3 197 552 71 605 20 777 Income taxes 5 -2 385 -631 -90 -8 -252 -3 366 Net income from continuing operations 13 967 17 411 Net income 13 967 17 411 Attributable to: Shareholders of Novartis AG 13 984 17 411 Non-controlling interests -17 17 0 Basic EPS from continuing operations (USD) 6 7.21 8.98 Basic EPS (USD) 6 7.21 8.98 The following are adjustments to arrive at core gross profit from continuing operations Other revenues 2 142 -344 1 798 Cost of goods sold -13 699 2 805 59 20 -10 815 The following are adjustments to arrive at core operating income from continuing operations Selling, general and administration -13 248 10 -13 238 Research and development -11 200 392 491 16 6 -10 295 Other income 1 460 -380 -413 667 Other expense -2 343 2 435 1 146 -760 The following are adjustments to arrive at core income before taxes from continuing operations Other financial income and expense -136 180 44 1 Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets 2 Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment 3 Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions 4 Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 “Financial Reporting in Hyperinflationary Economies” for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability 5 Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. 6 Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. 55 2024 (USD millions unless indicated otherwise) IFRS Accounting Standards results Amortization of intangible assets1 Impairments2 Acquisition or divestment of businesses and related items3 Other items4 Core results Gross profit from continuing operations 38 895 2 965 -9 21 41 872 Operating income from continuing operations 14 544 3 174 1 428 25 323 19 494 Income before taxes from continuing operations 13 640 3 174 1 428 25 504 18 771 Income taxes 5 -1 701 -592 -74 -8 -641 -3 016 Net income from continuing operations 11 939 15 755 Net income 11 939 15 755 Attributable to: Shareholders of Novartis AG 11 941 15 757 Non-controlling interests -2 -2 Basic EPS from continuing operations (USD) 6 5.92 7.81 Basic EPS (USD) 6 5.92 7.81 The following are adjustments to arrive at core gross profit from continuing operations Cost of goods sold -12 827 2 965 -9 21 -9 850 The following are adjustments to arrive at core operating income from continuing operations Selling, general and administration -12 566 2 -12 564 Research and development -10 022 209 500 23 -12 -9 302 Other income 1 175 -1 -458 -443 273 Other expense -2 938 938 460 755 -785 The following are adjustments to arrive at core income before taxes from continuing operations Loss from associated companies -38 26 -12 Other financial income and expense 140 155 295 1 Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies 2 Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment 3 Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions 4 Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items 5 Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. 6 Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. 56 5.B Liquidity and capital resources The following table summarizes the Company’s cash flows and net debt: (USD millions) 2025 2024 Net cash flows from operating activities 19 144 17 619 Net cash flows used in investing activities -4 877 -7 513 Net cash flows used in financing activities -14 867 -11 742 Effect of exchange rate changes on cash and cash equivalents 576 -298 Net change in cash and cash equivalents -24 -1 934 Change in marketable securities, time deposits and derivative financial instruments -1 843 963 Change in current and non-current financial debts and derivative financial instruments -3 939 -4 987 Change in net debt -5 806 -5 958 Net debt at January 1 -16 141 -10 183 Net debt at December 31 -21 947 -16 141 Cash flow Net cash flows from operating activities amounted to USD 19.1 billion, compared with USD 17.6 billion in the prior year. This increase was mainly driven by higher net income, adjusted for non-cash items and other adjustments, partly offset by unfavorable changes in working capital, higher payments out of provisions and higher income taxes paid. Net cash outflows used in investing activities amounted to USD 4.9 billion, compared with USD 7.5 billion in the prior year. In the current year, net cash outflows used in investing activities were mainly driven by USD 2.8 billion for acquisitions applying the optional concentration test, net of USD 0.3 billion in cash acquired, including the acquisition of Anthos Therapeutics, Inc. for USD 0.8 billion, the acquisition of Regulus Therapeutics Inc. for USD 0.8 billion and the acquisition of Tourmaline Bio, Inc. for USD 1.2 billion. In addition, the cash outflows for purchases of intangible assets amounted to USD 2.4 billion and purchases of property, plant and equipment amounted to USD 1.5 billion. These cash outflows were partly offset by the net proceeds of USD 1.8 billion from marketable securities and time deposits, mainly due to the maturity of time deposits. In the prior year, net cash outflows used in investing activities were mainly driven by USD 3.9 billion net cash outflows for acquisitions and divestments of businesses, including the acquisition of Kate Therapeutics for USD 0.4 billion, the acquisition of Mariana Oncology for USD 1.0 billion (USD 1.04 billion, net of cash acquired of USD 80 million) and the acquisition of MorphoSys for USD 2.3 billion (USD 2.5 billion, net of cash acquired of USD 0.2 billion). In addition, the cash outflows for purchases of intangible assets amounted to USD 2.4 billion, purchases of property, plant and equipment amounted to USD 1.4 billion, purchases of financial assets amounted to USD 0.2 billion and net investments in time deposits, marketable securities and commodities amounted to USD 0.7 billion. These cash outflows were partly offset by cash inflows of USD 1.0 billion from the sale of financial assets (including USD 0.7 billion proceeds from the sale of Sandoz Group AG shares by consolidated foundations) and by USD 0.2 billion from the sale of intangible assets and property, plant and equipment. Net cash outflows used in financing activities amounted to USD 14.9 billion, compared with USD 11.7 billion in the prior year. In the current year, net cash outflows used in financing activities were mainly driven by USD 9.2 billion for net treasury share transactions, USD 7.8 billion for the annual dividend payment and USD 3.35 billion for the repayment of three bonds at maturity, comprising two US dollar denominated bonds with notional amounts of USD 1.75 billion and USD 1.0 billion, respectively, and one Swiss franc denominated bond with a notional amount of CHF 0.5 billion, equivalent to USD 0.6 billion. These cash outflows were partly offset by cash inflows of USD 6.0 billion, from the issuance of US dollar denominated bonds with a notional amount of USD 6.0 billion. In the prior year, net cash outflows used in financing activities were mainly driven by USD 8.3 billion for net treasury share transactions, USD 7.6 billion for the annual dividend payment, USD 2.15 billion for the repayment of a US dollar bond at maturity and USD 0.3 billion for the repayments of other current financial debts. Cash outflows for MorphoSys shares purchased outside the Offer amounted to USD 0.3 billion, which included a USD 0.2 billion payment to the former remaining minority shareholders in connection with the “squeeze-out.” These cash outflows were partly offset by cash inflows from the issuance of bonds totaling USD 6.1 billion (Swiss franc denominated bonds with a notional amount of CHF 2.2 billion, equivalent to USD 2.5 billion, and US dollar denominated bonds with a notional amount of USD 3.7 billion). The change in current financial debts resulted in net cash inflows of USD 1.0 billion. 57 Non-IFRS measure Free cash flow Free cash flow is a non-IFRS measure, see “—Item 5.A Operating results—Non-IFRS measures as defined by Novartis—Free cash flow” for further information. The following table is a reconciliation of the three major categories of the IFRS Accounting Standards consolidated statements of cash flows to the non-IFRS measure free cash flow: 2025 2024 (USD millions) IFRS Accounting Standards cash flow Adjustments Free cash flow IFRS Accounting Standards cash flow Adjustments Free cash flow Net cash flows from operating activities 19 144 19 144 17 619 17 619 Net cash flows used in investing activities 1 -4 877 3 329 -1 548 -7 513 6 147 -1 366 Net cash flows used in financing activities 2 -14 867 14 867 0 -11 742 11 742 0 Non-IFRS measure free cash flow 17 596 16 253 1 With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. 2 Net cash flows used in financing activities are excluded from the free cash flow. The following table is a summary of the non-IFRS measure free cash flow: (USD millions) 2025 2024 Operating income from continuing operations 17 644 14 544 Reversal of non-cash items and other adjustments Depreciation, amortization and impairments 5 275 6 114 Change in provisions and other non-current liabilities 1 083 696 Other 1 194 817 Operating income from continuing operations adjusted for non-cash items 25 196 22 171 Dividends received from associated companies and others 1 1 Interest received and other financial receipts 576 489 Interest paid and other financial payments -1 007 -971 Income taxes paid -2 562 -2 258 Payments out of provisions and other net cash movements in non-current liabilities -1 483 -1 107 Changes in inventories and trade receivables less trade payables -1 363 -1 261 Changes in other operating cash flow items -214 555 Net cash flows from operating activities from continuing operations 19 144 17 619 Net cash flows from operating activities 19 144 17 619 Purchases of property, plant and equipment -1 548 -1 366 Non-IFRS measure free cash flow 17 596 16 253 Free cash flow amounted to USD 17.6 billion (+8%), compared with USD 16.3 billion in the prior year, driven by higher net cash flows from operating activities. 58 Condensed consolidated balance sheets (USD millions) Dec 31, 2025 Dec 31, 2024 Assets Non-current assets Property, plant and equipment 10 782 9 458 Right-of-use assets 1 570 1 415 Goodwill 25 567 24 756 Intangible assets other than goodwill 29 411 26 915 Investments in associated companies 98 119 Deferred tax assets 5 438 4 359 Financial assets 2 348 2 015 Other non-current assets 5 275 3 505 Total non-current assets 80 489 72 542 Current assets Inventories 6 269 5 723 Trade receivables 8 937 7 423 Income tax receivables 205 133 Marketable securities, time deposits and derivative financial instruments 155 1 998 Cash and cash equivalents 11 435 11 459 Other current assets 3 459 2 968 Total current assets 30 460 29 704 Total assets 110 949 102 246 Equity and liabilities Total equity 46 549 44 126 Liabilities Non-current liabilities Financial debts 27 935 21 366 Lease liabilities 1 657 1 568 Deferred tax liabilities 3 397 2 419 Provisions and other non-current liabilities 4 133 4 075 Total non-current liabilities 37 122 29 428 Current liabilities Trade payables 4 456 4 572 Financial debts and derivative financial instruments 5 602 8 232 Lease liabilities 263 235 Current income tax liabilities 1 969 1 599 Provisions and other current liabilities 14 988 14 054 Total current liabilities 27 278 28 692 Total liabilities 64 400 58 120 Total equity and liabilities 110 949 102 246 Assets Total non-current assets of USD 80.5 billion increased by USD 7.9 billion compared with December 31, 2024. Intangible assets other than goodwill increased by USD 2.5 billion, mainly due to acquisitions applying the optional concentration test (Anthos Therapeutics, Inc., Regulus Therapeutics Inc., Tourmaline Bio, Inc. and a private clinical-stage biotech company), additions, and currency translation adjustments, partially offset by amortization and impairment charges. Goodwill increased by USD 0.8 billion, due to currency translation adjustments. Property, plant and equipment increased by USD 1.3 billion, mainly due to additions and currency translation adjustments, partially offset by depreciation. Other non-current assets increased by USD 1.8 billion, mainly due to an increase in prepaid post-employment benefit plans. This increase was driven by an increase in the fair value of plan assets, a higher discount rate applied in calculating actuarial defined benefit obligations, and currency translation adjustments. Deferred tax assets increased by USD 1.1 billion, mainly due to higher deferred tax assets on inventories. Financial assets increased by USD 0.3 billion. Right-of-use assets and investments in associated companies were broadly in line with December 31, 2024. Total current assets of USD 30.5 billion increased by USD 0.8 billion compared with December 31, 2024. Cash and cash equivalents were broadly in line with December 2024, as cash inflows from operating activities of USD 19.1 billion, net proceeds from changes in 59 financial debts of USD 2.7 billion and from marketable securities and time deposits of USD 1.8 billion, mainly due to the maturity of time deposits, were offset by cash outflows of USD 9.2 billion for net purchases of treasury shares, USD 7.8 billion for the annual dividend payment, USD 3.7 billion for net purchases of property, plant and equipment and intangible assets, USD 2.8 billion for the acquisitions applying the optional concentration test, as well as other net cash outflows from investing and financing activities, and currency effects of USD 0.1 billion. Marketable securities, time deposits and derivative financial instruments decreased by USD 1.8 billion, mainly due to the maturity of time deposits. Trade receivables increased by USD 1.5 billion, mainly due to the increase in net sales. Inventories increased by USD 0.5 billion. Other current assets increased by USD 0.5 billion, mainly due to higher prepaid expenses and other current assets. Income tax receivables were broadly in line with December 31, 2024. We consider our provisions for doubtful trade receivables to be adequate. We particularly monitor the level of trade receivables in countries deemed to have an elevated credit risk. We consider macroeconomic environment, historical experience, country and political risks, in addition to other relevant information when assessing risk. These risk factors are monitored regularly to determine any adjustments to risk classification. The majority of the past due trade receivables from elevated credit risk countries are due from local governments or from government-funded entities. Deteriorating credit and economic conditions as well as other factors in these elevated credit risk countries have resulted in, and may continue to result in an increase in the average time that it takes to collect these trade receivables and may require the Company to re-evaluate the expected credit loss amount of these trade receivables in future periods. As at December 31, 2025, amounts past due for more than one year were not significant in elevated credit risk countries. For a table showing an overview of the aging analysis of total trade receivables and the total amount of the provision for doubtful trade receivables as at December 31, 2025, and 2024, see “Item 18. Financial Statements—Note 15. Trade receivables.” There is also a risk that certain countries could devalue their currency. Currency exposures are described in more detail in “Effects of currency fluctuations.” Liabilities Total non-current liabilities of USD 37.1 billion increased by USD 7.7 billion compared with December 31, 2024. Non-current financial debts increased by USD 6.6 billion, mainly due to the issuance of US dollar denominated bonds with a notional amount of USD 6.0 billion and currency translation adjustments of USD 1.1 billion, partly offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts. Deferred tax liabilities increased by USD 1.0 billion, mainly due to higher deferred tax liabilities on other assets, provisions and accruals. Provisions and other non-current liabilities, and non-current lease liabilities were broadly in line with December 31, 2024. Total current liabilities of USD 27.3 billion decreased by USD 1.4 billion compared with December 31, 2024. Current financial debts and derivative financial instruments decreased by USD 2.6 billion, mainly due to the repayment at maturity of two US dollar denominated bonds with a notional amount of USD 2.8 billion and a Swiss franc denominated bond with a notional amount of CHF 0.5 billion. This was partially offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts. Provisions and other current liabilities increased by USD 0.9 billion, mainly driven by the increase in provisions for deductions from revenue. Current income tax liabilities increased by USD 0.4 billion. Trade payables and current lease liabilities were broadly in line with December 31, 2024. In our most significant tax jurisdictions, Switzerland and the United States, tax assessments have been agreed by the tax authorities up to 2020 in Switzerland and up to 2016 in the United States. Novartis believes that its total provisions are adequate based upon currently available information. However, given the inherent difficulties in estimating these liabilities, Novartis may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to the Company’s financial condition but could be material to the results of operations or cash flows in a given period. Equity The Company’s equity increased by USD 2.4 billion to USD 46.5 billion compared with December 31, 2024. This increase was mainly driven by net income of USD 14.0 billion, a favorable impact from currency translation differences of USD 3.0 billion, actuarial gains from defined benefit plans of USD 1.2 billion, and a favorable impact from equity-based compensation plans of USD 1.2 billion. These were partially offset by annual dividends of USD 7.8 billion paid to Novartis AG shareholders and the purchase of treasury shares of USD 9.1 billion. 60 Summary of equity movements attributable to Novartis AG shareholders Number of outstanding shares (in millions) Equity attributable to Novartis AG shareholders 2025 2024 2025 USD millions 2024 USD millions Balance at beginning of year 1 975.1 2 044.0 44 046 46 667 Shares acquired to be canceled -77.6 -77.5 -8 947 -8 316 Other share purchases -1.7 -1.2 -175 -134 Equity-based compensation plans and employee transactions 12.3 9.7 1 157 1 060 Taxes on treasury share transactions -113 -68 Dividends -7 818 -7 624 Net income of the year attributable to shareholders of Novartis AG 13 984 11 941 Other comprehensive income attributable to shareholders of Novartis AG 3 985 592 Changes in non-controlling interests -89 -226 Other movements 0.1 0.1 100 154 Balance at end of year 1 908.2 1 975.1 46 130 44 046 In 2025, Novartis repurchased a total of 77.6 million shares for USD 8.9 billion on the SIX Swiss Exchange second trading line. These repurchases included 49.1 million shares (USD 5.4 billion) under the USD 15 billion share buyback (announced in July 2023 and completed in July 2025) and 17.8 million shares (USD 2.3 billion) under the new up-to USD 10 billion share buyback announced in July 2025. In addition, 10.7 million shares (USD 1.3 billion) were repurchased to mitigate full-year dilution related to the equity-based compensation plans of employees. Furthermore, 1.7 million shares (equity value of USD 0.2 billion) were repurchased from employees. In the same period, 12.4 million shares (equity value of USD 1.2 billion) were delivered to employees related to equity-based compensation plans. Consequently, the total number of shares outstanding decreased by 66.9 million versus December 31, 2024. These treasury share transactions resulted in an equity decrease of USD 8.0 billion and a net cash outflow of USD 9.2 billion. In 2024, Novartis repurchased a total of 77.5 million shares for USD 8.3 billion on the SIX Swiss Exchange second trading line. These purchases included 68.8 million shares (USD 7.3 billion) under the up-to USD 15 billion share buyback announced in July 2023 (with up to USD 5.4 billion still to be executed). In addition, 8.7 million shares (USD 1.0 billion) were repurchased to mitigate the impact of share deliveries under the equity-based compensation plans for employees. Furthermore, 1.2 million shares (equity value of USD 0.1 billion) were repurchased from employees. In the same period, 9.8 million shares (equity value of USD 1.1 billion) were delivered as a result of share deliveries related to employee equity-based compensation plans. Consequently, the total number of shares outstanding decreased by 68.9 million versus December 31, 2023. These treasury share transactions resulted in an equity decrease of USD 7.4 billion and a net cash outflow of USD 8.3 billion. Treasury shares As at December 31, 2025, our holding of treasury shares amounted to 204.3 million shares, or approximately 10% of the total number of issued shares. Approximately 75.4 million treasury shares were held in entities that restrict their availability for use. As at December 31, 2024, our holding of treasury shares amounted to 214.9 million shares, or approximately 10% of the total number of issued shares. Approximately 86.0 million treasury shares were held in entities that restrict their availability for use. 61 Effects of currency fluctuations We transact our business in many currencies other than the US dollar, our reporting currency. The following table provides an overview of net sales and operating expenses from continuing operations based on IFRS Accounting Standards values, for the most important currencies to the Company: 2025 2024 1 Currency Net sales % Operating expenses %2 Net sales % Operating expenses %2 US dollar (USD) 45 42 44 39 Euro (EUR) 23 22 23 23 Swiss franc (CHF) 1 17 1 18 Chinese yuan (CNY) 8 5 8 5 Japanese yen (JPY) 4 2 4 2 Canadian dollar (CAD) 2 1 2 1 British pound (GBP) 2 2 2 2 Russian ruble (RUB) 1 1 1 0 Brazilian real (BRL) 2 1 2 1 Other currencies 12 7 13 9 1 In 2025, the Australian dollar (AUD) was no longer designated as one of the most import currencies to the Company. In 2024, the AUD net sales and operating expenses have been reclassified to Other currencies to conform with 2025 presentation. 2 Operating expenses include cost of goods sold; selling, general and administration; research and development; other income and other expense. We prepare our consolidated financial statements in US dollars. As a result, fluctuations in the exchange rates between the US dollar and other currencies can have a significant effect on both the Company’s results of operations as well as the reported value of our assets, liabilities and cash flows. This in turn may significantly affect reported earnings (both positively and negatively) and the comparability of period-to-period results of operations. For purposes of our consolidated balance sheets, we translate assets and liabilities denominated in other currencies into US dollars at the prevailing market exchange rates as of the relevant balance sheet date. For purposes of the Company’s consolidated income and cash flow statements, revenue, expense and cash flow items in local currencies are translated into US dollars at average exchange rates prevailing during the relevant period. As a result, even if the amounts or values of these items remain unchanged in the respective local currency, changes in exchange rates have an impact on the amounts or values of these items in our consolidated financial statements. Because our expenditure in Swiss francs is significantly higher than our revenue in Swiss francs, volatility in the value of the Swiss franc can have a significant impact on the reported value of our earnings, assets and liabilities, and the timing and extent of such volatility can be difficult to predict. The Company manages its global currency exposure by engaging in hedging transactions where management deems appropriate, after taking into account the natural hedging afforded by our global business activity. In 2025 and 2024, we entered into various contracts that change in value with movements in foreign exchange rates, to preserve the value of assets, commitments and expected transactions. We use forward contracts and foreign currency options to hedge. For more information on how these transactions affect our consolidated financial statements and on how foreign exchange rate exposure is managed, see “Item 18. Financial Statements—Note 1. Accounting policies,” “Item 18. Financial Statements—Note 5. Interest expense and other financial income and expense,” “Item 18. Financial Statements—Note 15. Trade receivables,” “Item 18. Financial Statements—Note 27. Commitments and contingent liabilities” and “Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures.” 62 The following table sets forth the foreign exchange rates of the US dollar against key currencies used for foreign currency translation when preparing the Company’s consolidated financial statements: Average for year Year-end USD per unit 2025 2024 Change in % 2025 2024 Change in % Brazilian real (BRL) 0.179 0.186 -4 0.183 0.162 13 Canadian dollar (CAD) 0.715 0.730 -2 0.730 0.696 5 Swiss franc (CHF) 1.205 1.136 6 1.261 1.107 14 Chinese yuan (CNY) 0.139 0.139 0 0.143 0.137 4 Euro (EUR) 1.129 1.082 4 1.174 1.041 13 British pound (GBP) 1.318 1.278 3 1.346 1.256 7 Japanese yen (JPY (100)) 0.669 0.661 1 0.639 0.640 0 Russian ruble (RUB (100)) 1.200 1.080 11 1.255 0.889 41 Currency impact on key figures The following table provides a summary of the currency impact on key Company figures due to their conversion into US dollars, the Company’s reporting currency: Change in USD % 2025 Change in constant currencies % 2025 Percentage point currency impact 2025 Net sales from continuing operations 8 8 0 Operating income from continuing operations 21 25 -4 Net income from continuing operations 17 19 -2 Basic earnings per share (USD) from continuing operations 22 24 -2 Core operating income from continuing operations 12 14 -2 Core net income from continuing operations 11 12 -1 Core basic earnings per share (USD) from continuing operations 15 17 -2 For additional information on the constant currency calculation (“cc”), see “—Item 5.A Operating results—Non-IFRS measures as defined by Novartis—Constant currencies.” For additional information on the effects of currency fluctuations, see “Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures.” 63 Company liquidity, financial debts and net debt The following table shows Company liquidity, financial debts and net debt: (USD millions) 2025 2024 Non-current financial debts -27 935 -21 366 Current financial debts and derivative financial instruments -5 602 -8 232 Total financial debts -33 537 -29 598 Less liquidity Cash and cash equivalents 11 435 11 459 Marketable securities, time deposits and derivative financial instruments 155 1 998 Total liquidity 11 590 13 457 Net debt at December 31 -21 947 -16 141 The Company’s net debt as at December 31, 2025, increased to USD 21.9 billion, compared with USD 16.1 billion as at December 31, 2024. Total financial debts amounted to USD 33.5 billion as at December 31, 2025, compared with USD 29.6 billion as at December 31, 2024. Non-current financial debts increased by USD 6.6 billion, mainly due to the issuance of US dollar denominated bonds with a notional amount of USD 6.0 billion and currency translation adjustments of USD 1.1 billion, partly offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts. Current financial debts and derivative financial instruments decreased by USD 2.6 billion, mainly due to the repayment at maturity of two US dollar denominated bonds with a notional amount of USD 2.8 billion and a Swiss franc denominated bond with a notional amount of CHF 0.5 billion. This was partially offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts. Novartis has a US commercial paper program under which it can issue up to USD 9.0 billion in the aggregate of unsecured commercial paper notes. Novartis also has a Japanese commercial paper program under which it can issue up to JPY 150 billion (approximately USD 1.0 billion) of unsecured commercial paper notes. Commercial paper notes totaling USD 4.0 billion under these two programs were outstanding as at December 31, 2025 (2024: USD 4.1 billion). Novartis further has a committed credit facility of USD 6.0 billion. This credit facility is intended to be used as a backstop for the US commercial paper program. This facility matures in May 2029, and was undrawn as at December 31, 2025. Total liquidity decreased to USD 11.6 billion compared with USD 13.5 billion as at December 31, 2024. As of year-end 2025, Moody’s Ratings rated the Company Aa3 for long-term maturities and P-1 for short-term maturities and S&P Global Ratings rated the Company AA- for long-term maturities and A-1+ for short-term maturities. Liquidity and financial debts by currency The following table provides a breakdown of liquidity and financial debts by currency as at December 31: Liquidity in % 20251 Liquidity in % 20241 Financial debts in % 20252 Financial debts in % 20242 USD 57 59 66 65 CHF 5 7 12 13 EUR 30 30 18 18 JPY 2 2 Other 8 4 2 2 100 100 100 100 1 Liquidity includes cash and cash equivalents and marketable securities, including debt securities and time deposits. 2 Financial debts includes non-current and current financial debts. 64 Bonds In February 2025, a 5-year US dollar denominated bond of USD 1.0 billion with a coupon of 1.75% was repaid at maturity. In May 2025, a 10-year Swiss franc denominated bond of CHF 500 million with a coupon of 0.25% was repaid at maturity. In November 2025, seven US dollar denominated bonds totaling USD 6.0 billion were issued: a 3-year floating rate note of USD 800 million with a quarterly-reset coupon based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, a 3-year bond of USD 700 million with a coupon of 3.90%, a 5-year bond of USD 1.75 billion with a coupon of 4.10%, a 7-year bond of USD 925 million with a coupon of 4.30%, a 10-year bond of USD 925 million with a coupon of 4.60%, a 20-year bond of USD 350 million with a coupon of 5.20% and a 30-year bond of USD 550 million with a coupon of 5.30%. In November 2025, a 10-year US dollar denominated bond of USD 1.75 billion with a coupon of 3.00% was repaid at maturity. In May 2024, a 10-year US dollar denominated bond of USD 2.15 billion with a coupon of 3.40% was repaid at maturity. In June 2024, five Swiss franc denominated bonds totaling CHF 2.2 billion were issued: a 3-year bond of CHF 650 million with a coupon of 1.60%, a 7-year bond of CHF 435 million with a coupon of 1.65%, a 10-year bond of CHF 645 million with a coupon of 1.75%, a 16-year bond of CHF 280 million with a coupon of 1.85% and a 25-year bond of CHF 190 million with a coupon of 1.85%. In September 2024, four US dollar denominated bonds totaling USD 3.70 billion were issued: a 5-year bond of USD 1.00 billion with a coupon of 3.80%, a 7-year bond of USD 0.85 billion with a coupon of 4.00%, a 10-year bond of USD 1.10 billion with a coupon of 4.20% and a 30-year bond of USD 0.75 billion with a coupon of 4.70%. Liquidity/short-term funding The Company’s liquidity amounted to USD 11.6 billion as at December 31, 2025, compared with USD 13.5 billion as at December 31, 2024. Total non-current and current financial debts, including derivatives, amounted to USD 33.5 billion as at December 31, 2025, compared with USD 29.6 billion as at December 31, 2024. The debt/equity ratio increased to 0.72:1 as at December 31, 2025, compared with 0.67:1 as at December 31, 2024. The net debt increased to USD 21.9 billion as at December 31, 2025, compared with USD 16.1 billion as at December 31, 2024. We continuously track our liquidity position and asset/liability profile. This involves modeling cash flow maturity profiles based on both historical experiences and contractual expectations to project our liquidity requirements. We seek to preserve prudent liquidity and funding capabilities. We are confident that we have sufficient liquidity to support our normal business activities for the foreseeable future. Certain countries have legal or economic restrictions on the ability of subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances, but these restrictions do not have an impact on the ability of the Company to meet its cash obligations. We are not aware of any significant demands to change the level of liquidity needed to support our normal business activities. We make use of various borrowing facilities provided by several financial institutions. We also successfully issued various bonds in 2025 and previous years and raised funds through our commercial paper programs. The maturity schedule of our net debt can be found in “Item 18. Financial Statements—Note 28. Financial instruments—Additional disclosures—Nature and extent of risks arising from financial instruments—Liquidity risk.” Material contractual obligations and commitments The Company’s material contractual obligations and commitments, entered into from time to time, consist of the following: • Non-current financial debts, including current portion (see “Item 18. Financial Statements—Note 19. Non-current financial debts”). For the table showing the maturity schedule of our current and non-current financial debts, see “Item 18. Financial Statements—Note 28. Financial instruments—additional disclosures—Nature and extent of risks arising from financial instruments— Liquidity risk”; • Leases on assets used in operations entered into in the ordinary course of business (see “Item 18. Financial Statements— Note 10. Right-of-use assets and lease liabilities”); • Long-term research and development agreements with various third parties related to intangible assets. The Company has also entered into acquisition agreements related to intangible assets with third parties that were accounted for as assets separately acquired by electing to apply the optional concentration test. These agreements may provide for potential milestone payments by Novartis, which are dependent on successful achievement of specified clinical development, regulatory approval, or sales milestones, or other conditions specified in the agreements (see “Item 18. Financial Statements—Note 27. Commitments and contingent liabilities—Research and development commitments”); • Commitments related to the acquisition of businesses and interests in intellectual property focused on key disease areas and indications that the Company expects to be growth drivers in the future (see “Item 18. Financial Statements—Note 27. Commitments and contingent Liabilities—Other commitments”). In addition, certain business combination arrangements include contingent payments, which the shareholders of the acquired company are eligible to receive upon the achievement of specified milestones. For the table showing the maturity schedule of contingent 65 consideration liabilities, see “Item 18. Financial Statements—Note 28. Financial instruments—additional disclosures—Nature and extent of risks arising from financial instruments—Liquidity risk”; • Unfunded independent pension and other post-employment benefit plans (see “Item 18. Financial Statements – Note 24. Post-employment benefits for employees”); and • Property, plant and equipment purchase commitments in the ordinary course of business (see “Item 18. Financial Statements—Note 9. Property, plant and equipment”). The Company intends to fund contractual obligations and commitments related to leases, long-term research and development agreements, business combinations, acquisition agreements related to intangible assets accounted for as assets separately acquired by electing to apply the optional concentration test, property, plant and equipment, and unfunded independent pension and other post-employment benefit plans with available cash and short- and long-term borrowings. 5.C Research and development, patents and licenses Our research and development spending from continuing operations totaled USD 11.2 billion and USD 10.0 billion (non-IFRS measure core research and development from continuing operations USD 10.3 billion and USD 9.3 billion) for the years 2025 and 2024, respectively. Novartis has numerous products in various stages of development. For further information on these products in development, see “Item 4. Information on the Company—Item 4.B Business overview.” As described in the risk factors section and elsewhere in this Annual Report, our drug development efforts are subject to the risks and uncertainties inherent in any new drug development program. Due to the risks and uncertainties involved in progressing through preclinical development and clinical trials, and the time and cost involved in obtaining regulatory approvals, among other factors, we cannot reasonably estimate the timing, completion dates and costs, or range of costs, of our drug development programs, or of the development of any particular development compound (see “Item 3. Key Information—Item 3.D Risk factors”). In addition, for a description of the research and development process for the development of new drugs and our other products, and the regulatory process for their approval, see “Item 4. Information on the Company—Item 4.B Business overview.” 5.D Trend information See “—Item 5.A Operating results”, “—Item 5.B Liquidity and capital resources” and “Item 4. Information on the Company—Item 4.B Business overview” for trend information. 5.E Critical accounting estimates Not applicable. 66