Novartis Third Quarter and Nine Months 2026

Condensed Interim Financial Report – Supplementary Data

Novartis Third Quarter and Nine Months 2026
Condensed Interim Financial Report – Supplementary Data

Operating performance review

Key figures

Third quarter and nine months

Strategy

Our focus

Novartis is a “pure-play” innovative medicines company. We have a clear focus on four core therapeutic areas (cardiovascular-renal-metabolic, immunology, neuroscience and oncology), with multiple significant in-market and pipeline assets in each of these areas, that address high disease burden and have substantial growth potential. In addition to two established technology platforms (chemistry and biotherapeutics), three emerging platforms (gene & cell therapy, radioligand therapy and xRNA) are being prioritized for continued investment into new R&D capabilities and manufacturing scale. Geographically, we are focused on growing in our priority geographies – the US, China, Germany and Japan.

Our priorities

1. Accelerate growth: Renewed attention to deliver high-value medicines (NMEs) and focus on launch excellence, with a rich pipeline across our core therapeutic areas.

2. Deliver returns: Continuing to embed operational excellence and deliver improved financials. Novartis remains disciplined and shareholder-focused in our approach to capital allocation, with substantial cash generation and a strong capital structure supporting continued flexibility.

3. Strengthen foundations: Unleashing the power of our people, scaling data science and technology, and continuing to build trust with society.

Financials

Third quarter

Net sales

Net sales were USD 14.5 billion (+4%, +4% cc), with volume growth contributing 14 percentage points, partly offset by 9 percentage points from generic competition. Pricing had a negative impact of 1 percentage point, and currency had no impact. By region, sales in the US were USD 6.4 billion (+7%) and sales in the rest of the world were USD 8.1 billion (+3%, +3% cc).

Sales growth was driven by continued strong performance from Kisqali (USD 1.8 billion, +37%, +37% cc), Kesimpta (USD 1.5 billion, +21%, +22% cc), Scemblix (USD 593 million, +66%, +67% cc), Leqvio (USD 506 million, +64%, +63% cc) and Cosentyx (USD 1.9 billion, +9%, +9% cc), partly offset by generic competition, mainly Entresto (USD 1.2 billion, –38%, –38% cc) and Promacta (USD 142 million, –61%, –61% cc).

In the US (USD 6.4 billion, +7%), sales grew mainly driven by Kisqali, Scemblix, Kesimpta, Rhapsido, Leqvio and Cosentyx, partly offset by generic competition, mainly Entresto. In Europe (USD 4.3 billion, +1%, +3% cc), sales grew driven by Kisqali, Kesimpta, Leqvio and Scemblix, partly offset by generic competition, mainly Promacta and Xolair. Sales in emerging growth markets were USD 3.8 billion (+11%, +8% cc), including USD 1.2 billion of sales from China (+25%, +18% cc).

Operating income

Gross profit was USD 11.4 billion (+6%, +5% cc), mainly driven by higher net sales.

SG&A expenses were USD 3.1 billion (+7%, +7% cc)¹, driven by productivity.

R&D expenses were USD 5.2 billion (–75%, –76% cc), mainly due to a partial impairment charge of the del-desiran IPR&D asset obtained as part of the Avidity acquisition in Q1 2026. The charge followed the September 2026 Phase III HARBOR study results in DM1, which did not meet the primary endpoint. Evidence of clinical activity was observed in secondary endpoints and exploratory analyses. Novartis is evaluating the full dataset and expects to engage with health authorities regarding the asset’s development path. The USD 1.9 billion charge reduced the carrying amount of the asset to USD 5.5 billion. See Notes 3 and 10.

¹ 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.

Other income was USD 0.2 billion (–15%, –13% cc).

Other expense was USD 1.6 billion compared with USD 0.3 billion in the prior-year quarter, increasing mainly due to higher provision charges, including for a long-term supply agreement, and higher restructuring expenses.

Operating income was USD 1.8 billion (–59%, –61% cc), declining mainly due to higher R&D expenses and higher other expense, partly offset by higher net sales. Operating income margin was 12.7% of net sales, decreasing 19.7 percentage points (20.2 percentage points in cc).

Core adjustments were USD 4.2 billion, mainly due to impairment charges and provisions, compared with USD 1.0 billion in the prior-year quarter.

Core gross profit was USD 12.2 billion (+6%, +5% cc), mainly driven by higher net sales.

Core SG&A expenses were USD 3.1 billion (+7%, +7% cc), driven by productivity.

Core R&D expenses were USD 2.8 billion (–4%, –5% cc), mainly due to investments in recently acquired assets.

Core other income was USD 0.1 billion (–1%, +2% cc).

Core other expense was USD 0.3 billion (–108%, –122% cc), mainly due to a net increase in pre-launch inventory provisions.

Core operating income was USD 6.0 billion (+11%, +10% cc), mainly driven by higher net sales. Core operating income margin was 41.6% of net sales, increasing 2.3 percentage points (2.0 percentage points in cc).

Interest expense and other financial income and expense

Interest expense amounted to USD 468 million compared with USD 281 million in the prior-year quarter, mainly due to the increase in financial debt.

Other financial income and expense amounted to an expense of USD 55 million, broadly in line with the prior-year quarter.

Core interest expense amounted to USD 468 million compared with USD 281 million in the prior-year quarter, mainly due to the increase in financial debt.

Core other financial income and expense amounted to an expense of USD 14 million, broadly in line with the prior-year quarter.

Income taxes

The tax rate in the third quarter was 9.2% compared with 6.3% in the prior-year period. The current-year tax rate was reduced by deferred tax income related to impairment charges on intangible assets other than goodwill in jurisdictions with higher tax rates. The prior-year tax rate was reduced by the remeasurement of deferred tax balances following tax law changes, primarily in the US, partially offset by prior-year items. Both the current and prior-year rates were impacted by the effect of adjusting to the estimated full-year tax rate. Excluding these impacts, the tax rate would have been 17.4% compared with 14.3% in the prior-year period, increasing mainly due to a change in profit mix.

The core tax rate (core taxes as a percentage of core income before tax) was 16.1% compared with 16.2% in the prior-year period. The current-year core tax rate was impacted by the effect of adjusting to the estimated full-year core tax rate. Excluding this impact, the core tax rate would have been 16.5% compared with 16.2% in the prior-year period, increasing mainly due to a change in profit mix.

Net income, EPS, cash flows from operating activities and free cash flow

Net income was USD 1.2 billion (–70%, –71% cc), declining mainly due to lower operating income and higher interest expense. EPS was USD 0.63 (–69%, –70% cc).

Core net income was USD 4.7 billion (+8%, +6% cc), driven by higher core operating income, partly offset by higher interest expense. Core EPS was USD 2.46 (+9%, +8% cc), benefiting from the lower weighted average number of shares outstanding.

Net cash flows from operating activities amounted to USD 5.5 billion (–16%), as higher net income, adjusted for non-cash items and other adjustments, was more than offset by unfavorable changes in working capital and higher interest paid.

Free cash flow amounted to USD 5.1 billion (–18%), declining due to lower net cash flows from operating activities.

Nine months

Net sales

Net sales were USD 42.0 billion (+2%, 0% cc), with volume growth contributing 14 percentage points, partly offset by 12 percentage points from generic competition. Pricing had a negative impact of 2 percentage points, and currency had a positive impact of 2 percentage points. By region, sales in the US were USD 17.3 billion (–4%) and sales in the rest of the world were USD 24.7 billion (+6%, +3% cc).

Sales were broadly in line with prior year, as strong growth from Kisqali (USD 5.0 billion, +45%, +44% cc), Kesimpta (USD 4.1 billion, +27%, +26% cc), Scemblix (USD 1.6 billion, +78%, +78% cc), Pluvicto (USD 2.0 billion, +42%, +41% cc) and Leqvio (USD 1.4 billion, +67%, +63% cc) was offset by generic competition, mainly Entresto (USD 3.7 billion, –44%, –45% cc), Promacta (USD 505 million, –64%, –65% cc) and Tasigna (USD 438 million, –53%, –54% cc).

In the US (USD 17.3 billion, –4%), strong growth from Kisqali, Kesimpta, Scemblix, Pluvicto and Leqvio was more than offset by generic competition, mainly Entresto and Promacta. In Europe (USD 12.9 billion, +5%, +1% cc), sales grew driven by Kisqali, Kesimpta and Leqvio, partly offset by generic competition, mainly Promacta and Xolair. Sales in emerging growth markets were USD 11.5 billion (+10%, +6% cc), including USD 3.7 billion of sales from China (+17%, +10% cc).

Operating income

Gross profit was USD 32.7 billion (0%, –1% cc), broadly in line with the prior year.

SG&A expenses were USD 9.5 billion (+4%, +5% cc), driven by productivity.

R&D expenses were USD 10.7 billion (–34%, –32% cc), mainly due to the USD 1.9 billion partial impairment charge on the del-desiran IPR&D intangible asset acquired through the Avidity acquisition.

Other income was USD 1.1 billion (+7%, +4% cc), mainly driven by higher asset divestment gains, partly offset by lower government grant income.

Other expense was USD 2.8 billion (–49%, –47% cc), increasing mainly due to higher provision charges, including for a long-term supply agreement, and higher restructuring expenses, partly offset by lower legal-related expenses.

Operating income was USD 10.8 billion (–23%, –24% cc), declining mainly due to higher R&D expenses and higher other expense. Operating income margin was 25.8% of net sales, decreasing 8.3 percentage points (8.2 percentage points in cc).

Core adjustments were USD 6.0 billion, mainly due to impairment charges and amortization, compared with USD 2.9 billion in the prior year. Core adjustments increased mainly due to higher impairments.

Core gross profit was USD 34.9 billion (+1%, 0% cc), broadly in line with the prior year.

Core SG&A expenses were USD 9.4 billion (+4%, +5% cc), driven by productivity.

Core R&D expenses were USD 8.1 billion (–8%, –6% cc), mainly due to investments in recently acquired assets.

Core other income was USD 0.3 billion (–16%, –22% cc), mainly due to lower government grant income.

Core other expense was USD 0.7 billion (–27%, –25% cc), mainly due to a net increase in pre-launch inventory provisions.

Core operating income was USD 16.9 billion (–1%, –2% cc), declining mainly due to higher R&D expenses and higher other expense, partly offset by lower SG&A expenses. Core operating income margin was 40.1% of net sales, decreasing 1.1 percentage points (0.8 percentage points in cc).

Interest expense and other financial income and expense

Interest expense amounted to USD 1.3 billion compared with USD 0.8 billion in the prior year, mainly due to the increase in financial debt.

Other financial income and expense amounted to an expense of USD 122 million, broadly in line with the prior year.

Core interest expense amounted to USD 1.3 billion compared with USD 0.8 billion in the prior year, mainly due to the increase in financial debt.

Core other financial income and expense amounted to an income of USD 9 million, broadly in line with the prior year.

Income taxes

The tax rate in the first nine months was 19.3% compared with 12.0% in the prior year period. The current-year tax rate was increased by intercompany transactions and changes in uncertain tax positions, partially offset by deferred tax income related to impairment charges on intangible assets other than goodwill in jurisdictions with higher tax rates. The prior-year tax rate was reduced 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 prior-year items and other items. Excluding these impacts, the tax rate would have been 17.4% compared with 14.3% in the prior-year period, increasing mainly due to a change in profit mix.

The core tax rate (core taxes as a percentage of core income before tax) was 16.5% compared with 16.2% in the prior-year period, increasing mainly due to a change in profit mix.

Net income, EPS, cash flows from operating activities and free cash flow

Net income was USD 7.6 billion (–34%, –35% cc), mainly due to lower operating income, higher interest expense and higher income taxes. EPS was USD 4.01 (–32%, –33% cc).

Core net income was USD 13.0 billion (–4%, –5% cc), mainly due to lower core operating income and higher interest expense. Core EPS was USD 6.85 (–1%, –3% cc), benefiting from the lower weighted average number of shares outstanding.

Net cash flows from operating activities amounted to USD 15.1 billion (–11%), mainly due to lower net income, adjusted for non-cash items and other adjustments, unfavorable changes in working capital, higher interest paid, and a change from net other financial receipts to net other financial payments.

Free cash flow amounted to USD 14.0 billion (–12%), declining due to lower net cash flows from operating activities.

Product commentary (relating to Q3 performance)

Cardiovascular, RENAL and METABOLIC

Entresto (USD 1 165 million, –38%, –38% cc) sales declined due to generic competition in the US. Entresto continued to grow ex-US, where the product is approved for heart failure globally as well as hypertension in China and Japan.

Leqvio (USD 506 million, +64%, +63% cc) sales grew driven by the US, Europe and continued uptake in China following inclusion in the National Reimbursement Drug List (NRDL) in January. Leqvio is registered in 109 countries worldwide and commercially available in 89 countries. Novartis obtained global rights to develop, manufacture and commercialize Leqvio under a license and collaboration agreement with Alnylam Pharmaceuticals. Novartis is in US ANDA litigation with a generic manufacturer.

Vanrafia (USD 31 million) sales reflect continued launch execution following 2025 approvals in the US and China, as the first and only selective endothelin A (ETA) receptor antagonist for proteinuria reduction in primary IgA nephropathy (IgAN).

Immunology

Cosentyx (USD 1 857 million, +9%, +9% cc) sales grew in most markets, driven by the HS and SpA indications. US growth benefited from prior-year revenue deduction adjustments.

Ilaris (USD 591 million, +25%, +26% cc) sales grew across most regions, with continued momentum in the Periodic Fever Syndromes and Still’s disease indications.

Xolair (USD 331 million, –25%, –25% cc) sales declined due to continued biosimilar pressure. 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 101 million) continued to show strong launch uptake in the US, supported by sustained prescription growth and a free drug program facilitating patient access. Ex-US, sales were mainly driven by early launch uptake in Germany and China.

Neuroscience

Kesimpta (USD 1 484 million, +21%, +22% cc) sales showed continued strong momentum globally, driven by increased demand and broad access, as a high efficacy B-cell therapy with at-home self-administration for a broad population of RMS patients. Kesimpta is now approved in 94 countries with more than 226,000 patients treated since launch.

Zolgensma Group (USD 404 million, +34%, +35% cc) sales grew strongly, reflecting continued launch momentum from Itvisma, now approved in the US, Japan, multiple Gulf countries and the EU. Zolgensma maintained leadership in the incident SMA population across the US and ex-US, with over 6,000 patients treated globally since launch.

Aimovig (USD 87 million, +1%, +2% cc) sales grew, mainly driven by Germany. Novartis commercializes Aimovig ex-US and ex-Japan, while Amgen retains all rights in the US and Japan.

ONCOLOGY

Kisqali (USD 1 821 million, +37%, +37% cc) sales continued to grow strongly across all regions, with market share growth in early breast cancer (eBC) as well as leadership in metastatic breast cancer (mBC). Kisqali performance reflects its consistent overall survival (OS) benefit across all Phase III mBC trials and clinically meaningful OS in eBC. This is supported by its NCCN Category 1 preferred status, ASCO guidelines recommendation in eBC, the only “A” rating from ESMO-MCBS for a CDK4/6 in HR+/HER2- eBC, and ESMO preferred status in 1L mBC.

Pluvicto (USD 674 million, +20%, +20% cc) sales showed continued strong demand driven by the pre-taxane metastatic androgen pathway modulation-resistant prostate cancer (mAPMR, previously mCRPC) setting, with US and China approvals in metastatic androgen pathway modulation-naïve or sensitive prostate cancer (mAPMN/S, previously mHSPC) in Q3. Global access continues to expand, with the post-taxane mAPMR setting now approved in 52 countries, and the pre-taxane setting approved in 18 countries.

Jakavi (USD 564 million, +5%, +5% cc) sales grew across all indications. Incyte retains all rights to ruxolitinib (Jakafi^®) in the US.

Tafinlar + Mekinist (USD 570 million, +4%, +4% cc) sales grew, led by China, emerging markets and the US. Novartis is in US ANDA litigation with a generic manufacturer.

Scemblix (USD 593 million, +66%, +67% cc) sales grew across all regions, with continued momentum in the early-line setting, where 70 markets have secured approval.

Lutathera (USD 219 million, +3%, +3% cc) sales grew, driven by demand in the US and Europe, with continued 2L leadership and solidified share in the 1L setting in the US. Novartis is in patent litigation with two manufacturers having FDA applications referencing Lutathera, which have received final approval in the US. Novartis has appealed the negative district court decision regarding the validity of its patents covering Lutathera, which expire in 2039

(with pediatric exclusivity). Any commercial launch of a product referencing Lutathera prior to the final outcome of the appeal may be at risk of later litigation developments.

Fabhalta (USD 237 million, +59%, +60% cc) sales grew, with expansion in PNH and renal indications.

Established BRANDS

Sandostatin Group (USD 311 million, +3%, +3% cc) sales grew, driven by the US.

Exforge Group (USD 183 million, +4%, +1% cc) sales grew, driven by China, partially offset by declines in Europe and other emerging markets.

Promacta/Revolade (USD 142 million, –61%, –61% cc) sales continued to decline due to generic competition.

Diovan Group (USD 137 million, –4%, –6% cc) sales declined due to generic competition ex-US.

Tasigna (USD 141 million, –36%, –37% cc) sales continued to decline due to generic competition.

Piqray/Vijoice (USD 122 million, +36%, +37% cc) sales grew, driven by Vijoice in the US.

Myfortic (USD 110 million, +13%, +11% cc) sales grew in emerging markets.

Lucentis (USD 87 million, –41%, –41% cc) sales declined mainly due to competition from biosimilars and next-generation anti-VEGF therapies. Novartis only commercializes Lucentis in markets ex-US.

Kymriah (USD 82 million, –15%, –15% cc) sales declined across most markets due to continued competitive pressure.

Cash Flow and Balance Sheet

Cash flow

Third quarter

Net cash flows from operating activities amounted to USD 5.5 billion, compared with USD 6.6 billion in the prior-year quarter. Higher net income, adjusted for non-cash items and other adjustments, was more than offset by unfavorable changes in working capital and higher interest paid.

Net cash outflows used in investing activities amounted to USD 1.7 billion, compared with USD 0.9 billion in the prior-year quarter.

In the current-year quarter, net cash outflows used in investing activities were mainly driven by USD 1.1 billion cash outflows for acquisitions of businesses (net of cash acquired of USD 0.1 billion), relating to Myricx Pharma Ltd. In addition, cash outflows for purchases of intangible assets and for property, plant and equipment amounted to USD 0.4 billion each. These cash outflows were partly offset by proceeds of USD 0.1 billion from the sale of financial assets.

In the prior-year quarter, net cash outflows used in investing activities were mainly driven by USD 0.5 billion for purchases of intangible assets and USD 0.4 billion for purchases of property, plant and equipment.

Net cash outflows used in financing activities amounted to USD 2.5 billion, compared with USD 2.8 billion in the prior-year quarter.

In the current-year quarter, net cash outflows used in financing activities were mainly driven by USD 1.7 billion for treasury share transactions and by net cash outflows of USD 0.7 billion resulting from changes in current financial debts.

In the prior-year quarter, net cash outflows used in financing activities were mainly driven by USD 2.3 billion for net treasury share transactions and USD 0.4 billion for the net decrease in current and non-current financial debts.

Free cash flow amounted to USD 5.1 billion (–18%), declining due to lower net cash flows from operating activities.

Nine months

Net cash flows from operating activities amounted to USD 15.1 billion, compared with USD 16.9 billion in the prior-year period. This decrease was mainly due to lower net income, adjusted for non-cash items and other adjustments, unfavorable changes in working capital, higher interest paid and a change from net other financial receipts to net other financial payments.

Net cash outflows used in investing activities amounted to USD 16.6 billion, compared with USD 2.8 billion in the prior-year period.

In the current-year period, net cash outflows used in investing activities were mainly driven by USD 12.8 billion cash outflows for acquisitions of businesses (net of cash acquired of USD 0.4 billion), including USD 11.7 billion for the acquisition of Avidity Biosciences, Inc. and USD 1.1 billion for the acquisition of Myricx Pharma Ltd. Acquisitions applying the optional concentration test amounted to USD 2.7 billion (net of cash acquired of USD 5 million), including Excellergy, Inc. (USD 0.9 billion) and Pikavation Therapeutics, Inc. (USD 1.8 billion). In addition, cash outflows for purchases of intangible assets were USD 1.2 billion and for property, plant and equipment USD 1.1 billion. These cash outflows were partly offset mainly by net proceeds of USD 0.8 billion from time deposits and the sale of marketable securities (mainly marketable security funds acquired through the acquisition of Avidity Biosciences, Inc.), by proceeds of USD 0.2 billion from the sale of financial assets, and by net proceeds of USD 0.1 billion from divestments of businesses.

In the prior-year period, net cash outflows used in investing activities were mainly driven by USD 1.9 billion for purchases of intangible assets and by USD 1.6 billion for acquisitions applying the optional concentration test, net of USD 0.1 billion in cash acquired (Anthos Therapeutics, Inc. for USD 0.8 billion and Regulus Therapeutics Inc. for USD 0.8 billion). Cash outflows for purchases of property, plant and equipment were USD 0.9 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.

Net cash outflows used in financing activities amounted to USD 0.9 billion, compared with USD 16.6 billion in the prior-year period.

In the current-year period, net cash outflows used in financing activities were mainly driven by USD 9.1 billion for the annual dividend payment and USD 4.8 billion for net treasury share transactions. These cash outflows were partly offset by cash inflows of USD 12.9 billion from the issuance of bonds, including USD 10.9 billion from US dollar denominated bonds (notional amount USD 11.0 billion) and USD 2.0 billion from euro denominated bonds (notional amount EUR 1.7 billion), and by net cash inflows of USD 0.3 billion from changes in current financial debts. The proceeds from the US dollar denominated bonds were used to repay the USD 11.0 billion bridge loan entered into in February 2026 to fund the acquisition of Avidity Biosciences, Inc.

In the prior-year period, net cash outflows used in financing activities were mainly driven by USD 7.8 billion for the annual dividend payment and USD 7.7 billion for net treasury share transactions. Cash outflows also included USD 1.6 billion for the repayment of two bonds at maturity, comprising a US dollar denominated bond with a notional amount of USD 1.0 billion and a Swiss franc denominated bond with a notional amount of CHF 0.5 billion, equivalent to USD 0.6 billion. Cash outflows for lease liabilities amounted to USD 0.2 billion. These cash outflows were partly offset by cash inflows of USD 1.0 billion from the net increase in current and non-current financial debts.

Free cash flow amounted to USD 14.0 billion (–12%), declining due to lower net cash flows from operating activities.

Balance sheet

Assets

Total non-current assets of USD 88.4 billion increased by USD 7.9 billion compared with December 31, 2025.

Intangible assets other than goodwill increased by USD 10.4 billion, mainly due to the Avidity Biosciences, Inc., Pikavation Therapeutics, Inc., Myricx Pharma Ltd. and Excellergy, Inc. acquisitions, as well as other additions, partly offset by amortization, impairments and currency translation adjustments.

Goodwill increased by USD 1.6 billion, mainly due to the acquisition of Avidity Biosciences, Inc. and Myricx Pharma Ltd., partly offset by currency translation adjustments.

Other non-current assets decreased by USD 3.6 billion, primarily due to a USD 4.8 billion reduction in prepaid post-employment benefit assets following the application of the asset ceiling to the Company’s defined benefit pension plans in Switzerland, partly offset by returns on plan assets and actuarial gains.

Financial assets decreased by USD 0.3 billion. Property, plant and equipment, right-of-use assets, deferred tax assets and investments in associated companies were broadly in line with December 31, 2025.

Total current assets of USD 28.7 billion decreased by USD 1.7 billion compared with December 31, 2025.

Cash and cash equivalents decreased by USD 2.6 billion compared with December 31, 2025 as net cash inflows from operating activities of USD 15.1 billion, net proceeds from financial debts of USD 13.1 billion and net proceeds of USD 0.8 billion from time deposits and the sale of marketable security funds, were more than offset by cash outflows related to the acquisitions of Avidity Biosciences, Inc., Pikavation Therapeutics, Inc., Myricx Pharma Ltd. and Excellergy, Inc. totaling USD 15.5 billion, the annual dividend payment of USD 9.1 billion, net purchases of treasury shares of USD 4.8 billion, as well as other net cash outflows from investing and financing activities and currency effects of USD 2.2 billion.

Trade receivables increased by USD 0.8 billion mainly due to the increase in net sales.

Inventories, other current assets, marketable securities, time deposits and derivative financial instruments, and income tax receivables were broadly in line with December 31, 2025.

Liabilities

Total non-current liabilities of USD 47.1 billion increased by USD 9.9 billion compared with December 31, 2025.

Non-current financial debts increased by USD 8.8 billion compared with December 31, 2025, mainly due to the issuance of U.S. dollar denominated bonds with a notional amount of USD 11.0 billion and euro denominated bonds with a notional amount of EUR 1.7 billion, partly offset by the reclassification from non-current to current financial debts of bonds maturing in 2027, comprising two U.S. dollar denominated bonds with notional amounts of USD 1.3 billion and USD 1.0 billion, a Swiss franc denominated bond with a notional amount of CHF 0.7 billion, and a euro denominated bond with a notional amount of EUR 0.6 billion, and by currency translation adjustments.

Deferred tax liabilities increased by USD 1.0 billion mainly due to the acquisitions of Avidity Biosciences, Inc. and Myricx Pharma Ltd.

Provisions and other non-current liabilities, and non-current lease liabilities were broadly in line with December 31, 2025.

Total current liabilities of USD 32.5 billion increased by USD 5.2 billion compared with December 31, 2025.

Current financial debts and derivative financial instruments increased by USD 4.0 billion compared with December 31, 2025, mainly due to the reclassification from non-current to current financial debts of bonds maturing in 2027, comprising two U.S. dollar denominated bonds with notional amounts of USD 1.3 billion and USD 1.0 billion, a Swiss franc denominated bond with a notional amount of CHF 0.7 billion, and a euro denominated bond with a notional amount of EUR 0.6 billion.

Provisions and other current liabilities increased by USD 0.7 billion, mainly driven by the increase in provisions for deductions from revenue and provisions for onerous contracts.

Current income tax payable increased by USD 0.7 billion whereas trade payables and current lease liabilities were broadly in line with December 31, 2025.

Equity

The Company’s equity decreased by USD 9.0 billion to USD 37.6 billion compared with December 31, 2025, mainly as net income of USD 7.6 billion and a favorable impact from equity-based compensation of USD 0.9 billion were more than offset by the annual dividend paid to Novartis AG shareholders of USD 9.1 billion, purchases of treasury shares of USD 5.0 billion, remeasurement losses on defined benefit plans of USD 2.9 billion, net of taxes, and the impact from currency translation differences of USD 0.8 billion.

Net debt and debt/equity ratio

The Company’s liquidity amounted to USD 9.0 billion as at September 30, 2026, compared with USD 11.6 billion as at December 31, 2025. Total non-current and current financial debts, including derivatives, amounted to USD 46.3 billion as at September 30, 2026, compared with USD 33.5 billion as at December 31, 2025.

The debt/equity ratio increased to 1.23:1 as at September 30, 2026, compared with 0.72:1 as at December 31, 2025.

The net debt increased to USD 37.4 billion as at September 30, 2026, compared with USD 21.9 billion as at December 31, 2025.

Innovation Review

Novartis continues to focus its R&D portfolio prioritizing high value medicines with transformative potential for patients. We now focus on ~100 projects in clinical development.

Selected innovative medicines approvals in Q3

Selected innovative medicines projects awaiting regulatory decisions

Selected innovative medicines pipeline projects

Condensed Interim Consolidated Financial Statements

Consolidated income statements

Third quarter (unaudited)

Consolidated income statements

Nine months to September 30 (unaudited)

Consolidated statements of comprehensive income

Third quarter (unaudited)

Nine months to September 30 (unaudited)

Consolidated balance sheets

Consolidated statements of changes in equity

Third quarter (unaudited)

Consolidated statements of changes in equity

Nine months to September 30 (unaudited)

Consolidated statements of cash flows

Third quarter (unaudited)

Consolidated statements of cash flows

Nine months to September 30 (unaudited)

Notes to the Condensed Interim Consolidated Financial Statements for the three month and nine month period ended September 30, 2026 (unaudited)

1. Basis of preparation

The consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRS^®) Accounting Standards as issued by the International Accounting Standards Board. They are prepared in accordance with the historical cost convention, except for items that are required to be accounted for at fair value.

These Condensed Interim Consolidated Financial Statements for the three month and nine month period ended September 30, 2026, were prepared in accordance with International Accounting Standards (IAS®) Standards 34 Interim Financial Reporting and accounting policies set out in the 2025 Annual Report published on February 4, 2026.

2. Accounting policies

The Company’s accounting policies are set out in Note 1 to the Consolidated Financial Statements in the 2025 Annual Report and conform with IFRS Accounting Standards as issued by the International Accounting Standards Board.

The preparation of financial statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the period, which affect the reported amounts of revenues, expenses, assets, liabilities, and contingent amounts.

Estimates are based on historical experience and other assumptions that are considered reasonable under the given circumstances and are regularly monitored. Actual outcomes and results could differ from those estimates and assumptions. Revisions to estimates are recognized in the period in which the estimate is revised.

As disclosed in the 2025 Annual Report, goodwill, and the intangible assets not yet available for use (in-process research and development (IPR&D)) are evaluated for impairment annually, or when facts and circumstances warrant. The intangible assets available for use (currently marketed products and other intangible assets) are evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. The amount of goodwill and intangible assets other than goodwill on the Company’s consolidated balance sheet has risen significantly in recent years, primarily from acquisitions. Impairment testing may lead to potentially significant impairment charges in the future that could have a materially adverse impact on the Company’s results of operations and financial condition.

The Company’s activities are not subject to significant seasonal fluctuations.

Status of adoption of significant new or amended IFRS standards or interpretations

No new IFRS Accounting Standards were adopted by the Company in 2026. There were no new IFRS Accounting Standards amendments or interpretations that became effective in 2026 and 2025, that had a material impact on the Company’s consolidated financial statements.

In 2024, the International Accounting Standards Board issued the following new IFRS Accounting Standard, which is not yet effective:

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 Presentation and Disclosure in Financial Statements was issued by the International Accounting Standards Board in April 2024. IFRS 18 will become effective on January 1, 2027, and is required to be applied retrospectively to comparative periods presented, with early adoption permitted. Upon adoption, IFRS 18 replaces International Accounting Standards (IAS®) Standards 1 – Presentation of Financial Statements.

IFRS 18 sets out new requirements focused on improving financial reporting by:

• requiring additional defined structure to the statement of profit or loss (i.e. consolidated statement of income), to reduce diversity in the reporting, by requiring five categories (operating, investing, financing, income taxes and discontinued operations) and defined subtotals and totals (operating income, income before financing, income taxes and net income),
• requiring disclosures in the notes to the financial statements about management-defined performance measures (i.e. certain non-IFRS measures), and

• adding new principles for aggregation and disaggregation of information in the primary financial statements and notes.

IFRS 18 will not affect the recognition or measurement of items in the financial statements, but it might change what an entity reports as its “operating profit or loss”, due to the classification of certain income and expense items between the five categories of the consolidated income statement. It might also change what an entity reports as operating activities, investing activities and financing activities within the statement of cash flows, due to the change in classification of certain cash flow items between these three categories of the cash flows statement.

The Company’s preliminary assessment of IFRS 18 impacts indicates that certain income and expense amounts are expected to be reclassified within the consolidated income statement. For example, portions of foreign currency results and monetary losses from hyperinflation accounting will move from non-operating to operating income and expense. These expected presentation changes will not affect reported net income. The consolidated statement of cash flows presentation will change. It will start with operating income instead of net income, and certain cash flows are expected to be reclassified among the operating, investing, and financing activities categories. For example, dividends received and interest received are expected to be reclassified from operating activities to investing activities, while interest paid is expected to be reclassified from operating activities to financing activities. These presentation changes will not affect the net change in cash and cash equivalents reported for the period.

Novartis is currently finalizing its assessment of the impact of adopting IFRS 18, which will be effective January 1, 2027.

Based on the Company’s assessment, there were no other IFRS Accounting Standards, amendments or interpretations not yet effective in 2026 that would have been expected to have a material impact on the Company’s consolidated financial statements.

3. Significant acquisitions of businesses

The following are the significant acquisitions of businesses where the Company applied the business combination acquisition method of accounting.

2026

Acquisition of Myricx Pharma Limited

On July 5, 2026, Novartis entered into a Stock Purchase Agreement to acquire Myricx Pharma Limited (“Myricx”), a UK-based, privately held biotechnology company developing antibody-drug conjugates (ADCs) using N-myristoyltransferase inhibitor (NMTi) payloads. The transaction closed on August 28, 2026.

The acquisition agreement provided for cash consideration of USD 1.1 billion, and potential additional payments of up to USD 0.4 billion, which Myricx shareholders are eligible to receive upon the achievement of specified milestones.

The fair value of the total purchase consideration was USD 1.3 billion, consisting of a cash payment of USD 1.2 billion, after customary purchase price adjustments, and the fair value of contingent consideration of USD 0.1 billion. The acquired net identifiable assets included cash and cash equivalents of USD 0.1 billion, resulting in a net cash outflow on acquisition of approximately USD 1.1 billion. The preliminary purchase price allocation resulted in net identifiable assets of USD 0.7 billion, consisting primarily of IPR&D intangible assets of USD 0.6 billion, other intangible assets of USD 0.3 billion, deferred tax liabilities of USD 0.2 billion and other net assets and liabilities. Goodwill amounted to USD 0.6 billion. As the transaction closed in the third quarter of 2026, the valuation of the acquired intangible assets had not been finalized as of September 30, 2026, and the purchase price allocation remains preliminary.

The results of operations from the date of acquisition were not material.

Acquisition of Avidity Biosciences, Inc.

On October 25, 2025, Novartis entered into an agreement and plan of merger to acquire Avidity Biosciences, Inc. (“Avidity”), a US-based, publicly traded biotechnology company specializing in RNA therapeutics for rare genetic neuromuscular diseases. Avidity’s portfolio includes delpacibart etedesiran (del-desiran), a development-stage therapy for the treatment of myotonic dystrophy type 1 (DM1), as well as development-stage programs for facioscapulohumeral muscular dystrophy (FSHD) and Duchenne muscular dystrophy (DMD).

Pursuant to the merger agreement, on February 27, 2026, following the satisfaction of the closing conditions, Novartis, through an indirect wholly owned subsidiary, acquired all outstanding shares of Avidity’s common stock for USD 72.00 per share in cash. The total consideration amounted to approximately USD 12.0 billion in cash on a fully diluted basis. The acquiring subsidiary merged with and into Avidity, resulting in Avidity becoming an indirect wholly owned subsidiary of Novartis. Avidity shares admitted to trading on NASDAQ were subsequently delisted. The acquisition was financed through a combination of available cash and third-party debt financing.

The fair value of the total purchase consideration was approximately USD 12.0 billion. The preliminary purchase price allocation resulted in net identifiable assets of approximately USD 10.6 billion. These comprised identifiable intangible assets, including IPR&D, of USD 11.3 billion (of which USD 7.48 billion was attributable to the del-desiran IPR&D intangible asset and approximately USD 3.8 billion in aggregate was attributable to the separate FSHD and DMD IPR&D intangible assets),

marketable security funds of USD 0.7 billion (which were settled for cash on February 27, 2026 by Novartis), cash of USD 0.4 billion, other net assets of USD 0.1 billion, and net deferred tax liabilities of USD 1.9 billion. Goodwill arising from the acquisition amounted to approximately USD 1.4 billion.

Following the acquisition, in September 2026, Novartis recognized a partial impairment of USD 1.94 billion on the del-desiran IPR&D intangible asset as a result of an event occurring after the acquisition date. For further information, see Note 10. Other interim disclosures - Property, plant and equipment, right-of-use assets and intangible assets.

The results of operations from the date of acquisition were not material.

2025

In 2025, there were no acquisitions of businesses where the Company applied the business combination acquisition method of accounting.

Fair value of assets and liabilities acquired through business combinations

The following table presents the fair value of the assets and liabilities acquired through business combinations and the total purchase consideration for the first nine months of 2026. In 2025, there were no business combinations.

The business combinations in the first nine months of 2026 were Avidity and Myricx. The goodwill arising from the 2026 business combinations is not tax deductible. It is primarily attributable to the deferred tax effects arising from the recognition of identifiable intangible assets for which no corresponding tax basis exists, expected synergies, and the value of the acquired assembled workforce. The goodwill was allocated to the group of CGUs at the level of the Company’s operating segment, which is the level at which the goodwill is monitored for internal management purposes and the acquisition synergies are expected to be realized.

The following are the significant acquisitions where Novartis elected to apply the optional concentration test, resulting in the transaction being accounted for as assets separately acquired rather than as a business combination within the meaning of IFRS Accounting Standards.

2026

Acquisition of Excellergy, Inc.

On March 26, 2026, Novartis entered into an agreement and plan of merger to acquire all outstanding shares of Excellergy, Inc. (“Excellergy”), a US-based, private clinical-stage biotechnology company focused on the development of next-generation anti-IgE therapies for IgE-driven diseases. The transaction closed on June 24, 2026.

The purchase price consisted of cash consideration of USD 0.9 billion and potential additional milestones of up to USD 1.1 billion, which Excellergy shareholders are eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 0.9 billion, and other net assets including cash of USD 5 million. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.

Acquisition of Pikavation Therapeutics, Inc.

On March 18, 2026, Novartis entered into a stock purchase agreement to acquire Pikavation Therapeutics, Inc., (“Pikavation”), a wholly owned subsidiary of Synnovation Therapeutics, LLC (“Synnovation”), that holds a pan-mutant selective PI3Ka inhibitor IP, including SNV4818 phase 1 program. The transaction closed on May 28, 2026.

The purchase price consisted of cash consideration of USD 1.8 billion and potential additional milestones of up to USD 1.2 billion, which Synnovation is eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 1.8 billion, and other net assets. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.

2025

Acquisition of Tourmaline Bio, Inc.

On September 8, 2025, Novartis entered into an agreement and plan of merger to acquire Tourmaline Bio, Inc. (“Tourmaline”), a US-based, publicly traded clinical-stage biopharmaceutical company focused on developing a treatment option for atherosclerotic cardiovascular disease.

Pursuant to the merger agreement, on September 29, 2025, Novartis, through an indirect, wholly owned subsidiary, commenced a tender offer (the “Offer”) to acquire all of the outstanding shares of common stock of Tourmaline in exchange for USD 48.00 in cash per share. The tender offer expired at one minute past 11:59 p.m., New York City time on October 27, 2025 with a payment on October 28, 2025 in the amount of USD 1.4 billion for the tendered outstanding shares to the Tourmaline shareholders. On October 28, 2025, the acquiring subsidiary merged with and into Tourmaline, resulting in Tourmaline becoming an indirect wholly owned subsidiary of Novartis. Tourmaline shares admitted to trading on NASDAQ were subsequently delisted.

The cash purchase price consisted of cash consideration of USD 1.4 billion. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 1.2 billion, and other net assets including cash and cash equivalents of USD 0.2 billion.

Option agreement to acquire a private clinical-stage biotech company

On September 16, 2025, Novartis entered into an agreement granting it an option to acquire all outstanding shares of a private clinical-stage biotech company (the “Biotech company”). The option is subject to pre-defined terms and is exercisable at Novartis sole discretion. Management concluded that the terms of the option agreement conferred substantive control over the Biotech company, in accordance with the principles of IFRS Accounting Standards. Consequently, the Biotech company was consolidated into Novartis consolidated financial statements effective from September 2025.

If Novartis decides to exercise the option to acquire, it would make a payment to the Biotech company’s shareholders, with potential additional payments, which they are eligible to receive upon achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets at the consolidation date was concentrated in an identifiable IPR&D intangible asset.

The purchase price as at the option agreement date was USD 0.4 billion. The amount was allocated to the net assets at the consolidation date, including USD 0.4 billion IPR&D intangible assets and USD 18 million in cash and cash equivalents. A non-controlling interest of USD 0.4 billion was recognized in equity. Subsequent milestone-related payments will be recognized as additions to the intangible asset when the specified milestones are achieved.

Acquisition of Regulus Therapeutics Inc.

On April 29, 2025, Novartis entered into an agreement and plan of merger to acquire Regulus Therapeutics Inc. (“Regulus”), a US-based, publicly traded clinical-stage biopharmaceutical company focused on developing microRNA therapeutics. Regulus lead development phase asset, farabursen, is a potential first-in-class, next-generation oligonucleotide targeting miR-17 for the treatment of autosomal dominant polycystic kidney disease (ADPKD).

Pursuant to the merger agreement, on May 27, 2025, Novartis, through an indirect, wholly owned subsidiary, commenced a tender offer (the “Offer”) to acquire all of the outstanding shares of common stock of Regulus in exchange for (i) USD 7.00 in cash per Share, plus (ii) one contingent value right (each, a “CVR”) per Share, representing the right to receive one contingent payment of USD 7.00 in cash, upon the achievement of a specified regulatory milestone. The tender offer expired at one minute past 11:59 p.m., New York City time on June 24, 2025 with a payment of USD 0.7 billion for the outstanding shares to the Regulus shareholders for their tendered shares and the issuance of 1 CVR per share. Additionally, the liability related to the Regulus employee share plans amounted to USD 0.1 billion and was paid on July 11, 2025, with the issuance of 1 CVR per share. On June 25, 2025, the acquiring subsidiary merged with and into Regulus, resulting in Regulus becoming an indirect wholly owned subsidiary of Novartis. Regulus shares admitted to trading on NASDAQ were subsequently delisted.

The purchase price consisted of cash consideration of USD 0.8 billion and CVRs of up to USD 0.9 billion, which Regulus shareholders are eligible to receive upon the achievement of a specified regulatory milestone. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 0.8 billion, and other net assets including cash and cash equivalents of USD 23 million. Subsequent payments for the potential CVRs upon achievement of the specified regulatory milestone will be recognized as additions to the intangible asset if the specified regulatory milestone is achieved.

Acquisition of Anthos Therapeutics, Inc.

On February 10, 2025, Novartis entered into an agreement and plan of merger to acquire all of the outstanding shares of common stock of Anthos Therapeutics, Inc. (“Anthos”), a US-based, privately held clinical stage biopharmaceutical company with abelacimab, a late-stage medicine in development for the prevention of stroke and systemic embolism in patients with atrial fibrillation. The transaction closed on April 3, 2025.

The purchase price consisted of cash consideration of USD 0.9 billion and potential additional milestones of up to USD 2.1 billion, which Anthos shareholders are eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 0.9 billion, and other net assets including cash and cash equivalents of USD 47 million. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.

Identifiable net assets acquired through acquisitions applying the optional concentration test

The following table presents the identifiable net assets acquired through acquisitions applying the optional concentration test:

For significant pending transactions, see Note 10. Other interim disclosures — Commitments — Other commitments.

4. Summary of equity attributable to Novartis AG shareholders

4.1. The annual gross dividend to shareholders of Novartis AG amounted to USD 9.1 billion (2025: USD 7.8 billion).

4.2. In July 2023, Novartis entered into an irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares on the second trading line under its up-to USD 15.0 billion share buyback. In June 2024, Novartis amended the arrangement to include the repurchase of an additional 8.7 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 8.7 million shares concluded in October 2024. In June 2025, Novartis amended the arrangement to include the repurchase of an additional 10.7 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 10.7 million shares concluded in August 2025.

The repurchases under the USD 15.0 billion share buyback that commenced in July 2023 concluded in July 2025.

In July 2025, Novartis amended and restated its arrangement to repurchase Novartis shares on the second trading line under its new up-to USD 10.0 billion share buyback.

In March 2026, Novartis replaced its July 2025 arrangement with a new irrevocable, non-discretionary arrangement with a bank to continue repurchasing Novartis shares on the second trading line under its up-to USD 10.0 billion share buyback. In May 2026, Novartis amended the arrangement to include the repurchase of an additional 12.1 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 12.1 million shares concluded in September 2026. In September 2026, Novartis amended the arrangement to continue the repurchases under its up-to USD 10.0 billion share buyback.

Novartis is able to cancel this arrangement at any time but may be subject to a 90 day waiting period. As of September 30, 2026, and December 31, 2025, these waiting period conditions were not applicable and as a result, there was no requirement to record a liability under this arrangement as of September 30, 2026, and December 31, 2025.

4.3. Other movements include mainly the impact of the application of IAS Standards 29 “Financial Reporting in Hyperinflationary Economies,” for subsidiaries in hyperinflationary economies.

5. Financial instruments

The following table illustrates the three hierarchical levels for valuing financial instruments at fair value as of September 30, 2026, and December 31, 2025. For additional information on the hierarchies and other matters, please refer to the Consolidated Financial Statements in the 2025 Annual Report, published on February 4, 2026.

In the first nine months of 2026, four equity securities with a carrying amount of USD 37 million were transferred from Level 3 to Level 1 following Initial Public Offerings of the invested companies or lifting of restrictions.

The carrying amount of non-current debt and equity securities, fund investments and non-current contingent consideration receivables totaling USD 1.6 billion at September 30, 2026 (USD 1.8 billion at December 31, 2025) is included in the line “Financial assets” of the consolidated balance sheets. The carrying amount of non-current contingent consideration liabilities of USD 0.4 billion at September 30, 2026 (USD 0.5 billion at December 31, 2025) is included in the line “Provisions and other non-current liabilities” of the consolidated balance sheets.

The fair value of straight bonds and floating rate bonds amounted to USD 37.4 billion at September 30, 2026 (USD 26.6 billion at December 31, 2025) compared with the carrying amount of USD 40.4 billion at September 30, 2026 (USD 27.9 billion at December 31, 2025). For all other financial assets and liabilities, the carrying amount is a reasonable approximation of the fair value.

The Company’s exposure to financial risks has not changed significantly during the period and there have been no major changes to the risk management department or in any risk management policies.

6. Details to the consolidated statements of cash flows

6.1. Reversal of non-cash items and other adjustments

The following tables show the reversal of non-cash items and other adjustments in the consolidated statements of cash flows.

6.2. Cash flows from changes in working capital and other operating cash flow items included in the net cash flows from operating activities