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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated January 20, 2005
(Commission File No. 1-15024)

Novartis AG
(Name of Registrant)

Lichtstrasse 35
4056 Basel
Switzerland
(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F: ý    Form 40-F: o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes: o    No: ý

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes: o    No: ý

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes: o    No: ý

Enclosure:        Press release dated January 20, 2005 announcing Novartis' results for the fourth quarter and the full year 2004

        Novartis International AG
Novartis Global Communications
CH-4002 Basel
Switzerland
GRAPHIC        
http://www.novartis.com

 
 
John Gilardi
Novartis Global Media Relations
+41 61 324 3018 (direct)
+41 61 324 2200 (main)
john.gilardi@group.novartis.com
 
Nehl Horton
Novartis Global Media Relations
+ 41 61 324 5749 (direct)
+ 41 61 324 2200 (main)
nehl.horton@group.novartis.com
MEDIA RELEASE • COMMUNIQUE AUX MEDIAS • MEDIENMITTEILUNG

Novartis delivers record results with strong double-digit net sales and earnings growth in 2004

Pharmaceuticals, led by the innovative, fast-growing oncology and cardiology franchises, drives expansion with market share gains

Key figures

Full year

 
   2004
   2003
   % Change
 
   USD m

   % of
net sales

   USD m

   % of
net sales

   USD

   lc1
Net sales   28 247       24 864       14   9
Pharmaceutical net sales   18 497       16 020       15   10
Consumer Health net sales   9 750       8 844       10   5
Operating income   6 539   23.1   5 889   23.7   11    
Net income   5 767   20.4   5 016   20.2   15    
Basic earnings per share/ADS   USD 2.36       USD 2.03       16    
Proposed dividend   CHF 1.05       CHF 1.00       5    

Fourth quarter

 
   Q4 2004
   Q4 2003
   % Change
 
   USD m

   % of
net sales

   USD m

   % of
net sales

   USD

   lc
Net sales   7 578       6 730       13   8
Pharmaceutical net sales   4 969       4 379       13   9
Consumer Health net sales   2 609       2 351       11   6
Operating income   1 534   20.2   1 606   23.9   -4    
Net income   1 378   18.2   1 360   20.2   1    
Basic earnings per share/ADS   USD 0.57       USD 0.55       4    

1    lc—Local currencies

All product names appearing in italics are trademarks of Novartis Group Companies

Unless otherwise stated, growth rates are in USD and comments refer to full-year 2004 figures

1

Basel, January 20, 2005—Commenting on the full-year results published today, Dr. Daniel Vasella, Chairman and CEO of Novartis, said, "Our innovation-focused strategy of bringing novel medicines to patients and the expertise and commitment of our associates delivered another record year of sustained, above-market growth. Pharmaceuticals, led by our innovative and fast-growing cancer and cardiovascular franchises, posted a double-digit rise in sales and operating income, with market share expanding globally. We have continued to enhance R&D productivity, resulting in a pipeline ranked as one of the most valuable in the industry. Despite challenging industry conditions, our outlook for 2005 remains strong, and we expect to deliver again a competitive performance with record sales and strong earnings."

Net sales

Group net sales up 14% to USD 28.2 billion

Net sales rose 14% (+9% in local currencies, or lc) to USD 28.2 billion as strong results were recorded in both Pharmaceuticals and Consumer Health, where OTC and Medical Nutrition offset lower net sales growth in the Sandoz generics business. Volume increases were the primary driver, contributing eight percentage points to net sales growth. Currency benefits added five percentage points, while acquisitions added one percentage point and price increases across the Group were insignificant (<1%). Pharmaceuticals accounted for 65% of total Group net sales and Consumer Health 35%. Geographically, the US accounted for 40% of total Group net sales, Europe 36% and other regions for 24%.

Pharmaceuticals net sales rise 15% to USD 18.5 billion

The Pharmaceuticals Division, bolstered by the five blockbusters Diovan, Gleevec/Glivec, Lamisil, Zometa and Neoral, reported a net sales increase of 15% (+10% lc) amid outstanding performances from top-selling prescription drugs in both the Primary Care and Specialty Medicines portfolios and above-average growth in several key markets. Most therapeutic areas expanded at double-digit rates in US dollars. Volume expansion contributed 10 percentage points, while currency benefits added five percentage points. Price changes had little impact.

Total net sales of strategic franchise products (Pharmaceutical sales excluding mature products) rose 21% (+16% lc) to USD 15.4 billion as seven of the top ten drugs delivered robust double-digit sales increases. Primary Care (excluding Mature Products) reported a net sales increase of 21% (+17% lc), led by the strong cardiovascular franchise (+21%, +17% lc), with the ongoing growth of the antihypertensive medicines Diovan, the No. 1 angiotensin receptor blocker (ARB) and No. 2 branded antihypertensive worldwide that exceeded USD 3 billion in yearly sales, and Lotrel, the No. 1 branded US combination high blood pressure treatment. Net sales in Specialty Medicines, which includes our activities in Oncology, Transplantation & Immunology, and Ophthalmics, rose 22% (+15% lc) and accounted for 33% of Pharmaceuticals net sales versus 31% in 2003. The Oncology franchise reported a 28% (+22% lc) advance, ranking as one of the fastest-growing businesses in its sector. The key oncology drugs Gleevec/Glivec, Zometa and Femara delivered dynamic growth as new data were presented during 2004 that continued to demonstrate benefits to patients. Mature products reported a 7% decline (-12% lc) in net sales to USD 3.1 billion.

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All regions performed well despite challenging market conditions. The US reported a 12% net sales increase. In Europe, net sales rose 19% (+8% lc), while net sales were up 16% (+8% lc) in Japan and 18% (+18% lc) in Latin America. Net sales in many of these regions outpaced local market average growth rates. Novartis increased its share of the global health-care market to 4.5% for the first 11 months of 2004, up from 4.42% in the year-ago period, according to IMS Health, which reported a 6.6% increase in worldwide pharmaceutical sales for the same period in 2004.

Consumer Health net sales up 10% to USD 9.8 billion

Net sales rose 10% (+5% lc) to USD 9.8 billion as a double-digit net sales expansion in US dollars in OTC, Animal Health and Medical Nutrition offset slower growth in Sandoz, Infant & Baby and CIBA Vision. Volume expansion overall in Consumer Health contributed two percentage points to growth, while currencies added five percentage points and acquisitions three percentage points. Price increases, on average, were insignificant. Sandoz net sales rose 5% (-1% lc) to USD 3.0 billion following an exceptionally strong 2003 performance driven by the launch of the antibiotic AmoxC in the US. Competitive pricing pressures also emerged during 2004, especially in the US and Germany. Strong performances from key strategic brands led to higher net sales in OTC, while Animal Health net sales were supported by double-digit growth in the companion animal franchise. Medical Nutrition net sales rose particularly fast following the successful completion of the Mead Johnson acquisition in February 2004. Infant & Baby net sales outpaced industry growth. CIBA Vision net sales advanced due to growth of the Dailies® and Night&Day™ contact lenses.

Operating income

Full year

 
   2004
   2003
    
 
   USD m

   % of
net sales

   USD m

   % of
net sales

   Change
in %
Pharmaceuticals   5 253   28.4   4 423   27.6   19
Consumer Health   1 181   12.1   1 320   14.9   -11
Corporate income & expense, net   105       146       -28
Total   6 539   23.1   5 889   23.7   11

Fourth quarter

 
   Q4 2004
   Q4 2003
    
 
   USD m

   % of
net sales

   USD m

   % of
net sales

   Change
in %
Pharmaceuticals   1 251   25.2   1 174   26.8   7
Consumer Health   184   7.1   330   14.0   -44
Corporate income & expense, net   99       102       -3
Total   1 534   20.2   1 606   23.9   -4

Group operating income up 11% to USD 6.5 billion

Operating income advanced 11%, supported by strong volume expansion of leading Pharmaceutical products. Most categories of functional expenses had a positive impact on the operating margin. Cost of Goods Sold (COGS) rose 12%, but declined as a percentage of net sales by 0.2 percentage points to 23.5%, owing mainly to efficiency gains and better product mix in Pharmaceuticals. Marketing & Sales fell 0.2 percentage points to 31.4% of net sales based primarily on sales-force productivity improvements, while Research & Development rose by 12% to USD 4.2 billion, but declined 0.2 percentage points to 14.9% of net sales following fewer upfront development costs. General & Administrative expenses also rose at a slower pace than net sales, accounting for 5.5% of net sales. The

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Group operating margin, however, fell 0.6 percentage points to 23.1% from 23.7% in 2003 based mainly on one-time charges in Sandoz, Medical Nutrition and Animal Health that led to higher Other Expenses.

Pharmaceuticals operating income climbs 19% to USD 5.3 billion

In Pharmaceuticals, operating income expanded significantly faster than net sales, rising 19% to USD 5.3 billion. This resulted in a margin expansion of 0.8 percentage points to 28.4% of net sales from 27.6% in 2003. An improvement of 0.8 percentage points in Cost of Goods Sold (COGS) as a percentage of net sales, mainly from productivity gains and improved product mix, was an important contributor. Marketing & Sales expenses as a percentage of net sales fell 0.2 percentage points to 33.0% of net sales based in part on sales-force productivity improvements, particularly in the US. Research & Development expenses rose 13% on investments in the Novartis Institutes for BioMedical Research (NIBR) and late-stage clinical trial programs. However, R&D expenses declined 0.4 percentage points to 18.8% of net sales as fewer upfront development costs were paid compared to 2003. Other Operating Expenses increased 56% as a result of several factors, including a decline of USD 171 million in hedging gains and lower income from product divestments compared to 2003, which included a one-time gain of USD 178 million from the sale of the Fioricet/Fiorinal product line. General & Administrative costs fell to 3.5% of net sales from 3.6% in 2003.

Consumer Health operating income declines 11% to USD 1.2 billion

Operating income declined 11% to USD 1.2 billion despite strong expansion in OTC, Animal Health and CIBA Vision. One-off charges of USD 120 million were recorded, which included USD 37 million in restructuring charges and related impairments on property, plant & equipment at Sandoz, a one-time inventory write-down of USD 18 million in Animal Health, one-time costs of USD 14 million associated with the acquisition of Mead Johnson and the creation of a USD 51 million provision in Medical Nutrition to cover legal liabilities related to an investigation by the US Department of Justice in the US enteral pump market. Novartis Nutrition Corporation is currently in the process of negotiating a possible settlement of that portion of the investigation directed against it. Excluding these one-off items, operating income would have declined 1% to USD 1.3 billion and the operating margin would have been 13.3% of net sales compared to 14.9% in 2003.

Group net income up 15% to USD 5.8 billion

Net income grew 15% to USD 5.8 billion in 2004 from USD 5.0 billion in 2003. As a percentage of net sales, net income rose to 20.4% compared to 20.2% in the year-ago period based on the strong improvement in operating income.

Group outlook (barring any unforeseen events)

Novartis expects to gain further market share in 2005 and remain one of the fastest-growing pharmaceutical companies, delivering high single-digit net sales growth for the Group and Pharmaceuticals in local currencies.

In 2005, Novartis anticipates to expense share-based compensation. Barring any unforeseen events, Group operating and net income should reach new record levels on a comparable basis.

4


Pharmaceutical business and key product highlights

(Note: All net sales percentage figures refer to full-year 2004 results)

Primary Care

Diovan (+28%; +22% lc; +20% US) maintained a strong growth rate in 2004 in the US and worldwide with sales exceeding USD 3 billion, reaffirming its position as the world's leading angiotensin receptor blocker (ARB) and one of the fastest-growing branded hypertension medicines. In the US, Diovan reached 2.6% of the US broad antihypertension market segment and 38.5% of the ARB therapeutic category (IMS Health data as of December 2004), which is expected to remain one of the most dynamic pharmaceutical categories in the coming years. Net sales growth has been driven primarily by data from recent successful outcome trials, the global rollout of more effective doses and the recent launch of a Novartis-sponsored hypertension awareness program in the US. Novartis recently received an approvable letter from the US Food and Drug Administration (FDA) for Diovan to treat high-risk heart attack patients, an indication already approved in 27 countries, including the UK. Approval is pending further discussions with the FDA.

Lotrel (+18% US), the No. 1 US fixed combination treatment for hypertension, delivered double-digit net sales growth in 2004 amid an increased focus on the efficacy of antihypertension agents in the US. Lotrel has expanded its position as the No. 1 branded combination therapy, a position held since 2002, based on greater awareness of the need for patients to achieve lower blood pressure goals set by national guidelines. Lotrel, which is sold only in the US, also benefited from the US hypertension awareness program.

Lamisil (+19%; +14% lc; +23% US), the leading treatment worldwide for fungal nail infections, achieved net sales of more than USD 1 billion for the first time after extending its US market segment leadership position to a high of 72% (IMS Health data as of November 2004). Higher disease awareness in the US and in leading European markets were key growth drivers.

Elidel (+49%; +47% lc; +36% US), the world's No. 1 branded prescription agent for eczema, outperformed the market segment growth (+54% Elidel vs. 7.8% IMS top 16 countries as of October 2004) to deliver excellent net sales. In 2004, the influential UK National Institute for Clinical Excellence (NICE) recommended the use of Elidel, which is now available in approximately 90 countries worldwide, for treating appropriate cases of eczema.

Zelnorm/Zelmac (+81%; +80% lc +89% US), a breakthrough therapy for irritable bowel syndrome (IBS) with constipation (IBS-C) and the first and only prescription medicine for chronic idiopathic constipation, reached USD 299 million in net sales. A key driver has been increasing patient and physician awareness of the availability of a medicine to treat these diseases effectively. Results of the ZENSAA study published in 2004 showed the treatment to be highly effective as a repeat treatment for women with IBS and additionally demonstrated dramatic improvements in important quality of life measures. This study was the basis for resubmission in the European Union in October 2004, with a decision expected in 2005. The US Food and Drug Administration (FDA) granted approval in August 2004 for the additional indication of treating chronic idiopathic constipation in both men and women under age 65.

Specialty Medicines

Oncology

Gleevec/Glivec (+45%; +36% lc; +23% US), for all stages of Philadelphia-chromosome positive (Ph+) chronic myeloid leukemia (CML) and certain forms of gastro-intestinal stromal tumors (GIST), continued to grow dynamically amid further penetration of both the CML and GIST markets as well as continued increases in the average daily dose. New data presented at the American Society of

5


Hematology meeting in December demonstrated that most newly diagnosed patients with Ph+ CML receiving 400 mg daily maintained their response to therapy long term. A separate study found patients receiving 800 mg daily had better outcomes compared to patients receiving 400 mg daily. In addition, encouraging data on the use of Gleevec/Glivec in the treatment of Ph+ acute lymphoblastic leukemia (ALL) and gliobastoma multiforme (GBM) were presented at major medical meetings in the fourth quarter. The Glivec International Patient Assistance Program is now open in 71 countries, and the combined Gleevec/Glivec patient assistance programs are providing treatments to more than 10,000 patients worldwide who otherwise would not have access to this innovative therapy.

Zometa (+21%; +17% lc; +10% US), the top intravenous bisphosphonate for bone metastases, achieved blockbuster status in 2004 by continuing to post solid growth despite challenges related to US Medicare reimbursement policy and increasing competition as well as high penetration rates in breast cancer and myeloma. Zometa continued to make progress on increasing the use of intravenous (IV) bisphosphonates in the treatment of prostate and lung cancer patients, two of the most common forms of cancer worldwide.

Femara (+70%; +62% lc; +137% US), a leading therapy for early and advanced breast cancer in postmenopausal women, generated high double-digit growth in 2004. Femara has now been approved in 20 countries, including the US, for a new indication as the only post-tamoxifen treatment for early breast cancer based on the landmark MA-17 study, which showed Femarasignificantly increases a woman's chance of staying cancer-free following five years of adjuvant (post-surgery) tamoxifen therapy. Important new data from the BIG 1-98 study comparing Femara with tamoxifen during the first five years following breast cancer surgery are planned to be presented on January 26, 2005, at the Primary Therapy of Early Breast Cancer conference in St. Gallen, Switzerland.

Ophthalmics

Net sales rose 25% (+19% lc) based on a continued strong performance from Visudyne (+25%; +20% lc; +15% US), the world's leading treatment for "wet" AMD (age-related macular degeneration), the leading cause of blindness in people over age 50 in developed countries. Improved US Medicare reimbursement for additional lesion types supported US sales growth, while sales in Europe remained strong.

Transplantation

Sales rose 1% (-5% lc) as the Neoral/Sandimmune franchise (-1%; -7% lc; -17% US) maintained relatively flat net sales worldwide amid market share gains in the US liver transplant segment and despite an overall slow erosion by generic competition in the US and some other key markets. Myfortic, an immunosuppressant used in kidney transplant patients, was launched in over 40 countries, including the US, and continued to gain market share. Certican, a novel proliferation signal inhibitor, received European Union Mutual Recognition Procedure review from 10 new EU accession countries and was approved in Australia. Novartis celebrated its 20 years of experience in transplantation in 2004 at the International Society of Transplantation meeting in Vienna.

Corporate

Net corporate income totaled USD 105 million in 2004 compared to income of USD 146 million in 2003, primarily the result of lower pension income.

6

Despite the ongoing low-yield environment, net financial income was USD 227 million compared to USD 379 million in 2003. The overall return on net liquidity was 3.4% compared to 5.2% in the year-ago period.

Income from associated companies increased to USD 142 million from an expense of USD 200 million in 2003. The Group's 42.5% interest in Chiron (at December 31, 2004) contributed pre-tax income of USD 33 million compared to USD 134 million in 2003. The reduction was a result of manufacturing production issues at a Chiron site in the United Kingdom that prevented Chiron from delivering flu vaccines to the US for the 2004/2005 flu season. An interest of just under one-third of the Roche voting shares, which represents a 6.3% interest in the total equity of Roche, generated pre-tax income of USD 97 million following a pre-tax loss of USD 354 million in 2003 as Roche's results improved significantly. The pre-tax income for 2004 reflects an estimate of the Group's share of Roche's 2004 pre-tax income, which is USD 399 million (including a positive prior-year adjustment of USD 30 million), reduced by a goodwill and intangible amortization charge of USD 302 million arising from the allocation of the purchase price to property, plant & equipment, intangible assets and goodwill. Any differences between the estimates for 2004 pre-tax income from Roche and Chiron and actual results will be adjusted in 2005.

Novartis debt continues to be rated by Standard & Poor's and Moody's as AAA and Aaa for long-term maturities and A1+ and P1 for short-term debt, respectively, making the Group one of the few non-financial companies worldwide to have attained the highest rating from these two benchmark rating agencies.

Total long-term assets increased by USD 2.8 billion, principally due to the acquisition of Sabex Inc. and the adult medical nutrition business of Mead Johnson as well as translation effects. The Group's equity increased by USD 3.4 billion during 2004 to USD 33.8 billion at December 31, 2004, as a result of net income (USD 5.8 billion), positive translation adjustments (USD 1.1 billion), valuation differences on marketable securities, cash-flow hedges and other items (USD 0.4 billion), which were offset by the acquisition of treasury shares (USD 1.9 billion) and the dividend payment (USD 2.0 billion). Total financial debts increased by USD 0.9 billion. The valuation differences on available-for-sale marketable securities and deferred cash-flow hedges increased to unrealized gains of USD 377 million at December 31, 2004 from unrealized gains of USD 81 million at December 31, 2003. The year-end debt/equity ratio stabilized at 0.20:1, the same level as in 2003.

In August 2004, Novartis announced the completion of the third share-repurchase program and the start of a fourth program to repurchase shares via a second trading line on the SWX Swiss Exchange. To complete the third program, a total of 22.8 million shares were repurchased in 2004 for USD 1.0 billion. Since the start of the fourth program, a total of 15.2 million shares have been repurchased for USD 0.8 billion. Overall in 2004, a total of 41 million shares were repurchased for USD 1.9 billion. The Novartis Board of Directors intends to ask shareholders at the Annual General Meeting on March 1, 2005, to approve the retirement of the shares bought through the repurchase programs via the second trading line.

Cash flow from operating activities increased by USD 73 million (+1%) to USD 6.7 billion. Depreciation, amortization and impairment charges remained at approximately the 2003 level of USD 1.4 billion, while current tax payments rose USD 241 million compared to the previous year.

7

The Board of Directors proposes a dividend payment of CHF 1.05 per share for 2004, up from CHF 1.00 in 2003 for approval at the next Annual General Meeting on March 1, 2005. This dividend increase, which represents a 16% rise in USD (translated at year-end USD/CHF exchange rates 2004 vs. 2003), marks the eighth consecutive increase in the dividend payment per share since the creation of Novartis in December 1996. If shareholders approve the 2004 dividend proposal, dividends paid out on the outstanding shares are expected to total approximately USD 2.2 billion compared to USD 2.0 billion in 2003, resulting in a payout ratio of 39% of Group net income, unchanged from 2003. Based on the 2004 year-end share price of CHF 57.30, the Novartis dividend yield would be 1.8%, the same as in 2003. The payment date for the 2004 dividend has been set for March 4, 2005. All issued shares are dividend bearing, with the exception of 291 million Treasury shares.

This release contains certain forward-looking statements relating to the Group's business, which can be identified by the use of forward-looking terminology such as "anticipate", "outlook", "expect", "should", "planned", "will be", "intends to", or similar expressions, or express or implied discussions regarding potential future sales of new or existing products, potential new products or potential new indications for existing products, or by other discussions of strategy, plans or intentions. Such statements reflect the current views of the Group with respect to future events and are subject to certain risks, uncertainties and assumptions. There can be no guarantee that any products will reach any particular sales levels, or that any new products will be approved for sale in any market, or that any new indications will be approved for existing products in any market. In particular, management's expectations could be affected by, among other things, new clinical data; unexpected clinical trial results; unexpected regulatory actions or delays or government regulation generally; the Group's ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and general public pricing pressures and other risks and factors referred to in the Group's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

An advance version of our Annual Report is available on our website at www.novartis.com. The final version of the Annual Report will be posted on our website and available to shareholders as of March 1, 2005.

Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2004, the Group's businesses achieved sales of USD 28.2 billion and net income of USD 5.8 billion. The Group invested approximately USD 4.2 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 81,400 people and operate in over 140 countries around the world.

For further information please consult http://www.novartis.com.

8


Further Important Dates

March 1, 2005   Annual General Meeting
April 21, 2005   First quarter results
July 14, 2005   First half and second quarter results
October 18, 2005   Nine-month and third quarter results

Contacts

Media:   Investors:
+41 61 324 2200
(Nehl Horton or John Gilardi—Basel)		   +41 61 324 7944
(Karen Huebscher—Basel)

+1 212 830 2457
(Sheldon Jones—US)
 
+1 212 830 2433
(Ronen Tamir—US)

9

Consolidated income statements

Full year

 
   2004
USD m

   2003
USD m

   Change
 
   USD m

   %
Total net sales   28 247   24 864   3 383   14
Cost of Goods Sold   -6 625   -5 894   -731   12
Gross profit   21 622   18 970   2 652   14
Marketing & Sales   -8 873   -7 854   -1 019   13
Research & Development   -4 207   -3 756   -451   12
General & Administration   -1 540   -1 381   -159   12
Other income & expense   -463   -90   -373    
Operating income   6 539   5 889   650   11
Result from associated companies   142   -200   342    
Financial income, net   227   379   -152   -40
Income before taxes and minority interests   6 908   6 068   840   14
Taxes   -1 126   -1 008   -118   12
Minority interests   -15   -44   29   -66
Net income   5 767   5 016   751   15
Average number of shares outstanding (million)   2 448.0   2 473.5        
Basic earnings per share (USD)   2.36   2.03   0.33   16
Diluted earnings per share (USD)   2.34   2.00   0.34   17

Fourth quarter (unaudited)

 
    
    
   Change
 
   Q4 2004
USD m

   Q4 2003
USD m

   USD m

   %
Total net sales   7 578   6 730   848   13
Cost of Goods Sold   -1 882   -1 608   -274   17
Gross profit   5 696   5 122   574   11
Marketing & Sales   -2 500   -2 176   -324   15
Research & Development   -1 234   -1 092   -142   13
General & Administration   -452   -403   -49   12
Other income & expense   24   155   -131   -85
Operating income   1 534   1 606   -72   -4
Result from associated companies   5   12   -7   -58
Financial income, net   66   -16   82    
Income before taxes and minority interests   1 605   1 602   3    
Taxes   -224   -248   24   -10
Minority interests   -3   6   -9    
Net income   1 378   1 360   18   1
Average number of shares outstanding (million)   2 428.9   2 472.3        
Basic earnings per share (USD)   0.57   0.55   0.02   4
Diluted earnings per share (USD)   0.56   0.55   0.01   2

10

Condensed consolidated balance sheets

 
   Dec 31, 2004
USD m

   Dec 31, 2003
USD m

   Change
USD m
Assets            
Total long-term assets   29 858   27 044   2 814
Current assets            
Inventories   3 558   3 346   212
Trade accounts receivable   4 851   4 376   475
Other current assets   1 609   1 292   317
Cash, short-term deposits and marketable securities   14 593   13 259   1 334
Total current assets   24 611   22 273   2 338
Total assets   54 469   49 317   5 152

Equity, minority interests and liabilities
 
 
 
 
 
 

Total equity
 
33 783
 
30 429
 
3 354
Minority interests   138   90   48
Long-term liabilities            
Financial debts   2 736   3 191   -455
Other long-term liabilities   6 734   6 287   447
  Total long-term liabilities   9 470   9 478   -8
Short-term liabilities            
Trade accounts payable   2 020   1 665   355
Financial debts and derivatives   4 119   2 779   1 340
Other short-term liabilities   4 939   4 876   63
  Total short-term liabilities   11 078   9 320   1 758
Total liabilities   20 548   18 798   1 750
Total equity, minority interests and liabilities   54 469   49 317   5 152

11

Condensed consolidated changes in equity

 
   2004
USD m

   2003
USD m

   Change
USD m
Consolidated equity at January 1   30 429   28 269   2 160
Dividends   -1 968   -1 724   -244
Purchase of treasury shares, net   -1 864   -273   -1 591
Reduction of cumulative translation differences on partial repayment of capital of a subsidiary   -301       -301
Other translation effects   1 400   2 363   -963
Net income   5 767   5 016   751
Redemption of equity instruments       -3 458   3 458
Other equity movements   320   236   84
Consolidated equity at December 31   33 783   30 429   3 354

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Condensed consolidated cash flow statements

Full year

 
   2004
USD m

   2003
USD m

   Change
USD m
Net income   5 767   5016   751
Reversal of non-cash items            
  Taxes   1 126   1 008   118
  Depreciation, amortization and impairments   1 388   1 386   2
  Net financial income   -227   -379   152
  Other   -350   -81   -269
Net income adjusted for non-cash items   7 704   6 950   754
Interest and other financial receipts   464   575   -111
Interest and other financial payments   -273   -240   -33
Taxes paid   -1 083   -842   -241
Cash flow before working capital and provision changes   6 812   6 443   369
Restructuring payments and other cash payments out of provisions   -219   -248   29
Change in net current assets and other operating cash flow items   132   457   -325
Cash flow from operating activities   6 725   6 652   73
Investments in property, plant & equipment   -1 269   -1 329   60
Decrease/ Increase in marketable securities, intangible and financial assets   -1 950   31   -1 981
Cash flow used for investing activities   -3 219   -1 298   -1 921
Cash flow used for financing activities   -3 124   -5 764   2 640
Translation effect on cash and cash equivalents   55   258   -203
Change in cash and cash equivalents   437   -152   589
Cash and cash equivalents at January 1   5 646   5 798   -152
Cash and cash equivalents at December 31   6 083   5 646   437

13

Condensed consolidated cash flow statements (unaudited)

Fourth quarter

 
   Q4 2004
USD m

   Q4 2003
USD m

   Change
USD m
Net income   1 378   1 360   18
Reversal of non-cash items            
  Taxes   224   248   -24
  Depreciation, amortization and impairments   360   432   -72
  Net financial income   -66   16   -82
  Other   -82   -116   34
Net income adjusted for non-cash items   1 814   1 940   -126
Interest and other financial receipts   112   105   7
Interest and other financial payments   -167   -142   -25
Taxes paid   -197   -152   -45
Cash flow before working capital and provision changes   1 562   1 751   -189
Restructuring payments and other cash payments out of provisions   -57   -105   48
Change in net current assets and other operating cash flow items   256   239   17
Cash flow from operating activities   1 761   1 885   -124
Investments in property, plant & equipment   -387   -503   116
Increase in marketable securities, intangible and financial assets   647   168   479
Cash flow used for investing activities   260   -335   595
Cash flow used for financing activities   820   -588   1 408
Translation effect on cash and cash equivalents   62   0   62
Change in cash and cash equivalents   2 903   962   1 941
Cash and cash equivalents at October 1   3 180   4 684   -1 504
Cash and cash equivalents at December 31   6 083   5 646   437

14

Net sales by Division & Business Unit

Full year

 
   2004
USD m

   2003
USD m

   % change
 
   USD

   lc
Pharmaceuticals   18 497   16 020   15   10
Sandoz   3 045   2 906   5   -1
OTC   1 975   1 772   11   5
Animal Health   756   682   11   5
Medical Nutrition   1 121   815   38   31
Infant & Baby   1 441   1 361   6   6
CIBA Vision   1 412   1 308   8   2
Consumer Health   9 750   8 844   10   5
Total   28 247   24 864   14   9

Fourth quarter (unaudited)

 
   Q4 2004
USD m

   Q4 2003
USD m

   % change
 
   USD

   lc
Pharmaceuticals   4 969   4 379   13   9
Sandoz   867   768   13   7
OTC   532   499   7   1
Animal Health   209   180   16   12
Medical Nutrition   285   208   37   31
Infant & Baby   354   348   2   2
CIBA Vision   362   348   4   0
Consumer Health   2 609   2 351   11   6
Total   7 578   6 730   13   8

15

Operating income by Division & Business Unit

Full year

 
   2004
   2003
    
 
   USD m

   % of sales

   USD m

   % of sales

   Change in %
Pharmaceuticals   5 253   28.4   4 423   27.6   19
Sandoz   235   7.7   473   16.3   -50
OTC   351   17.8   309   17.4   14
Animal Health   78   10.3   88   12.9   -11
Medical Nutrition   32   2.9   82   10.1   -61
Infant & Baby   274   19.0   254   18.7   8
CIBA Vision   236   16.7   153   11.7   54
Divisional Management costs   -25       -39       -36
Consumer Health   1 181   12.1   1 320   14.9   -11
Corporate income & expense, net   105       146       -28
Total   6 539   23.1   5 889   23.7   11

Fourth quarter (unaudited)

 
   Q4 2004
   Q4 2003
   Change in %
 
   USD m

   % of sales

   USD m

   % of sales
Pharmaceuticals   1 251   25.2   1 174   26.8   7
Sandoz   22   2.5   122   15.9   -82
OTC   58   10.9   93   18.6   -38
Animal Health   36   17.2   27   15.0   33
Medical Nutrition   -39   -13.7   28   13.5   -239
Infant & Baby   68   19.2   66   19.0   3
CIBA Vision   51   14.1   16   4.6   219
Divisional Management costs   -12       -22       -45
Consumer Health   184   7.1   330   14.0   -44
Corporate income & expense, net   99       102       -3
Total   1 534   20.2   1 606   23.9   -4

16

Consolidated income statements

Full year

 
   Pharmaceuticals Division
   Consumer Health Division
   Corporate
   Total
 
   2004
USD m

   2003
USD m

   2004
USD m

   2003
USD m

   2004
USD m

   2003
USD m

   2004
USD m

   2003
USD m
Net sales to third parties   18 497   16 020   9 750   8 844           28 247   24 864
Sales to other Divisions   146   133   98   98   -244   -231        
Sales of Divisions   18 643   16 153   9 848   8 942   -244   -231   28 247   24 864
Cost of Goods Sold   -2 568   -2 360   -4 310   -3 768   253   234   -6 625   -5 894
Gross profit   16 075   13 793   5 538   5 174   9   3   21 622   18 970
Marketing & Sales   -6 099   -5 322   -2 774   -2 532           -8 873   -7 854
Research & Development   -3 480   -3 079   -566   -529   -161   -148   -4 207   -3 756
General & Administration   -641   -582   -573   -485   -326   -314   -1 540   -1 381
Other income & expense   -602   -387   -444   -308   583   605   -463   -90
Operating income   5 253   4 423   1 181   1 320   105   146   6 539   5 889
Result from associated companies                           142   -200
Financial income, net                           227   379
Income before taxes and minority interests                           6 908   6 068
Taxes                           -1 126   -1 008
Minority interests                           -15   -44
Net income                           5 767   5 016

17

Consolidated income statements (unaudited)

Fourth quarter

 
   Pharmaceuticals Division
   Consumer Health Division
   Corporate
   Total
 
   Q4 2004
USD m

   Q4 2003
USD m

   Q4 2004
USD m

   Q4 2003
USD m

   Q4 2004
USD m

   Q4 2003
USD m

   Q4 2004
USD m

   Q4 2003
USD m
Net sales to third parties   4 969   4 379   2 609   2 351           7 578   6 730
Sales to other Divisions   38   47   38   33   -76   -80        
Sales of Divisions   5 007   4 426   2 647   2 384   -76   -80   7 578   6 730
Cost of Goods Sold   -731   -671   -1 217   -1 023   66   86   -1 882   -1 608
Gross profit   4 276   3 755   1 430   1 361   -10   6   5 696   5 122
Marketing & Sales   -1 759   -1 508   -741   -668           -2 500   -2 176
Research & Development   -1 011   -896   -174   -150   -49   -46   -1 234   -1 092
General & Administration   -187   -175   -171   -134   -94   -94   -452   -403
Other income & expenses   -68   -2   -160   -79   252   236   24   155
Operating income   1 251   1 174   184   330   99   102   1 534   1 606
Result from associated companies                           5   12
Financial income, net                           66   -16
Income before taxes and minority interests                           1 605   1 602
Taxes                           -224   -248
Minority interests                           -3   6
Net income                           1 378   1 360

18

Notes to the financial report for the year ended December 31, 2004

1. Basis of preparation

This financial report has been prepared in accordance with the accounting policies set out in the 2004 Annual Report.

2. Changes in the scope of consolidation and other significant transactions

The following significant transactions were made during 2004 and in 2003:

2004

On July 21, Idenix completed an Initial Public Offering (IPO) of its shares. Novartis retained its existing stake at 57%. As a result, Group liquidity increased by USD 60 million.

On June 30, Novartis acquired the Danish generics company Durascan A/S from AstraZeneca plc. Goodwill of USD 23 million has been recorded on this transaction.

On August 13, Novartis completed the acquisition of Sabex Holdings Ltd., a Canadian generic manufacturer with a leading position in generic injectables, for USD 565 million in cash. Based on a preliminary estimate, goodwill of USD 329 million has been recorded on this transaction.

A total of USD 61 million in net sales were recorded since the closure of these two transactions in 2004.

On February 13, Novartis completed the acquisition of Mead Johnson & Company's global adult medical nutrition business for USD 385 million in cash. These activities are included in the consolidated financial statements from that date with USD 220 million of net sales being recorded in 2004. Goodwill of USD 183 million has been recorded on this transaction.

In 2004, Group financial income, net, benefited from an exceptional recycled translation gain of USD 301 million from the partial repayment of capital of a subsidiary offset by USD 180 million of realized losses on marketable securities and the additional impairment charge of USD 101 million from the change in accounting estimate on available-for-sale securities.

2003

On February 11, Novartis announced the completed sale of the US rights to its Fioricet and Fiorinal lines (tension headache treatments) to Watson Pharmaceuticals, Inc. for USD 178 million.

On April 23, the urinary incontinence treatment Enablex/Emselex (darifenacin) was acquired from Pfizer for a total of up to USD 225 million, part of which is conditional on certain marketing approvals in the US. Enablex received approval in both the US and EU in 2004.

On May 8, an additional 51% of the fully diluted capital stock of Idenix Pharmaceuticals Inc. was acquired for an initial payment of USD 255 million in cash. This company is included in the

19


consolidated financial statements from that date. Goodwill of USD 297 million has been recorded on this transaction.

3. Principal currency translation rates

 
   Average rates
Full year
2004
USD

   Average rates
Full year
2003
USD

   Period-end rates
Dec 31,
2004
USD

   Period-end rates
Dec 31,
2003
USD
1 CHF   0.805   0.745   0.881   0.800
1 EUR   1.243   1.131   1.362   1.247
1 GBP   1.831   1.636   1.923   1.774
100 JPY   0.926   0.867   0.964   0.935

4. Condensed consolidated change in liquidity (unaudited)

Full year

 
   2004
USD m

   2003
USD m

   Change
USD m
Change in cash and cash equivalents   437   -152   589
Change in marketable securities, financial debt and financial derivatives   12   469   -457
Change in net liquidity   449   317   132
Net liquidity at January 1   7 289   6 972   317
Net liquidity at December 31   7 738   7 289   449

Fourth quarter

 
   Q4 2004
USD m

   Q4 2003
USD m

   Change
USD m
Change in cash and cash equivalents   2 903   962   1 941
Change in marketable securities, financial debt and financial derivatives   -1 819   100   -1 919
Change in net liquidity   1 084   1 062   22
Net liquidity at October 1   6 654   6 227   427
Net liquidity at December 31   7 738   7 289   449

5. Significant differences between IFRS and US Generally Accepted Accounting Principles (US GAAP)

The Group's consolidated financial statements have been prepared in accordance with IFRS, which, as applied by the Group, differs in certain significant respects from US GAAP. The effects of the application of US GAAP to net income and equity are set out in the tables below.

20


For further comments regarding the nature of these adjustments please consult note 32 of the Novartis 2004 annual report.

 
   2004
USD m

   2003
USD m
Net income under IFRS   5 767   5 016
US GAAP adjustments:        
Purchase accounting: Ciba-Geigy   -366   -339
Purchase accounting: Other acquisitions   17   -175
Purchase accounting: IFRS goodwill amortization   170   172
Available-for-sale securities and financial instruments   -183   -240
Pension provisions   -6   -18
Share-based compensation   -326   -273
Consolidation of employee share-based compensation foundation   -4   -3
Deferred taxes   100   -63
In-process Research & Development arising on acquisitions   -55   -260
Reversal of currency translation recycling gain   -301    
Other   13   -20
Deferred tax effect on US GAAP adjustments   163   -9
Net income under US GAAP   4 989   3 788
Basic earnings per share under US GAAP (USD)   2.12   1.59
Diluted earnings per share under US GAAP (USD)   2.11   1.57
 
   Dec 31, 2004
USD m

   Dec 31, 2003
USD m
Equity under IFRS   33 783   30 429
US GAAP adjustments:        
Purchase accounting: Ciba-Geigy   3 049   3 131
Purchase accounting: Other acquisitions   2 803   2 808
Purchase accounting: IFRS goodwill amortization   554   327
Available-for-sale securities and derivative financial instruments   -64    
Pension provisions   1 346   1 209
Share-based compensation   -129   -96
Consolidation of employee share-based compensation foundation   -864   -728
Deferred taxes   -510   -609
In-process Research & Development arising on acquisitions   -1 489   -1 338
Minimum pension liability   -501   -37
Other   -45   -56
Deferred tax effect on US GAAP adjustments   168   -162
Equity under US GAAP   38 101   34 878

21

Supplementary information (unaudited)

Free cash flow

Full year

 
   2004
USD m

   2003
USD m

   Change
USD m
Cash flow from operating activities   6 725   6 652   73
Purchase of property, plant & equipment   -1 269   -1 329   60
Purchase of intangible and financial assets   -928   -1 030   102
Sale of tangible, intangible and financial assets   799   1 059   -260
Dividends   -1 968   -1 724   -244
Free cash flow   3 359   3 628   -269

Fourth quarter

 
   Q4 2004
USD m

   Q4 2003
USD m

   Change
USD m
Cash flow from operating activities   1 761   1 885   -124
Purchase of property, plant & equipment   -387   -503   116
Purchase of intangible and financial assets   -254   -161   -93
Sale of tangible, intangible and financial assets   181   223   -42
Free cash flow   1 301   1 444   -143

Share information

 
   Dec 31, 2004

   Dec 31, 2003
Number of shares outstanding (million)   2 426.8   2 467.8
Registered share price (CHF)   57.30   56.15
ADS price (USD)   50.54   45.89
Market capitalization (USD billion)   122.6   110.9
Market capitalization (CHF billion)   139.1   138.6

22

Supplementary tables: Full year 2004 — Net sales of top twenty pharmaceutical products (unaudited)

 
    
   US
   Rest of world
   Total
   % change
  
Brands

   Therapeutic area

   USD m

   % change
in local
currencies

   USD m

   % change
in local
currencies

   USD m

   in USD

   in local
currencies

  
 
Diovan/Co-Diovan   Hypertension   1 323   20 % 1 770   25 % 3 093   28 % 22 %
Gleevec/Glivec   Chronic myeloid leukemia   368   23 % 1 266   41 % 1 634   45 % 36 %
Lamisil (group)   Fungal infections   528   23 % 634   7 % 1 162   19 % 14 %
Zometa   Cancer complications   630   10 % 448   29 % 1 078   21 % 17 %
Neoral/Sandimmun   Transplantation   180   -17 % 831   -4 % 1 011   -1 % -7 %
Lotrel   Hypertension   920   18 % 0   0 % 920   18 % 18 %
Sandostatin (group)   Acromegaly   374   18 % 453   11 % 827   19 % 14 %
Lescol   Cholesterol reduction   284   -8 % 474   3 % 758   3 % -2 %
Voltaren (group)   Inflammation/pain   9   13 % 629   1 % 638   7 % 1 %
Trileptal   Epilepsy   391   28 % 127   30 % 518   30 % 29 %
 
Top ten products total       5 007   15 % 6 632   16 % 11 639   21 % 16 %
Visudyne   Macular degeneration   209   15 % 239   25 % 448   25 % 20 %
Exelon   Alzheimer's disease   179   -1 % 243   20 % 422   15 % 10 %
Tegretol (incl. CR/XR)   Epilepsy   103   -16 % 293   5 % 396   3 % -2 %
Femara   Breast cancer   166   137 % 220   29 % 386   70 % 62 %
Miacalcic   Osteoporosis   236   -1 % 141   -13 % 377   -3 % -6 %
Elidel   Eczema   279   36 % 70   123 % 349   49 % 47 %
Foradil   Asthma   13   44 % 308   1 % 321   11 % 2 %
Leponex/Clozaril   Schizophrenia   72   -16 % 236   -3 % 308   0 % -7 %
Zelmac/Zelnorm   Irritable bowel syndrome   249   89 % 50   45 % 299   81 % 80 %
Famvir   Antiviral   160   10 % 95   0 % 255   9 % 6 %
 
Top twenty products total       6 673   17 % 8 527   15 % 15 200   21 % 16 %
Rest of portfolio       695   -20 % 2 602   -5 % 3 297   -4 % -9 %
 
Total       7 368   12 % 11 129   9 % 18 497   15 % 10 %
 

23

Supplementary tables: Q4 2004 — Net sales of top twenty pharmaceutical products (unaudited)

 
    
    
    
   Rest of world
    
    
    
  
 
    
   US
    
   % change
in local
currencies

   Total
   % change
  
Brands

   Therapeutic area

   USD m

   % change
in local currencies

   USD m

   USD m

   in USD

   in local
currencies

  
 
Diovan/Co-Diovan   Hypertension   314   17 % 502   19 % 816   22 % 18 %
Gleevec/Glivec   Chronic myeloid leukemia   100   22 % 366   36 % 466   40 % 33 %
Lamisil (group)   Fungal infections   125   13 % 176   6 % 301   12 % 8 %
Zometa   Cancer complications   167   13 % 123   24 % 290   21 % 17 %
Neoral/Sandimmun   Transplantation   45   -18 % 224   -6 % 269   -3 % -8 %
Lotrel   Hypertension   259   41 % 0   0 % 259   41 % 41 %
Sandostatin (group)   Acromegaly   107   24 % 118   12 % 225   22 % 17 %
Lescol   Cholesterol reduction   77   -19 % 129   3 % 206   -3 % -7 %
Voltaren (group)   Inflammation/pain   2   0 % 178   4 % 180   10 % 6 %
Trileptal   Epilepsy   106   22 % 36   28 % 142   26 % 23 %
 
Top ten products total       1 302   17 % 1 852   14 % 3 154   19 % 15 %
Visudyne   Macular degeneration   55   17 % 69   32 % 124   29 % 24 %
Exelon   Alzheimer's disease   44   2 % 65   13 % 109   14 % 8 %
Tegretol (incl. CR/XR)   Epilepsy   28   -26 % 85   5 % 113   0 % -4 %
Femara   Breast cancer   51   183 % 64   30 % 115   83 % 74 %
Miacalcic   Osteoporosis   54   2 % 38   -15 % 92   -2 % -5 %
Elidel   Eczema   74   25 % 19   62 % 93   33 % 31 %
Foradil   Asthma   4   100 % 83   -3 % 87   10 % 0 %
Leponex/Clozaril   Schizophrenia   18   -18 % 56   -14 % 74   -11 % -15 %
Zelmac/Zelnorm   Irritable bowel syndrome   57   12 % 15   37 % 72   18 % 18 %
Famvir   Antiviral   39   11 % 25   -8 % 64   7 % 3 %
 
Top twenty products total       1 726   16 % 2 371   12 % 4 097   19 % 14 %
Rest of portfolio       168   -26 % 704   -5 % 872   -5 % -10 %
 
Total       1 894   11 % 3 075   8 % 4 969   13 % 9 %
 

24

Net sales by region (unaudited)

Full year

 
    
    
   % change
    
    
 
   2004
USD m

   2003
USD m

   USD

   local currencies

   2004
% of total

   2003
% of total
Pharmaceuticals                        
  US   7 368   6 584   12   12   40   41
  Rest of world   11 129   9 436   18   9   60   59
TOTAL   18 497   16 020   15   10   100   100
Sandoz                        
  US   981   1 098   -11   -11   32   38
  Rest of world   2 064   1 808   14   5   68   62
Total   3 045   2 906   5   -1   100   100
OTC                        
  US   521   531   -2   -2   26   30
  Rest of world   1 454   1 241   17   9   74   70
Total   1 975   1 772   11   5   100   100
Animal Health                        
  US   308   255   21   20   41   37
  Rest of world   448   427   5   -4   59   63
Total   756   682   11   5   100   100
Medical Nutrition                        
  US   415   255   63   63   37   31
  Rest of world   706   560   26   16   63   69
Total   1 121   815   38   31   100   100
Infant & Baby                        
  US   1 184   1 096   8   8   82   81
  Rest of world   257   265   -3   -1   18   19
Total   1 441   1 361   6   6   100   100
CIBA Vision                        
  US   481   461   4   4   34   35
  Rest of world   931   847   10   1   66   65
Total   1 412   1 308   8   2   100   100
Consumer Health                        
  US   3 890   3 696   5   5   40   42
  Rest of world   5 860   5 148   14   6   60   58
TOTAL   9 750   8 844   10   5   100   100
Group                        
  US   11 258   10 280   10   9   40   41
  Rest of world   16 989   14 584   16   8   60   59
TOTAL   28 247   24 864   14   9   100   100

25

Net sales by region (unaudited)

Fourth quarter

 
    
    
   % change
    
    
 
   Q4 2004
USD m

   Q4 2003
USD m

   USD

   local currencies

   Q4 2004
% of total

   Q4 2003
% of total
Pharmaceuticals                        
  US   1 894   1 711   11   11   38   39
  Rest of world   3 075   2 668   15   8   62   61
TOTAL   4 969   4 379   13   9   100   100
Sandoz                        
  US   272   272   0   -1   31   35
  Rest of world   595   496   20   11   69   65
Total   867   768   13   7   100   100
OTC                        
  US   143   153   -7   -6   27   31
  Rest of world   389   346   12   4   73   69
Total   532   499   7   1   100   100
Animal Health                        
  US   91   76   20   18   44   42
  Rest of world   118   104   13   7   56   58
Total   209   180   16   12   100   100
Medical Nutrition                        
  US   105   67   57   56   37   32
  Rest of world   180   141   28   19   63   68
Total   285   208   37   31   100   100
Infant & Baby                        
  US   290   280   4   4   82   80
  Rest of world   64   68   -6   -6   18   20
Total   354   348   2   2   100   100
CIBA Vision                        
  US   120   117   3   3   33   34
  Rest of world   242   231   5   -2   67   66
Total   362   348   4   0   100   100
Consumer Health                        
  US   1 021   965   6   6   39   41
  Rest of world   1 588   1 386   15   7   61   59
TOTAL   2 609   2 351   11   6   100   100
Group                        
  US   2 915   2 676   9   9   38   40
  Rest of world   4 663   4 054   15   7   62   60
TOTAL   7 578   6 730   13   8   100   100

26

Quarterly analysis (unaudited)

Key figures by quarter

 
    
    
   Change
 
   Q4 2004
USD m

   Q3 2004
USD m

   USD m

   %
Total net sales   7 578   7 057   521   7
Operating income   1 534   1 717   -183   -11
Financial income, net   66   35   31   89
Taxes   -224   -317   93   -29
Net income   1 378   1 547   -169   -11

Net sales by region

 
    
    
   Change
 
   Q4 2004
USD m

   Q3 2004
USD m

   USD m

   %
US   2 915   2 881   34   1
Europe   2 734   2 506   228   9
Rest of world   1 929   1 670   259   16
Total   7 578   7 057   521   7

Net sales by Division & Business Unit

 
    
    
   Change
 
   Q4 2004
USD m

   Q3 2004
USD m

   USD m

   %
Pharmaceuticals   4 969   4 646   323   7
Sandoz   867   722   145   20
OTC   532   478   54   11
Animal Health   209   194   15   8
Medical Nutrition   285   289   -4   -1
Infant & Baby   354   371   -17   -5
CIBA Vision   362   357   5   1
Consumer Health   2 609   2 411   198   8
Total   7 578   7 057   521   7

27

Operating income by Division & Business Unit

 
    
    
   Change
 
   Q4 2004
USD m

   Q3 2004
USD m

   USD m

   %
Pharmaceuticals   1 251   1 387   -136   -10
Sandoz   22   4   18    
OTC   58   105   -47   -45
Animal Health   36   1   35    
Medical Nutrition   -39   30   -69    
Infant & Baby   68   76   -8   -11
CIBA Vision   51   67   -16   -24
Divisional Management costs   -12   -5   -7    
Consumer Health   184   278   -94   -34
Corporate income & expense, net   99   52   47   90
Total   1 534   1 717   -183   -11

28


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Novartis AG has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
 
NOVARTIS AG

Date: January 20, 2005
 
By:
 
/s/ MALCOLM CHEETHAM

 
 
Name:
 
Malcolm Cheetham
    Title:   Head Group Financial Reporting and Accounting



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SIGNATURES