Novartis AG (SWX:NOVN)
Switzerland flag Switzerland · Delayed Price · Currency is CHF
112.04
-0.10 (-0.09%)
Sep 11, 2026, 5:30 PM CET
← View all transcripts

Investor Update

Sep 30, 2021

Operator

Good morning and good afternoon, welcome to the Novartis ESG Investor event. Please note that during the presentation, all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions by pressing star and one at any time during the conference. A recording of the conference call, including the question and answer session, are available on our website shortly after the call ends. Should anyone need assistance during the conference call, they may signal the operator by pressing star and zero. With that, I would like to hand over to Maria Cuevas, Investor Relation ESG Director. Please go ahead, madam.

Maria Cuevas
Investor Relations Executive Director and ESG Head, Novartis

Good morning, good afternoon, and good evening, everyone. Thank you so much for joining our annual ESG investor event, and we appreciate you spending the next one and a half hours with us. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors. These may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. With that, I hand over to Vas.

Vas Narasimhan
CEO, Novartis

Thank you, Maria. Thanks also from my side for everyone for joining today's meeting and conference call opportunity for Novartis to share our progress over the last year on all of our ESG priorities and our ongoing goals to deliver lasting value to society. With me today, I have Klaus Moosmayer, our Chief Ethics, Risk, and Compliance Officer, Karen Hale, our Chief Legal Officer, Lutz Hegemann, our Group Head of Corporate Affairs and Global Health. Also on the line are Racey Muchilwa, our Head for Sub-Saharan Africa, joining us from South Africa, and Patrice Matchaba, our Head of U.S. Corporate Responsibility and President of our Novartis US Foundation. Moving to the next slide. In this section, I'll cover a little bit about our Novartis strategy and some of the other kind of big-picture priorities with respect to ESG.

There are six key points we want to highlight over the course of our discussion in the next 90 min. First, that we fundamentally believe that focusing on material ESG factors, our inspired, curious, Unbossed culture drives performance, drives the impact of the company. That we deeply care about patient health and safety as well as access to medicines, and we focus on areas that are consistent with our latest materiality analysis. Our sustainable business models and Novartis Access Principles enable us to get our medicines to patients around the world, we think in a differentiated way from many other companies. We are on track to triple the number of patients we reach, and Lutz will tell you more about that, as well as some exciting milestones, such as our 1 billion courses of antimalarial treatment.

Our sub-Saharan Africa model, which Racey will tell you more about, has really shown that we can both deliver a sustainable business model and also expand access to medicines. We've also started to address some of the root causes of health inequities in the U.S. Lastly, we are relentlessly tracking and measuring our progress, and these targets are incorporated in our performance evaluation and compensation systems. Moving to the next slide. I want to first begin with a fundamental reflection about the purpose of Novartis and how that purpose is so clearly linked to our contribution to society and the value we create for the world. Our purpose is to reimagine medicine to improve and extend people's lives.

We use our innovation engine to address major challenges in healthcare around the world. Our focus remains, as it has for nearly a century, through all of our predecessor companies, to develop breakthrough treatments to find and deliver medicines to as many people as possible. Some statistics I think worth reflecting on. Novartis, in a given year, can produce as many as 70 billion doses of medicine for the world, aspires to reach 800 million patients, which we can often do with our medicines, are currently working on over 100 new medicines within our clinical trials and clinical development programs. Our base operations, the reason our 100,000 people come to work every day, is already tightly linked to creating value for society and truly generating sustainable value in the long term for our shareholders. Moving to the next slide.

One of the things we've been reflecting on as an organization as well is as we deliver on that stated purpose, how do we balance the various components of capital to create an integrated stakeholder value proposition? The framework you see here on the slide is from Colin Mayer's work on "Prosperity," a book that I personally greatly enjoyed. It highlighted the six forms of capital that we reflect on as a management team to ensure that we are building a company that can sustainably deliver value for the long term.

While I won't go through each one in turn, I think it's valuable for us to think about the various sources of capital, how we manage them, and I think as you watch this presentation over the next hour, I think you'll sense that we do take each of these areas seriously and believe that in integrating them together, we create lasting stakeholder value. Now moving to the next slide. Our strategy has remained consistent over the recent years. We're a focused medicines company powered by technology, leadership, commercialization, and access. We think about where we want to play and want to play in areas we think we can lead in the long term, including seven core therapeutic areas, a broad geographical footprint and advanced technology platforms.

We have these five priority areas that we've consistently communicated within the organization, and I think integrate very well together to create a, I think, differentiated and sustainable value proposition. On the next slide. When we think about ESG management, this has been an area of intense focus within the management team. This is something, as Karen Hale will mention in a little bit, we take seriously from a governance perspective all the way up to the Chief Executive Officer and the Board. The reason we've elevated ESG now over recent years in the company is we fundamentally believe if you manage ESG-related matters well, you can reduce risk, amplify your value, hopefully multiply your value. Fundamentally, as a science-based, medically driven organization, it's the right thing to do.

We watch carefully, I think a growing amount of research, which indicates that companies that can manage their material ESG factors over the long run provide superior financial returns to shareholders. Certainly a complex, interconnected set of factors that lead to that. We certainly believe that's the case, and that's why we've elevated it at the highest levels of the organization. Moving to the next slide. Ultimately, we hope that by thinking about this sustainably with investors, that through Novartis, where we get the resources from all of you, we can ultimately have a lasting impact on the world. This quote, I think, is important. "ESG funds are measured against benchmarks for financial returns. They're not measured on the impact they deliver." We as a company have to keep asking ourselves, are we delivering impact for the world?

That's the, in a sense, social contract we have with all the countries and patients that we touch around the world. Moving to the next slide. One of the examples we are proud of and I think is a good example of our approach to impact in practice is our sustainability-linked bond, which we launched last year. It was a first-of-its-kind approach where we embedded access targets to medicine in the core of our business operations to a bond issuance that we conducted. I can say we're well on our way. We've embedded these targets. Lutz will speak more about it, but we're on our way to reaching 200% more patients in low and middle-income countries. Our global health flagship programs continue to expand.

I think this is a nice example of how we align our ESG and financing together, and hopefully 1 of many examples we can demonstrate over time. Moving to the next slide. We've also recently completed an updated materiality analysis that we completed this year in 2021, and it was a very helpful exercise to hear from a broad range of stakeholders get important feedback. You can see here the priority areas that came out of that materiality analysis, notably patient health and safety and access to healthcare innovation places that we know we need to be leaders as well as ethical business practice, which Klaus will talk more about. Importantly, areas that touch, I think, a broad range of companies, human capital, governance, financial performance, and environmental sustainability. We've set clear targets in the areas that we've mentioned here.

You can see them here on the right side of the slide. Just to highlight a few of them, we are now consistently ensuring that 100% of our launches have global access strategies on approval. We're investing $100 million to advance R&D for next-generation antimalarials, and we had a release just today, which you'll hear more about over the course of this presentation, of a novel antimalarial that we've discovered and are now bringing forward into late-stage clinical trials. We have a goal of net zero by 2040 in terms of our carbon footprint and plastic and water neutrality by 2030, and I'll be speaking a bit more about that in a moment as well. Taken together, we take the materiality analysis, translate that into focus areas for the company.

We have consistent targets for the long run, also consistent targets that we are transparent about on an annual basis, then create an accountability environment within Novartis. Moving to the next slide. When you look at our ESG progress, I think we're making good progress across all of our key areas. You can see this in our Novartis in Society report. We again transparently put out these targets and how we progress against them. Some of the areas I've not mentioned so far are our gender pay gap is now at 3.3% versus 21% for the benchmark, and we're on our way to getting equal representation in management at 45%, though the goal remains 50% and we have more to go. We rank number 2 in the Access to Medicine Index.

We're working hard on diversity in clinical trials, and Patrice will tell you more about that as well. I think these are just symbols of many things that are going on across the company to demonstrate that we're committed to delivering against the targets we set out from an ESG perspective. Moving to the next slide, and I think the last slide for my section. I also wanted to note that as we've continued to focus on this, we've seen improvements in our ratings and various scores from the relevant rating agencies. We don't do it because of the ratings. We do it because we believe it's the right thing for the business, the right thing for our impact, the right thing to do. Nonetheless, I think it's worthwhile for us as a company to keep asking ourselves, how do we stack up against our peer set?

You can see in a number of the relevant metrics, we're number 1 in our industry or number 1 across industries or trending up versus where we've been in the past. There are areas where we are not doing well. We look at these honestly, ask ourselves how we can do better, and put in concrete plans to improve. Overall, aspiration remains not only to be a leader in ESG within the biopharmaceutical industry or the healthcare industry, the aspiration remains to be a leader across industries, and that's what we'll be continuing to work towards over the years ahead. With that, I will hand over the presentation to Lutz Hegemann, Group Head of Corporate Affairs and Global Health. Lutz?

Lutz Hegemann
President of Global Health and Swiss Country Affairs, Novartis

Yeah. Thank you very much, Vas. Good morning. Good afternoon to all who are listening. Let me move to the next slide, where, Vas, you had highlighted the focus that we have on access and innovation. While this came out in our most recent materiality analysis, it has confirmed a path that we have been taking for the last decade almost. Why does it matter? If we look at the world around us, then there is about 2 billion fellow citizens who do not get access to the medicines they need, and there is several hundred millions that experience financial hardship through the fact that they need to pay for their medicines. The current pandemic has really exacerbated, I would say, the need, not only as it existed in low- and middle-income countries, but also in high-income countries.

We see in the space of non-communicable diseases very varying quality of care based on what we call the determinants of health, ethnicity, socioeconomic factors. We see different health outcomes depending on ethnicity, depending on country and socioeconomic strata. We have seen now in the COVID-19 pandemic, for instance, that 40% more Black people have died from COVID versus white people. That, to me, is really a wake-up call that indicates that underserved patients exist everywhere, not only in low and middle-income countries. As Vas had mentioned and Patrice will explain in greater detail, we have started a very comprehensive program to go beyond some of those metrics and really look into the underlying root causes and how we can contribute to correct some of those decades or even century-old inequalities.

Then, of course, in the low and middle-income countries, as we all know, the countries are struggling with the dual burden of rising non-communicable diseases while still fighting communicable diseases, where I would argue we have an unfinished agenda. As you know, a number of our dedicated efforts, what we call the flagship programs, are specifically targeting those challenges and opportunities. Next slide. This is a reminder that shows us that we've been on a journey for at least the last 20 years to address innovation and access to innovation. Like many companies in the early 2000s, we started with philanthropy, and over the years, we have integrated this more and more into our core business, and we have been piloting and experimenting with sustainable business models.

Vas had mentioned our longstanding commitment in malaria, and we'll get into it a little deeper, but an area that we have been very actively working on for the last 20 years. We crossed a very significant milestone earlier this year by having delivered 1 billion treatments, essentially at no profit to the world to fight this global health priority. Later we'll be diving in a bit more into the Novartis Access Principles that I'm sure many of you are familiar, we launched in 2017. Racey Muchilwa will be talking about our new business model in sub-Saharan Africa. The bond was already mentioned, and then really a highlight this year, and Patrice will go into it, is the co-creation of solutions to address health inequity in the United States.

The key point I want to make here is that we are not looking at global health or ESG somewhere in a corporate office, totally divorced from our core business, but that we are very seriously and in earnest finding ways to integrate ESG into everything that we do, and really bringing this to the very heart of the company. Next slide. Can I have the next slide, please? Thank you. The Novartis Access Principles really guide as a framework our approach in this space. As you had heard earlier, our commitment is to have 100% of our launches with a global access strategy defined prior to launch. In the access principles, we have 3 distinct but very closely connected areas that we are working on.

First and foremost, research and development, where our portfolio addresses unmet needs, but also takes the specific needs of resource-poor settings and underserved populations into account very early on. Whether that is adaptive development, where we consider how can we make our innovation fit for purpose in resource-poor settings, or the significant step that we are taking towards trial diversity strategy, initially focusing on the U.S., but with the ultimate goal that our clinical trial populations are representative of the patients who would eventually benefit from those innovations. In the space of affordability, for quite some time, we've been working with emerging market brands, and I'll give you an update in a minute.

Our new business model in sub-Saharan Africa and our tiered pricing framework help overcome that affordability stands in the way of access. What we have learned now, and we have many cases that indicate that even if you lower the price all to the way that you essentially donate a medicine, it doesn't mean that you're having impact. This very often is linked to intrinsic weaknesses of healthcare systems. Here, we earlier this year, developed a One Novartis Health System Strengthening Framework that's being deployed in all our divisions, whether it is oncology, innovative medicines in pharma or in Sandoz, and also, of course, in our global health programs. Also the new mandate of the Novartis US Foundation to make disparities of care a priority for their programmatic approaches. Next slide, please.

Now, let me take one example, and I'm sure you're all familiar with Leqvio and the approach that we are taking here, and particularly the significant impact that cardiovascular disease has on mortality. It's really, as we all know, the largest cause of mortality, not only in high-income countries, but to a large extent, also in low and middle-income countries. I'm very happy to say that Leqvio, we received approval in Ghana the same week as we received it in Switzerland, which speaks to our desire to bring innovation as quickly as possible to large parts of the world and avoid historically this lag time that we had from innovation entering in different parts of the world. For Leqvio also, we have a fairly comprehensive approach to pricing, tiered pricing, emerging market brands, 14 launches within 18 months of the first European Union launch. Further registrations being expected.

The recent example that we have with the National Health Service of England, to try a population health approach here, which essentially would give access to an entire population in a country that is eligible at the same time, rather than essentially convincing physician after physician, that this is a good intervention for the patients that they are taking care of. We are committed to working with other health systems to find similar opportunities in other countries, both high-income and low and middle-income countries. We can move to the next slide. This is the overview across the entire portfolio, how we are using emerging market brands. Just to re-emphasize a few of the messages that I shared with Leqvio, you first see that we do have an emerging market brand strategy for all our major brands.

You also see that the launch lag time is being greatly reduced across the portfolio. It's not always entirely in our control, but of course, also depends on approval timelines by health authorities. Our desire is to bring the innovation to as many countries across the globe, irrespective of their financial status, as quickly as we can. Entresto here is a good case in point that we are seeing now almost half of all the Entresto patient reach coming from low and middle-income countries. We see also that sales is nicely following through, so that the focus that we have for low and middle-income countries is not in conflict of us driving financial performance. It's rather the contrary. Racey Muchilwa will show this in a very impressive way from the African continent as well.

Typically, what we see is that the sales that we get in the low and middle-income countries are accretive to the sales from the high-income countries simply because medicines are available here and can create the impact for patients, but also can drive financial performance. We can move to the next slide. With that, let me pivot into some of the global health challenges that I am sure you are familiar that Novartis is engaged in here. Malaria, as I mentioned, two decades of commitment and a continuous commitment to invest in research development, but also programmatic implementation so that we hopefully in the foreseeable future will see not only control, but also elimination and eradication of malaria. As Vas had mentioned, we just issued a press release last night on an entirely new combination of medicines.

Ganaplacide, a novel medicine with a novel mechanism of action, partnered with lumefantrine, that is a component of our current anti-malarial, and it has met its study objective in a phase II-B study that included children. Of course, children, as we know, are the population that is at highest risk of contracting malaria and dying of malaria. A very significant step here. In fact, it is the first novel chemical entity that enters the malaria space in the last 20 years. In sickle cell disease, we're making great progress here, partnering with health systems across sub-Saharan Africa to help attenuate and eventually cure this devastating genetic disease.

You may be aware, we launched a collaboration with the Bill & Melinda Gates Foundation to reimagine the way how we deliver gene therapy so that it could be applicable to low and middle-income countries. Of course, other health priorities are antimicrobial resistance and, as we all experience these days, of course, the COVID-19 pandemic. Before I go there with a quick update, let me also highlight that increasingly so, we are using digital technologies in global health where, as you know, in low-income countries, we often have a scarcity of reliable data to drive programmatic decision-making. We entered a collaboration with Hewlett Packard Enterprise to address this and to look at opportunities in the digital space to make our interventions even more targeted and more impactful. The next slide.

On the theme of COVID-19, we are very happy to have partnered with a Swiss biotech company called Molecular Partners, who have a very new technology called DARPins which you would have to imagine as a fragment of an antibody that essentially does something very similar to an antibody, but I would argue in a slightly smarter way. We have a lead DARPin currently in clinical development together with Molecular Partners, where we expect to see a high potency against SARS-CoV-2, the virus that causes COVID-19. There is a few other technical upsides that this modality has. In preclinical work, we have seen remarkably ability to uphold the potency against all the new variants of concern and through a different technology, not using mammalian cells, but using fermentation processes.

We can also establish a second manufacturing line that doesn't compete with the existing manufacturing lines and would hopefully lead to high volume. That would, of course, be important to address, particularly those countries that are currently lagging behind in their vaccination efforts and their accessibility to vaccines. I would invite you to watch this space. Very exciting opportunity here and a very unique approach that we are following that would complement all the other interventions, including vaccines and therapeutics that we currently see in COVID-19. The next slide brings us to antimicrobial resistance, which I believe is a good case in point to see the interconnectedness of the ESG topics. As you are aware, through our generics division, Sandoz, we are the largest global supplier of antibiotics worldwide. Of course, through the global health efforts, we care about access and community-based healthcare capabilities.

While those elements existed in the past, we have now come together to really connect the dots and to make this a more impactful program that focuses on responsible manufacturing in Kundl, where we are the last, I would say, antibiotic manufacturer in the Western world. We work with partners to address opportunities in advocacy and surveillance, healthcare professional patient education. We are partnering with the Commonwealth Pharmacists Association to address the point of sales or the point of distribution at the pharmacy level, make sure that antibiotics are used as intended and according to all the recommendations that come with responsible antibiotic use. There's also an access opportunity that we have that in many parts of the world, the appropriate antibiotics aren't even available to the patients who need them.

We are working here on pediatric-specific formulations, bringing our antibiotics to more countries and making sure that we have a portfolio that is allowing a tailored antimicrobial resistance response. We believe that with those efforts, and really doubling down on those, we can delay the emergence of new resistance, that way, of course, the current use of antibiotics could be a driving force. Last but not least, we have joined the AMR Action Fund with a very significant investment to enable biotech companies to design the next generation of new antibiotics, which is not going to be a silver bullet. We'll see resistance against those as well, but it's a very elegant way and a very needed way to buy us additional time to safeguard the medical advancements that we have made in recent history. The next slide. Apologies. That's also my closing slide.

Really is an area that makes me very proud and where I believe we also distinguish ourselves from other pharmaceutical companies. That's the breadth and the depth of our R&D pipeline that is specifically targeting diseases of poverty through our Novartis Institute for Tropical Diseases in Emeryville under the leadership of a very accomplished scientist, Thierry Diagana. You see here the breadth and depth in areas of malaria that we had mentioned earlier, but also other emerging health threats like Chagas disease, dengue fever, which certainly is on the rise. Last but not least, as a consequence of global warming, cryptosporidiosis, and many other conditions. It also shows our longstanding commitment to this space because eventually we hope that many of those drug candidates will reach the clinic, and we'll see them through all the way to the benefit for patients.

I'll stop here. It's a great pleasure now to hand it over to two esteemed colleagues of mine, Racey Muchilwa, who leads in my organization all our efforts in sub-Saharan Africa, and friend and colleague, and many of you know Patrice Matchaba, who was my predecessor in role and is now focusing on the U.S. efforts. With that, let me hand it over to you, Racey.

Racey Muchilwa
Head of Sub-Saharan Africa, Novartis

Thank you so much, Lutz, and good day to everyone on the call. In the next few minutes, I will take you through our sub-Saharan mandate and how we are leveraging on partnerships and innovation to reach as many patients as we can. Probably before I go to the content of the slide on the screen, I would like to paint a clear picture of sub-Saharan Africa for greater context and why we see partnerships as something that has worked very well for us. Sub-Saharan Africa is home to over 1 billion people, and 25% of the disease global burden resides in this region. Additionally, you see that 3%, it accounts for roughly 3% of the world health workers, with roughly one doctor to 10,000 patients in some cases.

Especially when it comes to specialists, we find that even being worse than that, where the recommended doctor-patient ratio should be roughly one to one doctor to 1,000 patients. Why I thought it would be great to paint this picture is so that not to see the dire state that we are in, but also to also provide opportunities that we have to collectively come up with sustainable solutions, leveraging the power of partnerships and innovation, which is essential for us to be able to deliver sustainably across the full income pyramid. If you could just shift our focus on the slide on the screen. Our business model is pivoting from margin to patient reach, thus driving and sustainably delivering access across the full income pyramid. With this, we're operating at scale through a single Novartis organization. What does this mean?

We have combined all the three divisions. We are talking about Sandoz, we are talking about Pharma, we are talking about Oncology into one single Novartis organization, leveraging and building on the strengths and capabilities across all these divisions for us to be able to deliver this mandate of reaching as many patients as possible. From this, what you can see also is apart from the other operational tasks that we are working on to improve operational excellence internally, externally, what you've seen that we've had some very high-impact partnerships with key and private sector stakeholders who have come in to help us accelerate access to medicine. I'll just name but a few. One that was announced last year and is progressing very well is the Clinton Health Access Initiative. This initiative actually works more towards expanding access to oncology patients.

This is across 26 countries in the 46 countries we are managing currently, but also with the potential of doing more. This is across the big cancers that we talk about. We still talk about breast cancer, prostate cancer, cervical cancer. These are the areas we are talking about. We've been able to reach quite a number of patients on the ground. This has also contributed towards reaching more patients within the public sector with an improvement of over 20% within that sector. Also, one of the partnerships I need to mention, which is also quite big, is what we call Afya Dumu, which is concentrating more on screening and diagnosis of diabetes and hypertensive patients.

We've seen that as much as, and Lutz had alluded to that you can have donations coming in, but sometimes you can find the impact is not as is because then if the healthcare providers are not well-positioned to be able to give clinical advice and clinical care to these patients, then this also lacks. What does that mean then? We need to ensure then from all the process, from screening, diagnosis, all the way, how can we look into that whole patient journey and see where we come in to support the patient to ensure then they have access to the medicines to start with, but also to the right diagnosis, if we want to look at it that way. One of the things that we do is also partnering very well with academia to build capacity and capabilities.

I'll give a very good example that we've seen working very well. In one of the markets within Sub-Saharan Africa, to be precise Kenya, you'd find that we had only 20 sonographers across the country. We decided to come and partner with a leading university within Kenya to say, "How do we build capacity and capabilities of these healthcare providers so that then from a screening and diagnosis, they're able to screen the cardiovascular diseases much easily, and also the hypertensive patients?" Considering 1 in every 4 patients, person within Kenya is likely to have a cardiovascular issue. This is something that we've seen working very well. Up to now, we have over 170 sonographers within the country who are able to reach up to the upcountry, the community, the villages.

This is what we are looking at in terms of building capacity and the capabilities. Last but not least is also the sickle cell partnership, where we have hydroxyurea now prioritized under the healthcare policy. This means being able to partner not only with the private organizations, but with the public organizations, including the government. With this, just this change and shift in business approach, we've seen very strong results. In the first half of the year, we saw 29% growth over previous year in terms of our patient reach numbers, and also net sales is at 22% growth. What this demonstrates is you can actually drive a business purpose, a business with a purpose, and still remain sustainable. This is what we've been able to demonstrate very well within our business in Sub-Saharan Africa. Over to you, Patrice.

Patrice Matchaba
Group Head of Global Health and Corporate Responsibility, Novartis

Thanks, Racey, and thanks, Lutz, and then Vas. Then thank you all, and good morning, good afternoon, good evening. COVID has made this obvious, and a lot of you who have been engaged last year were asking, what are we going to do to address the issue of health equity, diversity, and inclusion, and the impact on Black and brown communities? What we'll show you here, we've put the most comprehensive partnership, taking our learnings, as Lutz articulated, and Racey from the emerging markets and brand strategies, integration of technology, bringing in multiple partners. You will see that it is not only comprehensive, but there's an innovation component, there's a talent component, there's a data component, and there's a technology component.

As Vas articulated, again, we did the process of materiality analysis, and this time, under Tom's leadership in the U.S., we had a substantial cohort of respondents. Thank you for some of you who responded to our materiality analysis. Again, as Vas articulated, we need and we can do a better job in regards to innovation, health access, health equity, diversity inclusion in terms of the communities of color. We know that they have suffered the most because of COVID, and it comes at a huge economic cost to the country. Our strategy then was, we need to integrate these findings into our core ESG strategy in the U.S. across the key divisions. There's complete alignment across the U.S. divisions in the U.S. to do so.

We look forward to talking and giving you more details as we progress before I discuss about the actual partnership itself. In keeping with our purpose, as Vas articulated, we're going to use science, technology, and our partnerships to integrate diversity and inclusion throughout our R&D and ecosystem. For example, we've already had an extensive discussion with Jay and Nibba to say, do we have the right portfolio discovery and development in translational medicine to address high impact diseases in communities of color? The answer is yes. You know our work in heart failure, our work in sickle cell, some work that's coming in with myeloma, in breast cancer. We just released a program around that. Into that, ask the question, how do we develop more investigators, first female investigators of color, Hispanic, African American, and Indigenous American?

We can talk about the numbers of increasing the number of patients to reflect the fabric of the racial diversity in the U.S. That's ongoing, and I'll talk about some of the technology partners, and the innovations that have come out of that. In summary, we have talked to the president of Morehouse and all the four historically Black medical schools are part of this partnership to develop centers of excellence for clinical trials, to allow research fellows over 10 years to have the capability to do clinical trials that are GCP compliant of high standard. We've also developed a partnership with 23 other non-medical HBCUs because we want to integrate all capabilities, including technology, the ability to integrate market insights, and so on throughout the breadth of careers.

Partnered with the Thurgood Marshall College Fund to provide scholarships, internships, and mentorships that will impact and empower close to 1,200 young people from Black and brown communities so that they can be integrated into our re-research and development ecosystem. Now, this partnership is going to be open to all other pharma companies and biotechnology companies because it's not about Novartis. It's about us doing the right thing and integrating research and development and rebuilding the trust in the healthcare system in that population.

Just two days ago, you are aware that we announced a partnership with the University of Pennsylvania, again, trying to address the health equity issue from a population design issue, again, coming using our experience from our Better Hearts Better Cities and the work we've been doing with Lutz and Racey, throughout the world, in South America, in São Paulo, in Dakar, and in Vietnam, this is the way we're going to structure it. We're going to add, and we're in discussion with all the major technology companies because they have data and are willing to participate in this partnership. They have data to the ZIP code in the U.S. by ZIP code in terms of health equity and impact of the different diseases.

From our side, we have already implemented this year that 100% of our phase III programs in the U.S. must integrate diversity and inclusion into the design. Because of COVID, Vas and Badhri and John Tsai have mentioned extensively the technology component of our Sense database. The teams have developed a technology now when you design a clinical trial, it automatically populates by ZIP code and by state and by country, the percentage racial numbers there unique in the clinical trial, and depending on the disease burden, in certain diseases, if you need a higher representation, for example, of Hispanics or Indigenous Americans, that is automatically populated into the clinical trial and the clinical development plan.

The second tool, which they have developed and we're eager to showcase in future events, is that at real time, a clinical trial leader, whether they're in São Paulo or they're in Dakar or they're in Cape Town or they're in New York, as they recruit a patient into a trial, the database is updated automatically to say you have the right distribution in terms of racial distribution and ethnic distribution, so that we don't get to a point where at the end of the clinical trial and we close the database, we don't have the right number of patients by race and ethnic diversity.

Now, just as a closing statement, we will be communicating with you and updating this and publishing this in the Novartis in Society report, just as we've done before in terms of progress in terms of the number of investigators, the number of trials that we've published there. Just to point out two last things. One, is that we've introduced a component of innovation, and that's related to a center of excellence and looking at data that uses race for diagnosis, prognosis, imputation, telemedicines, and algorithms. You all heard about the discussion around pulse oximeters that were overestimating the oxygen saturation of COVID patients who were Black and brown because they had not standardized the data using Black and brown patients.

There's a recent publication from the New England Journal of Medicine that has gone through over 13 disease areas, including breast cancer, heart failure, cesarean sections, where the imputation of race is to the detriment of Black and brown communities. We will create a center and support that for 10 years, working with other Ivy universities and big technology to re-address that component. We've also allocated 10 scholarships per year to the non-medical faculty of HBCUs to publish and do research that relates to health equity. We expect at least 100 publications to come out of this to fundamentally transform the health equity and diversity and inclusion. Lastly, I want to say this. Doing good, as Racey and Vas and Lutz have shown, is the right thing to do. Importantly, we've just seen the U.S. Census data.

By 2045, the mixed race population will be the majority population in the U.S. Us doing this now and equipping them and integrating them into our R&D system is the right thing to do and the right thing also for the company and the industry to do to rebuild trust. With that, I'll pass it on to Klaus, my good friend.

Klaus Moosmayer
Chief Ethics, Risk, and Compliance Officer, Novartis

Thank you very much, Racey and Patrice. Could feel your passion from Africa and U.S. to Basel. That's very, very impressive. Yeah, we can go to next slide directly. You heard Vas talking about the importance of ethical business practices from the point of our associates and also from all the stakeholders. That's beyond compliance. Compliance is important. It's part of a management system, but it's a broader scope we have started three years ago at Novartis. Three distinct pillars. Ethics, enterprise risk management, and compliance. If I start with ethics, it also, of course, comprises a very important topic, which I know is all close to your hearts. This is human rights topic. It's very close to culture and impact, and it's very innovative because it also goes into areas which are not regulated. For example, artificial intelligence.

We just issued a couple of weeks ago, a first position paper as a pharmaceutical company on the responsible and ethical use of artificial intelligence. If you do it right, ethics gives us the right boundaries for an integrated risk and crisis management. Crisis management, you all know what this means in a pandemic, taking care of our nearly 800 million patients around the globe. Risk management is more than a pure risk workshop. It's a holistic system which comprises assessment of risks, but also the right link to enterprise policies and controls. I will talk about this because it's important for you. We know this, third-party risk management. Compliance, of course, has as a basis a sound and effective compliance management system, which is based on data and digital.

It also has an important element in the SpeakUp culture and the SpeakUp office, which is our investigative office, the whistleblower office, because a good company will always see singular individual misconduct. This is part of society, a good company is acting on it, seeing it early, and investigating it thoroughly. That is the last point, continuous improvement. Centralized monitoring and remediation, that means acting on those shortcomings we see over time, is part of a good and forward-looking compliance system. If I focus a little bit on our ethical journey on the next slide. We launched, can go to the next slide, please, last year our new code of ethics, and we did it differently than others and as we did in the past.

We said we want to co-create this with our associates, we literally used the voice of several thousands of our associates around the globe to talk about the ethical principles, the ethical commitments, and the way how the people want to see their daily dilemmas reflected in our code of ethics. It's also more than a code. It is a code, it's commitments, we build around the code a support platform for our associates, where we offer, based on artificial intelligence, a decision explorer. Not a solution machine for associates, a decision explorer which helps our associates in difficult situation to reflect on their own ethical biases, to get support from the Ethics, Risk, and Compliance organization to solve their concrete specific dilemma they are in.

Now there's a lot of questions at ESG, you're asking this all the time, how do we measure success on ethics? Well, we give you a little bit of numbers here. Some training numbers. 99% training. Maybe more important, we measure how many of our associates, how often do they visit the code of ethics platform. Is this a living platform? Is this meaningful for our associates in their daily life? You see that we had more than 100,000 visits to the code of ethics platform. We are nearing to 200,000 visits on the decision explorer and have a very good feedback there. If we do it right, as I said at the beginning, this gives us the right boundaries for enterprise risk management. If you go to our next slide. Also this is an comprehensive integrated standard.

It's based on a common methodology of our risk assessment. It's then linked to our global policies, guidelines, and standards. We link it to our new centralized internal control system, because we believe that clear accountability and improved governance will help us to stay on track. I already mentioned the topic of third-party risk management. If you go to our next slide. This is also a topic in the call with investors. It's not an easy task. We have 10,000 of suppliers around the globe. How do we address them in a consistent and integrated way? We have developed our third-party risk management platform as an integrated platform. We cover not only anti-bribery risks, we cover cybersecurity risks, labor rights risks, animal welfare risks, health safety environment risks, data privacy, and trade sanction risks.

We believe it's important to have an early due diligence, an early dialogue with our third parties, our suppliers, our distributors. How do we want to drive together our business and together also our ESG aspiration? Again, here it comes all together. If you want to progress in our environmental goals, if you want to progress in our diversity and inclusion goals, if you want to progress in our ethical goals, we need to work together with our third parties. In closing, I want to quickly touch on a topic which is also important for all of you. You all know that, last year, we could settle most of our legacy compliance cases. That's an important task for management. We informed you and we announced already in March last year the settlement with the Criminal Division and the DOJ, U.S. DOJ Antitrust Division.

Already last year, we disclosed that we are in talks with the Civil Division of the DOJ Antitrust administration to also settle and solve their claims, which are the same claims as we settled with the Criminal Division. As transparency is important with investors at ESG, I want just to give you out of interest the heads-up that we anticipate finalizing also the civil part of the Sandoz antitrust topic in due time. Having said this, I hand over to my colleague, Karen.

Karen Hale
Chief Legal Officer, Novartis

Thank you, Klaus. I appreciate it. Good day to everyone on the call. Next slide, please. As Vas has indicated, governance and transparency are key priorities for Novartis. It actually starts at the top with our board of directors, specifically our governance nomination and corporate responsibility committee is charged with the oversight of the strategy and governance of our public health initiatives, our corporate responsibilities, and other ESG-related initiatives. In 2021, the committee extended its oversight, including reviewing our progress against our environmental sustainability strategy, further enhancing our governance, as well as reviewing our 2021 materiality assessment. Responsibility for our governance is not only with the board, but it also resides at the level of the ECN. Specifically, we have our Trust & Reputation Committee, which is chaired by our CEO, Vas.

It's a subcommittee of the ECN that is responsible for overseeing the progress of our ESG initiatives, as well as accelerating decision-making in key areas. In 2021, the Trust & Reputation Committee has met 4x already. Topics of discussion include reviewing our progress against our environmental sustainability strategy, ESG reporting, and also reviewing our 2021 materiality assessment. In 2020, we further enhanced our governance by creating our Chief Sustainability Officer role, which reports to a member of the ECN. The Chief Sustainability Officer is responsible for the strategy and execution of environmental sustainability across Novartis. In addition, we created the ESG management office, and the ESG management office is responsible for working with subject matter experts in the business functions and countries to help implement our ESG strategy and to lead key ESG initiatives. Just this year, we created our ESG council.

The ESG Council is comprised of senior leaders across Novartis who report into the ECN. Specifically, the members are unit leads, subject matter leads with respect to specific key ESG topics, as well as several corporate functions. The ESG Council is charged with identifying relevant topics and making recommendations to the Trust & Reputation Committee, with co-creating cross-functional ESG strategies, and also ensuring that our ESG activities are integrated into our operations. Not only is governance important, we are also focused on transparency. In 2020, Novartis had its first TCFD disclosure and its first SASB Index-aligned disclosure contained in the Novartis in Society report. In addition, Novartis comprised an index of ESG-related disclosures that they posted on novartis.com. In 2021, we will be moving to an integrated report that will be published in February of 2022.

Specifically, we will be integrating or merging the Novartis in Society report in our annual review. The consolidated report will focus on describing our strategy, our business, our performance, as well as our governance. It is designed to communicate and to demonstrate the long-term value that Novartis brings not only to our shareholders, but also to society. Last but not least, this merged report will appear in February 2022, along with our two regulatory filings and our year-end results. With that, I'll return the program to Vas.

Vas Narasimhan
CEO, Novartis

Thank you, Karen. Just in closing, I have a few more areas I'd like to cover with all of you. Human capital, environmental sustainability, and our longer-term ambitions. Here you can see an image with our partnership with Zipline in Ghana, an organization using drones to deliver medicines and support clinical trials. One example of many great partners that we've been able to work with on our ESG journey. Going to the next slide, I wanted to say a word on our cultural transformation. Three and a half years ago, we set out to transform Novartis' culture to what we called an inspired, curious, and Unbossed organization.

Building on extensive research which shows that organizations that have a strong sense of purpose, whose people have a strong sense of autonomy, and whose people also have a growth mindset, the ability to learn and improve, leads to better long-term innovation, better long-term performance, data sets that have been consistent over many decades. We work to deploy this knowledge and know-how through a very comprehensive approach to cultural transformation, leadership transformation, really touching almost every element of the employee experience at the company. We use a rigorous approach to measuring our progress on this front using an analytical tool called Glint. We consistently measure this on a quarterly basis, compare ourselves to external benchmarks. As you can see, from an engagement standpoint, we've seen a significant improvement from our initial baseline and ahead of the benchmarks that are available.

Still work to do, and we're going to continue to work to be leading across all sectors on the level of engagement. From a growth and learning standpoint as well, through our various efforts and a broad range of initiatives, we've, I think, assumed a leadership role in how we enable learning at our company, similarly with collaboration. We have a very extensive leadership development program, which we call the Unbossed Leadership Experience, which endeavors to reach 10,000 managers around the company. What that's led to is a consistent improvement on the experience of empowerment, but also importantly now up to an 84 rating for manager recommendations at the company, which is 7 points above an industry-wide benchmark. As I like to say to our organization, if we can get leaders to grow, we can get teams to grow.

If we can get those two areas to grow, the company will grow along with it. Moving to the next slide. Some other dimensions on our progress on human capital that we wanted to highlight. I've already mentioned the gender pay gap and how we are committed to closing it fully by 2023, and we're working now on pay transparency and pay equity in most of our key markets. Gender balance in management I also covered earlier. We are now included once again in the Bloomberg Gender-Equality Index, and we work very hard to ensure that we have diverse candidate panels and diverse slates. We also have gender-neutral parental leave, which has really been a globally recognized leadership position we took by being one of the early actors in providing broad parental leave.

From a supply chain standpoint, we continue to embed D&I principles in all of our third-party risk management efforts. Our goal by 2023 to have this fully embedded. Lastly, with respect to racial equity, an area we need to do better on. We acknowledge it. We're working on it. You can see some of the actions that we're taking in terms of diverse slates and focusing on better ethnic representation in our U.S. organization. Now moving to the next slide. I wanted to turn for a moment in the environment. Novartis had previously stated and are committed to getting to carbon neutral and net zero in our Scope 1 and 2 operations. To be clear, we believe we can achieve net zero in our Scope 1 and 2 operations, and carbon waste and water neutrality in the operations that we control.

Scope 3, as you all well know, is a bigger challenge and one that we're very aggressively focused on. We're committed to being carbon neutral in Scope 3 as well by 2030 and net zero by 2040, but of course, have an aspiration to minimize the use of offsets and try to bring forward our ability to be net zero as we work through detailed plans with our third parties. We know there are about 1,000 third parties in particular that we will need to focus on, we're doing systematic work to ensure that we get to the goals that we set out here and hopefully, again, can over-deliver against them. Some of the specific initiatives we have include driving efficiency with the electrification of thermal energy loads in our supply chain. We're consolidating our supply chain to a more limited set of suppliers.

We're 100% renewable energy for the EU and U.S., with six virtual power purchase agreements and seven solar and wind projects in Europe and the U.S. as well. A lot of effort going on here, but still a lot of work to do. Moving to the next slide. One thing that we are looking at more systematically and is high on our mind is we know that global biodiversity and the ability to protect the planet from climate change is fundamental to human health. We know that as the climate changes, we increase the risks of many forms of human health challenges, whether that's tropical diseases, whether that's because of air pollution, respiratory, cardiovascular, and renal complications. We're working very hard to understand the impact of climate change on health.

I'd also note that Novartis has one of the largest libraries of naturally occurring compounds, and we know nature has consistently been a source of breakthrough medicines. Losing biodiversity will surely have an impact in the future of our ability to find such medicines. It's an area where we know it's the right thing to do. We want to, of course, have an impact, but also from our business of improving human health and finding new medicines is also fundamental. Moving to the next slide and in closing, we're on track to meet our ESG aspirations in each of the areas we've outlined. We have long-term goals, short-term goals you can find in the various reports that we publish. I won't go through all of them now, but you can see here very clearly the goals that we have. Moving to the next slide.

I think we want to come back to where we started, is our deep belief that companies that focus on material ESG factors have better financial performance. Novartis, with our clear purpose of reimagining medicine to improve human health around the world, our core purpose ensures that fundamentally a powerful ESG impact is embedded in everything that we do at this company as we continue to work to generate 70 billion doses of medicine and reach 800 million patients. As a final note on the last slide, I think it's worthwhile as we've gone through so much data, so much information, is the very human element of the work that we do.

I think a great mentor of mine, Bill Foege, one of the leaders of smallpox eradication, said, "You have to work on the numbers, but remember the faces." I think we, as a leadership team, really believe that in the end, it's the faces that matter. It's the impact we have on individual human beings around the world. It's the ultimate legacy we leave as a company. We're quite committed to that. We'll keep working on it. We appreciate your interest and look forward to taking your questions. Thank you all very much. With that, operator, we can open the line for any questions in the audience.

Operator

Thank you. If you wish to ask a question, please press star one and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, if you wish to ask a question, please press star one. If you wish to cancel your request, please press the hash key. We are taking a question from Charles Pitman at Redburn.

Charles Pitman
Analyst, Redburn

Hi, can you hear me okay?

Vas Narasimhan
CEO, Novartis

Yes, we can.

Charles Pitman
Analyst, Redburn

Yeah. Hi. I was just wondering if you could touch on the targets you have in place for improving your suppliers' commitments to renewable energy as you yourselves work towards your kind of longer-term 2025, 2030 targets. Thanks.

Vas Narasimhan
CEO, Novartis

Yeah. Thanks for the question, Charles. We are currently working with our procurement organization to go through the 1,000 suppliers which I've mentioned and putting in clear goals that are consistent with our own goals. Namely, that they would also need to be able to achieve net zero or carbon neutrality in their operations. We're in the process right now of updating all of those agreements to ensure they're in place and then asking ourselves the question, which suppliers are going to be able to meet those goals and which suppliers have to maybe move away from if they aren't able to meet those goals. Alongside that, also reflecting on what additional investments we may need to make to enable or allow some of these suppliers to be able to reach these standards, which is also something we accept may be part of the equation.

I don't think we have a full assessment yet of what that investment would be, but it's also on our minds. Lutz, anything else to add? No.

Lutz Hegemann
President of Global Health and Swiss Country Affairs, Novartis

No, I think that covered it well.

Vas Narasimhan
CEO, Novartis

Okay. Thank you for the question. Next question, operator, if there is one.

Operator

Yes, we are taking our next question from the line of Paulina Kosnova at EOS at Federated Hermes.

Paulina Kosnova
Analyst, EOS at Federated Hermes

Hello. Thank you very much for taking my question, and thank you for this detailed presentation on your ESG strategy and for all the efforts you are making to take a leading holistic and integrated approach. Much appreciated. I wanted to ask about AMR. You explained your strategy to delay the apparition of antimicrobial resistance, but I wonder to what extent is AMR integrated into enterprise risk management and long-term business planning? I don't mean just for your antibiotics portfolio, but for the entire business. That's my first question. Also, because your strategy talks about advocacy, but mostly for responsible use of antibiotics, and I wonder if you could expand on how much you engage with third parties such as public health authorities or insurance companies to create new incentive mechanisms. Thank you very much.

Vas Narasimhan
CEO, Novartis

Yeah, thank you for the question. On the first part on enterprise risk management, Klaus?

Klaus Moosmayer
Chief Ethics, Risk, and Compliance Officer, Novartis

I can give it a start and hand over to Lutz maybe for the outreach. It's a great question. Interestingly, all what Lutz has shown you on the efforts on AMR also originated from a strategic risk discussion. What is from a risk perspective from the company, from a reputation, from a risk for the global health population? This came also up in our holistic risk workshops with the global health divisionals and the company. We said, look, the one thing is on the research and development. There must be other areas as we are leader in AMR globally, and the one remaining European producer. This has an impact, of course, on our brand and our reputation. We took it from there.

I think it's a good proof that the risk management is close to our reputational and business question, and you took it up, Lutz, with your team, and you made a strategy and implementation plan out of it, right?

Lutz Hegemann
President of Global Health and Swiss Country Affairs, Novartis

Yeah, I think it's a fair point that you are making, Klaus, and I would potentially even go a step beyond. I think we all understand that if antimicrobial resistance spreads to levels, that would really have a significant impact on the core medical interventions that essentially surgeries couldn't be conducted anymore, that transplants would be very challenging. That would essentially take us back many years in the way how we are advancing medical care and offset the advancements that we have made in recent years. I think we need to look at it really from a holistic perspective and see what can we do now in order to protect the progress that we have made in treatment of diseases over so many years. That's why it's really a burning platform to act here.

As you rightfully said, there's only so much that we can do as an individual company here, and that's why we are reaching out wherever we can find partners who share our vision and bring complementary skills and approaches to bear to join us in this fight. I think we have to be clear what is it that we can control, and I mentioned the responsible manufacturing where we've made significant investments. Klaus, you may be aware that antibiotic manufacturing is, for lack of a better term, a bit of a dirty process, and we have invested very significantly with Richard Saynor, our CEO of Sandoz, in our manufacturing capabilities to make sure that there is no contamination, no damage being done to the environment. Then it's really the advocacy educational part.

Last but not least, the investment in the discovery of new antimicrobials, where we believe that we come to a better outcome if we sort of spread and enable many different and diverse teams to look into these opportunities rather than doing it with one dedicated team in-house. That's why we are excited about the AMR Action Fund that we invest in. I hope that addressed your question. With regards to partnership, definitely yes, looking into partnerships across sector and would be very open, of course, also to any ideas that maybe other sector players may have.

Vas Narasimhan
CEO, Novartis

Thank you both. Thank you for the question. Operator, if there's a next question on the line?

Operator

There are no more questions on the line. Please continue.

Vas Narasimhan
CEO, Novartis

Very good. Thank you all for joining this ESG Investor event. We hope the information was helpful. As you can see, we have a really dedicated team, but most importantly, we have over 100,000 associates committed to this purpose of reimagining medicine for the planet. We'll continue to do our best to be transparent, provide clear updates on our progress, providing information through our website, through our annual reporting suite. We look forward also hearing feedback from you as to what would be most helpful as we continue to try to bring transparency about the impact we're having on the world. Thank you again, and we wish you a good day.