Dear shareholders, ladies and gentlemen, it is a great pleasure to welcome you for the first time in my role as Chair of the Board of Directors to our Annual General Meeting in Basel's St. Jakobshalle. By fortunate coincidence, this is also our 30th Annual General Meeting, which makes me extremely proud to be part of a jubilee year for Novartis. As many of you may have seen, we have organized a small history exhibition in the hallway, which you may also visit after the AGM. The exhibition not only sheds light on some of our company's biggest achievements during the past three decades, it also reflects the long and successful history of our predecessor companies, Ciba-Geigy and Sandoz, which many of you know very well and may have worked for yourselves.
We are proud of this legacy, which provides us with a strong foundation on which we are building our future. Let me now also welcome the attending members of the board of directors and of the executive committee. Also present in the hall are representatives of our auditor, KPMG AG, the public notary, Ms. Andrea Schmutz, and the independent proxy, Mr. Peter Andreas Zahner. The Annual General Meeting was convened by publication in the Swiss Official Gazette of Commerce number 24 on February 5, 2026, with a complete list of agenda items announced. I note that proper and timely notice was given for today's Annual General Meeting. Therefore, resolutions may be passed on all items on the agenda. Alas, unless the law requires otherwise, the general meeting passes resolutions and elections with the absolute majority of the votes validly represented. Today's resolutions will be conducted electronically.
Before the first vote, we will show a video that explains how to use the voting device. I would like to announce on behalf of the independent mr. Peter Andreas Zahner, that on Wednesday, March fourth, he provided the board of directors with aggregated information on the voting instructions received. As secretary of the meeting, I appoint Ms. Charlotte Palmer. I appoint the following persons as vote counters: Mr. Martin Kesselring, UBS, Ms. Olga Nieto, Citibank, and Ms. Alexandra Scriba, Zürcher Kantonalbank. I would also like to inform you that the general meeting will be recorded on audio and video. In addition, there is a live webcast. Shareholders who wish to speak are asked to go to the speaker's desk with their admission ticket to register. The speaking time is limited to five minutes.
Now that we are done with the formalities, please allow me and our CEO, Vas Narasimhan, to make a few additional comments on the past financial year and our company. Ladies and gentlemen. Allow me for the next few minutes to take the opportunity to share my perspective on the strategic trajectory of Novartis. The past 12 months have been very exciting for me as I've been able to gain a deep understanding of the impressive global operations of Novartis. This has included my time in Switzerland and visiting sites globally. After one year, I am enthusiastic about Novartis, including our highly talented and motivated associates, our deep research and development capabilities, our competitiveness at commercializing medicines globally, and our proven track record of operational excellence. Today, Novartis enjoys a very strong competitive position.
Our transformation from a diversified healthcare player into a pure-play innovative medicines company was the right strategic decision and one that was executed very effectively. By remaining focused and consistent on our strategy, we are able to dedicate the right focus and resources to breakthrough science. Whether one looks at the work taking place in our research laboratories, the medicines we are developing, the external innovation we have licensed or acquired, and our impact in the marketplace, Novartis today is truly redefining what is possible in medicine. As we gather here to review our 2025 results, the strong achievements of last year provide a validation of our strategy and constitute a solid foundation on which we will continue to build in the future.
During a year with considerable headwinds from patent expirations and pricing pressures in some of our key markets, 2025 group sales at constant currencies rose 8%. Thanks above all to the strong growth of medicines from our oncology portfolio. In addition, efficiency gains helped core net income at constant currencies improve by 12%. We also substantially evolved our pipeline. While Vas will discuss progress with the pipeline in more detail, we met or exceeded all our objectives in research and development, which allowed us to strengthen our long-term outlook for the rest of the decade. Thanks to our strong operational and financial performance, we're proposing a 5.7% increase in the dividend to CHF 3.7, marking the 29th consecutive year of dividend growth. Looking ahead.
During the last year, I've often been asked whether I see a need for Novartis to change its strategy. Based on what I have just mentioned, my answer is clear. I am confident we have the right strategy for long-term growth and impact on human health. Going forward, together with my colleagues on the board of directors and working with our CEO, Vas Narasimhan, and the executive committee, our focus will be to ensure that we continue on a strong trajectory. Even at times of significant external uncertainty, that the long-term prospects of Novartis continue to strengthen. I would like to briefly touch on our research and development efforts, which are, of course, central to the strategy of a company like Novartis.
In addition to our long-standing focus on chemistry and biotherapeutics, Novartis's decision to three invest in advanced technology platforms enabled us to establish an early leadership position across them. While we have already translated the promise of these platforms into medicines, all of them are just at the beginning of their impact potential. Looking at our research programs, I am confident there is tremendous potential to continue to advance our work in each of these areas. Similarly, we have built deep knowledge and established a strong commercial presence across cardiovascular, renal, and metabolic medicines, immunology, neuroscience, and oncology. We see continued unmet need and substantial growth potential in all of these areas. While our internal research and development capacity with more than 15,000 scientists and clinicians forms the backbone of our innovation engine, we will also continue to pursue targeted acquisitions and licensing deals.
We have embarked on more than 10 licensing deals and have completed several major acquisitions in 2025 alone. We are now also in the process of broadening our investment in the development space, and we will expand our local RNA production footprint. Additionally, every year, around half of our annual R&D budget is invested in Switzerland. With more than 700 private and public research centers, the Basel region is one of the world's leading pharmaceutical hubs. It has all it takes to expand its role and remain among the world leaders. As Switzerland is at the forefront of innovation and excels through its infrastructure, we believe there is an opportunity to continue to work on reforms to stay competitive.
We welcome the government's decision to support the development of a national life sciences strategy and hope this will include clear steps in terms of valuing and rewarding pharmaceutical innovation, an area in which Switzerland should do better and which will be increasingly important in the future. With the right strategy in place, I am confident that Switzerland can further strengthen its competitiveness, allowing companies such as Novartis to continue to invest here. Ladies and gentlemen, beyond our commitment to deliver paradigm shifts in medicine, we are also determined to push the boundaries when it comes to sustainability and social impact. In terms of our environmental efforts, we're making significant progress in reducing our water and plastic waste, as well as our greenhouse gas emissions, which is keeping us firmly on track toward our goal of reaching net zero by 2040.
We are also determined to accelerate our efforts in the global health space, where we were able to further advance our leading infectious disease portfolio in 2025, most notably in malaria, which Vas will talk about in more detail. Let me now turn to the Board of Directors. Over the past decade, the board has worked to consistently improve governance and strengthen its focus. For this reason, and reflecting the changing risk landscape in our industry, the board will assume direct oversight over risk and conduct periodic reviews of strategic risks. We have therefore decided to discontinue our Risk Committee. As our company has become more focused and the board continues to evolve, we have also decided that the role of Vice Chair and Lead Independent Director will be structured as a combined role again, held by one member.
Going forward, this position will be filled by our current Vice Chair, Simon Moroney. I would like to thank Patrice Bula for serving as a lead independent director since March of 2022. Mr. Bula will continue to chair our governance, sustainability, and nominations committee. I would also like to thank my colleague, Daniel Hochstrasser, who has decided not to stand for re-election. Daniel joined Novartis in 2022. Thanks to his legal experience in M&A transactions and industrial and infrastructure projects, he made significant contributions to strengthening Novartis. Thank you, Daniel, for your years of support. I would also like to welcome Charles Swanton, whom we propose to join the Board of Directors. Charles is a clinician scientist and medical oncologist who has won broad industry recognition for his pioneering work on cancer evolution and drug resistance, among others.
He is currently group leader at the Francis Crick Institute and Professor of Cancer Medicine at University College London, where he also treats patients. We are very proud that Charles Swanton, who cannot be here today and who will present himself with a video message, has accepted our offer and will bring his valuable expertise to help Novartis accelerate its efforts in the vital oncology space. Before I close, let me also reiterate that Novartis will continue to engage very actively with our shareholders. We will maintain the intensive and fruitful discussion we have nurtured in the past. Likewise, we will uphold our collaborative approach that has served as the basis for our success during the past 30 years. Thank you for your attention. Let me now hand over to our CEO, Vas Narasimhan. Vas, please.
Thank you, Giovanni. Herzlich willkommen. Thank you for joining us today for our Annual General Meeting. It's a pleasure to be with you to reflect on our progress and discuss the path ahead. 2025 was another strong year for Novartis as we continued to deliver on our performance track record. When you look at the last five years, net sales have grown 8% on average, and core operating income has grown by 15%. We committed to reaching 40% core margin by 2027, and we have delivered on our goal two years ahead of plan. These results reflect the strength of our pure-play innovative medicine strategy and the momentum across the company. Our performance has clearly translated into strong value creation, delivering 129% in total shareholder return over the past five years, well ahead of the Swiss Market Index.
We also remain committed to expanding global access to our medicines, and we reached more than 300 million patients last year. This continued impact shows our ability to deliver both strong shareholder value and broad and meaningful patient impact worldwide. Now, taking a closer look at 2025, our net sales grew 8% in constant currencies. Core operating income grew 14%, reflecting strong top-line momentum and continued financial discipline. As I mentioned earlier, we achieved a 40% core margin. Free cash flow reached $17.6 billion, a historical high for Novartis and an important source of flexibility for strategic investment in launches, pipeline, and value-creating deals. Our priority brands grew 35%, demonstrating the strength of our in-market portfolio and our strong launch performance.
An important example of this is Kisqali, our breast cancer drug, which continued to grow strongly and is on track towards becoming the largest brand in Novartis's history. We delivered strong performance across all key geographies with continued momentum in the U.S., China, Japan, and Germany. Markets we expect will continue to drive our growth in the years to come. We also saw performance across the rest of the world, with Asia, the Middle East, Africa, and Latin America delivering solid results. Our pipeline continued with 29 regulatory approvals and 29 submissions across therapeutic areas, each representing meaningful progress for patients living with unmet medical needs. We are expanding our reach across more patient populations by moving into the earlier lines of therapy and broadening indications. For example, prostate cancer patients in the U.S. can now receive Pluvicto earlier in their treatment journey before chemotherapy.
Rhapsido is now the first oral treatment of its kind for Chronic Spontaneous Urticaria in the United States. We expect to expand to more indications over the coming years. These advances reflect the quality of our science and the power of our development engine. We're advancing our innovation strategy by combining internal scientific excellence with targeted external opportunities. Over the past year, we were among the industry's most active player in strategic business development transactions, strengthening our early-stage pipeline and adding focused bolt-ons to take to our late-stage portfolio. Taken together, these moves build meaningful replacement power and power our long-term growth profile. We also importantly made meaningful progress in global health. We launched Coartem Baby in Ghana, the first-ever malaria treatment designed specifically for newborns and young infants, ensuring even the smallest and most vulnerable can finally receive the care they deserve.
In addition, the phase III success of KLU156, a next-generation antimalarial with the potential to combat resistance and block transmission, marks the most significant innovation in malaria since Coartem's launch in 1999. Building trust with society remains central to our strategy. We continue to advance our 2040 net zero emissions goal with significant progress in 2025. We are proud to lead in priority ESG ratings, including being number one in the Access to Medicine Index and being a recognized leader in indices such as MSCI and Sustainalytics. 2025 was a strong year for our financial performance, productivity, and pipeline execution, and it gives us a solid foundation for the future. Now, looking ahead, I'll share how we plan to continue that momentum and stay on track to achieve our long-term goals.
After the loss of exclusivity of Entresto, Promacta, and Tecfidera in the U.S. last year, we will face the largest impact from loss of exclusivity in our company's history. Yet with the momentum of our business, we expect to continue to grow. As we shared earlier this year, we expect net sales to grow low single digit in 2026. This will also be an exciting year for innovation. We expect 28 key submissions or approvals, and we are on track to deliver on nine key study readouts and six study initiations, many in diseases with no current treatment. As Giovanni shared, we will stay disciplined in driving our focus strategy across our four core therapeutic areas, powered by the technology platforms that give us a competitive edge. With this, we are well positioned for the years ahead.
We remain confident in our 2025 to 2030 sales guidance of 5%-6% average annual growth rate and expect our core margin to return to 40%+ by 2029. This confidence is grounded in the strength of our pipeline with 15 or more submission-enabling readouts in the next two years and 30 or more potential high-value pipeline assets. When you take it all into account and look at the progress we've made, we've strengthened Novartis, our focus, our science, and our execution. Our strategy is delivering. Our pipeline, it is advancing, and our teams are executing with discipline. We are grateful to the dedication of our people and the trust of our stakeholders as we work to improve and extend lives around the world.
As we continue on our journey to become the most valued and trusted medicines company in the world, I'm confident in the future of Novartis and the impact we will continue to have on patients, society, and our shareholders. Thank you very much.
Thank you very much, Vas. We have now determined the attendance.
Ladies and gentlemen, I'm reading to you the attendance at the Ordinary General Assembly of March 6th, 2026. Present today are 1,554 shareholders or their representatives and the Independent Proxy. Together, they represent 1,249,402,658 votes. This is 59.15% of the 2,112,421,867 shares issued. Votes are represented as follows: Independent Proxy represents 1,238,967,609 votes are represented by shareholders present, 10,435,049 votes.
Thank you very much, Ms. Palmer. This brings us to agenda item one, votes on the financial and non-financial reporting for the 2025 financial year. Under agenda item 1.1, the board proposes approval of the operating and financial review of Novartis AG, the financial statements of Novartis AG, and the consolidated financial statements for the 2025 financial year. KPMG has audited the annual financial statements of Novartis AG and the consolidated financial statements of the Novartis Group and recommends approving the financial statements. KPMG has nothing to add to these audit reports. Under agenda item 1.2, the board proposes endorsement of the report on non-financial matters for the 2025 financial year in an advisory vote. KPMG has provided an independent practitioner's limited assurance report on selected sustainability information specified in the report on non-financial matters.
The annual report and the Novartis report on non-financial matters have been available on the Novartis website since their publication. I now open the discussion. There are six requests to speak on this agenda item. I invite Mr. Kaufmann to the podium.
Chairman, members of the board, shareholders, ladies and gentlemen. My name is Vincent Kaufmann. I am the Director of the Ethos Foundation. We represent more than 250 Swiss pension funds managing the assets of 100,000 people in Switzerland. When we speak today, we speak on behalf of people who are placing their financial future in the hands of companies like Novartis. Novartis has a very good year behind it. Turnover has grown by, and profits by 17%. Novartis is top of the Access to Medicine Index. We recognize that performance, and we thank Dr. Narasimhan and his team for that. Just because something is good doesn't mean that somebody should earn an unlimited amount of money. In 2025, the CEO earned almost CHF 25 million.
Let me just illustrate what that actually means for you a little bit. A pensioner in Switzerland gets about three and a half thousand Swiss francs from their pension fund per month. Dr. Narasimhan would earn that much money in less than one hour. He's earning almost 300 times the annual median salary in Switzerland. Now, some people will say, "Okay, that's just the price for a global CEO." I ask you whether that's really true, and where do the limits lie here? Among the 10 largest companies in Switzerland, Dr. Narasimhan's earnings are more than 50% above the average. Many of you will remember the controversy about Daniel Vasella, who received almost CHF 40 million. We're not there yet. When Dr.
Narasimham came to the company in 2018 with such a healthy level of earnings, people said, "Well, the years of unreasonable pay are over." Nevertheless, we've seen his pay go up threefold in the last few years. You know, it's not just a matter of fairness. I think it's a risk for the reputation of our company. Now, we're not expecting that you should pay low wages. We know that Novartis is an international company. Nevertheless, receiving a total payout of more than 11 times base salary and the increases we've seen in the last few years is unreasonable. We think this system is no longer in favor of shareholders. It's only in favor of management. Things need to change here. We have four demands.
First of all, variable remuneration should be limited to no more than five times the base salary. Secondly, the companies that you compare yourselves against should be primarily Swiss or European. You are, after all, based in Basel, not New York. Thirdly, a greater proportion of variable compensation should depend on performance. Fourthly, measurable sustainability goals should be part of the consideration for compensations, CO2 emissions, and so on. Until such reforms are implemented, we would call upon you, dear shareholders, to vote no on points 5.1, 5.2, and 5.3 on today's agenda. You are long-term investors. You want Novartis to be successful in the long term and to be able to attract and retain the best talent. You also want a company that pays fairly, respects its shareholders, and sets a good example.
You have the power today with your vote to do something about this. Thank you very much.
Thank you, Mr. Kaufmann. Thanks, first of all, on the positive comments on the performance of the company, I'd like to address your concerns on compensation. First of all, I would start by saying we do look at a global set of peers because obviously that is the talent pool with which we compete. That's the group of companies with which we compete when we look at our talent. It is companies based in Europe, of course, and companies based across the world, including the United States.
When you look at how we set target compensation for our CEO, it is really in between the 25th and the 50th percentile of the global group, so it is really not based on U.S. comparables. It is very much anchored in our in Novartis being a European company. I think what's most important is what you referenced, that our compensation plan is really performance-based. The most important part of the compensation plan, of course, is the long-term performance plan, which is based on measurable objectives, which include, of course, the financial performance of the company over three years, but importantly also total shareholder returns as a measure of the value that is created for shareholders. That payout from the long-term plan is very variable.
In fact, during the tenure of our current CEO, it has ranged from 57%-188%, which reflects a very strong correlation between pay and performance, which we hear from shareholders is very, very important. Of course, it was 188% for 2025 in a year in which shareholder return was 84%, which is really the second-highest in our industry globally. We feel that our compensation strategy is based on measurable metrics. It is performance-based, and we continue to discuss it with all shareholders. We appreciate your comments. We are reassured by the fact that last year our plan received 87% approval from our shareholders. Thanks for your comments. Now I would like to ask the second speaker, Mr.
Kurat, to comes to the podium.
Chairman, ladies and gentlemen, I'm Rolf Kurath, and I'm here on behalf of Actares. We represent private individuals and are committed to a sustainable economy. We'd like to congratulate Novartis on the very good results, the excellent results, not just financial, but also the ESG ratings. You are at the top of the charts, so congratulations to all of you. Nevertheless, we still see room for improvement in three areas, starting with communication, then hiring policy, and transparency. In terms of communication first, we expect more respect and less Trump, please.
It became very clear to us over the past year that things are simply not like they once were. The change of attitude from the U.S., in the U.S., places considerable challenges before us here in Switzerland, and it's not acceptable that Novartis has jumped straight on board in the new alliance with the Trump administration. Pressure is being placed upon European authorities as a result of this. Let's look at one example. For example, nobody can really present a proper calculation of the way that prices are calculated, for example. Now, it may be that people will say that Europe has a stable system, it's able to fund innovation while the European system is all about high sales costs and transaction costs.
You know, if that's the case, and until that is clarified, then we need to see more of substance in your communication and more respect vis-à-vis the Swiss authorities. Secondly, I want to address recruitment policy and pay because we're seeing excessive pay. As we've just heard, the CEO has earned a sum that's something like 400 times that earned by those on the lowest wages. I don't know how you can justify this. You're talking about reimagining medicine. I think it's important that the collective performance of the entire workforce be respected rather than having such excessive pay for individuals. We don't know either whether the workforce here at Novartis is happy with their working conditions and their compensation. We'd also like to ask about your plant in Stein. What are you doing there?
You've mentioned that you have a social plan, but you haven't published it. That is not enough from a company of your caliber. We call upon you to make sure that nobody is laid off unless they've got a job to go to. You need to look after your workforce and consider the broader society in these difficult times. Thirdly, I want to talk about transparency. We need better transparency. Actares has noted that major ESG data is missing from the sustainability report. The last report still had data on staff engagement, whereas in the recent report, you only mention turnover, staff turnover rates, and you haven't published anything about staff engagement, in other words, staff satisfaction and so on. We do expect, please, that you make good on that in the next report.
As to environmental protection now, we expect better data on water usage and waste, that we don't have to go searching for such information on your website, but that they are properly included in the report. I'd like to thank shareholders for coming today and playing their role. I hope that the members of the board will take our words of constructive criticism into account. Thank you.
Thank you. Thanks, Mr. Kurat. First of all, let me start by thanking you for your comments you made on our commitment and results in ESG. You've raised a number of points. I will try to answer all of them. The first one on communication, I'm sure you understand that the U.S. market being by far the largest market for Novartis, I think it's important for us to discuss it. It's important for us to be focused on it, as we do everywhere in the world, to work with local authorities to ensure that the right conditions exist for us to continue to do business there. I think that's true in the U.S. I think that's true everywhere else around the world. I just want to make sure that our position is clear.
We do because of the work we do, we do aim for a collaborative approach with governments everywhere, including Switzerland, so that medicines that we develop and bring to patients are valued and rewarded with the right price that reflects their value. While you're right that there is complexity in understanding what the net prices of products is globally, it is clear that across Europe and in Switzerland, there is an improvement which is needed in terms of our ability to have our innovation recognized with the right price.
With respect and a spirit of collaboration, we will continue to work with the Swiss government and other governments around the world to make sure that this situation improves because obviously we have one objective, which is to bring our medicines to patients that need them wherever they are. The second point from you was on pay. I've already made comments on that. I like to comment very briefly on Stein and the changes that are happening there. Of course, as I mentioned earlier, we are very committed to continuing to invest in Switzerland. For us, it really is about the most advanced and sophisticated manufacturing.
We in Stein, we are going through a transition in which we plan on continuing to invest in sterile dosage forms, manufacturing, and most important in the next generation of cellular therapies. This is very aligned with the strategy of the company. At the same time, we have decided to actually reduce our investment in some of the current manufacturing operations of Stein. We don't take it lightly that this has an impact on the workforce. We are working very actively in order to understand how to manage that situation. There are consultations ongoing, and we're very committed to them. The third point that you made on ESG, you are right that we have evolved our communication and disclosure strategy there.
We've issued this year a report on non-financial matters, which replaces the Novartis in Society report. I think this report has the advantage of bringing all of the disclosures in one place. It is consistent with Swiss regulations and with CSRD as it is evolving, and there have been metrics that have been added. Some metrics have been discontinued, and many metrics, of course, we continue to follow. The ones that are not in that report are easily accessible in an ESG data summary, which is easy to access. We'll be happy to continue to dialogue with you on this, but we definitely are committed to transparency in ESG, which is a critical area for us.
Your last point was on, employee engagement and satisfaction, and I like to ask Vas Narasimhan to comment on that.
Very good. Thank you. Thank you, Giovanni, thank you very much for the interest on how our employees perceive the company's treatment. We conduct regular surveys quarterly to understand the engagement in the organization, both globally but also site by site. This feedback is very positive. Overall, the company ranks amongst the best in the world across sectors, certainly as one of the best, if not the best in the pharmaceutical sector in how employees feel like the company treats them, the overall environment, the overall engagement. We of course have many areas to always look to improve and will continue to do so. I wanna reassure our shareholders we take that matter very seriously, all indications are our employees are very highly and well engaged. Thank you.
Thank you, Vas. Thank you again. Now I'm asking, our next speaker, Miss Schweidler-Mahli to come to the podium.
Thank you very much, ladies and gentlemen. I'm here on behalf of myself and just a small number of shares. I'm not representing anybody else, but I'm delighted to have heard what Ethos and Actares have had to say, and I entirely endorse that. Also, thank you for the explanations that you just gave us. I am actually very happy about the restructuring in Stein and your move towards personalized medicine. Let me just sum up the way I see it, perhaps not in such fine language as you just did, but, you know, I believe that Novartis absolutely belongs to the avant-garde in this sector. You're leading the way, and I'm very proud of that. You're much less positive in my view, though, when I see that 500 or so people are going to lose their jobs in Stein.
You know, everybody says it's difficult to find qualified workers at the moment. You need to be very careful and show that you are well set up for the future. You know, that you're not going to just lose these people. Should be able to retrain people. That would be very good for our resilience so that we are resilient. We can cope, for example, with supply chain issues that might come up in the future, or if we find that know-how expertise is being lost in traditional methods of manufacturing, for example, capsules, tableting, and so on. This is important know-how, and it needs to be retained even here in Switzerland, and in a company like Novartis to make sure that you are resilient for the future.
Please may I call upon you to be flexible in the way that you employ your resources, as you say in your strategy, actually, to make sure that you don't lose expertise in traditional methods of manufacturing, that you try to retrain your staff wherever you can, because you know many of them would do almost anything for you. I ask you, please don't just lay them off. You could, for example, set up a transfer organization. Thank you very much for your attention there.
Thank you very much for your comments. I've already addressed many of them. I just want to reiterate there are important considerations that you made, and there are good discussions taking place in Stein. We're very conscious of the importance of our decisions. I'd like to ask now the next speaker, Mr. Roveda, to come to the podium.
Good morning to everyone. Thank you for giving me the floor. I have four question. The first one concerns the independent development of AAA. As some of you know, I am a Novartis shareholder and also a shareholder in Novartis subsidiary named AAA, also known as Advanced Accelerator Applications, which was acquired by Novartis in 2018. The acquisition of AAA allowed Novartis to become a world leader in radioligand therapy. At last year's shareholder meeting, in response to one of my questions on the future of AAA, Mr. Vas Narasimhan surprisingly emphasized that in parallel to Novartis R&D investment and technological acquisition, AAA had invested independently in the development of the radioligand platform since the Novartis acquisition in 2018.
Since all publicly available information tended to indicate that, to the contrary, the AAA team and manufacturing site have been dedicated to development, manufacturing, and commercialization of Novartis products, such as Pluvicto, rather than to the development of AAA products. Can you please elaborate on the independent developments you referred to last year? The second question concerned the regularity of Novartis financial statement due to the lack of AAA's consolidated financial statements. For several years, I have raised concerns with Novartis and AAA regarding accounting irregularities without receiving any substantive explanation. It seems that since the 2018 financial year, certain information that are required by law in connection with the financial and economic position of AAA subgroup have been missing in Novartis financial statement.
Upon many requests by my side, Novartis has repeatedly maintained that such information are rightfully omitted, relying on some specific waivers provided for by the applicable French law. Nevertheless, it has recently been brought to my attention, after thorough investigation, that such waivers are indeed available only upon request respect of the specific requirement set forth by the same French law, requirements that, in all evidence, are not met in the case hereof, and that this omission may have implication for the regularity of those financial statement for their certification by the statutory auditors and for the validity of the resolution adopted at the general meetings over the past eight years. I'm also concerned about the potential regulatory or criminal exposure that could arise for the group, its directors, and its auditors.
It seems to me that this is a serious issue, as these are Novartis financial statements which are relied upon by investors on the Swiss and U.S. stock exchange where the share are listed. The management of Novartis and AAA are well aware of my concern, which I have raised many times and as recently as two weeks ago, but I have never received a serious answer to date. Could you please inform all of us here today how you intend to address the situation? The third question regards the annual report production section, page 29. Since the acquisition of the AAA group in 2018, Novartis as heavily as not exclusively relied on the experience and the expertise of AAA team and the manufacturing site to develop, manufacture, and commercialize its leading therapies, Pluvicto and Lutathera.
Starting in 2022, Novartis has continuously stated in its successive annual reports that it was integrating the AAA manufacturing site into its existing manufacturing and supply structure. I know that this is no longer mentioned in 2025 annual report. I presume this means such integration is over or suspended, I don't know. Can you please elaborate on what exactly this integration has consisted in and what has been the financial impact thereof for Novartis as well as for AAA? Last question regards the principal subsidiary section, page F-76 of the annual report. In the 2024 annual report, the Novartis equity interest percentage in AAA S.A., the French parent of the AAA Group, was reported at 99.23%.
In all logic, the Novartis equity interest percentage in each of the main wholly owned subsidiary, like U.S., Italy, Spain, and Switzerland, was reported at the same level, 99.23. I note the 2025 annual report indicates a Novartis equity interest percentage in AAA down from 99.23% to 99%. It surprisingly remains at 99.23 for some subsidiary like U.S., Italy, and Spain, and has increased to 100% to AAA Switzerland International? Can you please confirm the equity interest percentage shown for AAA S.A. is a mistake and should read 99.23? Can you also please elaborate on what has been the consideration paid by Novartis to AAA S.A. for the 0.77 bought in AAA Switzerland, in case this one is not another mistake?
Thank you. Thank you, Mr. Roveda. You asked a number of questions. I will ask our CEO, Vas Narasimhan, to address your questions. He has good knowledge of the history here.
Thank you. Thank you, Giovanni, and thank you, Mr. Roveda. We've appreciated, I think now the almost 7+ years of engagement with you as a minority shareholder in AAA. We also note that you have initiated legal proceedings against the Novartis subsidiary in question. As such, we can't comment on any ongoing legal matters with respect to that lawsuit that you have brought forward. I would also note we are prepared to answer your questions as appropriately as appropriate when they are raised at the subsidiary's shareholder meeting, which we believe is the appropriate venue for this discussion, not at the Novartis AG General Meeting. We're happy to provide our justification for that in writing.
We'll look forward to engaging you at that venue to do our best to address your concerns. Thank you very much.
Thank you, Vas. Next question from Mr. Nayar.
Dear shareholders, Mr. President, and members of the committee. I'm here in a slightly off position. I dedicated my life to educate young talents and to bring them to a state that they can contribute to the health of this country and of the world, working in companies like Novartis. I'm very happy to have heard your commitment to this site, Switzerland. To summarize what I will do now, I heard the message, I have difficulties to believe you. I'm sorry that I'm speaking in English, I think it's important that we understand each other directly. Your first, and probably one of the more important strategic decision, was to reduce the production site of Stein by 1/3.
The textbook tells all of us, and the experience tells all of us, there is a reduction in production, there is some years later a reduction in development, and a reduction in research following. This is clear textbook knowledge. You decided to devote quite some time to state your engagement in Switzerland. Thanks a lot. Can you make the proof of the pudding is in eating. Can you make reliable, controllable, understandable arguments how you are going to replace all the losses of sales and production which are the consequence of the decision? Can you, because you have a pipeline, a planning of the pipeline, give us the names of what you are going to produce there? It will be easy for all of us then to understand how deep your engagement in Switzerland is and will be.
I sorry that I'm slightly polemic in what I'm saying. I'm deeply concerned. I'm sure, or I hope, that you can give me back my belief.
Thank you, Mr. Nayar. I appreciate your comments and maybe I can start, and Vas, if there's anything to add, please. What I can say is when I look at Novartis today, it is a company that continues to evolve at the pace at which science evolves. Our industry 10, 15 years ago was one where small molecules and biologics were the main technological platforms in the industry. As I mentioned earlier, Novartis has actually been at the forefront of continuing to recognize the technologies of the future and invest in the technologies of the future. Today is all about RNA-based therapies, which are manufactured in Schweizerhalle.
It is about, it is about cell and gene therapy, and I made a comment earlier about our cellular therapy, new platforms, where Stein will play a role. What I can tell you is that the technology and the science that underpins the growth of Novartis can continue to evolve, will continue to evolve in the future. I think with that, as a responsible company, we also continue to adapt our investment strategies and there are technologies which are less differentiated, and maybe less relevant to our future portfolio, and there are new technologies that come. I suspect that there will always be an evolution in our manufacturing footprint.
I am confident that actually Switzerland has a lot of the very sophisticated manpower that enables us to continue to have a presence in research, in development here, and in some of the most advanced manufacturing technologies. You mentioned a textbook analogy. What I can tell you is that Novartis invests more in R&D every year, not less in R&D every year. As a company that grows, that's our plan going forward. Vas? Yeah.
Thank you, Giovanni, thank you very much for your, I think, passionate defense of why investing in R&D is so important. When you think about Novartis' global investments in R&D, it approaches $11 billion. We're one of the global leaders in our sector, our sector is one of the leaders in investments in R&D in any sector. When you look at our footprint, nearly half of our footprint is in Basel for R&D, that commitment remains absolutely clear. When you look at some of the very, I think, tangible things we've done, in addition to expanding our internal R&D capacity, we have moved the Friedrich Miescher Institute onto our campus, that is now more and more integrated into Novartis. I would really separate, I think, our actions to optimize our manufacturing footprint from our commitment to R&D in Switzerland.
That is absolutely clear, and we will continue to vest in R&D for the long run here in this country.
Thank you. Thank you, Vas. Thank you again. I'd like to call our next speaker, Mr. Grob, to the podium.
Herr Präsident, meine Damen und Herren.
Chairman, ladies and gentlemen. My name is Grob, and I come from Bern. I've got five points I want to raise.
I want to know how is your income exactly? I have read many different place things in the press. I would like it hear from you. I wait. Mr. CEO, what is your income in fact?
Was that your only question?
No, no, it's one of the questions. It's the first question.
Okay. I think I've already answered-
Yes, that would be nice.
On compensation. Maybe if you wouldn't mind asking all the questions that we would answer.
I would want first half the questions.
Okay.
Okay. I continue. A, the second question going together with the first, how do you justify this income? What do you do for this money? What are you really giving to Novartis someone else couldn't give? That's why I want to know.
What are you doing for Novartis that nobody else can? I'd like to know the following. I see an increase in your salary since 2018. I mean, it's gone up and up. Has it gone up, have anyone else gone up as much?
Money as you have. Now we come to the States. You're going to have a lot of investments there. You promised it now for three years. I have not seen and heard the re-results. What did you build? What did you produce? What did you sell in the U.S.? Did you get help from Mr. Trump that or his government? Do you have subsidies from the U.S. government in order to build your factory in the States? That were my questions for the moment. I'm listening now for the answers.
Sure. You asked a number of questions. Let me say on compensation, I think I've already addressed many of your points. Maybe you asked how is the compensation composed? The vast majority of the compensation of senior executives, including the CEO, is variable compensation. As I mentioned earlier, the long-term performance plan represents the vast majority of the compensation. That is performance driven, it changes every year depending on the performance of the company. With respect to the U.S., I can say, of course, the U.S. is the most important market for Novartis. Almost 40% of our revenue comes from the U.S. It is the entire portfolio of Novartis.
We have demonstrated the ability to be successful in the U.S. market as you look at the performance last year. Of course, we manufacture already in the U.S. some of the medicines we sell there. Our plan is that over a period of three to five years, we will be able to manufacture in the U.S. the medicines we sell in the U.S. That's as much as I can answer your question. Thank you for asking the question about these two topics.
I continue. What are you going to rise prices in U.S., in the U.S.? Or are you going to decline the prices? What are the prices of the new product in Switzerland? Mr. Trump has asked you to make more difficult, more higher prices in Switzerland. Are you following me, Mr. Trump?
Thank you. Of course, as you know, the prices of our medicines in any country, in Europe, it's the case in Switzerland, it's not our decision. It's the result of a negotiation with the government. For every one of our medicines, of course, we will negotiate with, in this case, the Swiss government. It's not easy for me to give you an individual answer on the price of each medicine. I think what's important is what I mentioned earlier, our objective that the price of our medicines everywhere, including Switzerland, recognizes their value. Thank you so much for your comments.
One last remark. When you continue with your honorary in this size, you provoke a new initiative from Mr. Minder for the next future. Thank you.
Thank you so much. Thanks for your question. The next question comes from Mr. Tschopp.
Yeah, Herr Caforio.
Mr. Caforio. I have a difficult decision to take now. I've never had to take this decision before. Should I stand here and speak in English or in German? I mean, maybe we should take a vote on that as well, on the languages that we use. Until a few moments ago, I thought I would come up here and speak English. Now I've changed my mind, actually, and I'm speaking German because I believe that the majority of us here in the room aren't so comfortable in English. I'm going to make my comments here in German. I think it's important as well for the people of Basel, for former employees of Novartis. German ladies and gentlemen, we've already heard this morning, and it's just as I expected, actually. We heard you talk. We heard from Ethos and Actares.
I've listened to what everybody has said. You know, I mean, it's a bit like a stuck record. We're saying the same thing as in previous years. It's all about the compensation of the management. Ethos, Actares have made their comments, have criticized Novartis' compensation policies. Let me perhaps see the other side as well and point out that the head of SAP in Germany earned EUR 16 million last year, and in fact, nearly EUR 19 million the year before. Actually not much less than the CEO of Novartis. Just to put things in perspective. I do actually have some positive aspects that I want to raise about Novartis. Others have touched on these as well, actually. The chairman and the CEO touched on them as well.
I want to highlight the strong performance of Novartis' shares over the past weeks and months. It's really been very good, and we're very happy about that. Secondly, we're very happy to see the ongoing increase in dividends that we've been enjoying for some years now. Thirdly, and this is something really particular this year, I think. We have this internal message from Novartis, that there is the one-off payment of a double pension payout coming in February, so pensioners of Novartis received a double monthly payment. On behalf of my sister, who can't be here today, unfortunately, I'd like to thank you for that. She worked for Geigy, Sandoz, and Novartis during her career.
The Novartis Pension Fund has written to us about this one-off, double payment, stating that the pension fund wishes to support pensioners at this current moment. Of course, the tax authorities will be happy about that as well because the upcomingA tax bill will rather bump up the tax bill as well, along with the additional Social Security payment that people receive in December. Anyway, thank you.
Thank you so much for your comments. Thank you. I'd like to invite, Ms. De Gregorio to speak, to the podium.
Chairman, directors, ladies and gentlemen, thank you. I'd like to thank everybody at Novartis for the performance that they've delivered that delivers the dividend to us. Of course, Mr. Vasella set quite the example here at Novartis when he took his $40 million. Not to mention expenses and everything else. I once experienced a sell-off of an arm of the company myself. As employees, of course, we were not asked about that, nor were we given very much support. It's normally older workers, of course, who are laid off first. Many of them may have spent half their lives or longer working for Novartis.
In terms of communication, what we experienced was that, you know, we were only told then what we'd already read in the paper that morning. Our managers told us that we needed to come to a meeting today, and then they made their announcement even though we'd already heard it in the press. You know, we found ourselves pushed out in that way. Then I hear, you know, all these millions that you're earning there, while treating others like this, you know, it's simply beyond all proportion that people are losing their jobs while this is going on. I think you should be more conscientious in the way that you treat your staff. I myself didn't find the redundancy process very pleasant.
I was allowed to stay until the end, the end if you like, although I was one of the younger members of staff, and I said, "Well, I think I can go. I think I can find a new job." Then, you know, it was very, very difficult because I had doors slamming in my face on a daily basis. You can imagine how we all felt back then. We didn't know who was next, what was going to happen. You know, what we were going to get paid. Now, I'm sure it's correct that those at the top should be correctly paid. You know, this is just totally disproportionate now what you're earning. Then when I see that people who've spent half their lives toiling away for Novartis are simply being put outside like this. Thank you.
Thank you very much for your comments. Of course, we take any comments on fair treatment of our associates very seriously. That's an important priority for the board. Are there any other questions from the room before we continue with the program on this agenda item? That's not the case, so we will now play the video explaining how to use the voting device.
Your televoter system has three buttons. Green is for yes, yellow is to abstain, and red is for no. At the beginning of each voting, the three buttons will light up briefly, and the agenda item as well as the time will be shown on the big screen in front of you, at the front of the room. You should press the correct button in order to cast your vote. The button will light up to show how you have voted. Within the timeframe, you can change your vote by simply pressing a different button. If you have any questions during the meeting, please go to the help desk on the floor of the auditorium.
Okay, let's now proceed to the votes. The board proposes that you approve the operating and financial review of Novartis AG, the financial statements of Novartis AG, and the consolidated financial statements for the 2025 financial year, and therefore recommends that you vote Yes. Please cast your vote now. I note that you have accepted the proposal of the board. We will vote on agenda item 1.2. The board proposes endorsement of the report on non-financial matters for the 2025 financial year in an advisory vote, and therefore recommends that you vote "Yes". Please cast your vote now. I note that you have accepted the proposal of the board. We now move on to agenda item two, discharge from liability of the members of the board of directors and the executive committee.
The board proposes to discharge each of its members and each of the members of the Executive Committee for the 2025 financial year. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That's not the case. Please note the current and former members of the Board of Directors and the Executive Committee who were involved in any way in the management of Novartis in 2025 are not entitled to vote on this matter. The board proposes that this motion be approved and therefore recommends that you vote "Yes". Please cast your vote now. I note that you have accepted the proposal of the board.
Let us proceed to agenda item three, appropriation of the available earnings of Novartis AG as per balance sheet and declaration of dividends for 2025. The board proposes payment of a gross dividend of CHF 3.70 per dividend-bearing share. Should this proposal be approved, the dividend will be paid out as from March 12, 2026. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That is not the case. The board proposes that this motion be approved and therefore recommends that you vote "Yes". Please cast your vote now. I note that you have accepted the proposal of the board. We now continue with agenda item four, reduction of share capital.
Agenda item four provides for the cancellation of the shares repurchased in 2025 and the corresponding reduction of the share capital. I note that creditors were informed by means of a publication in the Swiss Official Gazette of Commerce on February 4, 2026, that they may request security by registering their claims. KPMG AG will issue its audit confirmation after the Annual General Meeting. The board of director proposes that the share capital be reduced by CHF 38,025,155.42 from CHF 1,035,086,714.83 to CHF 997,061,559.41 through cancellation of 77,602,358 own shares repurchased in 2025.
The reduction amount will be used to decrease the negative items for own capital shares shown in the shareholders' equity. I open the discussion. There are no questions, no requests to speak on this agenda item. Are there any other comments or questions on this agenda item? This is not the case. The board of directors proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now. I note that you have accepted the proposal of the board of directors. Next up is agenda item five, votes on compensation for the members of the board of directors and the executive committee. Under this agenda item, we will vote on the future remuneration of the board of directors and the executive committee, both in a binding vote, as well as on the 2025 compensation report in an advisory vote.
Further details on the compensation system can be found in the brochure Compensation Votes, which is available on our website. KPMG AG has reviewed the compensation report and has nothing to add to its audit report. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That is not the case. Let us now vote on the compensation of the board of directors. The board proposes approval of a maximum aggregate amount of compensation for the board of directors of CHF 8,240,000, covering the period from the 2026 Annual General Meeting to the 2027 Annual General Meeting, and therefore recommends that you vote yes. Please cast your vote now. I note that you have accepted the proposal of the board.
Next, we will vote on the compensation of the executive committee. The board proposes approval of a maximum aggregate amount of compensation for the executive committee of CHF 95 million to be paid, promised or granted during or in respect of the 2027 financial year, and therefore recommends that you vote yes. Please cast your vote now. I note that you have accepted the proposal of the board. Let's proceed now to the vote on the 2025 compensation report. The board proposes endorsement of the 2025 compensation report in an advisory vote and therefore recommends that you vote yes. Please cast your vote now. I note that you have accepted the proposal of the board. We continue with agenda item 6, reelections of the board chair and the members of the board of directors.
Election of one new member of the board of directors. The board proposes the reelection of the current members of the board of directors, except for Daniel Hochstrasser, as well as the election of Charles Swanton as a new member of the board of directors, each until the end of the next Annual General Meeting. Let us first turn to the proposal for my reelection as a member and as the board chair. For that vote, I would like to hand over to our vice chair, Simon Moroney. Please, Simon.
Vielen Dank, Giovanni.
Thank you very much, Giovanni. This is agenda item 6.1. We have no requests for the floor.
Gibt es zu diesem Traktandum noch Bemerkungen oder Fragen? Dies ist nicht der Fall. Kommen wir zur Wahl. Der Verwaltungsrat beantragt die Wiederwahl von Giovanni Caforio als Mitglied sowie als Präsident des Verwaltungsrats und empfiehlt Ihnen daher, Ja zu stimmen. Bitte geben Sie Ihre Stimme jetzt ab. Ich stelle fest, dass Sie Herrn Caforio als Mitglied sowie als Präsident des Verwaltungsrats wiedergewählt haben. Congratulations, Giovanni.
Thank you.
Ich darf die Versammlungsleitung wieder unserem Präsidenten über-
I would like to hand back to our chairman.
Thank you, Simon. We now continue with the reelections to the board of directors. There are no requests to speak on agenda items 6.2 to 6.11. Are there any comments or questions on agenda items 6.2 to 6.11? That's not the case. Let us now move on the reelection of the 10 current members of the board of directors. You will see each candidate in the order set out in the invitation on the screen, and you have seven seconds to cast your votes for each candidate. The board proposes the reelection of all 10 candidates and therefore recommends that you vote "Yes" for each of them.
Nancy C. Andrews. Ton Büchner. Patrice Bula. Elizabeth Doherty. Bridgette Heller. Frans van Houten. Elizabeth McNally. Simon Moroney. Ana de Pro Gonzalo. John D. Young. Das Ergebnis wird ermittelt.
I note that you have accepted the proposals of the Board. I would like to congratulate all my colleagues and look forward to continuing to work with them. This brings us to the election of Charles Swanton to the Board of Directors. I have spoken to his biography earlier and would only like to add that he's independent from Novartis according to the independence criteria set forth by the Board of Directors. Before we proceed to the election process, he would like to address you with a video message.
Dear shareholders, ladies and gentlemen. While I'm unfortunately unable to attend today's Annual General Meeting in Basel in person, I'm delighted to take this opportunity to introduce myself to you via video ahead of my proposed election to the Board of Directors of Novartis. I'm truly honored to be considered for a role at a company that has long stood at the forefront of scientific innovation and patient-focused medicine, especially in my field in the oncology space. As a clinician scientist and a medical oncologist, my work is centered on understanding the evolutionary nature of cancer and translating fundamental biological insights into new approaches for prevention and treatment.
In this context, I have long admired Novartis for its commitment to advancing precision medicine and for its willingness to tackle some of the most complex and challenging diseases through rigorous discovery science. I currently serve as a group leader at the Francis Crick Institute and professor of cancer medicine at University College London while continuing to care for patients with lung cancer. Thank you for your attention, I really hope to meet you all in person in Basel soon.
I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That's not the case. The board proposes the election of Charles Swanton to the Board of Directors, and therefore recommends that you vote yes. Please cast your vote now. I note that you have elected Charles Swanton to the Board of Directors. I congratulate him on his election and wish him every success. We will now consider agenda item seven, reelections and elections to the Compensation Committee. The board proposes the reelection of the current members of the Compensation Committee and the election of Elizabeth McNally as a new member of the Compensation Committee, each until the end of the next Annual General Meeting. If Simon Moroney is reelected, the board intends to reappoint him as Chair of the Compensation Committee.
I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on agenda items 7.1 to 7.5? That's not the case. Let us move to the elections. You will again see each candidate on the screen, and we'll have seven seconds per candidate to cast your vote. The board proposes the reelection or election of all five candidates, and therefore recommends that you vote yes for each of them.
Patrice Bula. Bridgette Heller. Simon Moroney. John D. Young. Elizabeth McNally.
Das Ergebnis der-
Thank you for your patience while we establish the results.
I note that you have accepted the proposals of the board. I warmly congratulate all those elected. We now move on to agenda item eight, reelection of the auditor. The board proposes the reelection of KPMG AG as auditor for the financial year starting on January 1st, 2026. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That is not the case. Let us proceed to the vote. The board proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now. I note that you have reelected KPMG AG. Our last topic is agenda item nine, reelection of the independent proxy. The board proposes the reelection of Mr.
Peter Andreas Zahner, attorney at law in Basel, as independent proxy until the end of the next Annual General Meeting. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That's not the case. The board proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now. I note that you have reelected Mr. Peter Andreas Zahner. Before we close, I would like to just say a few word and thank an important member of our executive committee at Novartis, Harry Kirsch. Harry, after 23 years with Novartis, 13 years as the chief financial officer of the company, you have overseen a tremendous transformation of Novartis and have been intimately involved in the great success of the company.
You leave Novartis in a very strong position, and I want to take this opportunity on behalf of the executive committee, the board of directors, and all shareholders to sincerely thank you for your contributions to Novartis and wish you all the best in the next chapter of your life. Thank you, Harry. Thank you very much. This brings us to the end of this year's Annual General Meeting. I would like to thank you for the trust you have placed in us through your votes and elections. The next Annual General Meeting is scheduled for Friday, March 5, 2027. I hereby declare today's meeting closed. Thanks to all for your attendance.