Novartis AG (NOVN) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, good morning, and welcome most warmly to the 24th Annual General Meeting. It's a great pleasure, once again, to see a large number of shareholders here with us. I would like, in particular, to welcome members of the Board of Directors who are here today. That's Nancy Andrews, Ton Buechner, Patrice Bula, Srikant Datar, Elizabeth Doherty, Ann Fudge, Andreas von Planta and up here on the stage with me, Enrico Vanni. I would also like to extend a warm welcome to the candidate members of the Board of Directors, Ms. Bridgette Heller and Mr. Simon Moroney as well as the attending members of the executive committee. In addition, I would like to welcome the representatives of our auditors, PricewaterhouseCoopers; our notary, Andrea Schmutz; and the independent proxy, Mr. Peter Andreas Zahn. I appoint Ms. Charlotte Pamer, Secretary of the Board of Directors, as keeper of the minutes today. And I appoint the following gentlemen as tellers: Thomas Aegerter from UBS in Basel; Stephanino Isele from the Zürcher Kantonalbank; and Marco Superina from Crédit Suisse in Zurich. Today's Annual General Meeting was convened by publication of the complete agenda in the Swiss Trade Gazette #23 dated 4th of February, 2020. Unless otherwise provided by the law of the articles of incorporation, the Annual General Meeting shall take decisions by absolute majority of share votes represented here. And Ms. Pamer will later announce the number of shareholders present as well as the number of shares represented by them. Our resolutions will be taken electronically as usual. And prior to the first vote, Ms. Pamer will give you brief instructions on how to use the voting device. Shareholders who wish to take the floor today on any of the agenda items should please proceed to the speakers' registration desk with their ballot documents in order to register, if you've not already done so. Speaking time will be limited to 5 minutes. I would also like to inform you that the Annual General Meeting is being recorded in audio and video today and is also being webcast. I hereby announce that the notices to today's Annual General Meeting were published in due time and due form. Thus, the meeting shall take resolutions on all agenda items. Let us then begin with item 1 of today's agenda, which concerns the approval of the operating and financial review of Novartis AG, the financial statements of Novartis AG and the Group Consolidated Financial Statements for the business year 2019. The annual report and the auditor's reports were opened for inspection at the company's headquarters and were also available on the Novartis website. In addition, we have also published an annual review this year that provides a summarized overview of our performance in the past year and the progress made in implementing our priorities, and that can be forwarded to you upon request. PricewaterhouseCoopers AG has audited the consolidated financial statements of the Novartis Group and the financial statements of Novartis AG and does not have anything to add to its audit reports. Myself and our CEO, Mr. Narasimhan would now like to give you some additional explanations on the past fiscal year and about our company. Shareholders, ladies and gentlemen, 2019, Novartis had a very good performance. At the same time, we continued to work on positioning the company for the future, both structurally and operationally. We extended our product portfolio and our research pipeline and opened up new therapeutic areas by targeted acquisitions. We are investing into fields of research that have the potential to bring about a sustainable change in medicine. We also made substantial investments in order to expand digital technologies throughout the company and further developed our global production facilities. In addition, we stepped up our commitment to environmental, social and governance issues and further improved risk management, especially with regard to the growing risk of cyber attacks and for the protection of patient data. After the successful spin-off of Alcon, we were able to make further progress in implementing our portfolio strategy last year. Today, we have a wide range of both highly specialized pharmaceutical therapies and high-quality generics. At the same time, we are expanding our activities on the front line of medical advances in areas such as gene therapy and nuclear medicine. As a focused but still diversified pharmaceutical company, we believe to have the necessary size and experience to establish ourselves in fast-growing markets. We will take advantage of the opportunities presenting themselves in the health care industry over the next few years. Excluding Alcon, consolidated sales rose by 6% to $47.4 billion in 2019. Net income fell by 44% to $7.1 billion. And this is mainly due to the income from the sale of our OTC business posted in 2018. Excluding this onetime effect, net income was broadly in line with the previous year. Free cash flow showed an increase of 15% to $12.9 billion, and core earnings per share increased by 17% to $5.28 in constant currencies. This positive overall result shows that our long-term innovation strategy is bearing fruit. Annual expenditure on research and development of around $9 billion, which corresponds to approximately 20% of our sales, allows us to develop the necessary expertise to cutting edge -- to do cutting-edge research and drive highly innovative medical approaches. This is also one of the reasons why we have managed to obtain far more approvals for new products in important markets, such as Europe, the U.S., China -- and China over the last 6 months -- years than most of our competitors. This momentum is likely to continue in the future. For the next 2 years, we are planning more than 80 important -- approval applications in important markets. We want to continue to strengthen our innovative force by acquisitions. We want to obtain access to platform technologies which enable us to generate a high added value to sharpen our profile as an innovation-driven health care company and to round off our existing portfolio. We also aim to continue our advances into pioneering medical fields, such as gene therapy and nuclear medicine, which we launched 2 years ago. With the acquisition of Medicines Company, we are investing in another type of gene technology or more precisely through so-called small interfering ribonucleic acid chains or siRNA. This technology, which has the natural ability to regulate proteins and inhibit their functioning offers many potential applications and has already shown promising results in clinical trials, for example, for the treatment of heart disease. The acquisition will enable us to build on our position in cardiology, in which we already have a good basis today with Entresto. Another important element of our strategy which we have been following since 2014 is an increasing focus on our core business. This means that we're only active for those indications and in those markets where we have the necessary size to be among the best. This focus has also had a positive impact on our profit margins. In addition to divesting parts of the company and acquiring new businesses, we've also reorganized the company to work more efficiently by establishing global functions. Our leaner structure allows us to employ our management capacity in a more targeted way and implement global efficiency enhancement programs more rapidly. This applies, for example, to our digitalization efforts, which we've been accelerating both in research and development and in our internal processes. Our partnership with Amazon Web Services will help us drive forward the digitalization of our production and distribution, while the collaboration with Microsoft is aimed at using artificial intelligence for the development of new approaches to therapy and diagnostics. The combination of the structural and operational measures will support our long-term margin expansion. We firmly believe that with our product portfolio and our leaner global organization, we are very well positioned to make the most of the opportunities presented to us in the market environment and cope with the challenges the industry is set to face over the next few years. We are well positioned in Europe and in the U.S. At the same time, we are also expanding our business in high-growth regions, such as China. The Chinese healthcare system has made great advances in the past few years and today is structured in a similar way to the U.S. and Europe, in particular, when it comes to the efficiency of their regulatory approval processes. As a result, we have been able to launch around a dozen new medicines in the Chinese market and expect more launches for the next few years. This will also be reflected in the continued growth of sales. Ladies and gentlemen, we are still optimistic about the future. At the same time, we are aware of our social responsibility as a global company and the need to earn the trust of our shareholders, partners, patients and society as a whole, each and every day. Against this background, environmental protection, social engagement and business ethics have become increasingly important. When it comes to environmental protection, we are pursuing ambitious objectives. By 2025, our operations are to be carbon neutral. We've also committed to reducing our water consumption, and we are extensively restricting plastic consumption by 2013. For many years, we've also been funding several reforestation projects in countries such as Argentina, China and Colombia, which are helping us to further improve our carbon footprint. It is our mission to ensure that as many as -- as many people as possible have access to our therapies. That is why we have revised our principles for improved access to medicines and made them an integral part of our general business model. As part of this approach, we are already working on a global access strategy during the early drug development phase. This enables us to give less wealthy market where there is a high medical need quick access. We are also continuing to develop in the area of governance. In addition to the newly established function of ethics, risk and compliance, we are also in the process of introducing a principles-based ethics code throughout the group. This will help our associates to make decisions on the basis of clear ethical standards and will make it easier for them to find their way around an increasingly complex market environment. Ladies and gentlemen, shareholders, 2019 was a successful year. Our financial position remains very good. We have a strong balance sheet. And thanks to the high cash flow, we can continue to make significant investments and pay reliable dividends. I am, therefore, delighted to be able to propose a dividend increase, like in all of previous years, today of 4% to CHF 2.95, which corresponds to a dividend yield of 3.2% as per end 2019. Novartis' good results and the high performance of our associates, to whom I would like to take this opportunity to extend my thanks for their excellent work, continue to give us confidence for the future. Thank you. To ensure that we can keep producing this performance, we need stable framework conditions, however, so that we can plan for their long-term future and continue to make investments. In Switzerland, we still have the situation, and we have recently invested CHF 90 million in the construction of our new cell and gene therapy facility in Stein. But in view of the complicated political situation, we must not allow ourselves to be lured into a false sense of security. Political initiatives such as the responsible business initiatives and limitation initiatives are dangerous because they may inflict further structural harm on the position of Switzerland as a business hub in the long term and weaken the investment climate. We must take particular care in relations to our most important trading partner, the EU, with which Switzerland exchanges goods each year worth more than CHF 400 billion. A loss of the bilateral agreements would be disastrous and would lead to unnecessary costs and export delays, which are likely to have a negative impact on an export-oriented country such as Switzerland. While Switzerland must certainly do all it can to protect the domestic labor market and support the needs of its citizens, we should try our best to maintain our agreements with the EU. Scrapping the compromise which was agreed many years ago would not be in the long-term interest of the government or industry of this company and harm Switzerland unnecessarily. Dear shareholders, please let me say a few words about the Board of Directors. In the last few years, we've been working on improving our governance and further professionalizing the Board of Directors. We intend to do this in the future too in order to strategically well position Novartis in the long term. In view of the expected age-related resignations in the coming years, we are also working to prepare the Board of Directors for these changes and to rejuvenate it. I'm therefore, delighted to be able to propose Bridgette Heller and Simon Moroney, who are 2 renowned leaders. Ms. Heller has had a very successful career in the consumer goods industry. Besides working for leading companies such as Kraft Foods and Danone, she led the consumer care unit at U.S.-based Merck, where she was able to gain experience in the pharmaceuticals business. Ms. Heller has an international recognized leader -- is an internationally recognized leader in marketing and during her long career, she's also worked for a series of foundations, providing professional and cultural support for minors and disadvantaged people. Mr. Moroney is recognized worldwide for his work in the field of antibody research. He co-founded the German biotechnology company MorphoSys, for which he served as CEO for 27 years. Today, the company is one of the most highly valued biotech companies in Europe. During his long career as a researcher, which took him to the U.K., the U.S. and Switzerland, he was also part of the research team that developed the first-generation antibody-drug conjugates in the field of cancer therapy. I strongly believe that the appointment of Mr. Moroney and -- to the Board of Directors will further strengthen the Board and allow us to continue our work with the customer care and sense of responsibility. This brings me to the close. And I would now like to pass over to Vas Narasimhan. Thank you very much for your attention.

Good morning, ladies and gentlemen. It is a great honor being here with you today. 2019 was an extraordinary year for Novartis, and I look forward to sharing some of our achievements with you. Last year, we executed on the strategy we outlined in 2018, continuing our journey to focus Novartis as a leading medicines company powered by advanced therapy platforms and data science. As I will share with you today, we delivered meaningful progress across each of the 5 priorities you see here. And we will stay the course on this strategy in 2020. As you already know from our annual results, that strategy led to a very successful 2019 for Novartis, with strong performance across the board. On continuing operations, including the proposed divestment to Aurobindo, net sales grew 9%, and core operating income grew 17%. Free cash flow was USD 12.9 billion, and the company achieved top-tier ranking in total shareholder return. Now when I started as CEO, we set out to focus Novartis as a leading medicines company, and we have progressed towards realizing that ambition. Over the last 2 years, we have completed around USD 70 billion in transactions to focus Novartis. In 2019 alone, we successfully completed the spin-off of Alcon, we added Xiidra to our front-of-the-eye portfolio and we acquired The Medicines Company and inclisiran, our potentially transformational investigational therapy for cardiovascular disease, which is the world's leading cause of death and disability. I also wanted to spend a moment reflecting on the spin-off of Alcon, resulting in the largest publicly traded medical devices company created in 2019, with an initial market cap of USD 28 billion. The company has been incorporated in Fribourg and is now headquartered in Geneva. It is dual-listed on both the SIX Swiss Exchange and the New York Stock Exchange. And a value of CHF 5 billion was generated for Novartis shareholders on the first day of trading. We also continued our progress across each of our 5 priorities. When it comes to unleashing the power of our people, in 2019, we kept working at full speed on our transformation towards an inspired, curious and unbossed culture. As you know, our culture change is driven by a research-backed belief that culture ultimately drives company performance. And as you can see on this slide, we introduced and advanced a set of targeted initiatives related to our company culture, such as offering free access to learning platforms for all associates and rolling out a 14-week parental leave policy for all associates, regardless of gender or sexual orientation. In Switzerland, it is 18 weeks. In terms of delivering transformative innovation, 2019 was a standout year for the company, one of the best in our history. Last year, we had 6 new molecular entities approved by the FDA across different therapeutic areas, 5 of which have the potential to be blockbuster medicines. When you consider for the moment the complexity of human biology and how difficult it is to even find 1 impactful medicine, the fact that we had 6 approved in 2019 is truly something to be proud of. We are perhaps the only company to ever have this many new molecular entities approved by the FDA in a single year. But the true measure of our innovation performance is the impact these medicines have on the lives of patients. I wanted to share a video which was put together by a patient's family and helps show the impact of our efforts to deliver transformative innovation. This is the story of a boy who was diagnosed with type 1 spinal muscular atrophy, who would have normally died in his first year of life. He received our breakthrough gene therapy Zolgensma, as a very young infant. We wanted to share with you his progress as of recently. [Presentation]

What a remarkable story and a reminder of our purpose to reimagine medicine to improve and extend peoples' lives. Now when it comes to embracing operational excellence, in 2019, we made substantial progress in our ambitious transformational plans for Novartis Technical Operations and Novartis Business Services. In technical operations, we invested in the technologies that we believe will be core to our future, including technologies related to advanced therapy platforms and biologics. We streamlined our network of manufacturing sites, and we are also introducing a new operating model to make the organization more agile. In business services, we continued striving for simplification and efficiency by investing in new technology platforms and capabilities, transforming our footprint and redesigning enterprise processes. If I had to pick one example from last year to highlight, I would mention the creation of a new cell therapy facility in Stein, Switzerland, which released its first batch of Kymriah in September of 2019. More than 90% of our associates there at that site were retrained or retained from within Novartis, which is another sign of our deep, long-standing commitment to Switzerland. [Presentation]

This is one of the most difficult medicines to produce in the world, a process in which we reprogram a patient's individual cells and reintroduce them into their body to fight cancer. We're very, very proud of our team in Stein. We've also made meaningful progress in our effort to go big on data science and digital technologies, marking important milestones across the 4 pillars of our strategy. To point out just a few. We scaled our partnership accelerator called the Biome to engage leading tech communities around the world. Last year, we opened a Biome in Paris. And just in February of this year, we opened Biomes in London and in Hyderabad. We also established strategic alliances with tech giants like Microsoft, Amazon and Tencent to help us accelerate our progress, empowering the company by data science and digital technologies. Perhaps most importantly, last year, we continued working to build lasting trust with society. I'd like to quickly share examples along the 4 categories you see here. On ethical standards, we started creating and crowdsourcing a new code of ethics for the company, which will be co-created with our associates to ensure ethics are deeply embedded in decision-making in every corner of Novartis. Last year, we outlined a new strategy in sub-Saharan Africa, where there is a need to dramatically improve access to medicines. We plan to abandon a focus on profit and measure our success in the region on whether patients who can benefit from our medicines have the access they need. In global health, we continue working to eradicate leprosy from the planet, and we've provided over 7 million patients with free treatment over the past 2 decades. And finally, as we strive to reach gender equality in leadership, we're pleased that we currently have 44% female representation in management. We have work to do on gender equity. That goes deeper than just representation and focuses as well on inclusion, but we believe this is an important symbol of the progress we're making. Looking towards the future, we have very ambitious targets on environmental, social and governance topics. In low- and middle-income countries, we want to reduce the launch lag time for our medicines to 3 months, and we will work to implement an access strategy for advanced therapies to ensure innovation is accessible across the world and not just in wealthy countries. We've committed USD 100 million in R&D to help transform the treatment of malaria. Finding the next wave of antimalarial medicines will be critical for global health, especially if we see resistance to current treatments increase. We're the only company with novel compounds for malaria currently in the pipeline. And we remain committed to ultimately eradicating malaria from the planet. We continue pushing towards our bold environmental targets, including to be carbon neutral in our own operations by 2025. And Novartis has also signed the UN EPIC pledge and the LGBTI equity pledge, and we commit this year to continue making progress on diversity and inclusion. Finally, after signing a partnership with the government of Ghana and the Sickle Cell Foundation of Ghana earlier this year, we will continue collaborating across sectors to help tackle sickle cell disease across Africa and around the world. I wanted to end with one more video from a trip I took to Ghana in November where I visited a company called Zipline, which Novartis closely works with. [Presentation]

Zipline can deliver vast amounts of medicines across large swathes of a country like Ghana, including very remote regions like the one you just saw. I like sharing this video because it allows us to glimpse the future and see how technology can help us accelerate our progress as a society towards broad access to medicines. As you can see, Novartis made significant progress across all our priorities in 2019 and I believe, delivered outstanding performance by all measures. Above all, we remain deeply committed to patients and to improving human health across the world. As I move into my third year as CEO, I remain deeply grateful to serve in this role, inspired and thankful to our teams around the world, thankful to our Board of Directors and our shareholders and optimistic about the opportunities we have to continue reimagining medicine as a truly focused medicines company. Thank you very much for your attention, for your continued investment in Novartis and for joining us on this grand journey to reimagine medicine. And with that, I'd like to hand it back to our Chairman, Herr Joerg Reinhardt.

Thank you, Vas. [Interpreted] Thank you very much, Mr. Narasimhan. We've, in the meantime, been able to establish attendance figures. Ms. Pamer?

[Interpreted] Ladies and gentlemen, here, are the attendance figures for today's Annual General Meeting, 20th of February, 2020. Here at the AGM today, we have 1,189 shareholders as well as the independent proxy. Together, they represent 1,493,407,097 votes, equating to 59.09% of the issued shares. Shares are divided out as follows: the independent proxy represents 1,401,359,407 votes; and the shareholders present here today in the room together represent 92,047,690 votes.

[Interpreted] Thank you, Ms. Pamer. I would now like to open the floor for discussion. And under agenda item 1, we have a series of people wishing to take the floor. We have 8 on the list at the moment. And first of all, I would like to invite Mr. Thomas Schuster to proceed to the rostrum. And Ms. Veronika Hendry should be ready to speak after him.

[Interpreted] Mr. Schneider, gentlemen, Novartis has done very well in recent months. I'm talking on behalf of private investors today and representing my own shares as well. Novartis has done very well. And if things continue to go so well, then we may actually be able to knock Roche out of the top seat, a wonderful performance. But there are weak points as well. I think if you compare us to Roche, we are rather behind. They have a higher cash flow, and they have better margins than we do. And we should take this seriously. We should do everything we can to catch up and close that gap. Now the dividend is great. We've seen it go up to CHF 2.95. Wonderful. What you've said about the last business year is very nice as well. You've talked about improving by a further 5% to 10%. We're very pleased to hear that. But what about the coronavirus? What's that going to do to us? Is it going to endanger our healthy rate of growth? How many of our raw materials do we get from China? If things go really wrong, do we have other suppliers that we can turn to? And how much of our products do we sell in China? How much might we lose if things really go wrong? I wonder if you can tell us a bit about that. Another weak point which I see is Sandoz, the generics arm. There's been a lot of speculation about hiving off that part of the company. Do you have any further thoughts about that? So what's going to happen? We recently acquired The Medicines Company, a biotech company, for $9.7 billion. It only employs about 65 people. So that's quite an incredible price. Now of course, biotech companies cost a lot of money. But at the time of acquisition, they had no drug on the market that we could sell. So I do hope that this acquisition is really going to pay off. I'd like to know about the state of play with the integration of Medicines Company and what you intend. Perhaps you can give us some more detail about that, please. Now Zolgensma, of course, has been all over the papers all around the world. Of course, if you are a parent of a sick child, then you want that treatment for your child. And I don't really know whether the idea of the draw that you have for the treatment is such a good idea. There's been a lot written about this in the press. Should our lives really be dependent on some sort of draw? Isn't there a better way to make this medicine available to the children of these parents? I know it's not licensed yet in Europe. I wonder why that is. So why is it not licensed? What's going to happen there? Now what we have is goodwill on our balance sheet and our performance. And I think if you put all that together and compare it with the equity that we have, then the 2 things are around the same. But these are assets that nobody can really measure. They don't have a market value. There are many, many assumptions behind them. Now thankfully, we have plenty of equity at our disposal. But I wonder how strong that is, if you constantly have to engage in write-downs. If you're not careful, then eventually, some of your equity might go up in smoke. So let's make sure that we don't keep having to have write-downs and that we have a really strong position. My name is Thomas Anton Schuster. I've been living on dividends for quite a few years now. I started out very small 40 years ago. And I've taken it from there. I still find it a shame that people are not braver in investing in shares and that they leave their money in the bank instead. If you want any advice, then you can also check me out online and download information from my website.

[Interpreted] Well, thank you very much, Mr. Schuster. We take your points on board as comments or suggestions, but there are a few points you raised I'd like to comment on. You talked about the margins, that our margins are not quite as good as those of Roche. It's true. Roche, of course, is mostly focused on oncology drugs, where margins are generally bigger than in the rest of the pharmaceutical industry. We've tried to catch up over the last few years. And once again, we promise you today that we're going to improve our margins. So we really are working very hard to catch up with Roche. As to the coronavirus, yes, of course, some of our active ingredients do come from China, particularly in the generic sector. As things stand today, we have not had any supply problems. We think that for our generics and our pharmaceutical products, we shouldn't have reason to fear any shortages over the next few weeks. Now if the outbreak lasts for the next 6 months, say, then we can't precisely forecast what is going to happen. But at the moment, we have no reason to feel that we need to be concerned. Our sales in China will be affected, of course. We don't know to what extent. We have to wait and see. At the moment, we're only expecting moderate effects there. As to Sandoz, no, we are not intending to hive off Sandoz. If you've been following what's been going on, then you'll see that Sandoz has been developing very nicely over the last few years under the leadership of Richard Saynor. It's doing very well, both in -- is working on its sales and its margins, and we are optimistic that things are going to continue to go in the right direction. Of course, I don't have a crystal ball to tell you how Sandoz will look in 10 years' time, but at the moment, we remain very optimistic, and we have no plans to hive it off. You asked about The Medicines Company and Zolgensma, and I think I might hand over to Vas for an answer on those questions.

So thank you for your questions, Herr Schuster. So first, on Medicines Company. Inclisiran, we believe, could be a truly transformational medicine for cardiovascular risk reduction, which is the leading cause of death and disability in the world. This is a unique medicine using double-stranded RNA that enables you to control cholesterol with 2 injections a year conducted by your physician. You can think of it as a vaccine against cholesterol. We acquired the company shortly after they had filed with the U.S. FDA. That filing has also now been completed in Europe as well. We believe that assuming things go according to plan, we could see approvals later this year of this medicine. And we believe it could have a significant potential from a sales, but most importantly, from a health impact around the world. The integration is going very well, and we fully integrate The Medicines Company into Novartis cardiovascular disease operations. Now with respect to Zolgensma, Zolgensma, as you saw in the video, is a truly transformational medicine. It was called by the U.S. Food and Drug Administration as one of the great breakthroughs of recent decades. So a truly remarkable medicine. It is licensed in the U.S. And over 99% of children eligible for Zolgensma, who request to receive it, receive it. We filed in Europe, and we are currently in the process of completing the approval process in Europe. We expect to receive approval from the CHMP, the relevant committee within the EU in first quarter of this year. Now pre-approval, because of the extraordinary efficacy of this medicine, we received substantial demand for this medicine, even though it is not approved in any way outside of the United States. Our challenge was that we did not have adequate supply to meet the demand of the United States as well as meet the demand of the world broadly for this incredible medicine and for young children. We made the decision, however, a first of its kind decision, to start a managed access program for cell and gene therapies. This has not been done by other companies. And this, of course, would allow patients to receive the medicine before approval, free of charge. In order to determine who would be eligible for this treatment, we worked with an independent ethics group that consisted of ethicists from around the world. And they determined there was no fair way to determine who should receive this medicine. They determined that a randomization process was the right approach until we receive approval. So we conducted that -- we went forward with that randomization approach. Now we acknowledge the feedback that we've received, and we continue to be in dialogue with ministries and as well as patient organizations and other stakeholders. To date, an alternative approach has not been proposed, and so we continue to use this randomization process. I would note there are randomized clinical trials ongoing in spinal muscular atrophy in infants in Europe today with our competitors. So randomization is something that is part of the process, in many instances, in the development of a drug. Our aspiration, of course, is to find ways to get every patient who needs the medicine, the medicine, and that's what we're working very hard to do. Now on goodwill and balance sheet. Okay, I'll hand it back to our Chairman.

Okay. Thank you, Vas. I think we should move -- sorry. [Interpreted] Thank you. I think we should move on to the next speaker, which is Mrs. Veronika Hendry, please. And after Mrs. Hendry comes Mr. Patrick Durisch.

[Interpreted] Good morning, Chairman, ladies and gentlemen, members of the Board and shareholders. My name is Veronika Hendry, and I am the President of Actares, which represents shareholders for sustainable and socially responsible business. Actares has been drawing up voting recommendations for its members for 20 years and representing them at AGMs as we are doing here today at Novartis. The questions that we want to ask this year echo those of the previous speaker today but perhaps go into a little more detail. And Mr. Reinhardt, I would hope to get more precise answers from you as well. But first of all, I'd like to turn to you, Mr. Narasimhan. You are a technical expert, a cosmopolitan individual. You are a business expert. You've brought a breath of fresh air into Novartis, a great package all around. And Actares is very pleased to see this as well. However, there are certain decisions that Novartis is taking, which Actares feels requires further investigation. At last year's AGM, we asked about the lack of transparency with the prices of Kymriah and the exorbitant prices that health insurance companies are going to have to pay. We also criticized the fact that these gene therapies would probably never become accessible to people from outside of rich western countries. Now of course, since then, we've seen Zolgensma with even higher prices. EUR 2 million needs to be spent to save the life of a baby or a small child suffering from SMA. Now what happens then if the parents or the health insurance company won't or can't pay for this? Who will pay? The U.S. has the license in the United States. And then we've heard that you are giving out 100 treatments per month by a kind of lottery. Perhaps we need to take part in that lottery. We find this really highly questionable. How did Novartis actually take the decision to offer treatment to babies in countries where Zolgensma isn't licensed and to do it by this kind of lottery? Are you trying to exert pressure on governments in order to speed up the licensing process for Zolgensma? That's our question. And then we would like to know, what guarantee does Novartis actually really give for Zolgensma? Is it going to be effective in the long term? You've only got a couple of studies involving 30-odd babies in the U.S. And Zolgensma, let's remember, is not a product that was developed by Novartis itself. It's come through acquisition. Since Mr. Narasimhan has been with us, we've spent $28 billion on acquisitions. The company we've just talked about cost nearly $10 billion and only delivers 1 medicine, although we have heard a reason for that today. Now this, of course, has an effect on Novartis' results. But of course, it also has a pretty big hit on the wallets of patients. So here are our questions. Are you attempting through these acquisitions to compensate for the loss of patent protection on some of your blockbusters? Are we correct in fearing that these very expensive acquisitions will need to be compensated by putting up drug prices even higher and sending us all into spiraling health insurance premiums? Thirdly, pharmaceutical companies like Novartis live on innovation and research. What is your strategy for the future in this area? Do you intend to grow through acquisition or through investment in your own research activities? And finally, something else that the previous speaker also mentioned. Sandoz announced on Wednesday that in spite of the risk of possible shortages due to coronavirus, they won't be putting up the price of generics. Now this is very laudable, but it's not necessarily a solution to the problem, I believe. According to reports on Swiss television, around 80% of the raw materials for generics come from China, and the coronavirus epidemic, of course, is leading to growing fears that we will see shortages, not just of active ingredients, but also of raw materials. And I think the answer you've given, Mr. Reinhardt, is rather brief, doesn't really address the issue. We would like to hear some more detail from you. Precisely what percentage of starting materials for medicines made at Novartis and Sandoz come from China? Sandoz has been struggling with shortages anyway for a while, we've heard. Now are you going to be able to correct this in the next few months, if there are further shortages from China? Thirdly, does Novartis have a worst-case scenario worked out? What will you do if there is really a massive problem with deliveries from China or, indeed, if they would stop altogether? Those are the things that we are concerned about right now. You have written back to us in response to our letter and answered some of your questions, but we would be very pleased to hear further detail from you here today. So thank you, Dr. Reinhardt, for answering our questions. And I wish you all a pleasant day, and thank you for your attention.

[Interpreted] Well, thank you, Mrs. Hendry. I'm sure you will understand that I can't go into great detail about all of those questions that you've just asked, but we will certainly be happy to write to you again. There are a few questions there that I think are of general interest, and which I will address now. You asked a basic question about our portfolio and how we intend to develop it, how much value do we place on internal research. Well, I'd like to be very clear about this. If anybody should think that we're too heavily focused on acquisition, and we're not focusing on our internal research anymore, well, that is incorrect. If you see how much we invest in research and development each year, and that's a figure that's growing every year as well, then you will see that we are not abandoning research in favor of expensive acquisitions. We need both. It's not just us who are investing in biotech companies -- acquiring biotech companies. Other companies within Switzerland and out with Switzerland are doing the same, some more in one year, some less in the following year and so on. We certainly will continue with acquisitions in biotechnology companies. But this does not mean that we're going to cut out our internal research and innovation at the same time. Now you've also asked whether our acquisitions are being made in order to bolster Novartis' figures. Well, no, more or less the opposite would be true because the acquisitions we've made in recent years have not done very much for our headline figures. At the moment, they've cost a lot before they deliver sales. Our results from last year are on the basis of some very nice developments in the price or in the sales of our in-house products, like Cosentyx and others. These are products that we've developed ourselves, and they are doing very nicely. So it's not all about the acquisitions for sure. Now just briefly, before I turn to Vas, again, to talk about Zolgensma, let me say something about our raw materials coming from China for us and for Sandoz. I wasn't very precise before because I can't give you precise figures. As I am informed, less than 50% of our active ingredients come from China -- considerably less than 50%, actually. We got 2 production facilities where -- so that we have a backup if anything goes wrong. We also have quite large stocks, which will get us through the next few months. Now if the situation really does get worse, then of course, we will have to see what we would do over the next couple of years. But we're quite relaxed for the time being. We think that the supply situation is fully under control. You mentioned shortages of medicines in Switzerland, in certain areas. This is true. It relates to certain Sandoz products, not so much Novartis products. Now this is not to do with China. And it's not to do with us holding back products either. The shortages are basically due to a series of technical issues with active ingredient production or factory operations issues, technical issues in warehouses and so on. But these are all exceptional circumstances. And they generally relate to products that are not life-saving medicines. Nevertheless, we are, of course, concerned with ensuring that we don't have such shortages in the future. Now to address the issue of Zolgensma again, I would turn back to you, Vas.

So thank you, Frau Hendry. And we always appreciate your feedback and always take it into consideration. First, last year, you asked about Kymriah. Kymriah now is reimbursed, licensed and reimbursed in nearly 20 markets around the world. Markets around the world recognize the incredible value the medicine provides. It remains to be -- it remains -- continues to be priced at 50% the cost-effective price that health systems determine and is considered a great value proposition for cancer patients. A similar model is what we used for Zolgensma. When you look at the 10-year cost of treating a child with spinal muscular atrophy in Europe today, with the approved medicines and reimbursed medicines in Europe today, the cost is approximately EUR 4.5 million to EUR 5 million. That is what the health care systems in Europe today spend on these medicines. In many rare diseases, the 5- to 10-year cost for long-term treatment, chronic treatment is $7 million to $10 million. With respect to Zolgensma, we endeavor to price the medicine at a fraction of that cost. So roughly 1/2 of the 10-year cost at a cost-effective price, and it was determined to be cost-effective in the United States, value-based, which is why over 99% of children receive it. So we believe our pricing is fair and rational, and we'll continue to work with European governments and governments around the world to make sure the medicine like Zolgensma has accessibility like a medicine like Kymriah did. I think the shift here is, of course, from going from chronic therapies that people take or children take over decades to a onetime therapy. Now there are unknowns with respect to a onetime therapy. But what I can say is we have now children who have been 5 years since receiving the first dose of Zolgensma and continue to do very well, and we'll continue to monitor. With all of these agreements, we offer that if a child, ultimately, has a worsening of their condition, at certain parameters, we reimburse the government for the money that they would otherwise not have received value for. So that is the approach we take on Zolgensma. We believe it's very rational and responsible. You also asked about, again, about the "lottery.” This was at the request of patient groups and ministries around Europe that we create a managed access program for the medicine. Prior to December of last year, we did not have a managed access program for Zolgensma. When the ministries requested, we created one. We created the best one we could in the fairest way possible, consulting with world-leading ethicists to find the right way to construct the program. There is no intent here to try to place pressure on anyone. And in fact, patient groups around the world, particularly those outside of Europe have thanked us for putting this program together to enable access to the medicine. I think that should address most of your questions, but we'll welcome to continue the dialogue. Thank you.

Thank you, Vas. [Interpreted] The next speaker is Patrick Durisch and followed by Leo Troxler.

Directors, dear shareholders, ladies and gentlemen, my name is Patrick Durisch. I'm the pharma specialist of Public Eye, an independent Swiss advocacy NGO, formerly known as Berne Declaration. I will start by paraphrasing young youth climate activist Greta Thunberg. How dare you? How dare you, Novartis, impose an insane price of over $2 million for a single injection of Zolgensma, the result of a pure financial speculation over the acquisition of a biotech that had largely benefited from public and charities funding and not of your own investments in research and development? How dare you say that this price is a good bargain in the long run, while nobody knows today how long the benefits of Zolgensma may really last? It has been tested on very few children over a short time span, with reported data manipulation and without even doing a head-to-head comparative study with the existing approved treatment. How dare you launch a Zolgensma global lottery, a sort of Russian roulette, playing with children's lives and parents' distress and resembling more a marketing stunt than charity to increase pressure on regulatory authorities? As European Health Ministers of Beneluxa has stated, "If one equals the fate of a patient to a lottery ballot, human dignity and moral values get out of sight." Your aspiration to, and I quote, "hold to the highest ethical standards and be a trusted leader in changing the practice of medicines," seems just an empty slogan. Zolgensma is only the latest example of skyrocketing prices that threaten the financial sustainability of our health systems even in wealthy countries. Take Kymriah, your CAR-T cell therapy against leukemia that also hit the headlines, first, because of its price tag of CHF 370,000 for a single injection, totally unjustifiable as the technology stems from public efforts and as we don't know what Novartis has really invested in it; second, because of the untransparent reimbursement scheme, subject to secret agreements between Novartis and health insurers with the real covered price being kept confidential; finally, because of its unmerited patents as witnessed by a recent decision to drop the European Kymriah patent following our and doctors of the world's opposition for lack of novelty. The revocation of this patent and your unilateral withdrawal of another application are a confirmation that such patents are abusive. We call on Novartis to spontaneously drop all remaining Kymriah patents. Finally, our latest study on post-trial access to medicines tested in some low- and middle-income countries showed that you are still not complying with your ethical obligations in this field. If most of your products were found to be registered locally, a notable improvement compared to past studies, your pricing policy makes many of them totally unaffordable. For example, an average Mexican worker earning the official minimum wage will have to work over 20 years to pay for just 1 year of treatment with Cosentyx or Gilenya, even if Mexico has contributed to their development. Dr. Reinhardt, 6 years ago, in this -- at the same tribune, you agreed that post-trial access to tested medicines in resource-poor countries is essential and that you would act upon it. You need to walk the talk now. Innovation and affordable access can coexist, assuming you end up your irresponsible pricing policy and accept to be totally transparent on your real R&D investments. A fair price is one that takes into account the public contribution to innovation. But while taxpayers are largely footing the bill for drug research, you are reaping all the gains and focus on short-term shareholder value, another proof that the current incentive system revolving around patents and monopoly prices fails to deliver optimal, affordable treatments and must be reformed. With an annual core net income of more than USD 12 billion, over 25% profit margin, we trust you have the necessary leeway to apply affordable prices without compromising on your R&D efforts and still make a reasonable profit. Instead, Novartis has been embroiled in a series of marketing scandals, such as in Greece and the United States in recent years, despite the priorities set by the new CEO to restore the company's reputation and integrity. This has to change urgently. Thank you for your attention.

Mr. Durisch, thank you very much for your comments. I mean you didn't ask a real question. You made a number of comments that go pretty much in the direction that other speakers have made here already this morning, and I don't think that it makes too much sense to come back to pricing of Kymriah and Zolgensma. I think we explained what the reasoning is, what the situation is. You made one comment regarding access after clinical trials, which I think is a fair comment, and we will follow up on that. I remember, yes, you're absolutely right, I made this statement, and I think we acted on it, but not enough, as you say. So there is something which we will have to look into more detail and see what else we could do. Beyond that, I don't think that there is any real need to go very much into -- more detail now. Vas, you want to...

Access to medicine.

Access, you want to comment? Okay, please.

So thank you, again, for your comments. We always, of course, take Public Eye's comments and reflect on them. I would say on -- first, on clinical trials, post-trial access, I believe we are doing very well. I think our benchmark data would suggest that in countries we conduct clinical trials, we are registering the medicine. I would also note versus our peer group, we have one of the most ambitious access programs in the world. We have 180 emerging market brands that provide access to medicines, new innovations to millions of patients at prices that they can afford. And you can find that in our annual report, and those data are transparently published. In addition, we are now working to ensure that our pricing reflects tiered income-based pricing so that in any instance where there is an income disparity, our prices are tiered appropriately. This is recognized in the Access to Medicines Index where -- I think, where we were ranked #2 in the industry in terms of our approach to access to medicines in low- and middle-income settings. It's a top priority for me and the executive team, and we'll continue to show progress on that front. Thank you.

Thank you. So [Interpreted] Mr. Troxler, please. So -- and Mr. [ Lang Lukas Kanan Kasundra ] will be next.

[Interpreted] Mr. Reinhardt, I'll keep it brief. I am really astonished how Novartis focuses on these medications that are hardly payable and affordable and then play as the savior of the world. Well, that's really inappropriate, and I'm very surprised how your strategists do not recognize how dangerous full digitization is and the -- a war with [ 5G ] from China is imminent. Everybody on the street will know that, or don't you? Third, well, get an adviser from climate research if you question all the viruses and other things. We'll be the one that are going to be ahead of the coronavirus next time. Be ashamed. Don't you think that the ethic code that is really absolutely necessary went so wrong? Just tackle that once again because appropriateness will only come to life when you ensure it. Well, please call these children next time test animals that are exposed to the lottery.

[Interpreted] Mr. Troxler, I don't think that your last comment was really appropriate. You were mentioning a couple of things that have been mentioned before, I don't think I need to comment on that. However, let me get back to one of your comments, and I can't really remember because your last comment really threw me. Children who suffer from a disease that cannot be cured and can then be cured must not be called test animals, that's just inappropriate. The next speaker on our list, Mr. [ Kanan Kasundra ].

[Interpreted] Ladies, gentlemen, shareholders, do you know what I read first when I leaf through the Novartis brochures or go on to their website? Man is in the center of work at Novartis. Let me repeat once again, man is in the center of work at Novartis. With the help of innovation, people are supposed to be helped to a better and longer life. Research stopped for new antibiotics proves the contrary. Resources, according to Novartis, ought to be used in areas with better innovation opportunities. This is what Novartis declared mid-2018. The World Health Organization pronounced that multi-resistant bacteria are one of the most urgent health risks of our time. It is a real threat for medical progress of an entire century where men, where people are in the center of attention. How can you then stop research in such an important area? The reason is quite evident, short therapy times and restrictive use of new antibiotics do not promise higher yields. That means the return, the money that you make with it is in the center of the work of Novartis. If the CEO of Novartis would estimate that differently, he would no longer be a CEO very soon because you, shareholders, would see to that. With that research stop, Novartis is not alone. In addition, smaller companies do not have the necessary funds to launch new antibiotics. All the challenges about multi-resistant bacteria and germs show that the profit-oriented business model for solving the most important health problems is just not adequate. We, therefore, kindly invite you to attend our conference, health is not good to be handled, on the -- starting from the 5th of April in Basel. Please come and attend that conference. It will have a critical look also on Novartis' business model. We also kindly like to invite you, shareholders, to talk about these different aspects. This conference will be a contrary point to what we've just heard and seen. There will be 12 different workshops, 2 presentations and also exhibitions. We'll discuss different aspects: corruption, which was also mentioned; research and development gap; prices of drugs; and also Basel as a pharmaceutical city. So that's my invitation that I'd like to extend to you. We'd be quite happy to go there. My name is [ Kanan Kasundra ]. I work for Multiwatch, and we'd be very, very happy, especially if there's some shareholders amongst you who are a bit more critical here in the room, who also critically deal with the work of the company. So we'd be happy to be welcoming you at our conference. Thank you so much. No questions.

[Interpreted] Thank you. Well, I don't think I have anything to add because that was advertisement for one's own purpose. Antibiotics. Don't forget that Sandoz is the world's biggest producer of antibiotics. And a large part of antibiotics that are delivered in the world are produced by Sandoz. Okay. Regarding new antibiotics, we've been a bit more reluctant, but that doesn't mean that if there are attractive new research approaches, we will not restart that. Now the next speaker on the list is Pauline Lecoursonnois. Please come to the rostrum. And then Mr. [indiscernible] [ Urs Rik Strup ].

Mr. Chairman, members of the Board, fellow shareholders. My name is Pauline Lecoursonnois. I work for EOS at Federated Hermes. I am here on behalf of our institutional investor clients, who together represent 1.2% of the share capital. First of all, we want to share our enthusiasm for the strategy set out in 2018, which appears to be progressing well, and the recent performance of the company. Today, I would like to address the following 3 topics which we consider as essential for the long-term success of Novartis: Board effectiveness, ethics, auditor independence and audit quality. We have long been engaging with Novartis at Board and executive level. Many of our conversations have focused on Board effectiveness. We welcome the recent commitment to increase gender diversity on the Board and the additional information provided on the Board's self-evaluation. We are looking forward to reviewing the outcomes of the external evaluation, which is planned for 2020. We have also engaged on the conduct-related issues faced by Novartis in recent years. And we welcome that, under the leadership of Mr. Narasimhan as CEO, ethical business practice became a top priority. This has been exemplified through the creation of a Trust & Reputation Committee chaired by the CEO himself. So Novartis Board and executives are working to set the right culture. We expect that these efforts will be evidenced by business behaviors. Maintaining independent external assurance is a fundamental pillar of good stewardship and the fiduciary duty of the Board of Directors. Independence and potentially audit quality is at risk when the same assurance provider is maintained for long periods. The EU, for example, has regulated that this period be an absolute maximum of 20 years. Novartis has commissioned the same audit firm since 1940, now 80 years. Our experience is that simply rotating the audit partner is insufficient. And only by tendering the audit firm at regular intervals will audit quality and auditor independence be protected in the interest of shareholders and other stakeholders. Our view is that auditor rotation can also add value with a fresh pair of eyes, fresh challenge and opinions. It will bring a new firm with a different approach and set of subject specialists. It will also support one of the company's top 5 priorities: rebuilding trust and reputation with society. Now Mr. Chairman, my question is, will the Board launch a tender process so that a new external auditor is in place for the audit of 2022 reporting? And if not, can we expect to see a rotation? When can we expect to see a rotation? Thank you very much for your attention.

Thank you very much for your comments. I mean regarding your concrete question regarding audit, this rotation -- potential rotation of auditors is on the agenda of the Board now since many years, not since 80 years, but since many years. And what I can confirm is that it will, again, be on the agenda in the first half of this year. We will take a decision whether we are going for a request for proposal later this year. We share the perspective that we need to seriously consider. But we have not taken a decision yet, but you will be informed as soon as it happened. Thank you very much. Mr. [ Rik ]? [Interpreted] Mr. [ Rik ], you have the floor. And after Mr. [ Rik ], comes Mr. [ Volte Krov ].

[Interpreted] Chairman, ladies and gentlemen, members of the Board, shareholders, ladies and gentlemen, I want to talk about a topic that has to do with ethics and social responsibility and Novartis' standing in Switzerland. Mr. Reinhardt has already mentioned that there are certain tendencies in political circles in Switzerland, which are coming up for votes and would not be very positive for Novartis. The probable fourth annual protection initiative as well as the redundancy initiative, I agree, would not be particularly positive to you. But the corporate responsible business initiative is coming in the autumn, and it looks highly likely to be approved by the Swiss electorate. Now Mr. Reinhardt has suggested that this may have negative consequences for Novartis. And we've had an e-mail exchange about this, haven't we, Dr. Reinhardt? Now the company is headquartered, of course, here in Switzerland and has various subsidiaries overseas and therefore, certainly has to have high standards of social and environmental responsibility. And if it doesn't live up to those standards, it ought to be held to account. Mr. Reinhardt has suggested to me that he don't think -- doesn't think it's a good idea for Switzerland to go alone in this area. However, the International Chamber of Commerce, of which economiesuisse is a member, has welcomed the initiative in other countries, including France, the U.K. and the Netherlands, already have similar provisions. So it's not the case of Switzerland going alone. Now to the second point, the initiative calls upon business to uphold those standards and calls for them to be held to account where things go wrong. A good example here, I think, of course, is Glencore [indiscernible], which we know doesn't always uphold its standards. In the Council of States, a counter proposal has been made suggesting that companies should merely be called upon to report on their activities, whereas the Swiss parliament has produced a proposal, which is more in line with that of the people who brought the initiative in the first place. So we will have to see what exactly goes through when the electorate votes. I think it would be great for Novartis if you -- well, you don't necessarily have to support this initiative. But I think you need to declare that you support the objectives behind the initiative. That would be courageous, and it would be highly ethical for you as a company. So I would suggest that, that's what you should do. Thank you for listening to me today.

[Interpreted] Well, thank you very much, Mr. [ Rik ]. As you said, we did have an exchange of e-mails about this already, and I wrote to you just a few days ago and said that we have nothing against the core idea of this initiative, whereby a company should make sure that its suppliers and its subsidiaries overseas behave in just as an ethical manner as the company would at home. But the devil is in the detail with this. There are, as you said, a number of countries, which already have certain legislation in place. You mentioned France among others. The legislation in France actually closely reflects the counter proposal that you mentioned that's been produced by the Swiss Council of States, whereby companies are called upon to report on what they're doing. When it comes to the provision of active evidence that can be considered before a court, then it's rather difficult. Of course, it gets very complicated to prove what you might have done or what you didn't do. And as you, yourself have said, it's quite complicated. It's not a trivial matter. The bottom line is that we, of course, agree that all of our activities around the world, be they our own activities or those carried out by companies with which we work, should live up to high ethical standards. We have nothing against that. The devil is in the detail, as I say. We will have to see precisely how this is best to be achieved. And I think with the way the initiative stands at the moment, it would deliver a strong competitive disadvantage to us. But I'm sure the final word has not been had on this, and we will be hearing from each other once again. So thank you, Mr. [ Rik ]. And now we will hear from Mr. [ Volte Krov ]. You have the floor, sir.

[Interpreted] Good morning, ladies and gentlemen. I'm [ Volte Krov ] from Bern. Chairman, I'd like to begin by thanking you because some things have improved since the years of Vasella. Mr. Vasella, back then, we just used to get a coffee and a croissant. We've been getting much better catering in recent years, so thank you very much. I would like to know, though, whether you're going to be signing up to the call for tender from the Swiss national research fund to develop a vaccine or treatment for coronavirus. That would be a very nice thing for the company to do. Now I want to say something about the dividend. I think we're only getting a 4% increase. It's absolutely miserable. You could certainly have paid a higher dividend that this CHF 0.10 that we're getting on top of last year is, frankly, laughable. I also want to talk about the share price. Nestlé and Novartis used to have very close share prices. Nestlé has gone up to over CHF 100 now, whereas Novartis is jogging along behind. Why can't you do better? You should start doing better, I believe, not just talking about doing better. I want to hear what happened in the end with the case in Greece as well, please? Because there was a hefty scandal there, but it's all gone rather quiet in recent times. So I'd like to know how that one turned out, please.

[Interpreted] Yes. Thank you, Mr. [ Krov ]. Yes. Well, a little increase in the dividend. That's better than we've had in some years. So we'll see what we can do next year. As to vaccines for coronavirus and others, our vaccines business was sold off to GSK a couple of years ago. So our vaccine experts, well, they moved to GSK at the same time, and I'm sure they're very busy trying to develop a vaccination for coronavirus as we speak. So that would be for them. When you have exited a business of that type, it's not very easy to just jump back into it. And I'm sure that all companies around the world who work in the field of vaccines are very busy trying to come up with a vaccine for coronavirus. They will be heavily involved. If you're not a company working in the field of vaccines, then it's not something you can just dream up overnight. We decided that vaccines were not a business for us, and I'm afraid, that, that remains the case regardless of coronavirus. Now to the matter of Greece. It's gone a bit quiet, you said, well, that's because not much has happened. We haven't heard much either. It's a situation where, unfortunately, we have to assume that things are going to drag out somewhat. If you follow the Greek press, which probably not many of you do, but we're following things, and you'll see that there are reports at regular intervals about negotiations and discussions, but they don't seem to have led anywhere very much in recent times. We are, of course, in close contact with the Greek authorities. And we haven't changed our position vis-à-vis this case. We will, of course, see how things develop over the coming months or perhaps even years. I frankly don't expect the situation in Greece to be wrapped up anytime soon. That's all I can say on the matter, I'm afraid, just now. So I believe that brings us to the end of the list of people who registered to speak on this agenda item. Does anybody else wish to take the floor on agenda item 1? If not, then Mrs. Pamer will explain to you how to use the voting device.

[Interpreted] Ladies and gentlemen, let me briefly explain how to use your televoter. It has a touch screen. And a few seconds before we proceed to a vote, the agenda item for vote will be shown on your screen. Now you have 3 options along the bottom of the screen. A green button is to vote in favor for yes, a red button is for no and a yellow button is if you wish to abstain. As soon as you have placed your vote, the televoter will vibrate briefly and the option that you've selected will be ticked. If you accidentally press the wrong button, you can correct your vote as follows: either you press the same button again, which will reset the device or you can simply directly press the button that you actually intended to press. Now you can only cast your vote within the voting window. When we come to elections to the Board of Directors, we may vote on several candidates in a single voting round. It may be the case that not everybody's name, not all the candidates' names fit on the screen, and you may have to scroll from one page to the next, which you can do with the arrows at the bottom of the screen to go forwards and backwards between the different pages. If you have any questions about how to use your televoter during the meeting, then please go to one of the help desks, which are at the side of the room.

[Interpreted] Thank you very much, Mrs. Pamer. We can proceed to the vote then. We propose the approval of the operating and financial review, the financial statements of Novartis AG as well as the group consolidated financial statements for financial year 2019 and therefore, recommend that you vote yes. Please cast your vote now. [Voting]

[Interpreted] We now have the result of the vote. Mr. Aegerter?

[Interpreted] Ladies and gentlemen, the proposal has been approved with 99.5% of the votes represented.

[Interpreted] Thank you, Mr. Aegerter. I note that you've approved the proposal for Board of Directors. Now let's proceed with item 2 on the agenda, the discharge from liability of the members of the Board of Directors and the Executive Committee. The Board of Directors proposes to discharge its members and the members of the Executive Committee for the financial year 2019. I would like to open the floor for discussion on this item. We do not have any requests to speak. Okay. No requests. In that case, we'll proceed with the vote. Anyone who is part of the management, such as members of the Board and the Executive Committee, do not have a vote in this. And we recommend that the rest of you vote yes. Please cast your votes now. [Voting]

[Interpreted] We now have the results. Mr. Aegerter?

[Interpreted] You have approved the proposal with 98.3% of votes represented.

[Interpreted] Thank you very much. You have therefore approved the proposal of the Board. Now item 3, the appropriation of available earnings of Novartis AG as per balance sheet and declaration of dividend for 2019. Our annual report gives a detailed view of last year's business and has already been explained under item 1. The appropriation of available earnings proposed by the Board of Directors is contained in the notice for the Annual General Meeting as well on Page 11 of the annual report. The Board of Directors proposes a dividend increase of CHF 0.10 to CHF 2.95 per share entitled to dividends. If this proposal is approved, the dividend will be paid out from the 5th of March 2020. We also have no request from the floor here on this item, in which case we'll proceed with a vote. The Board of Directors proposes that you approve this proposal and therefore recommends that you vote yes. Please cast your votes now. [Voting]

[Interpreted] We now have the results of the vote. Mr. Aegerter?